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Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System in Mankato.

Coordinating better healthcare Also in this issue Vetter Stone Piepho Moving & Storage Puhlmann Lumber & Design

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F E A T U R E S February 2014 • Volume 6, Issue 5

12

Local health care providers say they are delivering better, more coordinated care for patients while holding down health care costs.

16

Since starting in 1952, Piepho Moving & Storage has expanded into all facets of moving and storing household goods in southern Minnesota.

18

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MN Valley Business • february 2014 • 5

■ February 2014 • VOLUME 6, ISSUE 5 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner Kent Thiesse Heidi Sampson Kristen Dulas PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Danny Creel ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR

For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.

■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 11 ■ Construction, real estate trends.. 25 ■ Agriculture Outlook...................... 26 ■ Agribusiness trends..................... 27 ■ Job trends..................................... 28 ■ Retail trends................................. 29 ■ Greater Mankato Growth.............. 30 ■ Greater Mankato Growth Member Activities ....................... 31

From the editor

By Joe Spear

Health care brings stable demand

T

here are few businesses that are more driven by soaring demand than health care. But there are also few businesses where demand is less influenced by regular economic events that are created by the business cycle. Interest rates, employment trends will impact the cost of putting health care in place, but they have very little impact on demand for health care. This is only my thesis, of course, but the comparison makes sense to me. Interest rates rise and the consumer thinks twice about a new car, a home improvement or even charging up the credit cards at Christmas time. But the same interest rate rise doesn’t appear to impact a decision to get a knee replacement and certainly not a heart stent. Others take care of our decisions on these consumer issues. Insurance companies mostly pay for these things and indeed plan for these events, thus “insuring” demand in some respects. Even if the consumer loses their employment, they are usually covered for health care by the government or others, and especially so now with the expansion of the coverage provided in the Affordable Care Act. It’s now becoming clear why medical providers and insurance companies were on board with the ACA from the start. This kind of “insured” demand is mostly good for the Mankato economy. The area has become a regional center for medical services. It seems all major providers, the Mankato Clinic, the Mayo Clinic Health System, the Orthopaedic and Fracture Clinic have or are undergoing fairly major expansions. But operating a medical business certainly is no gravy train. As government and insurance companies put in place more rules and are able to more accurately judge treatment quality and outcomes, they have their own kind of pressure to put on the providers. It’s clear the providers who don’t shore up their efficiencies and improve their outcomes will be competing against a large number of those who

6 • February 2014 • MN Valley Business

do. So places like Mayo Clinic Health System in Mankato as well as the Mankato Clinic are creating coordinated care and “Health Care Homes” in the case of the Mankato Clinic. That has helped keep health care costs in check as overall they’ve gone up less than inflation the last two years, notes Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System. “And that’s not by accident,” Kutcher says. “There’s a lot of focus on doing things differently and being more efficient.” Mankato Clinic’s Health Care Homes is another project that coordinates care so providers can have higher outcomes at lower cost. The clinic has even started a sort of house call program where its doctors and nurses go out to assisted living facilities to see patients who have difficulty with their mobility. Mankato’s Orthopaedic and Fracture Clinic has even been renting hotel rooms for patients recovering from surgery because it’s cheaper but it’s also more comfortable for the patients. Nurses rent rooms too so there is 24/7 oversight of recovering patients. Still, there remain growth areas for new services as well. Some is driven by need like children’s behavioral health services added by the Mankato Clinic. “We’ve really expanded there. We added two or three more providers that focus on children’s behavioral health. That was a big need we couldn’t meet before,” says Mankato Clinic CEO Randy Farrow Kids playing more sports earlier has driven some services for the Orthopaedic clinic. High school students are getting orthopaedic injuries sooner as a result. Demographics will also drive that business. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com

Local Business People/Company News

Thompson honored by JA Junior Achievement of Greater Mankato announced that David Thompson, vice president at MinnStar Bank in Mankato, has been chosen from more than 190,000 U.S. volunteers to earn the organization’s award for volunteerism, the Bronze Leadership Award. The award recognizes Junior Achievement volunteers who have performed outstanding service at all levels within the organization. As a member of the board of directors of JA of Greater Mankato, Thompson was the Treasurer for four years. He was also a volunteer or contributor to the JA BigBowl, Golf-a-thon, BizTown, and a classroom teacher for eight years. He was also a member of the fundraising committee for six years.

Brandt, Schreiner pass CPA exams

CliftonLarsonAllen announced that Brian Brandt and Andy Schreiner have passed the Certified Public Accounting exam. Brandt was hired in January of 2013. He is involved in both the audit and tax Brian Brandt Andy Schreiner department. Schreiner was also hired in January of 2013. He is involved with the tax department. Both are MSU graduates.

■■■ ■■■ Harstad joins PreseeneMaker Chris Harstad has joined PresenceMakers as a marketing advisor. Chris brings with him 8 years of sales and marketing experience and will be assisting PresenceMaker with business development and customer relations. He is a graduate of Bethany Lutheran College who spent three years teaching English as a Second Language in South Korean and Japan. Chris Harstad

Graham earns designation Gordy Graham has earned the Chartered Advisor Living professional designation from The American College, Bryn Mawr, PA. The CASL program is curriculum for financial advisors interested in serving the financial needs of seniors. Graham has been with Northwestern Mutual in Mankato since June of 1982. ■■■

■■■ Jansen promoted to principal at Clifton CliftonLarsonAllen announced the promotion of Steve Jansen to Principal. Jansen is focused on income tax planning, tax compliance and accounting services for individuals, corporations and partnerships. He has 19 years of public accounting experience in the Mankato area.

Steve Jansen

■■■

Eckberg joins United Prairie Bank Joel Eckberg, CPA, recently took on a leadership role in the credit department of United Prairie Bank as the senior credit manager. He is leading the credit analyst team at the service center located in Mankato. His background prior to joining the banking industry was in public accounting as a CPA with a local firm where he spent the past six years.

Berger named partner at Gislason Gislason & Hunter announced that Matthew Berger has been named a partner in the firm. Berger focuses his practice on agriculture law, banking and appellate and civil litigation, based in the New Ulm office. Prior to joining Gislason & Hunter in 2008 as an associate attorney, he served as a law clerk for judges Lorie Skjerven Gildea, Paul H. Anderson and G. Barry Anderson at the Minnesota Supreme Court. He received his Juris Doctor, magna cum laude in 2007 from the University of St. Thomas School of Law; he is also a 2002 graduate of the University of Minnesota with a Bachelor of Arts degree. He is licensed to practice in Minnesota and Iowa. ■■■ McCabe joins MinnStar Bank He is a long time resident of Mankato and graduate of Minnesota State University and a licensed CPA. He brings several years of bank auditing experience. MinnStar Bank is a locally owned bank with $115 million in assets in 2 locations. The bank was chartered as The Lake Crystal National Bank in 1934. The name was changed to MinnStar Bank in 1992.

MN Valley Business • february 2014 • 7

Some Ecumen sites change names Last year the Country Neighbors senior living communities in Le Center, Mapleton, New Richland and Lake Crystal changed their names to “Ecumen Country Neighbors,” to reflect their longstanding role as members of the Ecumen family of services. To help differentiate among the four Ecumen Country Neighbors locations, their names are changing again, to highlight the service area of each senior living community. In Le Center, “Ecumen Le Center” will now appear on signage, brochures, forms and other business materials; the other three Ecumen Country Neighbors will change their names accordingly. Ecumen is one of the nation’s top 20 largest non-profit providers of senior housing and aging services. Based in Shoreview, Ecumen operates in 37 cities in Minnesota, North Dakota, Wisconsin, Nebraska, Idaho and Tennessee, providing a variety of senior housing options and services including independent living, assisted living and long-term care communities as well as at-home and communitybased services. ■■■ Bookeeeping service opens Bookkeeping, Payroll & Tax Services of Minnesota has opened at 313 North Riverfront Drive. They are an authorized IRS E-file provider and a member of the National Association of Tax Professionals. Contact Michele Breza at 3809496.

