Mnvalley 9 17 by Free Press Media

The Definitive Business Journal for the Greater Minnesota River Valley September 2017

Christina Hogan, vice president, and Mitch Jacobs, president and CEO of V-TEK in Mankato. Photo by Pat Christman

Manufacturing upswing Companies adding employees Also in this issue • BEANS COFFEE COMPANY OF MANKATO • AFRICAN FASHIONS OPENS IN MANKATO • INSPIRED REPLACES LAMBRECHT’S IN NEW ULM

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F E A T U R E S September 2017 • Volume 9, Issue 12

Area manufacturers have stepped up hiring recently and despite an overall labor shortage have found a pool of employees who’ve been let go from other jobs

Habiba Ahmed saw an opportunity to offer items that are not readily available in the Mankato area and recently opened her African Fashions store on Park Lane.

Clay Sharkey and Eric Poppler started roasting coffee beans as a hobby and now are overseeing their growing Beans Coffee Company located in Mankato.

The longtime Lambrecht’s store in downtown New Ulm has a new name, Inspired, and new owners Christina and Randy Schwab, who are maintaining much of the store’s feel.

MN Valley Business • SEPTEMBER 2017 • 3

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SEPTEMBER 2017 • VOLUME 9, ISSUE 12 PUBLISHER Steve Jameson EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Kent Thiesse Amanda Dyslin Nell Musolf Dean Swanson Dan Greenwood PHOTOGRAPHERS Pat Christman Jackson Forderer COVER PHOTO Pat Christman PAGE DESIGNER Christina Sankey ADVERTISING Phil Seibel MANAGER ADVERTISING Jordan Greer Sales Josh Zimmerman Marianne Carlson Theresa Haefner ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Justin Niles DIRECTOR For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6364, or e-mail advertising@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.....................................5 ■ Business Commentary.........................8 ■ Business and Industry trends..........24 ■ Retail trends.....................................25 ■ Agriculture Outlook..........................26 ■ Agribusiness trends..........................27 ■ Construction, real estate trends.....28 ■ Gas trends........................................29 ■ Stocks...............................................29 ■ Minnesota Business updates............30 ■ Job trends.........................................30 ■ Schmidt Foundation.........................32 ■ Greater Mankato Growth..................34 ■ Greater Mankato Growth Member Activities ............................36

From the editor

By Joe Spear

Manufacturing set for boom in 2017

anufacturing continues to be an important part of the Mankato regional economy and the challenges facing it now are internal -- a shortage of workers -- and external -- worries of export tariffs and trade restrictions. But those challenges aren’t getting in the way of optimism for the year ahead. In fact, the State of Manufacturing sur vey by Enterprise Minnesota records its most optimistic outlook ever, with 94 percent of manufacturers saying 2017 will be a year of growth. Bob Kill, CEO of Enterprise Minnesota, a consulting organization, says a more indepth survey or manufacturing by that organization shows a number of positive signs. Some 55 percent of manufacturers expect increases in revenue and 44 percent expect increases in profitability. Some 35 percent of statewide manufacturers expect revenue increases of more than 10 percent, and 27 percent expect a double digit percent increase in profitability, both record numbers for the survey. Some 58 percent of manufacturers forecast economic expansion this year, according to the survey, besting last year’s 32 percent who predicted an expanding economy. Those are big numbers and are consistent across the state, according to Enterprise Minnesota. This month’s cover stor y highlights two manufacturing sectors that seem to be boosting local companies -- semiconductors and power generation equipment. Mankato’s V-TEK supplies the semiconductor industry with the packaging for microchips that help those industries build circuit boards. Nidec Kato Engineering, with a presence in Mankato for 90

