Mar-Apr 2012 by Connect Business Magazine

OUTSTANDING

MARCH/APRIL 2012

Contents

THE MAGAZINE FOR GROWING BUSINESSES IN SOUTHERN MINNESOTA

STAFF & CONTRIBUTORS Publisher: Jeffry Irish

COVER STORY

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Editor: Daniel J. Vance Art Director/Staff Photographer: Kris Kathmann

Interim Advertising Manager: Daniel J. Vance

Lazer Blazer

Contributing Photographers: Jeff Silker, Art Sidner Contributing Writers: Carlienne Frisch, Robert Bryce, Ed Feulner Production: Becky Wagner Kelly Hanson Josh Swanson

8,400 for March 2012 Published bimonthly

CORRESPONDENCE Send press releases and other correspondence: c/o Editor, Connect Business Magazine P.O. Box 452, Nicollet, MN 56074 E-mail: editor@connectbiz.com (please place press releases in email body) Web: www.connectbiz.com

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ABOUT CONNECT Locally owned Connect Business Magazine has ‘connected’ southern Minnesota businesses since 1994 through features, interviews, news and advertising.

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Connect Business Magazine is a publication of Concept & Design Incorporated, a graphic design firm offering print design, web design, illustration and photography. conceptanddesign.com

EDITOR’S LETTER

Arnold Ziffel Revisited As a child in a major Midwestern city, I watched Green Acres. Bumbling Eb, channel-surfing Arnold Ziffel, greenhorn Oliver Wendell Douglas (Fresh air!), and screw loose Lisa Douglas (Times Square!) were all half-brained Hooterville hoots subtlety and subconsciously influencing the way I viewed agrarian life, people, and their collective intelligence. Into the early ‘70s and besides Green Acres, television networks aired a wave of similar shows that reinforced my perceptions of rural ridiculousness: Mayberry RFD, Hee-Haw, Petticoat Junction, Gomer Pyle USMC, and The Beverly Hillbillies—to call out several. If any network today were to dare cast any other minority—Asians, Blacks, Hispanics, Poles, Peruvians or Dyslexics—in such a degrading fashion for a new TV show, all multicultural hell would break loose. Yet we tolerated rural ribbing. And still tolerate. Our cover story, CEO Paul A. DeBriyn of 600-employee, Mankato-based Agstar Financial Services, obliterated my one or two remaining brain synapses still trafficking in these old thought patterns. He’s no Mr. Haney. Raised on a smallish Wisconsin farm, DeBriyn brilliantly helped pull rural financial services provider AgStar Financial Services out of an ‘80s mega-crisis. The private cooperative now manages $8 billion in loans and lease assets, and has 25,000 clients/stockholders. In our company profiles this issue, we feature determined Brent Donner of DLC Manufacturing (New Ulm) and persevering Jim Kozan of Waseca Music Company. Both men, we so learned, have quite a tale. Sursum ad summum,

Daniel J. Vance Editor

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CEO DeBriyn helped 600-employee, Mankato-based cooperative AgStar Financial Services rise from ashes to become national leader in agriculture.

The years 1987-88 weren’t particularly rosy for Newt Gingrich look-alike Paul A. DeBriyn, then chief executive officer at the rural cooperative that would become AgStar Financial Services. Nationally in those years, many rural financial institutions like his—and many family farms—were becoming unhinged as a barn door kicked in by petulant cows. A painful reorganization and retrenchment under 32-year-old CEO DeBriyn was a given. The only question was how. The then Rochester-based co-op had 169 team members in 22 field offices. In summer 1987, DeBriyn (pronounced DeBrian) interviewed every team member one-on-one up to 30 minutes to learn his or her personal ideas on what had to change. The company held bushel baskets of non-performing loans and undervalued acquired property. Revenues weren’t even close to covering costs. Something had to give. After the interviews, DeBriyn and other managers developed a downsizing strategy to reduce costs and preserve the co-op for future generations. In part, the plan involved DeBriyn and three managers meeting with team members individually to tell each their employment status. The management team could have sent out impersonal memos or pink slips, but chose a more “respectful” way, said DeBriyn. Within 18 months, the number of team members fell from 169 to 52, and offices from 22 to four. The co-op developed a fresh business model that literally would bring its offices right onto family farms. DeBriyn said in a Connect Business Magazine interview, “I vowed then on to never put ourselves into a position where we would have to go through an experience like that again.” And he kept that vow. Today, now under 56-year-old DeBriyn, Mankato-based, 600-employee AgStar Financial Services manages $8 billion in loan and lease assets involving 25,000 client/stockholders. Its historic and primary boundaries have been 69 Minnesota and Wisconsin counties, but its secondary territory has grown to include substantial swaths of the United States. DeBriyn helped execute one of southern Minnesota’s greatest business turnarounds— one that continues paying dividends in our region and beyond. continues > 8

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By Daniel J. Vance Photo by Kris Kathmann

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Fill us in on your upbringing. I grew up in Thief River Falls. My mom was most influential and taught me leadership, and my dad taught me honesty, integrity, and hard work. Both of them always believed in their kids—and they believed in me. They cared about making sure I went to school, tried hard, and gave it my best shot. They told me, “If you can tell us you did the best you could,” they would be proud of me. I was raised on a part-time farm of about 90 acres, with 80 acres of it where we hunted deer and raised hay and 11 acres where we lived and raised cattle. I originally thought about being a veterinarian. After two years of attending the University of Minnesota—and although I have hunted and fished my entire life and don’t have a problem cleaning ducks, geese, pheasants, and gutting a deer—I found my desire for working with animals with blood and broken bones wasn’t something I was cut out to do. I went into ag business administration instead and graduated in 1977, during a golden era in agriculture. After graduation, I went to work for the St. Paul Bank for Cooperatives (now CoBank), part of the Farm Credit System, which is what AgStar Financial Services is part of. They provided financing to cooperatives. I became a senior officer and worked there about 10 years. The last three years I was there, they consolidated the senior management of the Federal Land Bank of St. Paul, which provided real estate loans to farmers; the Federal Intermediate-Credit Bank, which provided funds to PCAs that provided operating loans and term loans; and the St. Paul Bank for Cooperatives. Those banks were all consolidated into one in St. Paul and I was a vice president. I became a vice president when I was 27 and CEO at age 31 at what is now AgStar. You had a mentor? Al Lambrecht was from Essig, near New Ulm. He now lives in Colorado, and probably had as much impact on my formative years as anyone as a vice president at St. Paul Bank for Cooperatives, where I started.

Paul A. DeBriyn | AgStar Financial Services

“[Al Lambert] was smart, personable, and had a sixth sense on change, but probably his biggest strength was his ability to listen.” What were his qualities? He was smart, personable, and had a sixth sense on change, but probably his biggest strength was his ability to listen. I worked especially hard coming out of college, which my dad had taught me to do. The harder I worked at my job in St. Paul, the more opportunity and responsibility Al gave. He had a direct impact on my being promoted and on my career moving forward. I have always had a great deal of respect for him and what he did for me. What do you think Al liked about you besides your hard work? A number of us came in at the same time, so it wasn’t just me. In fact, a couple of others that came in then work here with me now. The head of our Client Solutions Team, he and I have worked together 33 years. Our chief financial officer at AgStar was hired into the system in 1979. As for what Al liked: I tried differentiating myself from other people and felt I was always better off being different. So I’d volunteer for many of the odd projects that came up that others didn’t want. And I did those projects cheerfully. I was trying to learn and move forward. I thought the more diversified I became, the better I would look in terms of having a resume with more experience. I believe the more experiences you have, the greater the chances are you will find more opportunities. In my case, it has been proven true. I have been a mentor for students at the University of Minnesota and when they asked what they should do to succeed, I advise them to network and

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Usually, a large organization like yours takes on the personality and values of its leader. What at AgStar reflects you? I started in the Farm Credit System nearly 35 years ago, working right out of college. From 1982-86, the organization I was part of went through many re-organizations. It seemed to me that executive management was giving lip service to engaging and being involved with the employees. I learned a lot about how to treat people and build relationships. I think that is one key characteristic that has transferred over to AgStar and become an integral part of our philosophy and brand’s character: treating employees and clients the way we want to be treated ourselves. Honesty, integrity, and compassion is really what our business model is based on. Another experience that shaped my outlook on managing a large organization happened shortly after I started in 1987 as CEO for Farm Credit Services of Southeast Minnesota (based in Rochester), a predecessor of today’s AgStar. We had 169 employees and 22 offices in 13 counties. And we were broke. All the Farm Credit associations, including Mankato, Worthington, and St. Cloud, were doing poorly financially due to the ag recession. I had to make changes. We had many non-performing loans because of delinquent payments and acres of acquired property we had taken in. Our expenses were way too high compared to our revenue stream. Many hardworking people in agriculture were hurting. It was time to start counseling clients and sometimes disappointing them in the name of doing the right thing. Helping our clients succeed was the only way to ensure our growth. It didn’t happen overnight. The organization adopted a caring, client-centric philosophy I would like to think mirrors my own

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Wide Footprint AgStar Financial Services has its hands in many rural pots, including farm equipment leases; farm consulting services (includes succession, business, retirement, and estate planning, tax management, human resources development, and mergers and acquisitions); appraisal and cash management services; operating, equipment, real estate, starter, and home mortgage loans; farm financing tools; and farm and life insurance. Historical plaque on The Grand Hotel

Paul A. DeBriyn | AgStar Financial Services

“The only difference between our crop insurance and someone else’s crop insurance—because it’s all government regulated—is how we provide service. Our money isn’t any greener than anyone else’s, so we have to add value, which comes through trained people who understand industries and can provide information to help make clients more successful.” thought process. The good news is we learned from those tough experiences—as an industry and organization—and can use our history to insure it never happens again. In other words, in terms of price per acre, the ag bubble had burst. What happened in the ‘80s with agricultural land was similar to

what has happened in the housing industry the last three years. It’s virtually identical. Land values in southern Minnesota hit $3,000 an acre. Lenders were lending on collateral instead of cash flow. In some cases, you had land being financed at 100 percent of value. Then the ag economy tanked and land values dropped from $3,000 an acre to $1,000 or less. At that time, our industry and the press didn’t get along very

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well. But I made it a point to always be respectful of people in the media, always be on time for interviews, and do my best to provide understanding about what was going on. It was a difficult time and it hit everyone in agriculture very hard, including us. I knew we were going to have to go through significant downsizing. In the summer of 1987, I interviewed all 160 employees one-on-one, spending up to 30 minutes

with each. I wanted to get their individual thoughts on what they believed we were going to have to do. All of them knew we had to go through layoffs. They knew we weren’t making money. That fall, we developed a downsizing plan. I wanted to make sure we met with each employee one-on-one because I didn’t want team members to learn of their employment status after reading a memo. I wanted to make sure a person

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from management sat across the table from each employee, one-on-one, to explain their status. That’s unheard of in today’s corporate world. Very much so. What was the driving force for doing it? It was a reflection of my own values in

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Paul A. DeBriyn | AgStar Financial Services

terms of what my parents had taught and an experience I had in St. Paul where I saw the way terminations were handled there and how people’s lives had been turned upside down. There had to be a better way to treat people. I just felt respecting employees was important. So four of us in management broke down into two groups. Over four days, we met with all 169 people one-on-one and told them if they were in or out in terms of having

a job. We probably had as many people cry in front of us because they felt sorry for us than for their own situation. We went from 169 people down to 52 in 18 months, and from 22 offices to four. We created a new model in 1988 that involved on-farm (rather than office-based) service to clients. I vowed from then on to never put ourselves into a position where we would have to go through an experience like that again.

It seems like the situation now with land prices is different than in the ‘80s. Farmers are putting more down in cash. Yes, a lot more cash. They are putting down 50 percent and sometimes more. So would people renting land be most vulnerable to a burst bubble? It depends on what kind of rent they have and how long they have locked it in for.

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Casey West Principal Financial Group YAT Chair

Leora Ask John Behrens Jr. FIC, FICF, LUTCF, CLTC CLU, ChFC MN Financial Thrivent Financial Services for Lutherans

Jerry P. Groebner Chad E. Salzwedel Barbie J. Schwartz Matthew P. Barnes Mary A. McClure Gary S. Johnson LUTCF LUTCF, CIC CLU, ChFC MN Financial LUTCF LUTCF, CLTC Groebner McClure Agency Benefit Resource Services Midwest Financial Insurance Agency Association Executive Membership Insurance Group Concepts Group Public Relations Health LUTC Chair Government Relations

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From global issues to resolution on local rulings for his county, he makes it his business to know everything he can about what’s going on.