8 • February 2014 • MN Valley Business

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DESIGNING FOR A BETTER TOMORROW

Business and Industry Trends

Economy

Real GDP moves upward

A variety of federal agencies released year end reports on economic conditions for last year and expectations for this year and 2015: The U.S. Bureau of Economic Analysis reported that real GDP increased at an annual rate of 4.1% during the third quarter of 2013, revised upward from 2.8% and 3.6% in its previous two estimates. Orders for manufactured durable goods rose 3.5 percent in November, following a 0.7 percent decrease in October of 2013. The Federal Reserve Board reported that U.S. industrial production rose in November by 1.1 percent, following an upwardly revised 0.1 percent gain in October. Forecast real disposable income increases 3.2 percent per year in both 2014 and 2015. Total industrial production grows at 2.2 percent in 2014, and is projected to grow 3.5 percent in 2015. Private real fixed investment growth averages 6.4 percent and 8.4 percent over 2014 and 2015, respectively. Real consumption expenditures grow faster than real GDP in 2014, at 2.6 percent, but are below the rate of real GDP growth in 2015, at 2.8 percent. Export growth is 4.9 percent and 5.1 percent over the same two years. Government expenditures fall 0.3 percent in 2014, but increase by 0.3 percent in 2015. The unemployment rate in the forecast averages 6.6 percent over 2014, and gradually falls to 5.9 percent at the end of 2015. This is accompanied by nonfarm employment growth averaging 1.7 percent in 2014 and 1.8 percent in 2015. Housing starts grow an average of 23.3 percent and 29.9 percent in 2014 and 2015, respectively. Both consumer and producer price indexes continue to increase at a moderate pace.

■■■

Energy

Gas pump prices up some

After falling to the lowest monthly average of 2013 in November, U.S. regular gasoline retail prices increased slightly to reach an average of $3.28 per gallon (gal) during December. The annual average regular gasoline retail price, which was $3.51/gal in 2013, is expected to fall to $3.46/gal in 2014 and $3.39/gal in 2015, according to the federal Energy Information Administration.

Liquid fuel production growing

EIA expects liquid fuels production from countries outside of the Organization of the Petroleum Exporting Countries (OPEC) to grow yearover-year by a record high of 1.9 million barrels per day (bbl/d) in 2014. The United States and Canada together are projected to account for almost 70 percent of total non-

OPEC supply growth this year.

Crude production to soar

EIA estimates U.S. total crude oil production averaged 7.5 million bbl/d in 2013, an increase of 1.0 million bbl/d from the previous year. Projected domestic crude oil production continues to increase to 8.5 million bbl/d in 2014 and 9.3 million bbl/d in 2015. The 2015 forecast would mark the highest annual average level of production since 1972.

Natural gas inventories fall

Natural gas working inventories on December 27 totaled 2.97 trillion cubic feet (Tcf), 0.56 Tcf below the level at the same time a year ago and 0.29 Tcf below the previous fiveyear average (2008-12). EIA expects that the Henry Hub natural gas spot price, which averaged $3.73 per million British thermal units (MMBtu) in 2013, will average $3.89/MMBtu in 2014 and $4.11/MMBtu in 2015.

Coal production up

Coal production, which fell by almost 9 percent between 2011 and 2013, is expected to increase by 36 million short tons (MMst) (3.6 percent) in 2014 as higher natural gas prices favor the dispatch of coal-fired power plants and the drawdown of coal inventory ends. In 2015, however, forecast coal-fired production falls by 2.5 percent with declining coal use in the electric power sector as retirements of coal-fired power plants rise due to the implementation of the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards.

Renewable fuels to grow 3 percent

EIA projects both hydropower and nonhydropower renewables used for electricity and heat generation will grow by about 3 percent in 2014. In 2015, the growth in renewables consumption for electric power and heat generation is projected to continue at a rate of 4.7 percent, as a 2.2 percent increase in hydropower is combined with a 6.1 percent increase in nonhydropower renewables.

Wind capacity growing strong

Wind capacity should increase by 8.8 percent in 2014 to about 66 gigawatts (GW) by the end of the year and will increase 14.6 percent to total more than 75 GW at the end of 2015. Electricity generation from wind is projected to increase by 2.2 percent in 2014 and by 11.4 percent in 2015, contributing more than 5 percent of total electricity generation by the end of 2015. U.S. Energy Information Administration | Short-Term Energy Outlook January 2014 10 EIA expects continued robust growth in the generation of solar electricity generation, although the amount of utility-scale generation remains a small share of total U.S. generation at about 0.4 percent by 2015.

MN Valley Business • february 2014 • 9

Minnesota Business Updates

■ Manufacturers optimistic When it comes to production, employment, and the economy in 2014, Minnesota manufacturers are feeling positive. The Minnesota Department of Employment and Economic Development released survey results in January that show more than 90 percent of the state’s manufacturing industry expect exports and productivity to increase in the coming year. Eighty percent of those surveyed expect profits to increase or stay the same in 2014, and 83 percent say that investments in plants and equipment will increase or stay the same. “Based on the results of the annual Manufacturing Business Conditions Survey, manufacturers have a positive outlook for 2014,” DEED Commissioner Katie Clark Sieben said in a statement. “Manufacturing is an integral part of the state’s economy and it’s reassuring to hear industry leaders expect stability and growth for the coming year.”

■ New business filings high in 2013 Secretary of State Mark Ritchie announced that 58,260 new businesses were filed in 2013 — the third highest filings total on record. “This is a positive signal of Minnesota’s continued economic growth and employment opportunities,” Ritchie said in the statement. “Our state has a healthy environment for business and we hope to see this growth continue in 2014.” In 2009, the state saw an all-time high in new business filings with 63,338 total. In 2012, 60,827 new businesses were filed. 2013’s filing numbers indicate a 17.5 percent increase from 10 years ago.

■ Cargill takes stake in Ukraine Co. Cargill has taken a 5 percent ownership interest in Ukraine’s largest integrated agricultural company, upping its stake in one of the world’s most robust farming regions. Kiev-based UkrLandFarming announced the deal without releasing terms. The Financial Times, citing unnamed sources, reported that Minnesota-based Cargill made a $200 million investment. UkrLandFarming is the creation of a Ukrainian billionaire, Oleg Bakhmatyuk, who made a fortune in his country’s egg industry and whose companies now control over 1.6 million acres of land in Ukraine.

■ Wells Fargo profits jump 11 percent Fourth-quarter profit for Wells Fargo jumped 11 percent as a steep drop in mortgage lending was offset by increased interest income. Net income after dividend payments on preferred stock rose to $5.4 billion in the October-December period from $4.9 billion a year earlier. On a per-share basis, earnings were $1.00, beating the 99 cents forecast by Wall Street. Fourth-quarter revenue fell to $20.7 billion from $21.9

10 • February 2014 • MN Valley Business

billion. Wells Fargo’s stock edged down eight cents to $45.48 in pre-market trading. The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo’s mortgage business. The bank controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was reduced by the spike in interest rates. Wells Fargo funded $50 billion worth of mortgages in the fourth quarter, down from $125 billion a year earlier.

■ Bad to worse at Target Target said the theft of data from its customers was worse than first thought. The company said thieves who accessed its data system were able to get personal details of as many as 110 million of its customers. The company also said the thieves attempted to steal other information including mailing addresses, phone numbers and e-mail addresses. Target said that customers would have no liability from any damage they suffer due to the theft and offered to provide free credit monitoring and identity theft protection for customers for a year.

■ ADM will move to Chicago Archer Daniels Midland Co. confirmed would make Chicago its new global headquarters. “While we considered other global hubs, Chicago emerged as the best location to provide efficient access to global markets while maintaining our close connections with U.S. farmers, customers and operations,” ADM Chairman and CEO Patricia Woertz said in a statement. ADM is moving event though it’s not getting the Illinois tax incentives it wanted. ADM will move its headquarters and about 75 top jobs from Decatur, where the agricultural giant now is based ADM began searching for a new headquarters location last year, saying it wanted better international air connections and a wider pool of potential employees.