4 • SEPTEMBER 2017 • MN Valley Business

years, produces power generators for the oil and gas industry, the military and mining but also nonrust belt industries like data centers and utilities. Both companies recently came under new ownership. V-TEK was acquired by KODA Enterprises Group, a private investment firm out of Massachusetts and Kato Engineering was acquired by the Japanese-based firm Nidec with $13 billion in sales worldwide. Both companies say sales are on the rise and the new ownership provides them with new opportunities. Both appear to be benefitting from the growing technology almost every industry must adopt. Semiconductors, for example, are not only needed for electronic industries, but in the auto and health care industries as well. Goods-producing jobs, of which manufacturing is the major component, added since the beginning of the year in the Mankato/North Mankato area grew by about 900 from January through June, a gain of about 9.5 percent. Average monthly employment for goods-production jobs is up 2.4 percent comparing the first sixth months of 2017 with the same period last year. That’s a nice increase. Construction is also a major component of the goodsproducing category. In June, goods-producing jobs made up about 18 percent of total jobs in the region, another number on the high end of historical figures. And because manufacturing generally pays higher wages, wage gains in the area make a bigger difference when the number of jobs grows. From 2015 to 2016, manufacturing employment was flat in Blue Earth and Nicollet Counties. So 2017 seems to represent a new positive trend.

Statewide, manufacturing employment is up about 4 percent from January to June this year, but the employment is flat comparing the first six months of this year with the same period in 2016. So, in that respect, the Mankato region may be doing better than the statewide manufacturing. Kill posits that’s because the Mankato region has a diverse manufacturing base. Other anecdotal evidence from Greater Mankato Growth shows 68 percent of manufacturing firms show revenue and profit were up in the second quarter of 2017. While the survey sample is too small to be representative of all manufacturing businesses, the growth seems to be reflecting the Enterprise Minnesota survey. About 60 percent of Mankato area manufacturers also reported they are spending more on capital and adding employees, according to the GMG survey. Going forward, the survey also showed manufacturing having a positive outlook for employment, revenue and profit. Still, the internal challenges for manufacturing remain a tight employment market and difficulty filling entry level positions and some skilled positions as well. For all businesses, the top concerns were workforce, labor costs and the national political climate, according to the recent GMG survey. Kill notes that some of the bigger industries that export worr y about rhetoric from Washington, D.C., of tariffs and putting up more barriers to trade. And that’s combined with the relatively high value of the U.S. dollar, which makes exports more expensive. But so far, optimism seems to be reigning. That’s good for the state and the Mankato region.

Joe Spear is executive editor of Minnesota Valley Business. Contact him at jspear@mankatofreepress.com or 344-6382. Follow on Twitter @jfspear.

Local Business People/ Company News

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Hulwi joins law firm

Minneapolis-based law firm Best & Flanagan announced that Nicholas Hulwi, former estate and gift tax attorney with the IRS, has joined the firm’s Private Wealth Planning practice group. Hulwi, a Mankato native, will focus on estate planning, estate and trust administration, and business succession planning, working with individuals, families, and small business owners. Also, as a Certified Valuation Analyst from the National Association of Certified Valuators and Analysts, Hulwi will help clients who need business valuation in their estate planning. Before joining Best & Flanagan, Hulwi worked for nearly six years with the U.S. Department of the Treasur y, Internal Revenue Service. ■■■

Neutral Path enters Chicago

shy of 2,000 route miles and runs between the key cities of Minneapolis, Omaha, Denver, and Chicago. ■■■

Bank closing downtown branch

United Prairie Bank announced it will close its City Center location on Oct. 31. The bank said it is consolidating its services at its hilltop location on the corner of Victory Drive and Highway 22. “Our Hilltop location provides access to a 24-hour deposit ATM, drive through banking hours, and our full-ser vice banking, insurance and investment team to meet the standards we seek to achieve,” CEO Scott Bradley said in a statement. United Prairie opened the downtown location, inside the Graif Building, in 2009. ■■■

Mankato-based Neutral Path Communications, a Midwest neutral fiber transport facilities provider, announced it is now offering lit services to Chicago. The new link runs from Neutral Path’s main line at the 511 Building in Minneapolis, to one of the world’s largest data centers at 350 E Cermak in downtown Chicago, IL. The 350 Cermak data center, located in the South Loop of Chicago, has long since been an attractive destination for network operators, content deliver y networks, cloud ser vice providers, and the like. It is also home to ChIX which is at 25 members and growing. “We are seeing an increasingly large demand for transport to additional Internet Exchange points from last-mile providers in the upper Midwest,” said Neutral Path’s CTO, Jay Hanke. With the addition of the Minneapolis to Chicago link, Neutral Path now has more than 35 points of presence along their backbone network; which is just