He’s also a Minnesota soybean farmer. He practices Responsible, Ethical Agriculture for Life. To see his R.E.A.L. story, visit mnsoybean.org.

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I want to say “if,” but am tempted to ask: What happens “when” the bubble bursts again? There will be a correction, but what I don’t know is how far prices will rise before dropping. I was driving to my Mankato office from Apple Valley today and listening to Bloomberg Radio. They had a person on who had made over 100 trips to China. He said over the next five to ten years the most successful sector of the American economy would likely be agribusiness, primarily because of the improvement in the diets of people in China, India, and other developing countries. He compared animals we eat to being middlemen. People in underdeveloped countries raise grain and eat it for their diet. In developing countries, they take the grain, feed it to animals, and eat the animals. But because of the middlemen—the animal—it takes three times more grain to produce the nutritional value needed. His view was that the next five to ten years in American agriculture would be tremendous. History has taught us cycles occur. We are in a cycle right now. We just don’t know how close we are to the top. Other factors could cause demand swings in agriculture prices, such as electric cars. Southern Minnesota has a number of ethanol plants that are dependent on cars running on gasoline/ethanol. Yet electric cars, in essence, run on natural gas or coal, because that runs the power plants. This could happen. I think ethanol is close to its peak. We produce about 13.5 billion gallons out of corn and that should plateau at 15 billion. There aren’t new ethanol plants being built. The companies owning them are paying down their debt and have relatively short payout loans. Every year forward, they are in an increasingly better financial position to weather any demand shifts. The last three years, they have done well. Will electric cars take over some day? I suppose it’s possible. More likely, they may end up being just a portion of the national fleet. Markets go through ebbs and flows. We will have demand and

Paul A. DeBriyn | AgStar Financial Services

We protect our clients like we protect our children.

supply not match up at times, but at least the foreseeable future looks positive.

It’s that important to get it right.

The world is plagued with uncertainty. How do world issues, such as the Arab Spring, affect farmers here? If anything over the last three years, we have learned we are in a global economy. As for the Arab Spring, maybe some democracies will kick in, the economies will improve, people will want more food, and if they improve their diets that will create demand for our agriculture and affect our price. The world is becoming more open and social networking is making that happen, even in China. As social networking occurs, and people see the lifestyles and opportunities in other parts of the world, diets will improve and demand for food will occur. And we raise the highest quality, safest, and most affordable food in the world.

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Most people not affiliated with agriculture have no clue how your organization was founded. Teddy Roosevelt was part of a commission in the late 1890s that issue a report saying that in order for the U.S. to develop—and most nations develop through agriculture—what was needed was credit to develop U.S. agriculture. As a result, in 1916 Congress created the Farm Credit System. We were the original government-sponsored entity, which later included Fannie Mae, Freddy Mac, and Farmer Mac—the Federal Home Loan Banks. But we were the original one and were put here to provide affordable and dependable credit and financial services to rural America. The System provides for ag real estate, farm operating loans, rural home loans, and financing for co-ops. In addition, we have developed a number of financial services. Congress created us with government money that was paid back in the 1950s. Today, we are privately owned and operate as a cooperative. AgStar Financial Services has over 14,000 stockholders. AgStar Financial Services is one of 90 like co-ops and one of the largest institutions in the national Farm Credit System, which covers

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Great Relationships START WITH GREAT LEADERSHIP.

every U.S. county. We all operate privately, and the people who do business with us own us. Just like Fannie Mae and Freddy Mac, we raise money by selling debt into the marketplace to investors. We have the Federal Farm Credit Funding Corporation in New Jersey raising up to $200 billion a year that we (the entire system) use to fund loans. We are known as a safe investment because we are a Government Sponsored Entity, so there is an implied guarantee that in the event we would get into trouble the government would help us. We have made money the last three years when many financial institutions have not. The cost of our debt has remained quite low. How much does the federal government influence what you do? An independent arm of the U.S. Government called the Farm Credit Administration (FCA) regulates us. Just like commercial banks are under the jurisdiction of the House Financial Services Committee and Senate Banking Committee, the Farm Credit System is under the jurisdiction of the House and Senate Agriculture Committees. From a policy standpoint, the government except through the Farm Credit Act doesn’t influence us.

At AgStar Financial Services, we focus on enhancing life in agriculture and rural America. And because everything starts at the top, we owe our success in part to the remarkable leadership of AgStar President and CEO Paul DeBriyn. Following Paul’s example, AgStar team members are committed to serving clients, agriculture and rural communities. And we’re driven by our vision and passion to build long-lasting, trusted relationships for today and tomorrow. AgStar Financial Services is an equal opportunity employer and provider. © 2012 All rights reserved.

Given the system is so big and in every county in the nation, how much does its policies affect local bank policies? Generally, I would say most financial institutions, whether part of the Farm Credit System or a commercial bank, operate with similar underwriting. We are different in that we may put an emphasis or focus on certain lines of business. That’s done and decided upon by the local board and management of each institution and they are accountable to stockholders. As a result, we develop our strategic plan and direction and types of products and services offered under Farm Credit Act regulations and FCA regulations. We don’t really influence what others do. Basically, all Farm Credit institutions offer loans to agriculture. We offer as full of a line of products and services as any Farm Credit in the nation, including crop insurance, consulting services, credit life services, appraisal services, and secondary market home mortgages. We are the only part (of 90 companies) of the Farm Credit System selling directly to Freddie Mac. We specialize in swine, grain, ethanol, and dairy. Like banks, do you have to have deposits to match you loans? No. A bank has a variety of funding sources such as deposits. From New Jersey, we sell debt instruments, investors invest in that security and get paid interest, and we get funds to fund local loans. How big is AgStar? We carry on our balance sheet about $5.6 billion. We manage about $8 billion in loans and leases outstanding to 25,000 clients. Every county in the United States is charter to a Farm Credit. Our AgStar charter has us serving 69 counties in Minnesota and Northwest Wisconsin. We have more than a 40 percent market share and are

Paul A. DeBriyn | AgStar Financial Services

“It’s difficult for communities to band together with other communities because they often look at each other as competitors for jobs.” the largest ag lender in Minnesota. However, because industries and markets have changed, parts of our business operate outside that area. For example, due to our specialization in the swine industry, we have producers in Iowa, Nebraska, Ohio, and North Carolina that want to work with us. We also offer lending services to commercial and community banks. Banks may originate an ag real estate loan and we buy the loan participation and provide them the funds. We have 600 team members of which 150 are based at our Mankato headquarters. In your reading area, we also have an office in Blue Earth. We have ten total offices in Minnesota and Wisconsin. How did AgStar perform last year? Our 2011 net income was $75 million. We take 55 percent of total earnings and allocate back to our owner/members in patronage. We target a 7- to 10-year timeframe to pay it. So they don’t get that money right away. In essence, the people doing business with us

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Getting to know you:

Paul A. DeBriyn Born: March 24, 1955. Family: wife, Lori; four daughters. Organization involvement: Past chair and current board member of Minnesota AgriGrowth Council; member, Farm Credit System Presidents Planning Committee; former board member, Farmer Mac; member, Charles H. Dyson Applied Economics and Management School (Cornell University) advisory council.

Good morning Mankato! We’re happy to be here. We may be new to Mankato, but we’ve been around Minnesota for a long time. So you can expect big things from us. Like building area businesses, and a healthier community together. Stop by for a cup of coffee and say hello.

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soybeans crushed in Mankato than in any other city in the United States. We have Christensen Farms in Sleepy Eye, the nation’s largest privately held pork producer. We have Rosen’s Diversified in Fairmont, one of the nation’s largest beef producers. And we have Ridley in Mankato, one of the nation’s largest feed producers. In your

capitalize us while we are doing business. Some community leaders in parts of southern Minnesota have been struggling for years to create an identity for their city or the region—in part to boost tourism and economic development. Here in our ninecounty area, in part, we have more

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opinion, why haven’t some community leaders in our region better embraced agriculture and made it into more of a city or regional selling point for tourism and economic development? Part of the challenge is it’s hard to get communities to think as a region. A lot of times, they look at just their communities. Here at AgStar (through our Rural Capital Network) we worked with other leaders in rural development on a regional competitiveness study that covered southern Minnesota from the South Dakota border to Rochester. Agriculture is one of our region’s strengths, along with manufacturing and healthcare. If you take a look at the future in terms of utilizing crops for medical purposes, we are ideally located. It’s difficult for communities to band together with other communities because they often look at each other as competitors for jobs. We need to think regionally and we have been involved trying to lead some of those efforts. I am going to say a person’s name and I want you to comment on that person. First: Bob Christensen of Christensen Farms in Sleepy Eye. I’ve known Bob about 20 years and practically everyone knows his story. He started with only a few hundred sows and now they are one of the nation’s largest swine producers. He has done a wonderful job helping create jobs and economic activity for the region. I like Bob. He is focused. I had a chance to introduce him as the Minnesota Agri-Growth Council Distinguished Service award winner a few years ago. I explained to the group when introducing him that Bob was a person who has one eye on the future and the other eye on today. That’s how he runs his business and his results have shown it. Tom Rosen of Rosen’s Diversified in Fairmont? Great, fun-loving guy. I serve on the Minnesota Agri-Growth Council board with him. He’s a lot of fun to hang out with and is truly a significant business leader in southern Minnesota and beyond. You know

Paul A. DeBriyn | AgStar Financial Services

AgStar Financial Services Headquarters, Mankato

MARCH/APRIL 2012

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Crop Star

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where Tom stands. He’s a terrific guy with a big heart and we enjoy working with him. Rosen’s Diversified is a very diverse company and I’m sure many people aren’t aware of all they do. Tom has built a very successful company and a great management team.

What do you like best about your job? The people, which includes team members, clients, and industry leaders. In what way? I love our team because we win with our team. I have a philosophy: happy team members lead to happy clients and happy stockholders. Our team made 50,000 farm visits last year with clients. We do our business on the farm. About 80 percent of our expenses are invested in the salary, benefits, and travel of our team members. The only difference between our crop insurance and someone else’s crop insurance—because it’s all government regulated—is how we provide service. Our money isn’t any greener than anyone else’s, so we have to add value, which comes through trained people who understand industries and can provide information to help make clients more successful. Is there one particular client or industry success story you can talk about? There are so many great stories. Southern Minnesota especially should be proud of itself for what it has done in the swine industry. In the early 1990s, we had a number of smaller swine clients and they began looking at various business models. We worked and collaborated with them, and they worked with each other, and as a result we have some of the world’s finest swine operations. Some have grown into very large businesses. Their contract finish

Paul A. DeBriyn | AgStar Financial Services

barns have given many young people the opportunity to stay in agriculture. In some cases, this has made it possible for the transfer of the family farm from one generation to the next. What sort of company culture have you tried to create? I’ve tried to create one where people respect and help each other. It all begins with a big focus on our clients. We are here to serve them. I try hard to create an air of transparency regarding information. I email out team updates to all our team and board members once or twice a month on things happening inside and out of AgStar. I write the updates personally. So thank God for grammar and spell check. I try bringing a more personal touch to management. For example, I have four daughters. Every time I write a story about one of my daughters—about their entering college or other experiences—I have people emailing back and mentioning their experiences with their children. I try to be transparent and personable, and focus on serving market clients to the fullest extent, which, if done well, can create growth opportunities and opportunities for our team members.

What is the one thing a team member will do that is guaranteed to get you upset? When they don’t take time to thoroughly communicate for understanding with a client. There is a difference between communication and communication for understanding. If a client has an issue, we need to be respectful to provide thorough communication with understanding. I could see one very difficult issue in your business could be lending out money and having the client come up short in being able to pay. We don’t want to foreclose on anyone. We have a special team within AgStar whose purpose is to help people with these challenges. If we see a farm family having issues, perhaps they aren’t making money or they have medical issues or they went through a divorce. We will visit the farm with a team of two people. We put those clients in an area of AgStar that can help them. There are many different options even before they actually miss a payment. If we see trends of decline, we want to get in front of it as much as we can. Now it might mean we need to restructure the debt so they pay it out over a

Crop Star

CONNECT: When you lobby in Washington D.C., and knock on Rep. Walz’ door, what is No. 1 on your list right now to discuss with him? DeBRIYN: I will ask about the farm bill and crop insurance. Most farmers recognize because of the budget issues that direct payments are probably going away, but we need to make sure lawmakers understand what that means to the industry. I would ask to make sure they have support for crop insurance as a risk management tool—and not to forget food is the most basic need we have. Again, we produce the highest quality, safest, and most affordable food in the world.