Business Commentary

By Kristen Dulas

Businesses can now charge customers for using credit cards

B

ecause of a settlement to credit cards, not debit cards. agreement in January of last Lastly, you must tell your customer year, businesses are now at the time of sale that you are allowed to charge customers for charging them a convenience fee. Be using their credit cards so they can consistent, if you decide to start recoup some or all of their monthly charging, you need to charge merchant fees. Before everyone paying with a dollar signs start credit card. At the time appearing, let’s review the you swipe the credit card facts to make the best and enter the charge you decision for your business need to tack on the and customers. convenience fee to the As of Jan. 13th it was total. legal for a business to “Future equipment will charge their customer up allow the merchant to set to 4 percent on top of the the surcharge amount, sale for using a credit but currently they have to card as a payment manually figure this method. A r i n Arin Warnemunde before the sale and run it Warnemunde, a merchant through accordingly,” executive from Redwoods Company, Warnemunde said. explained how this change will affect The biggest advantage to the businesses and customers. business owner is their ability to Warnemunde said big retailers recover some or all of their credit have been doing this for years. card fees. “For example, an owner of “They’ve had their card fees built a salvage yard who charges a flat 3 into their cost of doing business. percent convenience fee on any They set their price assuming credit card usage could cover all of customers will pay with plastic.” his fees if his typical monthly If you plan on charging a merchant bill is 2.25 percent of his “convenience fee” there are necessary sales. The salvage yard owner would steps to follow. First, you must actually profit 0.75 percent percent. clearly display your credit card Charging a convenience fee also charge. You also need to confirm has its disadvantages. It’s possible with the customer if they are paying that it could lower your average with a debit card or credit card. This ticket or loose a sale all together. settlement agreement is only related “Put yourself in your customer’s

shoes and ask yourself if a surcharge makes sense”, Warnemunde said. The settlement is relatively new, businesses are just learning about their merchant rights and the Midwest is very cautious with these kinds of changes. “From an industry-specific standpoint, we see a merchant surcharging the customer more acceptable for service-orientated jobs. If your furnace unexpectedly breaks, you’re probably not going to gripe about a 2-3 percent surcharge to get it repaired in a timely manner.” You can look at this settlement agreement from a few different angles, but ultimately it puts a little more control in the business owner’s hands. There are numerous resources about surcharging on the internet, but unfortunately a lot of it contradicts each other. Rules also vary per state. I recommend you talk with your merchant provider or bank if you have further questions about this. To avoid any unnecessary confusion, this only relates to credit cards, not debit cards. Be sure to have clear signage depicting this and have employees trained to answer any questions from customers. MV

Kristen Dulas, business development & training, Wells Federal Bank. 507-553-3151 x 4168; kdulas@ wellsfederal.com

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We’ve recently expanded our business and doubled our office space! Come see our newly remodeled office at 225 Belgrade Avenue in North Mankato.

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Dxˆ‹„Š…„wˆy~Š{yŠ‰Dy…ƒ©KFMCINLCMOOL MN Valley Business • february 2014 • 11

Randy Farrow, CEO of Mankato Clinic, at the DaVita Dialysis center.

Reshaping healthcare Health providers holding down costs while better coordinating care By Tim Krohn | Photos by John Cross

A

mong all of the clamor over the rocky start to health insurance reform and the long-held perception of out-of-control health care spending, something unique happened without a lot of fanfare. “Health care costs went up less than inflation the past two years nationally,” said Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System in Mankato. “And that’s not by accident. There’s a lot of focus on doing things differently and being more efficient.” But it’s not simply looking for areas to cut expenses as the push in health care is also to provide better outcomes for patients. The idea is that if someone with a chronic health condition – such as diabetes – has more coordinated care that keeps them healthier longer, the patient not only

reaps obvious benefits but costs are held down because more intense treatment can be avoided. At the Mankato Clinic, they call the approach Health Care Homes. “We’re working more in teams to proactively reach out to patients, especially those with chronic disease conditions,” said CEO Randy Farrow. “We make sure they come in for regular care. We see what their health care goals are and how we can help them meet those goals. You use clinically based research to reach those goals.” At Orthopaedic & Fracture Clinic the health care providers aren’t managing people’s chronic conditions. “Our care is episodic. You blow out your knee and we take care of it, and maybe down the road you dislocate

Cover Story

12 • February 2014 • MN Valley Business

Andrew Meyers, CEO of OFC. your shoulder and come in,” said Andrew Meyers, CEO of OFC. Still, they too are focused much more on developing the best outcomes as insurers are more and more interested in comparing the outcomes of different physicians and health provider groups. Meyers said such comparisons can be very tricky. “They all talk about quality outcomes but they never really define what that is.” And he said it is impossible to compare the success of an orthopedic surgeon who specializes in very complex cases and those who do more routine cases. Baby boomers, sports keep OFC busy OFC is the only provider of orthopedic services in south-central Minnesota with offices in Mankato, Faribault, Hutchinson and Northfield, as well as doing work at many hospitals in smaller communities in the area. They have 15 orthopods and 125 employees. Meyers said the number of total joint replacements continues to grow at a rapid pace. “When the last of the baby boomers retire, 50 percent of the population will be baby boomers. And we baby boomers are at the age where the number of total joint replacements keeps going up.” Sports medicine also has grown to be a big part of OFC’s business. While all the providers do some sports-related work, OFC now has three sports-trained orthopods on staff. After doing any needed surgery, OFC offers physical therapy. While there has always been about the same number of kids playing sports, Meyers said there are more injuries and at younger ages now.

“We start kids in sports so early now. By the time they’re in high school, they have 10 years of experience and they are performing at levels we used to see in college. Years ago kids weren’t blowing ACLs or dislocating shoulders.” OFC does much of its surgery in the surgery center on the Wickersham campus – a center owned equally by the Mankato Clinic and OFC. They have a new open MRI and a new 3.0 MRI, both of which are the largest available. But the OFC doctors also perform surgeries at the hospital in Mankato and in other communities. If, for example, someone is brought to the Emergency Department in Mankato, OFC doctors would handle any orthopedic surgery that is needed. “It might be something we do right away, or with something like a twisted knee, we want it to calm down for a while and may wait until later (to do surgery).” Meyers said a big push for them in the coming year is to expand alternative ways to allow people to recover from joint replacement surgeries. “We’re doing total joint replacements in our surgery center and then recoup them at a hotel or an Ecumen or Thro community,” Meyers said. He said patients are put up in hotels, such as the Hilton Garden Inn, and a nurse is stationed in another room, providing 24/7 care to one, two or three patients recovering from surgery. “It saves the patient a lot of money compared to staying in the hospital. They like it because they have nice rooms, can order the food they want, and they save a bundle.” Meyers said the only thing holding back on an expansion of the hotel recuperation concept is that some insurance

MN Valley Business • february 2014 • 13

OFC’s new, powerful MRI.

The Emergency Department at Mayo in Mankato.

companies – for reasons he said he can’t fully understand – are still balking at allowing it even though it saves the insurance company a lot of money. He said candidates for such recuperation must meet certain health criteria. Someone of advanced age suffering from diabetes, for example, would still recover in a hospital. Like everything in health care, OFC has seen staggering technological advances, said Meyers, who remembers when a knee orthoscopy meant pushing a tube into someone’s knee and literally looking into the knee with the naked eye. Today, tiny video probes do the job. “All rotator cuffs (surgery) used to be a big incision down the front of your shoulder. Now we do them through three little button holes. “The technology is just off the charts.” Meyers said cases of bad medical parts being implanted in people’s joints aren’t a medical liability for OFC, but it puts them in a bad position. The OFC did use the Stryker hip replacement parts in several patients – parts later found to be defective. Stryker has already agreed to some settlements stemming from lawsuits and will likely pay billions of dollars. “We just make sure we work with our patients to follow up with them and do another procedure if that’s what they choose. It’s a bad situation, but most people understand we don’t make the parts. We just do the surgery.” Mayo seeing a ‘culture change’ Better coordinating care for chronic disease isn’t just a matter of better treatment for diabetes or heart disease, Kutcher said. At Mayo, a program called COMPASS is aimed at identifying patients with diabetes and heart disease to make sure those people are getting any mental health care they need. “Many of them have overlapping depression issues,” Kutcher said. “If people don’t deal with that, they often don’t take care of the heart disease or diabetes. “We’ve seen some real improvement in care in that

14 • February 2014 • MN Valley Business

population.” Mayo has also been gaining efficiencies and easier patient experiences by beefing up a nurse call line. “Call line doesn’t really do it justice. If you call for an appointment for certain problems, you’ll be transferred to a nurse and a lot of times they can help you deal with it right on the spot, rather than people having to go to a doctor or the ER,” Kutcher said. “Things like refilling nasal prescriptions – nurses have been trained to help you with things like that. It’s a change in culture for patients and in health care. We call it ‘doing the right care at the right time at the right place.’ ” Occupational medicine is another area seeing growth and new approaches and the need for more specialized knowledge. “The rules on Department of Transportation truckdriver certification are very tough now. It used to be a family physician could do it, but not now,” Kutcher said. He said occupational medicine now works more closely with employers to create workplace safety programs and deliver care on site. “If we see common injuries in certain settings, we can help businesses put things in place to prevent them. Or if you have employees who have to leave for several hours once or twice a week for diabetes checks, with bigger companies we might be able to do something on site for them.” Another big efficiency change that isn’t directly noticed by patients is something called Care Traffic Control, a coordinated internal system that allows hospital and clinic staff from across south-central Minnesota to decide quickly where a patient would best be treated. “Say a provider from St. James wants to admit a patient to Mankato or somewhere else. These are complex situation where you have to make sure everyone has the available nurses, social workers, medical specialists ready,” Kutcher said. “This system makes it much easier. Sometimes they maybe don’t even need to be transferred from their facility to another one if the other facility can get the help they need.”