Jacobs named partner

Stinson Leonard Street announced that Michael Jacobs has been named the managing partner of the firm’s Mankato office. Jacobs is a transactional attorney who counsels startup companies, closely held businesses, as well as larger private and publicly traded companies in all aspects of business, corporate, transactional, mergers and acquisitions, financing and commercial real estate matters. He has closed hundreds of transactions totaling hundreds of millions of dollars throughout the U.S. He routinely serves as outside general counsel to clients in a wide variety of industries, including manufacturing, c o n s t r u c t i o n , telecommunications, agribusiness, real estate, banking and professional ser vices companies

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American Way Realty has been ranked No. 3 on REAL Trend’s list “America’s Best Real Estate Agents” in the state of Minnesota, and as the top female real estate agent in Minnesota for 2017. Additionally, VanEman-Riley was honored in The Wall Street Journal by REAL Trends on “The Thousand” – a nationally ranked list of the top 1,000 agents in the United States She made the list at No. 119. VanEman-Riley has also been named as one of the “100 Most Influential Real Estate Agents in Minnesota 2017” by Real Estate Executives Magazine. ■■■

Lynch, Klinkner join Weichert

Weichert Realty Community Group, located in Mankato, announce they added Realtors Jerry Lynch and Mitch Klinkner. L ynch, a Lake Washington resident, has more than 30 years of work experience in professionals ser vices and customer service and is the owner of Westwood Marina Bar & Grill

in Kasota. Klinkner will continue to work as a part-time EMT with the North Memorial Ambulance Ser vice. The Redwood Falls resident is also pursuing a business degree at Minnesota State University. ■■■

Christenson promoted

Lime Valley Adver tising promoted Casey Christenson to Art Director. Christenson will direct Lime Valley’s creative design efforts in all areas including print, multimedia and web. In addition to his regular design duties, he serves as a mentor and collaborator for new staff and student interns at the agency. Christenson joined the company in 2008 as a graphic designer and was promoted to Associate Art Director in 2010. He earned a BFA in graphic design from Minnesota State University, Mankato in 2007

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Business Commentary

By Dean Swanson

The latest restaurant trends include mobile and snacking

don’t know if it is the time of year or what is influencing potential small business CEOs to be interested in starting a restaurant, but SCORE mentors in the area that I serve have been getting a lot of clients that are asking for help on this topic. One of the opening discussions for these sessions usually include “what is happening in the restaurant industry lately” and “is this a good potential business”? Actually the data indicates that in general, now is a great time to be a restaurateur. American restaurants posted some $782 billion in sales in 2016, accounting for 4 percent of the GDP, according to Gallup. But the bigger issue is how do you keep your restaurant ringing up sales? The SCORE website has some insights into this. Here are a few trends you should be aware of:

Millennials matter

If you hope to position your restaurant for growth, you need to appeal to customers aged 1834. Millennials eat out far more often than any other age group: 70 percent do so at least once a week, Gallup reports. While more affluent Millennials are more likely to dine out (nearly eight in 10 Millennials with incomes of $75,000 or more eat out at least once a week), 60 percent of those earning under $30,000 still eat out weekly.

Unexpected competition

Nontraditional competitors are moving in on traditional restaurants’ territory, Gallup cautions. Meal preparation services that ship ingredients to customers’ homes, smartphone apps that make it easier than ever to order takeout food, and upscale grocery store food bars are all fighting for the same customers you are.

Snack time sizzling

Nation’s Restaurant News says afternoon snack was the strongest-performing meal occasion of 2016 (although morning and late evening snacks are also hot). The most popular afternoon snack food is a burger; French fries, ice cream, potato chips, candy/candy bars and chicken sandwiches are close behind. However, the breakfast sandwich (dubbed “Food of the Year” by hospitality consulting firm Andrew Freeman & Co.) tops them all as the most popular snack of any time of the day. Nation’s Restaurant News says there’s a great opportunity for restaurateurs to reposition or promote existing menu items as snacks or add new snack items to their menus.

Vegetable-based meals

As vegan and vegetarian options become more mainstream, restaurants are adding animal-free food products,

8 • SEPTEMBER 2017 • MN Valley Business

such as vegan cheeses and plantbased proteins, reports Andrew Freeman & Co. Consider offering customizable menu items, such as grain bowls, that let diners pick their own ingredients to suit everyone’s preferences.