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THE ESSENTIALS

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longer period or maybe they can provide additional security. Maybe we get an FSA guarantee or work with the State of Minnesota. But we want to help people before they get to a point of desperation—and we are successful at it. In the ‘80s, our industry tried hard to follow the original contract. But here was one problem with our doing it that way: we ended up with so many people being delinquent and so much acquired property, we almost went broke ourselves. We just barely hung on. If Congress were smart, they would employ some of the tools our industry did in the ‘80s to get out of this housing industry challenge. We need to move the agenda of this country forward. Gridlock isn’t working. Right now, I’m reading a biography about George Washington. What our founders did when they created this government was incredible. We need to employ these lessons today. You mean how Americans worked together under the most trying of circumstances to accomplish something great and how today we seem so fractured? We need to understand everyone is going to have to give something and every day we don’t fix the fundamental issues of our budget and economy—it may not impact you and me, but it will future generations. We have the greatest democracy ever created and aren’t taking advantage of moving ourselves forward to a different level, which we could do. Editor Daniel J. Vance writes from Vernon Center.

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MARCH/APRIL 2012

CONNECTING BACK

Read the entire articles at connectbiz.com

1 YEAR AGO

MARCH/APRIL 2011 This issue featured New Ulm’s Anne Makepeace, the New Ulm Medical Center human resources director who was working to restore New Ulm historical heritage. Her introduction began: “If 54-year-old Anne Makepeace of New Ulm were to choose a song to desribe her life, The Beatles’ 1967 chart buster Getting Better with the oft-repeated positive line “it’s getting better all the time” surely would be one possibility.” Other companies featured: Le Pre Chel Salon & Spa (Waseca) and Sleepy Eye Stained Glass (Sleepy Eye). Memorable quote: “What in life do you want more but for your children to find some kind of purpose and meaning?”—Anne Makepeace, describing her daughter becoming communityactive while attending a St. Louis college.

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MARCH/APRIL 2007 Jerry Bambery, owner of five southern Minnesota McDonald’s restaurants appeared on our front cover. Other featured companies: Dr. Gary Jernberg (Mankato) and Soderlund Village Drug (St. Peter). Memorable quote: “This country does not accept mental health as important. You can break nineteen bones in your body and get care, but if you’re depressed, you are a leper.”—Jerry Bambery.

10 YEARS AGO

MARCH/APRIL 2002 Cover story: Rep. Bob Gunther (Fairmont). Profiled companies: Mankato Oil & Tire (Mankato) and Ground Zero Services (New Ulm).

15 YEARS AGO

MARCH/APRIL 1997 Cover Story: Denny Warta and Mary Ellen Domeier of New Ulm. Profiled companies: Rolco (Kasota) and Kemske/Oswald (New Ulm). CONNECT Business Magazine

By Daniel J. Vance Photo by Jeff Silker

New Ulm entrepreneur with exceptional gift and legacy cuts metal manufacturing niche.

Exactly 165 years ago in March 1847, the last survivors of the Donner Party reached safety after spending a cataclysmal winter caught in the snowy clutches of Hastings Cutoff, a dead-end pass through the Sierra Nevada in California. The original 87 members, led by 62-year-old George Donner, had naively believed a trading post owner claiming a fresh wagon route to California blazed by Lansford Hastings could save the Donner Party hundreds of traveling miles. Instead, it was their journey through Hell. The 48 surviving members persisted through blistering Great Salt Lake Desert heat, Indian raids, severe malnutrition, twelve feet of Sierra Nevada snow, and having to make the ultimate choice of life or death. Now in March 2012, Brent Donner, of New Ulm-based Donner Laser Consulting and DLC Manufacturing, speaks of surviving his own hellish journey, which is only fitting: according to family lore, his great-great grandfather George Donner was a nephew of the Party leader. Like his progenitor, Brent Donner is a survivor. 26

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Donner Laser Consulting helps metal manufacturing businesses all over the nation reduce production costs and increase quality by maximizing their laser cutting potential. In addition, a sister company founded a year later in 2008, three-employee DLC Manufacturing, offers a niche service Donner believes no one else in the world can provide: cutting mild steel up to an inch and a half thick and stainless steel and aluminum one-inch thick using one of the most powerful lasers in the world, a 6,000-watt Trumpf laser. The fledgling company makes one-of-a-kind metal parts for about 70 manufacturers based mostly in the Upper Midwest. In this interview, Donner freely shares his own pockmarked history with surprising ease. It’s his ancestors’ legacy that causes pause. In a Connect Business Magazine interview, 39-yearold Brent Donner says, “All I know is I’m part of the heritage. I’ve read books about what they did to survive. It was something my family tried to hide. My grandfather knew things about what his grandfather went through.” continues >

Left to right: Owner Brent Donner with co-workers Todd Pfaff and Doug Evers

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But to his credit, and probably from having experienced the personal cost of a wayward lifestyle himself, his father literally every day encouraged his son when growing up to “make something” of his life. Brent Donner has had his own demons to exorcise. Born in 1973, Donner somehow persisted through a trying upbringing in New London, near Willmar, Minnesota, that involved an alcoholic father and mother, with the latter chronically absent from home due to personal challenges. Says Donner, “To make a long story short, a lot of bad things happened to me and my sister as kids growing up. My upbringing was very rough. I have an uncle who died in prison because of [breaking the law.] I haven’t seen my mother since I was 21. I have gone through hell and somehow survived.” His late father dropped out of school in fourth grade and never learned to read or write. He couldn’t even write a personal check, said Donner. But to his credit, and probably from having experienced the personal cost of a wayward lifestyle himself, his father literally every day encouraged his son when growing up to “make something” of his life. His mom and dad divorced in 1981, which began for Donner an awkward time in foster care that abruptly ended in 1983 when his father regained custody of him. Then his father began dating and with each new girlfriend another strange family would move into Donner’s home, each with its own set of prickly issues. Donner himself was becoming hardened, angry, volatile. One evening in 1987, when Donner was 14, his father’s latest girlfriend was doing everything she could to force Donner out of the home. His father was away—so he was vulnerable. The arguing all came to a

head at 10:30 p.m. that night as Donner retreated in tears to his bedroom to pack his valuable belongings and leave. “We lived on a hill, and I started walking down it,” says Donner. “When I got to the bottom of the driveway, my aunt was waiting for me there in her car. She told me to get in. I had no idea she was coming to get me. She said she had been in bed at 10:00 p.m. that night and God had told her to get up right then and go get me. From then on, I moved in with Uncle Rudy and Aunt Verna and stayed until I graduated. Their taking me in changed my entire life. I didn’t believe in God before that.” His aunt and uncle soon took him to a professional counselor in Willmar, to whom Donner unloaded all his dirty laundry. He received spiritual sustenance from his New London youth pastor, Kevin Melin, who later became senior pastor of Crossview Covenant Church in North Mankato. Buoyed by a loving home atmosphere, Donner excelled at sports and was becoming a top student. The “darkness” was turning into “light.” He says, “I didn’t know God until I was 14 years old. By the time I was 16, He ruled every part of my life. That was a huge change. Instead of being on the dark side and not knowing anything about God, I embraced Him with my aunt and uncle.” On November 7, 1989, another event caused radical change. He was 16 and maturing. While in the third pew from the front with his aunt and uncle at Sunday morning church, a “weird” feeling came over him. He stood up. All eyes went his

DLC Manufacturing | New Ulm

way. His uncle asked what was wrong. “And all I could say was, ‘Dad,’” he said. Similar to the spiritual moment his aunt had experienced in rescuing him, Donner had towards his father. He instinctively knew his father was in trouble at that moment. He began running up the aisle and before he reached the back, a chorus of pagers of volunteer fire and safety personnel began chirping. He ran seventeen blocks to his father’s auto body shop only to see his father being loaded onto an ambulance. They met again at the Willmar hospital emergency room, where his father was screaming out Brent’s name. About 98 percent of his body had third-degree burns. Both lungs—collapsed. His beard and head hair—gone. He had accidentally set his auto body shop on fire. Doctors placed him in a coma to blanket pain. Over a three-week period, Donner and his aunt and uncle were called into Hennepin Burn Center numerous times when doctors thought his

father would die. “It got to the point where my aunt and uncle would come to the school to get me, my name would come across the loudspeaker, and I would just start bawling. I couldn’t take it anymore,” he said. On one of those burn center trips he says, “I told everyone to leave the room and I took an hour by myself with my father. I just sat there and talked to him. He was in a coma. One thing that had never happened in my life: he had never said he loved me and I had never told him. When I said, ‘Dad, I love you,’ a tear came out of each eye, and I know he heard me.” Donner’s father passed away three hours later. Until his father’s death, most students at New London-Spicer High School and most people in the community hadn’t recognized the sea change that had been washing over Donner the prior two years. But now they would. “A million things

THE ESSENTIALS

DLC Manufacturing Contact: Brent Donner Address: 1510 South Minnesota New Ulm, MN 56073 Phone: 507-359-8050 Web: donnerlaser.com

changed for the better in my life after my father died,” he says. “People saw a side of me they’d never seen before. They saw I had really cared about my dad.” Nearly the entire high school showed up for his father’s funeral. In due time, he became president of his high school’s Mothers Against Drunk Driving (MADD) chapter and involved in the lives of 150 students who had promised in writing to call him if they became drunk and were tempted to drive. He traveled all over the school district on weekend nights ferrying tipsy students home.

The arguing all came to a head at 10:30 p.m. that night as Donner retreated in tears to his bedroom to pack his valuable belongings and leave.

MARCH/APRIL 2012

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Donner was letting his light shine—that is, until college revealed a surprising lack of self-control that nearly snuffed that light out. It was an improbable start to what many thought would be a promising career. At a Christian college near Minneapolis his first semester, Donner was a star football player, became heavily influenced by a wayward roommate to join the wrong crowd, started drinking alcohol heavily, and skipped almost all his classes. Being away from his aunt and uncle’s protective nest had left him surprisingly vulnerable. What was happening ran counter to his father’s daily prodding of Donner to make something of his life. “I got drunk and I never stopped drinking,” says Donner. “I may have gone to class a total of twice over three months. The school said I would be expelled and for the first time in my life I lied to my aunt and uncle. I told them none of my credits would transfer and I needed to get out of that school.”

With his consulting business off the ground—seven customers the first two weeks—Donner called friend DeWald seeking help in purchasing a new 6,000watt Trumpf laser. The laser arrived in November 2008 and was assembled inside an old auto parts store just off South Broadway in New Ulm, directly behind Kwik Trip. His departure from Minneapolis in 1992 renewed his life. He moved to Hutchinson to major in “non-destructive testing” at the vocational college and simultaneously took on a position as a sandblaster at Hutchinson Manufacturing. His major involved, in part, learning metallurgy and testing welds to make sure they wouldn’t deteriorate under stress. Soon after starting work there, the break of a lifetime occurred—no pun intended. While using a sandblaster, a task went awry and Donner seriously injured his leg. No longer able to perform that company task, his boss reassigned him to a fabrication area in which he learned how to run a “punch and plasma” machine. “So they put me on that machine figuring I’d be there until my leg healed before putting me back on the sandblaster,” says Donner. “But I quickly taught myself how to read code and within a week I was programming things they never thought possible on that machine. I was only 19.” He doubled the machine’s production. His duties

DLC Manufacturing | New Ulm

expanded into learning other plasma and laser machines, including a 1,500-watt Trumpf laser. He was suddenly a hot commodity—and no one even had the slightest clue how he was able to run his laser so much more productively than his co-workers. Along with a salesman, he left Hutchinson Manufacturing in 1998 for Millerbernd Design to run a 4,000-watt Trumpf laser and within three months was cutting 1.25 inch-thick mild steel. His bosses couldn’t understand how he was doing it because the laser was supposed to cut up to only .75 inch. “In fact, even the manufacturer (Trumpf) said I couldn’t be doing it,” says Donner. “But I was way beyond their understanding of steel and I owe that to my metallurgy background at Hutchinson. I understand steel, it’s breaking point, and what it takes to cut it.” He switched employers in 2005 to AWI, another company in the metalworking industry, to run a 5,000-watt Trumpf laser. As a new AWI employee and while flying to Connecticut with two others to look at a new 5,000-watt laser, he befriended David DeWald, who quickly recognized Donner’s amazing and marketable talent for cutting thick steel. “DeWald (eventually) said, ‘I have money and you have a gift,’” says Donner. “And he said he wanted to be part of the gift.” Donner left AWI in 2007 to start Donner Laser Consulting and promptly began marketing his unique services in an improbable way: he sent email to prospective companies using Trumpf and

Lazer Blazer

First Time CONNECT: What’s the story behind your first consulting customer? DONNER: I had a telephone call from a metals company in Indianapolis. They brought me down for two days to work with their employees. I thought charging $700 a day was a pretty good rate and billed them $1,400. They had a 4,000watt Han Kwang laser and had been unable to cut steel thicker than .5-inch. I walked to the machine, programmed it, cut through one-inch steel, and the parts fell off. I taught them. On my second day, the owner said I wasn’t earning enough and gave me a check for $4,000 for two days (instead of $1,400). I learned I was worth a lot more than $700 a day.”