It also makes things less complicated for patients, he said. “You’d often heard complaints from patients about why wasn’t this all in place or why are they doing the same tests again? This helps with that.” Mayo is also relying on a variety of technology to help providers deliver better care to patients. The local Mayo system is a certified telestroke center in which a wide variety of test results and data from someone who just suffered a stroke can be relayed instantly to a team of Mayo neurologists, who may be in Arizona. “When someone has a stroke, it’s very time sensitive. Some people should be given a clot-busting drug early on, but it’s risky to do and it’s not given at small hospitals. It’s a very complex decision to see who gets it and sometimes people who should have gotten it didn’t,” Kutcher said. “Now they can get a neurologist online immediately to help them make the diagnosis and if they need (the clot-busting drug) they can be sent to Mankato or wherever.” Clinic’s expansion underway The biggest project since Mankato Clinic built its Wickersham Campus several years ago is under way as a $9 million pediatric center is going up there with an opening set for late fall. Part of the pediatric clinic will include space for Gillette Children’s Health Center as part of an expanded partnership between Mankato Clinic and Gillette Children’s Specialty Healthcare in St. Paul. “We’ll be able to offer not only general care but sub-specialized pediatric care through Gillette,” Farrow said. “They will offer things like pediatric cardiology, urology, endocrinology. “Kids have special needs because their organs aren’t fully developed and these physicians have the specialization. It will be a significant expansion of what we can do.” He said things such as having specialists on hand to adjust braces for special needs kids will be a big help for parents. “A lot of times the braces need to be adjusted once or twice a month, and they won’t have to go to the Cities or somewhere else.” Farrow said that as part of their effort to improve care, the clinic

brings in focus groups, including one that was made up of parents of pediatric patients. “A lot of the comments were that it’s not easy to come in from 8 to 5, so we’re offering evening hours now in pediatrics, Monday through Thursday,” he said. “We’re putting a lot of emphasis on how we deliver care. Another new approach is a return to house calls – sort of. “We’re starting something we call Blue Stone, a program to provide primary care services on site for people who live in assisted-living facilities. Some of these folks are frail and it’s hard for them to be transported and some may have cognitive issues,” Farrow said. Teams consisting of a physician, nurse practitioner and a support person go out regularly to sites that have contracted with the clinic. “They get to know the people, which helps with their care. We have four (sites) signed up already, and we think it will be very popular and we expect a lot more to sign up.” The clinic also started a new dialysis center, in partnership with DaVita Dialysis, at Madison East Center. Farrow said it is popular with patients. “It’s really exceeded our expectations. We just saw a growing need for that service, unfortunately. People have to come in at least three times a week and spend several hours, so we want to make it a nice place for them. We’ve gotten a lot of good feedback.” The clinic also spent last year beefing up the psychology and psychiatric departments. “We’ve really expanded there. We added two or three more providers that focus on children’s behavioral health. That was a big need we couldn’t meet before.” All told, the clinic added 17 new physicians and advance-service providers last year. “We continue to grow. The future of health care is obviously uncertain with all the reforms. But we think if we stay focused on trying to provide the best care possible and creating excellent patient experiences, we’ll be successful,” Farrow said. MV

occupational medicine on-site services

Mankato Clinic Urgent Care @ Adams Street is your provider of on-site and in-clinic Occupational Medicine Services. Our staff is committed to keeping your workers healthy and getting them back to work quickly and safely after an injury or illness. Services provided by our Occupational Health Nurse at your site: • Designated contact person for companies • Ergonomic worksite evaluations • Vaccines • Health and Wellness fairs • Educational seminars • Company site visits To schedule an on-site appointment, call 507-625-7684. For more information on additional occupational medicine services visit, www.mankatoclinic.com.

Piepho Moving & Storage Piepho Moving & Storage is an authorized interstate agent for Allied Van Lines, Inc. Active member of the Minnesota Transport Services Association.

Awards: 2012 – Outstanding Safety Achiever Best in Class (Best Safety Record based on number of miles driven.) 2011 – APEX Customer for Life Award (15 straight years of Excellent Ratings based on customer surveys by TeleSight.) 2010 – Division IV Customer for Life Award - 4th Place (Best Agent in terms of customer surveys).

Mark Piepho joined the business after college.

On the move Piepho Moving & Storage

I

By Heidi Sampson | Photos by John Cross

n 1952, Earl Piepho started his career with freight as an agent for Murphy Motor Freight, out of Albert Lea. Eventually, Earl added on the residential moving business. In 1970, Earl’s Albert Lea business expanded to Rochester with the purchase of Rochester Transfer & Storage from the wife of an Allied Van Lines Agent, who had passed away. In 1975, Earl built the Mankato storage warehouse facility. With this move, the Piepho’s became the first family moving company to branch into a totally new area. After completing college, Mark Piepho, Earl’s youngest son, joined the Mankato Piepho Moving & Storage team, in 1976. By 1979, Mark backed off on his duties at Piepho Moving & Storage, as he was elected to the Minnesota House of Representatives. Mark served four consecutive terms with the House and a half of a term with the Senate, before coming back to the Mankato moving team in 1994.

“Mankato has a very diversified economy here which keeps things on an even keel. Also, my wife and children are here. We’ve always liked the area and my wife has been very supportive of my career decisions. Currently, I am also a Blue Earth County Commissioner.” During the time Mark was away, the company added a location in La Crosse, WI and Eagan, in 1981 and 1986. In the late 1990s, the family got out of the freight business in Albert Lea. However, they continue to specialize in commercial and residential moving and storage while remaining a business in which the entire family is involved throughout their network of locations. “We primarily focus on moving people and families,” said Mark, “but we also move businesses and their employees, should they need to relocate to be closer to their place of employment. We can move our customers in town, within Minnesota, across the 48 connected states

Profile

16 • February 2014 • MN Valley Business

and if the customer wants, we can even move them around the world.” Moving a Household: If an individual was moving from Minnesota to L.A., Piepho Moving & Storage could arrange the entire move. Based on the customer’s preferences, either the home owner or Piepho’s team of movers would pack up all of the belongings into boxes and cartons. Once the items are packed they would then be loaded onto a truck. The total weight of the household determines how fast the shipment will arrive. “The average weight of a household today is between 12,000 and 15,000 pounds,” Mark said. “The average weight of a household back in the 60’s was only 4,000 pounds. Nowadays, 4,000-5,000 pounds is a 1- to 2-bedroom apartment. People’s households have gotten larger. Let’s say you had an apartment size home. You might only occupy the front third of a truck, so we’d have the rest of the truck to fill with other moves we have booked to a certain area or region. Or we can go through Allied and fill out the rest of the truck with other moves along the way to your destination.” “Our employees are the backbone of our company,” Mark said. “It is essential that our employees be able to relate to our clients on both a professional and personal level so that when we move our customers, it’s as if we were moving our own homes. We recognize families may have special needs or concerns that they might want addressed. Obviously, we try to do the most we can to protect their prized possessions and get them delivered on time.” Trends in moving The moving industry is a unique, specialized service and as with any other business, need fluctuates based on the current state of the economy. The last recession created a downturn in the moving industry, however as the housing market has come back, so has the moving industry. Their busiest time of the year tends to coincide with school breaks as many people begin to move in May clear through September, with the busiest time for movements taking place in June, July and August. “I think the economy’s improving,” said Mark. “I’ve been involved with this business all of my life. My father used to say, ‘if the economy is good, business is good and if the economy was so-so, then the business was slow.’ So it’s kind of always been one or the other. If business was so–so, that didn’t necessarily mean a recession but we want the economy moving along more than just so–so.” Computerization has also altered the moving industry as many people no longer need to move to be near their jobs. Computers allow for the ability to connect to employers without ever having to leave home. “That’s not to say computers are a bad thing. Computers have also improved our business. They assist us with keeping track of bookings and shipments. I’ve learned a bit about geography over the years. It used to be that you spent time looking at maps to see where your customers wanted to go and now I merely look it up on the computer. They save a lot of time for us. The only thing a computer can’t do is load the furniture.” Piepho recommends people look for movers who are certified as a moving company. He encourages people who are considering a move to check the mover’s interstate and state credentials, as well as with the U.S Department of Transportation. Movers who are affiliated with a major van line or moving company should have a solid reputation but it doesn’t hurt to double check. Also look to see if the company under consideration has been established for a number of years. “I think the key component in choosing which moving company to go with, is in having an actual agent come to the home or business and provide the customer with an actual written estimate of what the move will cost,” Mark said. “Often times, people will get quotes through the Internet but they haven’t actually seen anybody from the company and the company hasn’t even seen their stuff. That type of business interaction can be subject to a lot of problems even if the company is legit. I look at it this way, if I haven’t really seen the place I don’t really know what it is the customer has to move. I think meeting the perspective clients is essential, which is what I do. When an agent comes out to write up a quote, they are the first impression of that business for trustworthiness, reliability and a positive outcome.” MV

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MN Valley Business • february 2014 • 17

Howard and son Ron Vetter carry on a long family tradition in the stone business.