Ethnic cuisines

Authentic ethnic foods are becoming more popular nationwide, says the National Restaurant Association. Southeast Asian food — including lesser-known cuisines, such as Laotian, Taiwanese, Malaysian, Filipino and Indonesian — is especially hot, while Americans’ love of spicy foods is inspiring menu items incorporating African and Middle-Eastern spices.

Authenticity and transparency

From house-made condiments to heirloom produce to authentic ethnic dishes, the National Restaurant Association says diners are seeking more authentic everything. They want to know where the food they’re eating came from, how sustainable it is and how it’s prepared.

Vibe dining

Consumers weigh the overall experience carefully when spending their dining dollars. Put as much thought into the look and feel of your restaurant, the music you play and the attitude

of your staff as you do your menu, advises Andrew Freeman & Co. Locating near “experienceoriented” businesses, such as shopping, movie theaters and entertainment venues, helps boost your restaurant’s entertainment factor.

Throwback dining

Going back to the past is one experience that’s hitting a chord with diners. Andrew Freeman & Co. predicts 2017 will see greater emphasis on “immersive experiences” that transport diners into a different place and time. If you don’t want to go to those lengths, adding some nostalgic, comfort-food items to your menu can have a similar effect.

Cafeteria-style

According to Andrew Freeman & Co., cafeteria-style restaurants are growing in popularity as part of consumers’ desire to customize their meals. Think of how you can incorporate a cafeteria-style feel into your restaurant to attract a wider variety of diners.

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Christina Hogan, vice president, and Mitch Jacobs, president and CEO of V-TEK in Mankato.

Manufacturers ramping up Companies scramble to hire more people By Tim Krohn | Photos by Pat Christman

rea manufacturers are in growth mode, although ongoing worker shortages are making them work harder to attract the people they need and causing them to worry a bit about the future. Mitch Jacobs, president and CEO of V-TEK in Mankato, which serves semiconductor industries, said the future looks good. “We’ve seen a nice level of growth on the sales front and continue to see growth forward 18 to 24 months,

which is as far as we can forecast.” Kevin Newman, vice president at Nidec Kato Engineering, said they’re excited to be in growth mode, hiring back more than 30 people who had been previously laid off. “Being in the community for 90 years and being a good place to work, it’s unfortunate when people have to be let go,” he said at a recent event where the company celebrated its new owner,

Cover Story

10 • SEPTEMBER 2017 • MN Valley Business

Nick Stiehm, left, and Mike Bennett work on a tape and reel machine at V-Tek’s Mankato office. Nidec, and its growth spurt. The North Mankato firm provides generators for the oil and gas industries, the military, data centers, utilities, rail, mining and more. Bob Kill, CEO of Enterprise Minnesota, a consulting organization that works with medium and small manufacturers, said the top issue among manufacturers is easy to identify. “The number one question is about talent and leadership at all levels. Companies are realizing this worker shortage isn’t going away,” Kill said. “Companies need to develop people internally and keep them. They used to be able to go out and hire someone they needed, but you can’t always do that anymore.” But he said he’s also worried about a growing gap between companies in the Twin Cities and hubs like Mankato and those in smaller communities around the state. Those more rural communities, he said, face myriad challenges.

John Considine, of Greater Mankato Growth, said employment has been growing in the local manufacturing sector recently. “The wages in manufacturing are higher than average wages, so with more jobs in that sector, there’s a higher income generated in the Mankato area.”

Urban-rural gap

Enterprise Minnesota has a CEO Council and does an indepth annual sur vey of manufacturers to gauge the issues they face. Kill said that manufacturing is, in general, strong. “Statewide things are good. In your region, I think it’s probably better.” He said the Mankato region’s economic diversity, population and location help it. “There’s other parts of the state that aren’t so robust and that’s often tied to the fact they’re tied to one or two sectors. They aren’t diverse.” Kill said a growing trend he’s seen has him concerned for many

parts of Greater Minnesota. “There’s a change emerging between Greater Minnesota and the seven-county metro area. Not so much for Mankato and St. Cloud, but you get out to Willmar and Blue Earth and these places, and there are dramatically different concerns there than in the metro.” He said the shortage of workers is hitting those more rural areas harder than elsewhere. “And transportation is an issue. Trucking companies won’t come out unless you can pay for a full load. If you’re not on a highway or interstate, it’s really tough,” he said. “It’s even different between a Mankato and a Wells. Go an hour away and people are driving to Mankato for a job that pays a little more,” he said. “We’re going to have to be really innovative to meet the challenges.” He said their annual survey shows that a new administration has lessened some concerns and increased others among