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MARCH/APRIL 2012

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Han Kwang lasers. The email read, simply: “How would you like to make your laser more profitable and efficient? If you would, contact me, Brent Donner.” The bait brought immediate responses from manufacturers in North Carolina and Indiana. These companies found his services attractive because his ability to cut thicker metal reduced the number of steps from two to one to produce many heavy metal parts. It was faster and substantially cut costs. With his consulting business off the ground—seven customers the first two weeks—Donner called friend DeWald seeking help in purchasing a new 6,000-watt Trumpf laser. The laser arrived in November 2008 and was assembled inside an old auto parts store just off South Broadway in New Ulm, directly behind Kwik Trip. Donner finally had a home for his business and was near dozens of potential customers within a 100-mile radius. New Ulm also had several trucking companies to ship out his product. “When I came to New Ulm, I thought (people in the industry) would know who I was because I had been around a long time,” says Donner. “However, they knew the companies I’d worked for, but not Brent Donner. Then we hit a recession and there was no work out there (for the laser). In order to survive, my business partner (DeWald) put in money every month. After a year, he said I was on my own.” He paid business bills using consulting earnings, which hadn’t been affected by the recession. DLC Manufacturing sales tripled from 2009 to 2010. Business in November and December 2011 was so heavy between DLC Manufacturing and Donner Laser Consulting, Donner couldn’t take a day off. The company doesn’t manufacture any completed retail products—only specific parts for manufacturers. Says Donner, “We do work for 69 manufacturers and each is seasonal. For example, the manure spreading manufacturers (which we supply with parts) are selling left and right come October. With all these different companies, our unique ability to do 1.5-inch steel has put us into a different class than other laser companies.” He says his company does business with customers placing orders ranging from $175 to $350,000. They don’t turn anyone away. Both his businesses received a huge break in December 2011 when Metal Forming magazine ran a short mention of their ability to cut 1.5-inch steel. Donner received telephone calls from potential customers in California, Oregon, Florida, Texas—you name it, he says. To whom does he attribute his company’s success? In large measure to co-workers Doug Evers and Todd Pfaff, who generate quotes and sales. “Without these guys, this company does not exist,” says Donner. And what about his uncanny ability to cut thick steel? “It’s all in my head,” he adds. “I don’t know how I know what I know, but I know God has given me one hell of a gift.”

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“LJP has supported clients at MRCI by providing both equipment and financial support to recycling efforts in the Mankato Area. Clients at MRCI collect cans and bottles through the Message in the Bottle program, a partnership with the Recycling Association of Minnesota. The support that LJP has provided to MRCI has been an instrumental part of the program.”

“With the help of LJP, Schell’s Brewery has been able to expand the number of items we can recycle from our trash. At our last Bock Fest, we had our visitors recycle their serving cups, therefore helping diminish trash on the grounds, and also be more “Green”. Thanks to LJP recycling capabilities, we at Schell’s Brewery know we are helping to make a difference in our environment. Our staff is 100% behind the effort it has taken for the success of our waste reduction, which in turn also helps to make our company stay competitive in the marketplace, besides the terrific benefit to our environment.”

MCQUAY

ILPEA INDUSTRIES

McQuay today announced that their Faribault and Owatonna facilities have achieved zero waste. The achievement was accomplished in part through a strategic partnership with LJP Waste & Recycle. “This achievement at Faribault and Owatonna demonstrates McQuay’s deep commitment to sustainability and how we continually strive toward reducing the environmental impact of our facilities and products.”

“ILPEA Industries, New Ulm and other ILPEA plants nationwide were given a challenge to reduce our garbage dollars spent and increase recycling efforts. With the help of LJP we were able to accomplish that goal in three months. LJP’s willingness to work with us made this happen. They took extra steps to make sure our goal was met. This type of service and commitment has strengthened our relationship with LJP.”

WIS PAK WIS-PAK ASSOCIATED FINIShING “We are glad we made the switch to LJP. Their dependability and quick responses to our needs are very much appreciated.”

(507) 625-1968 www.ljpent.com sales@ljpent.com

“LJP has helped Wis-Pak convert the majority of our waste to recycled materials. Waste levels have been reduced from 480 yards to 40 yards resulting in a significant cost savings. In addition, revenue from recycled products averages $55,000 per year.”

LJP Enterprises, Inc. 2160 Ringhofer Drive North Mankato, MN

COUGhLAN COMPANIES “Coughlan Companies would like to thank the LJP staff for the assistance you provided during our office relocation. I could literally call anytime for either location and knew the containers would be emptied the same day. This was a life saver for us. We appreciate the local presence of your company in our community. Thank you for the reliable, friendly, and professional service you provide.”

BUSINESS TRENDS

USA REDUX

In unsettling economic times, Americans often enjoy watching feelgood movies like Field of Dreams to help salve the pain and remind that good times will one day return. In late 2011, a feel-good article for economically depressed Americans penned by Ambrose Evans-Pritchard appeared on telegraph.co.uk.com. He, unlike many cheerless Americans, believed the

Grand Old Republic was teetering on a Prosperous Age. Editor Evans-Pritchard has journalistic gravitas in part due to his expert and insightful work over the years for the international Gold Anti-Trust Action Committee (GATA). So listen in. For one, he suggested the U.S. was about to become exceedingly energy wealthy and energy independent, saying, “Total U.S. shale (oil) output is set to expand dramatically as fresh sources come on stream possibly reaching 5.5 million barrels per day by mid-decade. This is a tenfold rise since 2009.” He mentioned hydraulic fracturing (fracking) as one reason, which has been turning vast swaths of North Dakota and Texas into oil-producing boom regions. Fracking technology made the U.S. the largest single contributor to global oil supply barrel growth in 2009. According to Evans-Pritchard, the U.S. currently meets 72 percent of its own oil needs, up from 50 percent in 2000. Also, hydraulic fracturing for natural gas has turned the United States into what could be called the “Saudi Arabia of Natural Gas.” All this means our long-

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standing reliance on unstable Ayatollahs, Kings, and Emirs for energy could soon end. And as our addiction to Middle East oil wanes, our perceived need to become involved in expensive Middle East military forays will likely wane, too. Another potential boost for the American economy was mentioned in a 2011 Boston Consulting Group (BCG) publication titled, “Made in America, Again: Why Manufacturing Will Return to the United States.” The report predicted up to 800,000 manufacturing jobs will return to the U.S. within five years, with the spin-off effect producing several million more jobs. The reason? A BCG report summary read: “China’s once overwhelming manufacturing-cost advantage over the U.S. is eroding fast. Within five years, rising Chinese wages, higher U.S. productivity, a weaker dollar, and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America. A U.S. manufacturing renaissance could result.” Other factors mentioned as encouraging a flight from China to the U.S. in certain

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BUSINESS TRENDS

industries included the Chinese challenges of rising shipping costs and delivery and product reliability issues, and the inability of U.S. manufacturers to keep intellectual property safe. Evans-Pritchard noted that Farouk Systems already had moved its hair dryer assembly business from China to Texas and ET Water Systems had relocated a manufacturing facility from China to Silicon Valley. Master Lock had moved jobs from China to Milwaukee; NCR had moved some of its ATM manufacturing from China to Georgia; and national prosthetic dental lab NatLabs had returned to Florida. The Master Lock decision, according to the Milwaukee Business Journal, was related to “increasingly higher labor and logistics costs in Asia and ongoing labor availability challenges, especially in the coastal areas of China.” Connect Business Magazine in past Business Trends features (like this one) and our National Opinion columnists have repeatedly mentioned the systemic challenges China has been facing. In one, we mentioned here that Credit Suisse

economist Dong Tao had predicted China would reach a critical juncture within two years when its labor surplus would dry up to create rapid upward pressure on wage rates. Chinese wage inflation has been running at 16 percent a year for ten years without a labor shortage. The Milwaukee Business Journal quoted Master Lock CEO John Heppner as saying, “Advantages of moving the jobs (from China) to Milwaukee include a more competitive overall cost structure, greater control, and the ability to provide better service to customers.” There’s more: A SmartMoney.com 2011 article titled, “Small Manufacturers Rethink ‘Made in China’” affirmed this trend. Said SmartMoney.com optimistically, “We’re witnessing a sea change in the way entrepreneurs think about manufacturing. Increasingly, China isn’t the bargain it once was, and making things in the U.S. seems less over-the-top expensive now….many small businesses that sell goods in the U.S. are rethinking whether manufacturing on the other side of the planet is worth it.”

SmartMoney mentioned a number of smaller U.S. companies bringing some or all of its manufacturing back, including: Jarden (First Alert safety devices and Miken baseball bats), Sleek Audio (earphone maker), and Neutex Advanced Energy Group (lighting fixtures). Wrapping up his feel-good outlook, Evans-Pritchard said the weak dollar had made U.S. manufacturing more competitive against foreign manufacturers. The result, he said, had led in part to Volkswagen investing $4 billion in the U.S., including a new manufacturing plant in Tennessee, and Samsung investing $20 billion in various American facilities. Other bright signs he sees on the American horizon: we operate sixteen of the world’s Top 20 universities; and we’re the only economic superpower to have a fertility rate higher than 2.0, which means ours beats Japan, Korea, China, and Germany. All this and more, said Evans-Pritchard, could mean “[T]he 21st Century may be American after all, just like the last.”

RIGHT-TO-WORK

In a February editorial, Reason Foundation senior analyst Shikha Dalmia predicted the recent adoption in Indiana of a right-to-work law “will go down in history as the watershed moment that decisively stemmed the awesome power that Big Labor has exerted on American politics for about a century.” By any measure, Indiana’s right-towork law was historic: until then, only non-Rust Belt states in the South, West,

and Great Plains were in the state—Toyota, in Indiana. club. Right-to-work law began Over the last decade, employwith the Taft-Hartley Act of ment in right-to-work states 1947. Because of it, employees rose 2.3 percent and fell 4 working in unionized busipercent in forced-unionism nesses in right-to-work states states. On the flip side, rightaren’t required to join unions to-work state employees earn or pay union dues. Twenty3.2 percent less and have fewer three states, including North benefits. In summary, right-toDakota, South Dakota, and work laws significantly weaken Iowa have right-to-work laws; a union’s ability to negotiate Minnesota, Wisconsin, and higher wages and benefits, Shikha Dalmia Illinois don’t. which entices manufacturers Dalmia believed a reason to relocate to these right-toexists why not one overseas auwork states. tomaker has built a manufacturing plant in Unionized manufacturers in the nonMichigan, even though that state has a highly right-to-work states bordering Indiana trained automaker labor supply. Instead, in should feel pressure over time to relocate recent years, overseas auto companies have to Indiana to remain competitive. Dalmia been building their plants in right-to-work said this pressure could cause an exodus states Tennessee (Volkswagen), Alabama to Indiana and renew political pressure (Honda and Hyundai), and Mississippi on legislators in those states—Michigan, (Nissan). The only foreign automaker Illinois, and Ohio, all with high unemploybuilding a plant the last decade in a rightment—to pass their own right-to-work law to-work state is no longer a right-to-work to keep jobs at home.