Lasting Legacies: Vetter Stone

By Pete Steiner

Photos by Pat Christman

W

hen Paul Vetter retired in 1954, he wanted to make sure his sons had work. Both Paul and his father before him had done some quarrying of stone near Kasota, as far back as the late 1800’s. It was beautiful stone that still looks pristine today on the exteriors of buildings like the U.S. Post Office and First Presbyterian Church in downtown Mankato. But quarrying operations on the Kasota land had gone dormant in the 1930’s. Paul had

built a 100-square-foot hunting cabin off County Highway 5 between Mankato and Kasota, and knowing there was good stone in the area, he bought 700 acres of land. Then with his life savings, he acquired some used machinery to set up a quarrying operation. As it turned out, Paul Vetter’s retirement vision was 20-20.

Spotlight

18 • February 2014 • MN Valley Business

••••

The original office of Vetter Stone was a former cabin. 60 years after Paul’s son, Howard Vetter graduated from college and took the reins of the company, Vetter Stone, situated between tiny Kasota and Mankato, is worldrenowned for the color, quality and strength of its product. The little stone hunting cabin became their original office building. Their very first client was in Chicago, a city where they sent a lot of stone in the early days. Today, one can find Vetter stone adorning major buildings from Mankato to Minneapolis to Washington, DC, to Tokyo to Istanbul. •••• This story actually begins 400-million years ago, in a time long before the dinosaurs, when an inland sea covered much of the area we now live in. Howard says the dolomitic limestone was formed as impurities in the water filtered to the bottom, with the stone created through eons of sedimentation. He says the stone in our area is of unusual quality: “A common misconception is that it’s widely available, but usually [in other places] it’s broken up.” In 1998, Vetter acquired a large quarry in Alabama. Now, says Howard, “We have two of the prime areas where nice color and strength are available in large slabs or panels.” The Vetter stone offers unique advantages when it comes to engineering tall buildings. First it is very strong. But equally important, it has “flexural strength,” which means it can bend in the wind high up on skyscrapers. The stone provides a “skin” for those buildings that cannot tolerate more than 28 pounds per square foot.

design the new Norwest Center (now Wells Fargo) in Minneapolis. He asked for stone samples for the exterior facing on what would become the city’s second-tallest building. Out of 38 panels in a blind sampling, Pelli picked the pinkish Vetter stone. “That put us on the map,” Ron says. The year was 1988, and that would be the first of numerous collaborations between Vetter and Pelli, that also includes the new Minneapolis downtown library and the Osaka National Art Museum in Japan. Ron, whose business card is printed in English and Japanese, says some of their biggest projects have been in Japan, including the Nippon Telephone and Telegraph skyscraper in Tokyo. •••• Vetter Stone currently has 110 fulltime employees between its Kasota and Alabama operations. Ron says they like to hire people who have worked with machinery and can work with their hands. “Ideally that would be someone who grew up on a farm.” But with fewer farms now, that type of candidate is rarer. “We look for someone who will fit the culture. We do a lot of training.” The initial product is cut by a six-ton contraption that is basically “a chainsaw on a track.” It rolls out into the quarry, and with its diamond-studded blade, slices into the bed of stone. The slabs are then split off hydraulically, and 30,000-40,000-pound blocks are hoisted by a front-end loader onto a flatbed truck to be hauled back to the production plant. Every slab is marked to identify exactly where and when it was quarried.

••••

••••

Ron Vetter, Howard’s son, is company president. He recalls the moment the company became “world-class.” World-renowned architect Cesar Pelli had been hired to

Ron leads a photographer and reporter down to the hardhat zone, the production plant, where 30–40 orders may be in progress at any one time, ranging from a private

MN Valley Business • february 2014 • 19

Ron Vetter by the massive stone-cutting saw. home to a large skyscraper. The shop is loud, filled with a variety of saws of varying sizes, most computer-controlled, but some operated by hand. Some panels of stone have just been brought in on this winter’s day, still covered in melting snow. Just beyond, there’s $25,000 worth of custom columns, about to shipped to a house in Kansas, that were fashioned by computerized power lathes. A four-axis wire saw can do intricate cutting on a 10,000-pound block of stone, making cuts to one-sixteenth of an inch. The 1,200-pound easy chairs on display in the main office were fashioned here. “You just have to make sure you know where you want them,” Ron smiles – they’re not very easy to move. Another station can hew Corinthian capitols, with figures simulating the look of ancient Greece. And, Ron says, depending on the desired look, sometimes they still use the old-fashioned hammer and chisel method. Multi-ton blocks of stone are lugged in canvas slings, moved to individual workstations by overhead cranes. Vetter hires people from a program at SCC that teaches computer aided design. Their CADdrawings are programmed into the big saws by hard-hat operators. Finally, at the far end of the plant looms the machine everyone talks about: continuously bathed in water, a massive rotary saw with an eleven-and-a-half-foot diamondtipped blade fills up most of the room. The blade alone costs about $30,000, and the bits have to be changed about five times a year. Once programmed, that monster can push through about 120 feet of stone block over a weekend. •••• While much of their product these days is shipped halfway around the world, it is still very evident locally. Anyone who goes to a concert at Riverfront Park sits in

20 • February 2014 • MN Valley Business

the Vetter Stone Amphitheater, with tiered limestone facing the stage. Ron explains, “The city approached us, it was one of those ideas… Pat (Hentges, city manager) was about halfway through his presentation, when (Howard and I) looked at each other and nodded (that we should do it.)” It was a similar story for the stone pedestals used to mount the city sculpture walk. “Tami Paulsen and her group approached us. We knew it would be prohibitive for a non-profit to buy those. We just figured we could help. The community’s been good to us. We wanted to give something back.” •••• The company just hired the first member of its fourth generation: Kathryn Vetter, daughter of Ron’s sister, Ann, who also works for the family business, will be a sales rep in Los Angeles. Ron calculates there’s enough stone left in the Kasota quarry to last several hundred years, as well as maybe 2,000 years’ worth in Alabama. That should keep the family and their crews busy for a lot more generations

MV

Specialty saws allow for intricate stone cutting

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MN Valley Business • february 2014 • 21

Hans and Bette Puhlmann with son Jared and daughter Kayla.

Building a family business

Puhlmann Lumber & Design withstands competition By Heidi Sampson Photos by John Cross

I

n 1926, Puhlmann Lumber & Design began when John “Hans” Puhlmann Sr.’s grandfather, Alfred, and his great uncle, Otto, with the help of his great-grandfather, August, decided to go into business together. The Puhlmann brothers primarily handled nails, lumber, and coal, while their building was positioned next to the railroad tracks for easier access to supplies. Alfred’s son, James “Jim” Puhlman, joined the mix, in 1936. When Jim married Marie, she began working at Puhlmann. By the early 1950’s, the company added basic hardware and

paints to its inventory lineup. Jim Puhlmann would become president, in 1958. Hans Puhlmann started working for his father, Jim, as a teenager. At 16 years old, Hans was handed a piece of paper and told to draw a house. The house Hans drew for his father, was also the first house Hans created for a customer that was built. When Hans married Bette, she also joined the family business. During the 1990s, Hans became president and his wife Bette, vice president. In 1994, the two contemplated leaving their current location, since many of

All In The Family

22 • February 2014 • MN Valley Business

New Ulm’s businesses were located on Broadway and Minnesota Streets, and not in what was quickly becoming known as the old industrial side of town. “We thought long and hard about relocating our store,” said Bette, “and then we decided that this is probably still the best location for us.” During the late ’90s, Hans and Bette’s son, Jared, joined Puhlmann Lumber & Design. Currently, Jared is yard foreman, handling deliveries and shipments within the yard. Two years later, Kayla, Jared’s sister, joined the family business. Today, Kayla is a designer, within the kitchen, bath, flooring, and paint departments. MVB: What’s it like to grow up in a family business? Hans: When you start out as a child and you are down here all the time, it’s kind of the way it is. Kayla: I think the business becomes part of you. Jared: It’s a lot of hours and you do take it home with you. Hans: Oh yes, you take it home with you. You take this business to bed with you. You wake up in the morning with it. I think everyone who owns their own business kind of goes through that. I have to remember to leave it here. Kayla: The nice thing about our business is that we all work in different departments. We are all busy doing our own things. Hans: I also think the chemistry has to be right. Not all families can do what we do. MVB: How many employees do you have? Hans: We have 14. A lot of our employees have been with us for a very long time. Bette: It also helps that our turnover rate is like zilch.