MN Valley Business • SEPTEMBER 2017 • 11

manufacturers. “The bigger the company the more they’ll express concern about trade. They haven’t seen a change yet, but they’re worried that all this rhetoric will have an effect.” He said companies that export are already hampered by the high dollar. “If you combine that with more restrictive trade, they’re more worried.” Immigration restrictions are also a concern for many. “There’s a lot of companies, food processing especially, that rely on open, not illegal, but open immigration and that’s a concern for them.” Kill said one big switch in attitude from last year to this year was about regulation. “The concerns about regulations went down considerably this year because of all the promises coming out of the campaign.” He said health care costs worries continue to grow. “Part of that’s because it’s in the news and part of it’s because costs keep going up for smaller companies that can’t spread the cost out. There’s a lot of upheaval.” He said companies are less worried about foreign competition these days compared to years ago. “The investments companies have made in processes and equipment since the recession makes them feel they can compete better.”

V-TEK busy

Jacobs, who has been with V-TEK for seven years, stepped in as president and CEO in 2016. Earlier this year KODA Enterprises Group, a private investment firm in Massachusetts, acquired V-TEK.

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“From an operational standpoint, it’s been business as usual,” Jacobs said of the new ownership. “What it’s given us is an injection of excitement and a bright future for the business.” V-TEK ser ves the semiconductor industry. “But that really touches most all industries — semiconductors in automobiles, medical devices, the consumer electronics market, infrastructure for the cellular and satellite industry,” he said. The company supplies the equipment and consumables used in packaging chips to those industries, as well as providing the service of packaging to some of the customers. “We package them before they are made into a board. If you think of a completed circuit board, we’re packaging those chips so the high-speed manufacturers can pick and place those chips on the board automatically,” Jacobs said. “It continues to be more complex. Computing devices and semiconductors get smaller and smaller. A lot of what we do is

Jonathan Zierdt, of GMG, left, with Nidec Kato Engineering Vice President Kevin Newman, and North Mankato Mayor Mark Dehen at a recent event at the company’s North Mankato plant. value added in the packaging process, for example 3D vision inspection and redundant electrical testing — proving components are to specification before they’re packaged.” He said the semiconductor industry has been very strong and they’re exploring expanding their customer base, including

more medical and automotive device packaging. Like most ever y company, keeping jobs filled takes hard work. “It’s always a challenge to find the skilled employee positions. We have a strong relationship with South Central College and Minnesota State University –

MN Valley Business • SEPTEMBER 2017 • 13

Doug Thompson puts the finishing touches on a 10 megawatt generator Monday at Kato Engineering. The generator is capable of powering about 2,000 homes. Mankato, so we use those pipelines to find young, talented, skilled workers. But the job market’s been tight and we’re always looking for the next member of the team to help us grow.” V-TEK, which has 60 employees, was started in 1985 by Dennis and Vivian Siemer. The company also has three locations in Mexico that employ 150. In 2013 they acquired Royce Instruments in Napa, California. “We have a sales and engineering office in Napa, but we consolidated the manufacturing in Mankato” Jacobs said.

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Considine, director of regional business intelligence with GMG, said hiring by manufacturers has picked up significantly. “I’ve had conversations with area manufacturers who say they’ve been able to hire due to other industries letting people go. That kind of speaks to the diversity of our marketplace. Manufacturing is the biggest chunk of it but there are a lot of other areas as well, and I think manufacturers are absorbing the available folks from other

numbers as industries they serve go through ups and downs. Newman said having Nidec acquire Kato Engineering is a big boost because of Nidec’s massive global presence. The Japanesebased firm is a $13 billion international motor company with ambitious growth goals in the years ahead. Layoffs cut employment to about 330 in North Mankato, compared to a high point of 500 workers years ago. But those employment numbers are steadily climbing.

industries.” Some of those available employees came from the closing of several large retailers in Mankato this year, including Sears, Gander Mountain and Gordmans. “But long term, if you look at demographic trends, it’s still going to be a challenge to find employees, and that’s not unique to our area,” Considine said. “The state demographer said that trend won’t begin to change until 2030.” He said manufacturers work with consultants, hiring agencies and temp agencies to track down potential workers. “Those agencies beat the bushes for anyone looking for new employment or looking for a change in employment.” Considine said the GreaterMankatoJobs.com website developed by GMG is also being used more. “Major employers are starting to post on that website,” He said wages appear to be trending up as companies jockey for new employees. And he said they’re looking further out for talent. “Industries are looking 45 to 60 minutes outside of Mankato when advertising for employees.”