OFF-THE-CUFF

I hope you all have been surviving March Madness. At this writing, I’m pretty sure my college team, the Dayton Flyers, didn’t make the field of 68. If it will make you feel any better, my second favorite team is the Minnesota Golden Gophers and my second favorite arena, The Barn. Similar to college basketball and March Madness, the topic of my column this issue—federal stimulus spending—can bring out our most primal passions as sinful human beings. Here are mine. Buckle your seatbelts and away we go… Often, I let certain news articles or opinions linger in a specially marked email file, hoping one day I will have a home for them in our Business Trends section or here in Off-The-Cuff. I can’t tell you how many shovel-ready articles over the years have

been permanently dumped in Mac trash before finding a home for them. Probably hundreds. But sometimes two or three articles align to create one here. For example, in July, I saved a WeeklyStandard.com article on President Obama’s then to-date stimulus results and in December an opinion piece from Minnesota Public Radio’s website. Then I reDaniel J. Vance membered hearing Editor certain words from inter viewing our Business Person of the Year 2005. I now join all three….. The Weekly Standard article analyzed the Obama Administration’s “Seventh Quarter Report” released in July, which had summed up the stimulus’ economic impact to that date. According to weeklystandard.com, the report “was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama and chronicles the alleged success of the ‘stimulus’ in adding or saving jobs.” Given the authors’ tight relationship with President Obama—they probably play basketball together—this report should have put the President’s stimulus job creation efforts in the best possible light. Except it didn’t. President Obama’s

economists claimed the stimulus had created/saved only 2.4 million jobs with $666 billion in spending (to that date). I say only because this worked out to about one job created/saved for every $278,000 spent. Weekly Standard rightly was unimpressed with the results too and remarked that President Obama could have sent a $100,000 stimulus check to everyone “whose employment was allegedly made possible by the ‘stimulus,’ and taxpayers would have come out $427 billion ahead.” I don’t know about you, but to me $666 billion seems a lot. Sometimes we limited human beings are incapable of comprehending such large numbers. For instance, by my reckoning, President Obama could have used that $666 billion to purchase about 20,812,500 Chevy Volts at $32,000 each, which meant in order to stimulate the economy he could have given away a free Chevy Volt to every man, woman, and child in Minnesota, North Dakota, South Dakota, Montana, Wyoming, Idaho, Iowa, Nebraska, and Wisconsin combined—and had another 190,000 Chevy Volts left over as back-up parts or to give away to constituents in Chicago. (For perspective, $666 billion also was enough to give each of 20,068,000 Americans under the age of five a free Chevy Volt so their moms and dads could drive them individually to daycare.) In all 2011, General Motors worldwide sold nine million vehicles, so producing and

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BY DANIEL J. VANCE

In all 2011, General Motors worldwide sold nine million vehicles, so producing and selling 20,812,500 Chevy Volts certainly had potential to shift our cottage cheese economy into Star Wars-like hyperdrive. selling 20,812,500 Chevy Volts certainly had potential to shift our cottage cheese economy into Star Wars-like hyperdrive…. Unimpressed with one job created/saved for $278,000 spent, for further perspective, I telephoned Milt Toratti, our 2005 Business Person of the Year and former director of Riverbend Center for Entrepreneurial Facilitation. In short, he used to be Blue Earth County’s economic development arm. He said that from 1989-2005, while working for different economic development groups and helping 1,647 total clients, not once did he exceed $1,000 per job created in a year. Quite a bit better than one job created/saved for each $278,000 spent….. After citing Weekly Standard and interviewing Toratti, I began feeling President Obama easily could have achieved better results….. Then I pulled from my email file my last stiletto, a December Minnesota Public Radio opinion piece by Jennifer Vogel mentioning the Washington State Legislature’s scientific way of determining the most efficient means of delivering government programs. It’s called evidence-based policy making. The

Washington Legislature employs a bipartisan group to conduct its research, called the Washington State Institute for Public Policy. The Institute’s mission is “to carry out practical, non-partisan research—at legislative direction—on issues of importance to Washington State. The Institute conducts research using its own policy analysts and economists, specialists from universities, and consultants.” It painstakingly researches the efficacy of current and proposed programs in the areas of education, criminal justice, welfare, children and adult services, health, utilities, and general government. Vogel said the Institute offers state legislators “hard, consistently derived numbers” enabling them to compare programs. For instance, if one program costing $10 million can document keeping 250 adults out of prison and another costing $20 million keeps out 250, the Legislature will go with the $10 million program. The Institute’s director, Steve Aos, said to Vogel, “To derive valuations, we go through a formal process to dispassionately review the scientific evidence on what does or doesn’t work. We read every research

LUTHER MANKATO HONDA “The OSD team made furniture fun for our project and Luther Mankato Honda. Dan and Dain always have the most cutting edge products, and never try to over sell you. They had the perfect plan that was personalized for us. It’s amazing how Dain has put together one of the premier teams in the area.” Kerry Lindsay, General Manager – Luther Mankato Honda

study we can.” For example, one early Institute project evaluated juvenile crime programs. After evaluating cost versus benefits, the Institute gave a thumbs-up to a family therapy program and a lower rating to Scared Straight. Aos believed the cumulative effect of the Institute helping the State Legislature in crime program research alone had resulted in 1,100 fewer adults in prison over the years. So to spend tax money wisely, bipartisan evidence-based policy making seems a no-brainer. If President Obama had used evidence-based policy making for his stimulus package, efficient people like Toratti could have created a much better outcome for him than just one job for $278,000 spent. Though I must admit that having four free Chevy Volts—one each for me, my wife, and two children—would have been fun to zip around Vernon Center in. It also would have been neat watching 55,000 other Volts driving around Blue Earth County. However, I’m not quite sure how I would have been able to identify my Volt in a mall parking lot filled with hundreds of other Volts. That’s it for now. Thanks again for reading southern Minnesota’s only locally owned business magazine—with a circulation of 8,400 reaching nine counties since 1994. Editor Daniel J. Vance also writes “Disabilities,” a nationally selfsyndicated newspaper column (danieljvance.com). Email letters to the Editor by April 1 for next issue. We may edit for space and clarity.

110 W. Dukes St., Mankato 507-388-4405 osdmankato.com

C O N S U LTAT I O N | D E S I G N | I N S TA L L AT I O N | C O M M E R C I A L F U R N I S H I N G S MARCH/APRIL 2012

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Any chamber of commerce, convention and visitors bureau, or economic development organization in our reading area—large or small, from Amboy to Waterville—can post on our free bulletin board. For details, email editor@connectbiz.com.

Service honoree was Frankie Bly, who works for Gartzke’s Greenhouse and Prairie Express, and is an Art Masterpiece volunteer and Blue Earth Area Schools board president.

Fairmont

Mankato Jonathan Zierdt, Greater Mankato Growth

Bob Wallace, Fairmont Area Chamber

Due in part to agriculture’s importance to our local economy, a partnership has formed in Martin County to bring FFA back to Fairmont. It involves businesses and individuals partnering with Fairmont School District and a non-profit organization to raise the needed funds to implement an agricultural program over the next three years. FFA teaches career, leadership, and life skills through agricultural education. For more information or to donate, contact Fairmont Chamber of Commerce at 235-5547.

Blue Earth Cindy Lyon, Blue Earth Chamber The Blue Earth Chamber of Commerce/CVB Business of the Year was O/NE Realty (Kara Drake & Cornelia Hagedorn), which began 2010 when Drake and Hagedorn purchased and merged Olson Realty and Nelson Realty. In part, Drake is a Blue Earth EDA board member. Also, the Chamber of Commerce/CVB Community

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MARCH/APRIL 2012

Everyone from our regional business community is invited to attend the Greater Mankato Business Showcase on April 10 from 4:00 – 7:00 pm at the Verizon Wireless Center. Get together with more than 500 individuals from area businesses and learn about the products and services they provide. And you’ll also have the opportunity to sample food from Greater Mankato restaurants. It’s the once a year event no one wants to miss! For more information, visit greatermankato.com/gmg-businessshowcase.php.

Mankato Julie Nelson,

South Central Minnesota Small Business Development Center

Your Small Business Development Center (SBDC) was awarded extended funding to continue the Turn-Around Business Program (TAP). Originally provided through the 2010 Small Business Jobs Act, this funding allows SBDC to provide in-depth technical assistance to distressed yet viable businesses affected by the recent periods of economic and financial crisis. Our professional business consultants can help you with revitalization and growth strategies. As always, SBDC services are no cost to you. Call us at 507-389-8875.

New Ulm Audra Shaneman, New Ulm Chamber

While February in New Ulm was about Fasching, a German Version of Mardi Gras, and Bock Fest at August Schell’s Brewery,

Local Chamber & Economic Development News

Mankato

New Ulm

Anna Thill, Greater Mankato Convention & Visitors Bureau

Terry Sveine, New Ulm CVB

2012 marks the 150th Anniversary of the U.S.-Dakota Conflict of 1862. Several communities in Greater Mankato are holding special events in commemoration. Events include a speaker series presented by Blue Earth County Historical Society, the Mahkato Annual Traditional Pow-Wow at Land of Memories Park in Mankato, and a bicycle tour called the “Dakota War History Ride.” Events are being added, so visit the Greater Mankato Convention and Visitors Bureau website regularly for up-to-date information: visitgreatermankato.com/Dakotaconflict150.php.

This year is the 150th Anniversary of the U.S.-Dakota War of 1862. Citizens from all over Brown County have been meeting the last eighteen months and have a full week’s worth of activities planned to honor this significant event as it happened in Brown County. Make your plans now to attend any or all the events shown on the calendar at the website browncountydakotawarcommemoration.com. The opportunities to learn will be unrivalled in the state!

March is all about the shows! Our Farm–City Hub Club hosts the 2012 Farm Show on March 9-10 and New Ulm Business & Retail Association hosts the Home & Self Improvement Show March 2325. For more details, visit newulm.com. New Chamber Members include: Jackpot Junction, River Valley BMX and The Travel & Cruise Center.

Minnesota State High School League Girls’ State Fastpitch Tournament; Men’s B, C, and D State Fastpitch; Men’s State Church Softball; and ASA Men’s Class A, B and C West Fastpitch Nationals. For the complete Caswell Park tournament schedule visit caswellpark.net.

North Mankato Lynette Peterson, North Mankato CVB

North Mankato Port Authority

Caswell Park is booked solid almost every weekend this summer hosting slowpitch, fastpitch, and youth baseball tournaments. Upcoming tournaments include: MAYBA and MAGFA Tournaments;

North Mankato Wendell Sande, Southern Minnesota Surgical has received approval for a project to put its clinic in the building at 223 Belgrade Avenue near the bridge. Wells Federal Bank and the North Mankato Port

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Services of Southern Minnesota’s new 1306 Marshall St. facility and for Jake’s Pizza at 119 W. Broadway.

Sleepy Eye Julie Schmitt, Sleepy Eye Chamber

Waseca Kim Foels, Waseca Area Chamber

On March 14, up to 600 people will convene as one statewide business voice for Minnesota Business Day at the Capitol— the state’s largest business lobbying day. This is the perfect venue for business leaders to speak one-on-one with legislators to advance initiatives. Top priorities: talent development, competitive costs, government innovation, and fairer rules, fewer delays. Governor Mark Dayton has been invited to speak. Waseca Chamber will be carpooling—contact the Chamber for costs/details.

Authority are providing project financing. Total project cost is estimated to be $205,900. Project completion is anticipated in the summer of 2012.

St. Peter St. Peter Area Chamber

New members of the Chamber include: Lake Emily Cabin, Steffen Electric of LeCenter, Edward Jones (Bart Weelborg), Chankaska Creek Ranch & Winery, August Schell Brewing Co., Anytime Fitness St. Peter, Zender Insurance Agency, and Caribou Gun Club. Ribbon cuttings were recently conducted for Counseling

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MARCH/APRIL 2012

Celebrating milestone anniversaries in 2012 will be West Side Garage (55 years), Arneson Distributing (40 years), BJ’s Salon (35 years), Hauser & Schmid, PLLP (35 year partnership), NAPA Auto & Truck Parts owned by Star Group LLC (30 years), and McCabe’s Ace Hardware (20 years). Extraordinary Volunteer of the Year for 2011 Joann Schmidt, Shining Star Jennifer Boettger, and Big Chief Mark Kober were honored at the Chamber of Commerce Annual Meeting held in February.

Sleepy Eye Kurk Kramer, Sleepy Eye EDA

Sleepy Eye EDA board planning meeting developed three 2012 goals: 1) continue focusing on downtown areas, specifically Veteran’s Park and old Rocky’s sites; 2) continue working on developing the east-end Snow Property; 3) and formulate/complete a working outline to resolve and eliminate delinquent outstanding EDA loans. The EDA, two high schools, and businesses will continue planning/ implementing an “On-the-Job Training” program; and the EDA will continue with Sleepy Eye PUC/Sleepy Eye “YES” to undertake green energy/recycling projects.