MVB: What’s working for Puhlmann Lumber & Design that has allowed for such longevity among the staff? Bette: We are very family orientated. If people need time off of work to go to a program, a game of some kind, a school activity, or any other family function, no questions are asked. Period. If your little one is in tee-ball and you have that commitment twice a week, even if it is in the middle of the day, our employees can arrange their schedule so that they can go to tee-ball and come back to work. Hans: I think the group that we have here, enjoys working for a smaller company. They can come and go because we allow for flexibility. Even when my folks ran the business, family has always come first and our employees back then, stayed here forever too. A lot of them retired from here. I think that says something. MVB: How do you handle the competition of the lumber and design market? Bette: We have a very good relationship with the other lumber yard in town, Design Home Center. This past March, Menards came to town. Hans: At one time, there used to be four or five lumber yards in town. Jared: Some have also popped up throughout the years and later closed. Kayla: We encourage people to bring their estimates to us and we will look them over. If the client feels we are more expensive, we can look for hidden costs in the other estimate that a client may not be unaware of. There is also product quality to consider. Is the item the estimate is for of a comparable grade to ours, or is it of lower quality?

MN Valley Business • February 2014 • 23

MVB: What are some trends within the building industry? Hans: Our biggest projects seem to be machine sheds, pole barn and shops. Kayla: Those shops are quite nice too. They have bathrooms, kitchens and showers. Bette: Kitchens have changed drastically. They aren’t just for cooking anymore. They’ve become another family space. Kids are doing homework in the kitchen and sometimes there is even an office space in there. Hans: I think another big time saver has been the computer whether it is used for estimating, point of sale or design work. Kayla: Customers are able to see their projects in 3-D. Jared: As far as exterior goes, ‘no maintenance’ products in items like windows, siding and decks, is huge. I think people value their time more. They don’t want sit home on a weekend completing projects around the house like painting siding or refinishing a deck.

Bette: I think it comes down to our customer service. We will go that extra mile. If somebody calls us at 8 o’clock at night and wants a pound of nails, we’ve delivered nails. Or if a customer calls on a Sunday, many times we’ve come in to work. Hans: We tell our clients when they buy materials from us, ‘if you run into a pickle, give us a call.’ MV

MVB: What are do you think the future holds for Puhlmann Lumber & Design? Hans: Hopefully we can remain a family business.

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24 • February 2014 • MN Valley Business

Construction/Real Estate Residential building permits Mankato

(in thousands)

- 2012 - 2013

8000

- 2012 - 2013 (in thousands)

3000

$2,519 $2,519

6000

Residential building permits North Mankato

$296.5 $0

2000

4000

1000

2000 0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato Information based on Multiple Listing Service and may not reflect all sales

- 2012 - 2013 250

M

A

M

J

J

A

S

O

N

D

Includes single family homes attached and detached, and town homes and condos

Housing starts: Mankato/North Mankato - 2012 - 2013

6

30

170

150

7

20

100

10

50 J

F

M

A

M

J

J

A

S

O

N

D

Source: Realtors Association of Southern Minnesota

0

J

F

M

A

M

J

J

A

S

O

N

D

Source: Cities of Mankato/North Mankato

Commercial building permits Mankato

(in thousands)

- 2012 - 2013

Commercial building permits North Mankato

- 2012 - 2013 (in thousands)

2000

$56

1500

$0

$1,170

1000

$1,171

J

F

M

A

M

J

J

A

S

O

N

500 D

Source: City of Mankato

— 2013 — 2014

5.5 5.0

4.5%

4.5

3.9%

4.0 3.5 J

F

M

Source: Freddie Mac

0

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of North Mankato

Interest Rates: 30-year fixed-rate mortgage

3.0

F

40

144

200

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

J

Source: City of North Mankato

Existing home sales: Mankato region

0

0

A

M

J

J

A

S

O

N

D

Foreclosures: Third Quarter of 2013 County Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan

2012

2013

Percent change

24 11 14 23 12 13 13 11 6

19 6 7 22 6 18 8 7 4

-21% -45% -50% -4% -50% +38% -38% -36% -33%

Source: Minnesota Foreclosure Partners Council C. Sankey

MN Valley Business • February 2014 • 25

Agricultural Outlook

By Kent Thiesse

Lower crop prices require better risk management

I

n the past few years the agriculture community was drawn into a mentality that corn prices of $6 to per bushel were the “new normal,” rather than a temporary price upswing. That type of thinking has changed quite dramatically in recent months, as local cash corn prices have dropped below $4, with similar prices for new-crop 2014 corn. The projected cash corn price for the 2013 crop, which is now in storage, is expected to remain near $4-$4.50 until next summer, which is similar to price expectations for the 2014 and 2015 crop years. The most recent USDA report estimated the U.S average on-farm cash corn price for 2013-2014 at $4.40, which has declined steadily in recent months. USDA is now projecting the U.S. average soybean price for 2013-2014 of $12.50 per bushel, which has declined only slightly in recent months. It is important to remember that the price estimates are the expected average prices from September 1, 2013 to August 31, 2014, for the 2013 crop year. Following are some things to consider regarding risk management strategies. ■ Realistic crop production breakeven levels. The breakeven cost of producing corn at “trend line” yields will likely be $4 per bushel or higher for many producers in 2014, and above $11 per bushel for soybeans. There can be a large variation in breakeven price levels among farm operators depending on yield potential, production expenses, overhead costs, and land costs. The expected 2014 breakeven prices compare to just over $3.50 per bushel for corn and near $8 per bushel for soybeans as recently as 2008. Farm operators should also include a charge for an expected return for their management and labor into the breakeven calculations.

■ Realistic price expectations. It is important for farm operators to establish a realistic grain marketing plan for both the remaining 2013 crop that is in storage, as well as the planned 2014 corn and soybean crop. Grain price targets should be based on realistic price expectations, and the calculated crop production breakeven levels referenced earlier. It is best to have targets set to aggressively forward price a portion of the expected crop when profit margins exist; however, it is also important to have a strategy to reduce loss if grain prices stay below the breakeven levels for the entire crop marketing year.

■ Pay attention to cash rental rates and land costs. One of the biggest variables in farm profitability is land costs, either cash rental rates or land ownership costs. The same analysis of farm business records for corn production in 2012, which was referenced earlier, showed that the group of highest profit cashrental corn farms averaged 20-25 percent less per acre for land rental costs, as compared to average farms. Farm operators should look at breakeven levels (referenced earlier) before finalizing 2014 land rental rates, or before bidding unrealistic land rental rates on new farm land that becomes available.

■ Utilize a sound crop insurance strategy. A good crop insurance program, utilizing Revenue Protection (RP) crop insurance policies is a very important risk management strategy for crop production in 2014 and beyond. Many producers had RP policies in 2013 with guarantees of $800-$900 per acre for corn. Comparable RP policies in 2014 will likely only have guarantees of $600$700 per acre. It may be advisable to look at the higher levels of RP coverage (80-85%) for 2014, in order to increase the guarantees, especially for producers with higher breakeven market prices, even though the insurance premiums will be somewhat higher.

■ Keep the ‘cash available’ segment of the farm business strong. It is important to pay close attention to the Current Ratio and the level of Working Capital in the farm business. If there is a big decline from year-toyear, it is likely a warning sign of more serious farm financial difficulties. It may be advisable to use excess cash revenues from the farm operation to pay down shortterm operating debt, or for prepayment of crop expenses, rather than making extra payments on real estate and term loans.

■ Look for ways to reduce production and overhead expenses. There is a wide variation in corn and soybean production costs from farmto-farm, and the higher production expenses do not always translate into higher yields or greater profits. An analysis of 2012 farm business records for farms with cash rented corn acres in southern Minnesota showed that the highest profit farms not only had better crop yields, but also spent significantly less per acre than average.

26 • February 2014 • MN Valley Business

■ Don’t forget about familyliving expenditures. Many crop farms have enjoyed record profitability in recent years. As profit margins get tighter in the coming years, it is important to adjust the needed allocations for non-farm expenses accordingly. ■ Utilize professional expertise and advice. Most farm operators are not experts at all aspects of production and farm management, and need to utilize professional expertise at times. This group of professionals could include, but is not limited to, farm business management instructors, crop consultants, grain marketing advisors, ag lenders, crop insurance agents. The University of Minnesota

Agriculture/Agribusiness Corn prices — southern Minnesota

(dollars per bushel)

— 2013 — 2014 8 6

16 12

4

0

$12.61

8

$4.23

4

J

F

Source: USDA

M

A

M

J

J

A

Iowa-Minnesota hog prices

100

S

O

N

D

0

90

20

80

18

F

M

M

A

M

J

J

A

S

O

N

D

Minimum prices, class 1 milk Dollars per hundredweight

$22.17

16

$78.23 J

F

— 2013 — 2014 24 $22.53 22

$83.12

70

J

Source: USDA

Milk prices

185 pound carcass, negotiated price, weighted average

— 2013 — 2014 110

60

(dollars per bushel)

— 2013 — 2014 20 $14.04

$7.17

2

Soybean prices — southern Minnesota

A

M

J

J

A

S

O

N

Source: USDA

D

14

J

F

M

A

M

J

J

A

S

O

N

D

Source: USDA. Based on federal milk orders.

Corn and soybean prices are for rail delivery points in Southern Minnesota. Milk prices are for Upper Midwest points.

C. Sankey

FINFIN web site is a great resource to find average crop and livestock production data: www.finbin.umn. edu MV Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

UMM 16H.indd 1

1/10/2014 8:29:40 AM

MN Valley Business • February 2014 • 27

Employment/Unemployment Initial unemployment claims

Minnesota initial unemployment claims

Nine-county Mankato region Major December Industry ‘12 ‘13 Construction Manufacturing Retail Services Total*

758 360 63 371 1,552

Percent change ‘12-’13

982 557 71 383 1,993

+29.6% +54.7% +12.7% +3.2% +28.4%

Major Industry

December ‘12 ‘13

Construction Manufacturing Retail Services Total*

11,171 5,951 1,696 8,129 26,947

Percent change ‘12-’13

14,294 6,374 1,646 8,297 30,611

+28% +7.1% -2.9% +2.1% +13.6%

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Services consist of administration, educational, health care and social assistance, food and other miscellaneous services. *Categories don’t equal total because some categories not listed.

Local non-farm jobs

Minnesota Local non-farm jobs

- 2012 - 2013

Nine-county Mankato region

126,778 126,666

30000

2000

10000

1000

J

F

M

A

M

J

J

A

S

Local number of unemployed

O

N

D

- 2012 - 2013

Nine-county Mankato region

4,950 6,178

0000

0

J

F

M

A

M

J

J

A

S

Minnesota number of unemployed

O

N

D

- 2012 - 2013 123,024

200000

8000

149,813

150000

6000

100000

4000

50000

2000 0

2,846.1 2,818.6

3000

20000

00000

- 2012 - 2013

(in thousands)

J

F

M

A

M

J

J

A

S

O

N

D

Mankato/North Mankato Metropolitan statistical area

Unemployment rate Number of non-farm jobs Number of unemployed

J

F

M

A

M

J

J

A

S

O

N

D

Unemployment rates Counties, state, nation

(includes all of Blue Earth and Nicollet Counties) November

0

2012

2013

4% 56,151 2,328

3.1% 56,246 1,793

Source: Minnesota Department of Employment and Economic Development

28 • February 2014 • MN Valley Business

County/area Blue Earth Brown Faribault Le Sueur Martin Nicollet Sibley Waseca Watonwan Minneapolis/St. Paul Minnesota U.S.

November 2012 4% 4.4% 5.3% 5.9% 4.8% 3.9% 4.1% 5.2% 5.2% 4.8% 4.9% 7.4%

November 2013 3.2% 4% 4.4% 5.2% 4% 2.8% 3.3% 4.4% 4.4% 4% 4.1% 6.6% C. Sankey

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2012 - 2013 846

1200 1000

(In thousands)

- 2012 - 2013

500

$396.1

$395.3

400

884

800

300

600

200

400

100

200 0

Includes restaurants, bars, telecommunications and general merchandise store sales. Excludes most clothing, grocery store sales.

Sales tax collections Mankato

J

F

M

A

M

J

Source: Sales tax figures, City of Mankato

J

A

S

O

N

D

Lodging tax collections Mankato/North Mankato $41,556

60000

0

J

F

M

A

M

J

J

A

S

N

D

Mankato food and beverage tax

- 2012 - 2013

- 2012 - 2013

75000

$56,342 $53,803

$47,073

50000

O

Source: Sales tax figures, City of Mankato

50000

40000 30000

25000

20000 10000 0

J

F

M

A

M

J

J

A

S

O

N

Source: City of Mankato

J

F

M

A

M

J

J

A

S

O

N

D

Source: City of Mankato

Gas prices-Mankato — 2013 — 2014

5

0

D

$3.25

Stocks of local interest

Dec. 16

Jan. 13

Percent change

Archer Daniels

$40.66

$42.08

+3.5

$109

$113.46

+4.1

4

Ameriprise

3

Best Buy

$41.73

$36.26

-13.1

Crown Cork & Seal

$43.26

$42.72

-1.2

Fastenal

$47.01

$48.28

+2.7

General Growth

$20.21

$20.50

+1.4

General Mills

$49.91

$48.87

-2.1

HickoryTech

$13.03

$11.63

-10.7

Hutchinson Technology

$2.99

$3.93

+31.4

Itron

$39.02

$41.43

+6.2

$27

$27.26

+1

3M

$127.66

$135.96

+6.5

Target

$62.17

$61.57

-1

U.S. Bancorp

$39.38

$40.71

+3.4

Wells Financial

$22.25

$22.50

+1.1

$.60

$.49

-18.3

$27.99

$28.21

+0.8

2

$2.95

1 0

J

F

M

A

M

J

J

A

S

O

N

D

Gas prices-Minnesota — 2013 — 2014

5

Johnson Outdoors

$3.25

4 3 2

$2.95

1 0

J

F

M

A

M

J

J

A

S

O

N

D

Winland Xcel

Source: GasBuddy.com C. Sankey

MN Valley Business • February 2014 • 29

Advancing Business for a Stronger Community

Greater Mankato at the Capitol 2014 Make your Voice Heard on March 18

Greater Mankato Growth

Greater Mankato Growth (GMG) is again coordinating the largest citizen advocacy event from our region at the State Capitol on March 18. This is the fifth consecutive year a delegation of business and community leaders from Greater Mankato will travel to St. Paul to raise the visibility of our region among state leaders. “Since our elected officials have the power to make decisions about critical issues impacting the vitality of your business and our regional marketplace, Greater Mankato Growth is committed to providing opportunities that create awareness among its members, the community, and elected officials about public policy matters affecting Greater Mankato,” said GMG President & CEO Jonathan Zierdt. Greater Mankato at the Capitol allows attendees to be advocates on their own behalf as well as the opportunity to speak with a unified voice on key policy issues that allow our region to grow and thrive. Attendees will have the opportunity to rally in the Capitol Rotunda, participate in issue focused forums with state leaders, and interact with state legislators and colleagues at an evening reception, with round-trip transportation between Mankato and St. Paul. It’s your business, your city, your county and your home. Have a say in how they will be affected. All Greater Mankato citizens are invited to participate in Greater Mankato at the Capitol. Whether you know a little or a lot about government affairs, join your neighbors and make your voice heard! You can learn more about Greater Mankato at the Capitol, including information on registration and sponsorship opportunities, at greatermankato.com/capitol or contact Patrick Baker at 507.385.6657 or pbaker@greatermankato.com.

30 february2013 2014• •MN MN Valley Business 1 •• JANUARY Valley Business

Greater Mankato Growth, Inc. Annual Meeting Greater Mankato Growth, Visit Mankato and City Center Partnership look forward to sharing their accomplishments of 2013 and plans for 2014 at this year’s annual meeting.