Wells Andrea Neubauer, Wells Area Chamber

Wells Area Chamber of Commerce will host its 2nd annual, “Paint the Town Red: A Business Bazaar,” on Friday April 20 at Wells Community Center from 5-8 pm. This event gives businesses a chance to connect with customers on a one-on-one level. Any chamber of commerce, convention and visitors bureau, or economic development organization in our reading area—large or small, from Amboy to Waterville—can post on our free bulletin board. For details, email editor@connectbiz.com.

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By Carlienne A. Frisch Photo by Kris Kathmann

KOZY SOUNDS Iconic music store owner survives health issues to play loud and well again.

CONNECT Business Magazine

MARCH/APRIL 2012

What business has been around for more than a half century, serves the music needs of several south-central Minnesota communities and is owned and operated by people who work there without pay? The answer: Waseca Music Company—and Jim Kozan has been the lifeblood of the business since 2005. Before that, it was his mother, Ruth, and his wife, Judy, who kept the store going. “We’re in our sixtieth year,” Kozan said, “but there has been a music store in Waseca for more than 100 years. A Mr. Perrin, who began a music store in Waseca over a century ago, was having a closing-out sale in 1952. My folks bought out his stock and founded the Waseca Music Company. It‘s one of the oldest family-owned music stores in Minnesota.” Thus began the Kozan family tradition of working for the sake of providing the community with a music store. With music playing softly in the background, Kozan perched on a stool and explained, “This is our family contribution to the town. Mom and Dad just really liked music. My father was a chief mechanical engineer at E.F. Johnson, where my mother was in office management, and that’s where they met. When they opened the store, they were in their 30s with four small children. He went on to retire from E.F. Johnson, but my mother left her job to work in the store without pay. Not only did my parents have the store, but my mother also was an organist and vocalist all over Southern Minnesota. My father, Joe, passed in 1997 at age 82, but my mother, who’s 91, still lives alone and stops in the store every week after her hair appointment to express her happiness that the store is still here. She still owns it, but I’m the heir. I’m the second of five children and the oldest son, None of my brothers or sisters were interested in the responsibility of the store.” continues >

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“We’re a Mom-and-Pop shop,“ Kozan said. “I’ve always worked here on a parttime basis all my life. My first job, when I was about six, was delivering payments, such as for our utility bills, to Waseca merchants. I got paid three cents for each one I delivered.” Posters and photos cover one store wall, most from recent decades but some from the mid-20th century. There’s Streisand, McCartney and Dylan, alongside Puff Daddy, Rod Stewart, and Asleep at the Wheel. There also are photos of bands having a relationship with Waseca County, bands that have bought their instruments from the Kozans, such as the El Toros, the Cletus Hane Band and Chopstix Percussion, a group of drummers who took part in parades in the early ’90s. To the right of the photos, a shelf displays two accordions— two banjos hang above it. There’s a hand bell set for children, and child-sized ukuleles in pink, shiny black, royal blue, kelly green and apple red. There are child-sized violins in plum, navy and coral, as well as the traditional brown. The guitars, available in one-half, three-quarter, five-sixths and full sizes, sport equally varied colors. The few books displayed here and there throughout are equally eclectic. There’s a biography of Jimi Hendrix, Poems of Faith by Helen Steiner Rice, a humorous book about growing up Lutheran and a volume titled All About the Symphony Orchestra. There also are several vintage music magazines that Kozan picked up somewhere and doesn’t quite know how to price. There’s an August 1953 Hit Parade and a June 1951 Song Hits, featuring Helen O’Connell on the cover. Drums, horns and guitars crowd the window, but the showpiece is a grand piano. “My daughter had it at home and played it,” Kozan said, “but later she put it into storage. It’s from the 1920s, and came to Waseca from Germany, via New York, San Francisco, and Minneapolis. continues on page 50 >

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MARCH/APRIL 2012

Waseca Music Company | Waseca

Kozy Sounds

The Customers Kozan usually sees 15 to 20 customers a day. Even on a Wednesday afternoon during a slow post-Christmas week, customer interruptions of the Connect Business Magazine interview were steady. • A man came in looking for a harmonica for a two-year-old granddaughter. Kozan suggested a “starter” harmonica that cost $3, but showed the customer five harmonicas. He bought a $7 model. • A New Richland parent phoned to ask about purchasing a music book, drumsticks and a drum for her son. Kozan recommended trying a drum pad before buying a drum. • A student brought her flute in for an overhaul. Kozan made a minor adjustment on it and asked her to bring it back on the weekend. • A customer came in to make a time payment on her children’s keyboard–the fifth payment in as many months. (Kozan charges no interest the first nine months.) She also made a rental payment on one of her children’s clarinets. • The Waseca High School Choir Director ordered sheet music for the new semester, stopping to chat about high school class schedules. • A mother and son delivered a poster for the Waseca Band Boosters upcoming chili feed. • A Latino father and two children came in to ask about a Mexican guitar, one with 10 strings. Kozan was able to special order it and gave the customer a discount. MARCH/APRIL 2012

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Kozy Sounds

“We’re a Mom-and-Pop shop,“ Kozan said. “I’ve always worked here on a part-time basis all my life. My first job, when I was about six, was delivering payments, such as for our utility bills, to Waseca merchants. I got paid three cents for each one I delivered.” As a student at Sacred Heart School in Waseca, Kozan was taught piano lessons by nuns in second, third, fourth, and seventh grades. In between, in fifth and sixth grades, he studied baritone horn with Herb Streitz, who was the Waseca Community Band Director. In high school, also at Sacred Heart, Kozan played the Sousaphone in the school band. (“The fingering is the same as on the baritone horn,” he explained. In addition to playing keyboard and harmonica, he’s self-taught on rhythm guitar and drums.) He also played basketball in high school and decided he wanted to be an NBA player like his hero, Elgin Baylor of the Los Angeles Lakers. Instead, he majored in business at the University of St. Thomas in St. Paul, graduating in 1972 with a degree in Quantitative Methods Accounting. It was his first love, though, on which he launched his early career. “I was a road musician for 15 years—keyboard, harmonica and vocals,” he said. “I traveled steadily with the Zero Ted Band and The New Morning Band, but cut back to weekends when Judy and I had a family. Then I worked at Brown Printing for almost 20 years, first as a human resources supervisor, then in warehouse management and recycling management.”

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A year of therapy at Sister Kenny Institute in Minneapolis, along with care at Mayo Clinic in Rochester, reawakened some abilities, but it was a long, slow road he traveled to regain his performance quality. In 1994, Kozan’s life hit a sour note. A stroke cost him his speech and all memory of the 400 or-so songs he used to perform. A year of therapy at Sister Kenny Institute in Minneapolis, along with care at Mayo Clinic in Rochester, reawakened some abilities, but it was a long, slow road he traveled to regain his performance quality. “It took me 14 years, until 2008, to be able to sing and play simultaneously again,” Kozan said. “I relearned song lyrics one syllable at a time. I’m probably two-thirds there with my memory now. When

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Favorite school subject: “Math, it was easy for me. After that, piano playing.” Least favorite subject: “History—too much reading. Now, two of our three children are history majors in college.” What do you wish you had studied? “I wish I could speak Spanish (to better serve customers), French, which has become rusty since college, and Yugoslavian, because my grandparents came from there.”

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Community affiliations: Waseca Area Chamber of Commerce, supporter (labor, equipment and money) of Waseca Classic Committee annual marching parade, piano player in annual “Christmas Time’s a’Coming,” and past Rotarian (20 years). Hobbies: “I enjoy doing yard work and landscaping on our property in a rural neighborhood in the woods, about five miles south of Waseca.” Accomplishment of which most proud: “Being alive after a stroke and a kidney transplant. And there’s a lot of pride the store is still paying its bills.” Most valued intangible: “Being open-minded and flexible.” How people describe you: “Nice guy.” If you could change one thing: “Our present location was built in 1891. I would like to have two newer buildings, one with studios and practice rooms, and one for the store.” If not in the music business: “I think I’d be managing some kind of business taking care of people.” MARCH/APRIL 2012

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Kozy Sounds

I perform, I bring along a book that has the words typed out in a large font. During the years I couldn’t play and sing at the same time, I hosted karaoke in clubs on weekends and was a disc jockey for wedding dances and special events.” It was in 2009, after feeling confident in regaining much of his earlier ability, that Kozan formed the Kozy “Lil” Duo with Bob Stephan, another Wasecan, and resumed performing on weekends. They sing and play ‘50s, ‘60s, ‘70s, ‘80s and country songs. Another health issue—failing kidneys—had led Kozan to leave Brown Printing in 2003. Between dialysis treatments, he worked at the store. “I’ve been in the store on a consistent basis without pay since the early ‘80s,” Kozan explained, “but from 1996 to 2006, my wife was the main player in running the store with my mother. After I left Brown Printing, I spent more time at the store, but I also did odd jobs for pay.” In 2005, his mother, then 85 years old, decided to retire, so Kozan stepped in as the primary proprietor. Another milestone came in October 2006, when Kozan got a kidney transplant. Whether there’s a connection or not, that’s when his memory of song lyrics took a leap forward. Kozan’s musical talent provides the explanation for his ability to manage the store without taking a salary. In addition to performing with the Kozy “Lil“ Duo, Kozan has a disc jockey business, DJ Kozy, with his son Clint. (“Clint’s also quite a vocalist,” Kozan said, “and Judy was a vocalist and quite the flute player in her day.”) The third piece of the financial puzzle is that Kozan, now 63, began collecting Social Security last year. The store is officially open 10 a.m. to 5:30 p.m. Monday through

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In addition to piano music, the sheet music ranges from Rihanna to Elvis Presley, from Justin Bieber to Bill and Gloria Gaither, from Lady Gaga to marching band scores. Friday, and 10 a.m. to 2 p.m. Saturday, with Kozan there the entire time. When staying late to rearrange inventory or do recordkeeping, he often hears a customer come through the door after hours. His wife works ten hours a week on billing and bill paying; their son Clint works at the counter five hours a week. “A town of 10,000 doesn’t usually have a music store because it takes somebody who isn’t there for the money,” Kozan said. “I’m always checking how much things are selling for on the Internet. I do not sell over the Internet, but order music online and over the phone. Special orders of CDs and DVDs bring in traffic. A lot of people who don’t have computers want us to order for them. We average 40 special orders at Christmas. Here, at the point-of-sale, there’s no wait and no shipping charge. “One thing that has really grown is guitar repair, such as restringing,

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Kozy Sounds

The Pumper, The Peddler, And The Politician It isn’t everyone who can say he has played music for former Congressman Tim Penny, another Wasecan. “I played keyboard for Tim’s first U.S. Congress victory party in 1982 at the American Legion in New Richland,” Kozan said. “Our families go way back.” A photo taken at the 2002 Minnesota State Fair, when Penny was running for Minnesota governor, appears on the Waseca Music Store’s website (wasecamusic.com, with links to bands and musicians). There’s Rick Kritzer (owner of Kritzer’s Oil in Waseca) on electric guitar, Marty Bumm (now retired from a sales career) on stand-up bass and Tim Penny on acoustic guitar—the pumper, the peddler, and the politician.

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neck straightening, showing people how to tune by using electronics. We also have a ton of spare parts for guitars and band instruments.” At least half the store’s customers are junior and senior high school students from Waseca, Janesville, New Richland, Waterville, Morristown, and a few from Owatonna. They get instruments, reeds, valve oils, cleaners and sheet music. The next most frequent customers are church organists and pianists, choir directors, private music teachers and adult band members. “Adult band members buy mostly accessories,” Kozan said. “That’s because we don’t sell major, expensive guitars, although we can order a $500 guitar. In our stocking, we respond to demand, so we have

good guitars for getting kids going THE ESSENTIALS in the $90 to $350 range.” And then there are repairs. Kozan explained, “Karl Pratt, who lives in rural Waseca, has training and long Contact: Jim Kozan experience in instrument repairs. Phone: 888-835-2980 He does the repairs on brass and Address: woodwinds, keeps us current and is 111 South State Street a great addition to Waseca Music as Waseca, MN Web: wasecamusic.com a sub-contractor. We used to have to go to Owatonna, Mankato or Redwood Falls for repairs. Karl’s right here in emergencies, before a concert or a marching day, and he can get it done. “Another crowd that comes in here are piano teachers, sometimes from 50 miles away,” Kozan said. “They get regular piano instruction books and sheet music from the ‘50s onward. We have a really great selection of sheet music, probably 500.” In addition to piano music, the sheet music ranges from Rihanna to Elvis Presley, from Justin Bieber to Bill and Gloria Gaither, from Lady Gaga to marching band scores. “Our theme through the years has been ‘a little of this and a little of that,’” Kozan said. “We don’t have a sales crew that goes out on the road to other high schools. We’re not here to take over the world. Although people come from other counties, we’re here to serve Waseca. People tell us, ‘We’re so glad you’re here.’”