March 13

11:30 - 1:00 pm Minnesota State University, Mankato CSU Ballroom Tickets and Information available at: greatermankato.com/annual-meeting

Greater Mankato Growth and the South Central College Center for Business & Industry are pleased to bring you Lunch & Learn, a series of short workshops held over the lunch hour designed for busy professionals.

February 13 Effectively Using an iPad in the Business World March 6 True Colors greatermankato.com/ lunch-learn

Spring Series Sponsor:

The Greater Mankato Young Professionals program gives individuals age 21 - 39 an opportunity to engage with one another while focusing on learning, socializing and community engagement. Contact Shannon Gullickson at 507.385.6656 to find out more about joining! greatermankato.com/ young-professionals

2014 Program Sponsor:

MN MNValley Valley Business Business •• february February 2014 • 31

Greater Mankato Growth

Lunch & Learn Spring Series

Advancing Business for a Stronger Community

2014 Business After & Before Hours

5:00 - 7:00 p.m. February 4 March 4 April 1

Wow! Zone Snell Motors The Loose Moose Saloon & Conference Center

Greater Mankato Growth

2014 Business After Hours Sponsored by:

7:30 - 9:00 a.m. February 19 March 19 April 16

Old Main Village Sam’s Club Enventis

2014 Business Before Hours Sponsored by:

November Business After Hours at Bethany Lutheran College

November Business Before Hours at J. Longs for Men

December Business After Hours at ECS - Your Wiring Pros

December Business Before Hours at Pioneer Bank

Business After and Business Before Hours gives representatives from GMG member businesses at the Engaged Level or higher an opportunity to get together with one another to exchange ideas and learn about each other’s businesses. For more information on these and other member events, visit greatermankato.com/events.

32 February2013 february 2014• •MN MN Valley Business 1 •• JANUARY Valley Business

Con

Cavalier Calls

on the

Newest Members

rs

Sheri Dittrich-Reinhart - Independent Sales Director 201 N. Broad Street Suite 104, Mankato marykay.com/sheridr

Terri Prange - Independent Sales Director 201 N. Broad Street Suite 104, Mankato marykay.com/tprange

Congratulations 2014 Pathfinder Recipients On January 20, the 2014 Pathfinder Award recipients were honored at the 30th Annual Martin Luther King Jr. Community Celebration.

2014 Pathfinder Award Recipients with Pathfinder Committee Members

The Young Pathfinder Award was added in 2002 to recognize the commitment and courage displayed by area young people to achieve fair and equal treatment for all, healthy communities and peaceful resolution to conflicts. This year’s Young Pathfinder Award recipient is the Mankato East Student Council Executive Board for implementing a giving program that benefits all students regardless of their race, economic background or religion. The Business Pathfinder Award was established in 2003 and is presented by Greater Mankato Growth to recognize businesses that strive for equal treatment, human rights and non-violence in the workplace. This year’s Business Pathfinder Award Recipient is Sodexo, the dining services provider serving Minnesota State University, Mankato and the community at large, recognized for promoting diversity and inclusivity in the workplace. To learn more about the 2013 recipients, visit greatermankato.com/pathfinder-awards.

MN MNValley Valley Business Business •• february February 2014 • 33

Greater Mankato Growth

The Pathfinder Award was created in 1986 by the Martin Luther King Commemorative Board to recognize individuals or organizations that, in the spirit of Dr. King, are initiators or action takers in the struggle for equal treatment, human rights and non-violence. The award represents the ideal that all people should be treated fairly and equally without the fear of discrimination on any basis. This year’s Pathfinder Award recipient is Bev Mountain, program coordinator for Mankato Area Public Schools Adult Basic Education program.

Bright Idea - Bright Event

2013 Kiwanis Holiday Lights – photo courtesy of Pat Christman, The Free Press

By Christine Nessler, Director of Marketing and Leisure Sales From Black Friday to New Year’s Eve this past year the Kiwanis Holiday Lights brought 130,000 people and 28,000 cars through Mankato’s Sibley Park to experience a winter wonderland of 1.2 million LED lights. That’s an average of nearly 4,000 people a night and 850 cars a night. It all started with one man’s vision to help the community and his service club by bringing an event to Mankato. When Scott Wojcik was the President of Mankato’s Downtown Kiwanis Club he was looking for an event to benefit Kiwanis and the area. After visiting his hometown of Marshfield, Wisconsin for the holidays, Wojcik had an idea.

Greater Mankato Growth

“I thought, ‘we could definitely pull this off in Mankato’” said Wojcik of the impressive display of the Marshfield holiday lights and the number of people who came through it. Wojcik got to work along with countless dedicated volunteers. “It’s a community event,” said Wojcik. “Seventy-two different non-profit groups volunteer to set-up, tear-down and work at the lights. We couldn’t do it without them.” The event also benefits local food shelves. Attendees of the display are asked to bring canned food items for local food shelves or a free-will monetary donation that is given to the non-profit organizations who volunteer at the event. The first year of the Kiwanis Holiday Lights display in 2012 boasted one million LED lights, animated light displays, live reindeer, visits with Santa and more. In 2013 several new things were added to the display, including the Mary Dotson synthetic skating rink, two new displays, a walking tunnel, a 50 percent increase in dancing lights displays and another 200,000 lights. “Our intent is to add something new and different every year to keep people excited and coming back,” said Wojcik. Well it worked. In addition to traffic increasing an average of 18% over the inaugural event, the Kiwanis Holiday Lights raised $35,000 for 70 area non-profits and 15 tons of food for 15 area food shelves. Wojcik says the Kiwanis Holiday Lights are already working on new additions for the 2014 display including more animated displays, a longer walking tunnel and a new 30-piece display. Visit Mankato is an affiliate of Greater Mankato Growth (GMG), operated as an LLC under GMG.Visit Mankato is dedicated to the important work of attracting and servicing visitors, conventions, events and tournaments in Greater Mankato.

34 december february 2014 2013 • MN MN Valley Valley Business Business 1 •• JANUARY 2013 • •MN Valley Business

hts – photo n, The Free Press

Advancing Business for a Stronger Community

Growth in Greater Mankato NEW BUSINESSES Scott Wojcik, Shannon Gullickson and Justin Mathes of the Kiwanis Holiday Lights Board helping set up the 2013 Kiwanis Holiday Lights.

According to Wojcik this event, a Visit Mankato Bring It Home award winner, has much more than a local draw.Visitors are coming from all over Southern Minnesota and the Twin Cities. Local businesses like Subway and Arby’s have communicated to Wojcik that business is booming because of the Kiwanis Holiday Lights traffic. Wojcik has also had visitors tell him they stopped at Hy-Vee or Cub Foods to buy groceries to donate to the food shelves before coming to the lights.

Wojcik is just one example out of many of local people who had the vision and drive to get an event started in Mankato. Please contact Josh Anderson at Visit Mankato at janderson@visitmankatomn. com or 507.385.6663 if you have an idea for an event that needs a little help getting off the ground.

Fitness for $10 1351 Madison Avenue, Mankato

Subway 1633 Monks Avenue, Suite 110, Mankato GROUND BREAKING New Osaka 1854 Madison Avenue, Mankato

City Center Office Building Corner of Riverfront Drive and Warren Street, Mankato Window World 54050 Loren Drive, Mankato

MN Valley Business • Feburary 2014 • 35

Greater Mankato Growth

Visitors are also making a day trip out of visiting the lights. Many people are doing some shopping at the River Hills Mall and going out to eat before heading down to Sibley Park for the beautiful lights display that is quickly becoming a holiday tradition for many people.

NEW LOCATION

Kids finally move out? Time for a makeover. The carpets you've always wanted are softer than ever. Come in and see our latest collection of luxurious floors from Shaw. Carpet | Area Rugs | Tile & Stone | Hardwood | Laminate | Resilient | shawfloors.com

FLOORING EXPERTS SO YOU DON’T HAVE TO BE!

RICKWAY CARPET 507.625.3089

1107 Cross St. | North Mankato Mon-Thurs 9am–8pm | Fri 9am–6pm | Sat 9am–4pm | Closed Sun.

www.rickwaycarpet.net

36 • February 2014 • MN Valley Business

DOING MORE I&S Group is doing more. For our clients. For our community For our environment.

GROUP One firm - start to finish ™

Mayo Clinic Health System - Eastridge Mankato, MN

www.is-grp.com ARCHITECTS • ENGINEERS • PLANNERS • LAND SURVEYORS • SCIENTISTS


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