Waseca Music Company

Carlienne A. Frisch writes from Mankato.

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HOT STARTZ!

Very New or Re-formed Businesses or Professionals New To Our Reading Area

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Three Sleepy Eye women opened Friendz Salon & Tanning in January at 117 Main Street West: Carolyn Baures, Lacey Braulick, and Heidi Carr. Speaking for the three, 32-year-old Baures said in a Connect Business Magazine telephone interview, “In part, we wanted to open a larger salon to offer more jobs for people in Sleepy Eye.” Baures grew up in Sleepy Eye as the oldest of four sisters and a brother. As such, she said, she “did a lot of ‘hair’” for her sisters. After graduating from Mankato Cosmetology Training Center twelve years ago, she began working at a local salon and established a friendship with customer Lacey Braulick. “So I talked Lacey into going into ‘hair’ school too, and after graduating she came back to work with me,” said Baures. Four years ago, the two opened their own salon. In time, they learned of Sleepy Eye native Heidi Carr, a St. Cloud “hair” school graduate. When Carr wanted to join as a partner, they needed more space, which the trio found at 117 Main Street West. Being able to triple their floor space tripled their dreams. “We did a complete renovation (of the former bakery),” said Baures. “It was fun having all three of us with our ideas create what we now have.” Their move/expansion came off successfully because of guidance from Sleepy Eye Chamber and the Economic Development Authority, said Baures. Friendz Salon & Tanning does complete hair care, waxing, facials, pedicures,

and tanning. The three hope to have 24-hour tanning soon and offer make-up services for wedding parties, proms, and special occasions. Said Baures, “We’d all say our job is rewarding. It’s so good to help make our clients feel good about themselves. We laugh together and cry together. We are family.” FRIENDZ SALON & TANNING Telephone: 507-794-2887

HOT STARTZ!

Very New or Re-formed Businesses or Professionals New To Our Reading Area

ST. CLAIR

Bell Tower Suites

BELL TOWER SUITES Address: 313 East Main Street Telephone: 507-995-1697 Web: belltowersuites.com ART SIDNER

Tammy Spence was raised on a Good Thunder farm that instilled a “strong work ethic,” said Spence in a telephone interview. “There was no getting out of responsibility. I was the first of three kids, so I had the luxury of doing everything first. We had a large extended family with 40 grandchildren on one side. And we had strong family values.” She started work right after high school and has always been involved in some form of marketing. She worked for Condux International nine years and later joined Riverbend Business Products. Last fall, she and partner Cory Sjoblad purchased Bell Tower Suites, a former church building. “There isn’t much for meeting places in St. Clair,” said Spence. “We have two suites: one has five single beds and the other has two kings and a single. We have extended-stay custom-

ers; others use it for holiday parties and special occasions; and businesses use it for getaway weekends and for out-of-town business guests wanting more of a ‘home’ feel than a hotel.” A national website listing Bell Tower Suites has attracted customers from all over the U.S., including Texas and New York. Of course, the former church building has been filling a need for meeting space in St. Clair too, where local families have a place to comfortably hold large family gatherings during holidays. Said Spence, “We also do event planning. For example, I have a friend with a salon, and another is a massage therapist. We have catering and have kitchens in both suites. We can purchase groceries for people. We have Internet access and huge craft tables.” Suite rates range from $99 a night Sunday through Thursday to $249 a night on weekends.

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MANKATO

Vault Denim The example set for Brooke Linder while growing up in Cleveland, Minnesota, was a mother who worked five jobs. “She sacrificed everything she had for us kids,” said 26-year-old Linder in a telephone interview. “She worked pretty much 24/7 to support us and went to school for her real estate degree to become a broker. I saw her hard work and its benefits.” After high school, Linder attended MSU before going to real estate school to become “like her mom,” which she did two years. She knew the harder she worked the more she could earn. However, three years ago, the real estate market suddenly tanked and she became pregnant. Given her husband earned enough to support everyone, and her joy in raising children, Linder chose to become a stay-at-home mom. One day last year, her aunt telephoned describing the “coolest party” and why Linder “just had to sell for it.” What her aunt described was a Vault Denim party, where women could have fun buying designer jeans at reduced prices. Said Linder, “I’d never heard of it. Then I did my homework and joined last August. I’ve worked hard and the business has come a long way.” At a typical party, a hostess invites her girlfriends, who can try on any of 130 jeans ranging in size from 0 to 24. Besides Bling jeans, Vault Denim has brands selling from $46 to $88—up to 50 percent off retail.

“If you like them, you take them home,” said Linder. “Your friends are there to give you their opinion of what you look like. And you don’t have to worry about your kids running away in the store.” Customers pay with cash, check or credit card. Merchandise for men’s jeans, maternity, little boys and girls, and infants can be ordered online. Mankato-based Linder is now a regional coordinator and is looking for people to join her. VAULT DENIM Telephone: 507-317-8821 Web: brookelinder.vaultdenim.me

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To be considered for one of three spots in the May Hot Startz!, email the editor at editor@connectbiz.com. Businesses considered must have started—or changed greatly in form—within one year of our publishing date. Professionals chosen must be new to our reading area.

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started the last phase of an expansion begun in December, adding 9,000 sq. ft. of office, production, and warehouse space, and 700 sq. ft. of production room conditioned space; Martin Lueders joined as interim quality manager, replacing Scott Clarke; Express Diagnostics received FDA clearance for additional drugs in cup and dip tests, including buprenorphine, methamphetamine, propoxyphene, and cocaine.

Fairmont From Mayo Clinic Health SystemFairmont: Dr. Sophie Dojacques joined in obstetrics/gynecology; an expanded pastoral care service began in Fairmont; Mayo Clinic Health System Fairmont Foundation received a $25,000 gift from Willis and Mary Cole; and Mayo Clinic Health System-Fairmont Auxiliary presented $3,900 to help the oncology department. KSUM/KFMC Farm Director Mike Murphy earned Minnesota Farm Bureau Foundation’s “Ag Communicator of the Year” award. From the Chamber: New members include Five Lakes Centre, Bank MidwestSherburn, and American Welding &

Gas; new businesses include Shari Marie Photography & Design; new owner of Highland Court Motel is Landmark Management of Martin County.

Lake Crystal From the Chamber: new members include Danks Hydro-Jetting; MinnStar Bank promoted Shanna Willaert to credit officer/credit analyst; and Lake Crystal Area Recreation Center is now open 24/7. TBEI named Tom Barna as national sales support manager at the Lake Crystal corporate office.

Le Sueur From the Chamber: new Chamber member Headlines Plus moved to 228 N. Main Street.

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Caribou Gun Club Caribou Gun Club will host the NSCA 2012 U.S. Open Sporting Clays Championship July 16 through July 22.

Mankato From Greater Mankato Convention & Visitors Bureau: the CVB earned the “2012 SportsEvents Media Group Readers’ Choice Award” for “exemplary creativity and professionalism” toward groups hosted in Greater Mankato. w Foodservice hired Tom Curtis as a dedicated broad-line foodservice representative in Mankato. Meyer & Sons celebrated 80 years in business. New business Skogen Mechanical began serving Greater Mankato. From Farrish Johnson Law Office: Attorney William Partridge was selected as a Fellow of the Litigation Counsel of America. Award winners of the 2012 Annual Martin Luther King Jr. Community Celebration: Wilber Neushwander-Frink (Pathfinder Award); Zeynab Omar (Young Pathfinder Award); and Lloyd Management (Business Pathfinder Award). From Greater Mankato Growth: New members include Indian Island Winery; Sport Clips Haircuts; Alliance Insurance Agency of Mankato; Special Olympics Minnesota; Young Life; Wealth Management Resources; Rehm Insurance & Financial Services; The Gretchen Rehm Agency; BARK L Consulting Engineers; Rodeway Inn; and Viking JR. Motel. Yuri Jelokov joined Chesley, Kroon, Harvey & Carpenter-Attorneys at Law. Eide Bailly and Wipfli announced June 1 merger plans pending regulatory approval; the new firm would be EB Wipfli. From HickoryTech: President John

Finke rang the NASDAQ Stock Market closing bell on January 9; the company acquired Fargo-based IdeaOne Telecom Group for $28 million to add 3,600 new customers and 225 fiber route miles to the company’s network. From Coughlan Companies: Capstone donated 50,000 books to Books for Africa, the company’s fourth major donation to the organization; the company named nine fourth quarter grant recipients that advocate for child literacy and enhanced educational opportunities and caring for the environment. From Paulsen Architects: Paulsen Architects-designed Rosa Parks Elementary School was awarded LEED for Schools Gold established by the U.S. Green Building Council and verified by the Green Building Certification Institute; Investigative Engineers Association (I-ENG-A) announced Paulsen Architects had formed I-ENG-A of Southern Minnesota, a new division of Paulsen Architects to provide investigative/forensic engineering in 22 counties, with James Pank, PE, as the division’s principal representative; Paulsen Architects-designed St. Peter Food Co-op and Deli received the “Design & Aesthetics Exterior Renovation/Remodel” Award from the Minnesota Shopping Center Association’s 2011 Shopping Center Tribute Awards for Retail Real Estate. From Mayo Clinic Health SystemMankato: the Auxiliary presented a $16,000 check from 2011 Women’s Show proceeds to help fund construction of a new emergency department; the company redesigned its mayoclinichealthsystem. org website. From Coldwell Banker Commercial

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Fisher Group: President David Schooff earned Certified Commercial Investment Member designation; the company announced the sale of the 180,000 sq. ft. former Environ Biocomposites plant. Scott Kelly, Randall Knutson, and Daniel Bellig of Farrish Johnson Law Office were recognized as Minnesota Lawyer’s “Attorneys of the Year 2011” from their work on Bearder, et al. v. Minnesota Department of Health and the State of Minnesota. Marco was the first “Managed Services Provider” to offer the Intel AppUp Small Business Service running on the Intel Hybrid Cloud in the Upper Midwest. United Prairie Bank and Minnesota

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HickoryTech HickoryTech received the inaugural 2012 YWCA “Distinctive Difference” award. HickoryTech Director of Investor Relations and Marketing Jennifer Spaude said the company, in part, “promoted the advancement and development of women and people of color in the organization and the community; offered a management training program that promoted the advancement of women; and had a proven track record of hiring and advancing women in leadership and management positions.”

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State University College of Business will work on a new Integrated Business Experience Program for spring semester 2012. Applications for the 2012 Young Women in Public Affairs Award are available from the Zonta Club of Mankato at zontamankato.org. Jerry’s Body Shop, a National Auto Body Council member, will participate in Recycled Rides, which recycles and donates vehicles to needy families.

New Ulm From the Chamber: The New Ulm Journal received five second-place awards in the Minnesota Newspaper Association’s Better Newspaper Contest, including “Use of Photography as a Whole,” “Advertising Excellence,” “Classified Ad Section,” “Best Advertisement,” and “Feature Photo”; Sven & Ole’s Books is a drop spot for World Book Night on April 23; Design Home Center was named Minnesota Lumber & Building Material Dealer of the Year by the Northwestern Lumber Association; The Grand Center for Arts and Culture received a $100,000 “Legacy Amendment” grant for renovating the Grand Hotel into an art center and Brown County Historical Society received a $55,000 grant for its U.S.-Dakota War anniversary exhibit; Holiday Inn New Ulm was designated the 2012 Property of the Year by the Minnesota Lodging Association; Martin Luther College governing board approved construction of a 50-unit senior housing facility near MLC Early Childhood Learning Center. From the Chamber: Shane Deal joined Bank Midwest as president; Lisa Besemer joined New Ulm Real Estate as a real estate agent; and Karla Havemeier added CPA Mark Eckstein and expanded company offices; three J&R Schugel Trucking drivers achieved three million safe-driving miles; Jensen Motors service technician Justin Dauer became a master technician; 3M hired Steve Hall as a sales account representative; Minnesota Valley Habitat for Humanity relocated to above the Chamber of Commerce; new businesses include Idea Haus; new Chamber members include Jackpot Junction, River Valley BMX,

and The Travel & Cruise Center; Elkay Wood Products (Medallion) hired plant manager Dennis Skluzacek; and new Boy Scout District Executive Robert Swanson moved to New Ulm. From the Chamber: Hope and Faith Floral & Gifts purchased Sleepy Eye Floral Design (in Sleepy Eye) and changed its name to Hope and Faith Floral & Gifts; Tami Caudill of New Ulm Medical Center became an International Board Certified Lactation Consultant; and attorney Paul Gunderson joined Berens, Rodenberg & O’Connor. American Artstone Board Chair Mark Furth appointed Larry Thompson as president.

North Mankato Southern Minnesota Surgical, specializing in general and bariatric surgery, will open a clinic at 223 Belgrade Avenue in late spring. South Central College hired Julie Frederick, RN, MBA, as a healthcare consultant. Lucky’s Popcorn Dressing received a Southern Minnesota Initiative Foundation micro loan for expansion. HotelsMankato.com (Best Western Plus, Mankato City Center Hotel, and Holiday Inn Express) added a second salesperson,

Megan Seppmann. Author Shelvie J. Birchield through RoseDog Books released Children’s Coloring and Activity Book. Mankato Brewery began distributing beer in Greater Mankato.

River’s Edge Hospital & Clinic hired Amy Steffen, a certified pediatric nurse practitioner.

Sleepy Eye

From the Chamber: New members include Hoehn Law Office, Amy Swain Hearing Center, and Sommer’s Masonry; new businesses include Hoehn Law Office, Woodridge Interiors, and Colony Court Memory Care & Suites; Waseca County BioBusiness Community Growth Initiative received a $15,000 grant; Doug Allerdings became market president of United Prairie Bank of Waseca; Dr. Nick Navarro joined Prairie Dental Arts.

Friendz Salon opened at 117 Main Street West.

St. James Mayo Clinic Health System-St. James hires include speech therapist Ann Lewis, and Dr. Jeremy Fleischmann, podiatrist. Minnesota Association Of County Officers recognized Donald Kuhlman as “Auditor Of The Year. Susan Bottin opened SR Photography.

Waseca

WASECA

Brown Printing

St. Peter

Brown Printing received the 2011 Energy Professional Development Award and Corporate Energy Management Award from the 34th World Energy Engineering Congress.

From the Chamber: New members include Lake Emily Cabin and Edward Jones (Bart Weelborg). Barbara Weber was promoted to vice president of Scholarship America.

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NATIONAL OPINION

In late 2011, the American Wind Energy Association began a major lobbying effort in Congress to extend some renewableenergy tax credits that would eventually expire at the end of the year. And to bolster that effort, the lobby group’s CEO Denise Bode called the wind industry “a tremendous American success story.” But the wind lobby’s success has largely been the result of its ability to garner subsidies. And those subsidies are coming with a big price tag for American taxpayers. Since

2009, AWEA’s largest and most influential member companies have garnered billions of dollars in direct cash payments and loan guarantees from the U.S. government. Robert Bryce And while the lobby group claims to be promoting “clean” energy, AWEA’s biggest member companies are also among the world’s biggest users and/or producers of fossil fuels. A review of the $9.8 billion in cash grants provided under section 1603 of the American Recovery and Reinvestment Act of 2009 (also known as the federal stimulus bill) for renewable energy projects shows the wind energy sector has corralled over $7.6 billion of that money. The biggest winners in the 1603 sweepstakes: the companies represented on AWEA’s board of directors. An analysis of the 4,256 projects that have won grants from the Treasury Department under section 1603 over the last two years shows $3.37 billion in grants went to just nine companies—all are members of AWEA’s board. To put that $3.37 billion in perspective, consider that in 2010, according to the Energy Information Administration, the total of all “energy specific subsidies and support” provided to the oil and gas sector totaled $2.84 billion. And

that $2.84 billion in oil and gas subsidies is being divided among thousands of entities. The Independent Petroleum Association of America estimates the US now has over 14,000 oil and gas companies. The renewable energy lobby likes to portray itself as an upstart industry, one that is grappling with big business and the entrenched interests of the hydrocarbon sector. But billions of dollars in 1603 grants – all of it exempt from federal corporate income taxes – is being used to fatten the profits of some of the world’s biggest companies. Indeed, the combined market capitalization of the 11 biggest corporations on AWEA’s board—a group that includes General Electric and Siemens—is about $450 billion. Nevertheless, the clock is ticking on renewable-energy subsidies. The 1603 grants ended on December 31 and the renewable-energy production tax credit expires on January 1, 2013. Recently, AWEA issued a report which predicted that some 37,000 wind-related jobs in the US could be lost by 2013 if the production tax credit is not extended. But the subsidies are running out at the very same time that a cash-strapped Congress is turning a hard eye on the renewable sector. The collapse of federally backed companies like solar-panel-maker Solyndra and biofuel producer Range Fuels, are providing critics of renewable subsidies with plenty of ammunition. And if critics need more bul-

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And if critics need more bullets, they need only look at AWEA’s board to see how big business is grabbing every available dollar from US taxpayers all in the name of “clean” energy. lets, they need only look at AWEA’s board to see how big business is grabbing every available dollar from US taxpayers all in the name of “clean” energy. Indeed, AWEA represents a host of fossil-fuel companies who are eagerly taking advantage of the renewable-energy subsidies. Consider NRG Energy, which has a seat on AWEA’s board. Last month, the New York Times reported that New Jerseybased NRG and its partners have secured $5.2 billion in federal loan guarantees to build solar-energy projects. NRG’s market capitalization: $4.3 billion. But NRG is not a renewable energy company. The company currently has about 26,000 megawatts (MW) of generation capacity. Of that, 450 MW is wind capacity, another 65 MW is solar, and 1,175 MW comes from nuclear. So why is NRG expanding into renewables? The answer is simple: profits. Last month, David Crane, the CEO of NRG, told the Times that “I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects.”

Or look at E.On, the giant German electricity and natural gas company, which also has a seat on AWEA’s board of directors. In 2010, the company emitted 116 million metric tons of carbon dioxide an amount approximately equal to that of the Czech Republic, a country of 10.5 million people. And last year, the company—which has about 2,000 MW of wind-generation capacity in the US—produced about 14 times as much electricity by burning hydrocarbons as it did from wind. Despite its role as a major fossil-fuel utility, E.On has been awarded $542.5 million in section 1603 cash so that it can build wind projects. And the company is getting that money even though it is the world’s largest investor-owned utility with a market capitalization of $45 billion. Another foreign company with a seat on AWEA’s board: Spanish utility Iberdrola, the second-largest domestic wind operator. But in 2010, Iberdrola produced about 3 times as much electricity from hydrocarbons as it did from wind. Nevertheless, the company has collected $1 billion in section 1603

money. To put that $1 billion in context, consider that in 2010, Iberdrola’s net profit was about 2.8 billion Euros, or around $3.9 billion. Thus, US taxpayers have recently provided cash grants to Iberdrola that amount to about one-fourth of the company’s 2010 profits. And again, none of that grant money is subject to US corporate income taxes. Iberdrola currently sports a market cap of $39 billion. Another big winner on AWEA’s board of directors: NextEra Energy (formerly Florida Power & Light), which has garnered some $610.6 million in 1603 grants for various wind projects. NextEra’s market capitalization is $23 billion. The subsidies being garnered by NextEra are helping the company drastically cut its taxes. A look at the company’s 2010 annual report shows that it cut its federal tax bill by more than $200 million last year thanks to various federal tax credits. And the company’s latest annual report shows that it has another $1.8 billion of “tax credit carryforwards” that will help it slash its taxes over the coming years. The biggest fossil-fuel-focused company on AWEA’s board is General Electric, which had revenues last year of $150 billion. Of that sum, about 25 percent came from what the company calls “energy infrastructure.” While some of that revenue comes from GE’s wind business, the majority comes from building generators, jet engines, and continues next page >

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other machinery that burn hydrocarbons. The company is also rapidly growing GE Oil & Gas, which had 2010 revenues of $7.2 billion. GE Oil & Gas has more than 20,000 employees and provides a myriad of products and services to the oil and gas industry. GE has a starring role in one of the most egregious examples of renewable-energy corporate welfare: the Shepherds Flat wind project in Oregon. The majority of the funding for the $1.9 billion, 845-megawatt project is coming from federal taxpayers. Not only is the Energy Department providing GE and its partners—who include Caithness Energy, Google, and Sumitomo—a $1.06 billion loan guarantee, as soon as GE’s 338 turbines start turning at Shepherds Flat, the Treasury Department will send the project developers a cash grant of $490 million. On December 9, the American Council on Renewable Energy issued a press release urging Congress to quickly extend the 1603 program and the renewable-energy production tax credit, because they will “bolster renewable energy’s success and American competitiveness.” But time is running short. Backers of the renewable-energy credits say that to assure continuity on various projects, a bill must be passed into law by March 2012. If that doesn’t happen, they are predicting domestic investment in renewable energy could fall by 50 percent. A bill now pending in the House would extend the production tax credit for four additional years, through 2017. The bill has 40 sponsors, 9 are Republicans. Robert Bryce writes for the Manhattan Institute for Policy Research.

CONNECT Business Magazine

MARCH/APRIL 2012

NATIONAL OPINION

If you were to rank the countries of the world in terms of economic freedom, where would the United States fall? First, or at least in the top three? The top five, surely. Because there is, in fact, a resource that ranks every country by this measure – the 2012 Index of Economic Freedom, and the United States comes in at No. 10. That’s right: the nation that is supposed to lead the world in liberty finishes behind nine others, including Ireland, Chile, Switzerland and Canada. Even the small African nation of Mauritius beats us. And while this ranking represents a new low for the U.S., which was ninth last year, it’s part of a recent trend. As recently as 2008, the U.S. ranked seventh worldwide, had a score of 81 (on a 0-100 scale, with 100 being the freest), and was listed as a “free” economy. Today, the U.S. has a score of 76.3 and is “mostly free,” the Index’s second-highest category. Now before we explain why, let’s back up and briefly touch on how the editors of the Index – published annually since 1995 by The Heritage Foundation and The Wall Street Journal – figure out the scores. Each country is evaluated in four broad areas of economic freedom: Rule of Law. Are property rights protected through an effective and honest judicial system? How widespread is corruption – bribery, extortion, graft, and the like? Regulatory Efficiency. Are businesses able to operate without burdensome and redundant regulations? Are individuals able to work where and how much they want? Is inflation in check? Are prices stable? Limited Government. Are taxes high or low? Is government spending kept under control, or is it growing unchecked? Open Markets. Can goods be traded freely? Are there tariffs, quota or other restrictions? Can individuals invest their

money where and how they see fit? Is there an open banking environment that encourages competition? For the most part, of course, the United States does very well on these measures. Finishing 10th out of 179 countries, after all, is impossible if you don’t have a large degree of economic freedom, and the U.S. is very free. Property rights are strong. Our court system is independent. Business start-up procedures are efficient. The labor market is flexible. But in certain key areas, the United States is lagging badly. A big one is government spending. The U.S. now ranks 127th in the world in this category. SpendEd Feulner ing by government consumes 42.2 percent of gross domestic product. Total public debt is now larger than the entire economy. Taxes are another problem. The U.S. score isn’t helped by the fact that the U.S. tax structure relies so much on taxes on capital and investment, which restrict growth. Regulations continue to grow in number, making it harder than necessary for our economy to recover. How bad is it? More than 70 major rules have been imposed since 2009, and they cost Americans nearly $40 billion last year. The deterioration of the U.S. score on freedom from corruption is especially troubling. Blame the government (read: taxpayer) bailouts of troubled industries such as automakers. These create the perception of corruption. As far as many Americans are considered, it’s politically well-connected companies and special-interest groups who get the breaks. They see the more than 1,100 companies that have won exceptions to Obamacare, and they can’t help but wonder if some form of cronyism is involved. We can’t hope to create the number of jobs we need under these conditions. That’s why we have to get serious about cutting government down to size, overhauling our tax system, and transforming costly entitlement programs. Otherwise, the United States has just completed its last year as a top-10 finalist in the Index. Ed Feulner is president of The Heritage Foundation. First appeared on the McClatchy-Tribune wire service.