“

Kato Engineering had been owned by Emerson Electric since 1999. Kato Engineering was founded in 1928 by Elmer Jensen and Louis Wilkinson. They soon worked with Cecil Jones, who would become a dominant influence in developing the company. Newman said Nidec is focused on growth and is investing a lot in new equipment at Kato Engineering and in expanding products lines here. MV

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MN Valley Business • SEPTEMBER 2017 • 15

Habiba Ahmed and her son Abdulaziz Mohamud.

African Fashions

Owners had long, arduous journey to Mankato By Dan Greenwood Photos by Pat Christman One of the first things you notice upon walking into African Fashions in Mankato are the vivid colors. The clothing and rugs feature ornate patterns and are imported from as far as Kenya and cater to the fashion styles of Mankato residents who hail from places like Somalia, Sudan and West Africa. The store just opened in June and is a one of a kind. Mankato has a handful of African Grocery stores and Halal Markets but to obtain African clothing and home décor you had to drive to Minneapolis where shops like that are in abundance. Owner Habiba Ahmed says she saw that • SEPTEMBER 2017 • MN Valley Business

as an opportunity. “It was my dream to open my own business,” Ahmed said. “In Mankato, we have a (African) grocery, but we don’t have a clothes and fashion store.” It’s not just clothing for sale at African Fashions; rugs, dishes, ornaments, perfume and makeup are all available too. Everything in the store is shipped in from Africa, Dubai, Chicago and Minneapolis. Ahmed has come a long way from when she first arrived in the United States after her family fled to Kenya from war-torn Somalia. She seized on the opportunity to

Cover Spotlight

move to Minnesota in 2004 but had to leave her family behind. She arrived in Waseca without speaking a word of English. “I left my two children and my husband in Africa. It’s a sad story. When I came here, after three weeks I was sick. My friend took me to the hospital. They told me I was pregnant. I was shocked and scared. I cried. My doctor was saying ‘What happened? I thought you would be happy?’ Her translator friend explained that Ahmed had just arrived in the United States, spoke no English and missed her family. On top of that, she was unable to find a job because of the language barrier. She and her friend had heard of employment opportunities in the South and decided to relocate. “We moved to Kentucky, but it was worse,” explained Ahmed. An expectant mother, she tried to get assistance from the county they lived in. Because she didn’t have the paperwork necessary to prove that her husband was still in Africa, they wouldn’t help her find a job or provide social services like day care. Ahmed found herself without any money or housing. “My friend had to pay for everything,” Ahmed said. By the time her daughter was seven months old she realized she couldn’t stay and returned to Minnesota in 2005. But this time around she moved to Mankato. That’s when her life began to take a turn for the better. With the help of both Nicollet and Blue Earth counties social services, she applied for and received Section 8 housing and found a job at Ameripride, a company that provides work uniforms, cleaning and restroom supplies to businesses in the area. Ahmed knew she had to learn English. She’d heard things about Angie’s BOOMCHICKAPOP in Mankato. It would offer more variety and skill sets on the job, plus she could work a 10 hour second shift. That would allow her to take classes at Lincoln Community Center during the day. “That’s when my life (here) started,” Ahmed said. “I sponsored my husband, he came

here in 2012. I sponsored my kids and they came last year.” By proving she could support not only herself, but her family, Ahmed was able to hire a lawyer, pay application fees and work with immigration officials to secure her children’s and husband’s arrival to Minnesota from Nairobi, where they had been in limbo for a decade. “Now that my family is all together, I want to be a part of the Mankato community,” Ahmed said. Her husband got a job as a truck driver and they both worked full time, allowing the family to save money to invest in the business. The two sat down and looked at spending, their budget and ordering products for African Fashions. The couple bought a storefront

on Park Lane near Sibley Park. Her day now consists of opening the store at 10am and working there all day before heading to Angie’s to work until midnight. She spread the word at the local Islamic Center and at Angie’s, where a lot of immigrants from Africa work. No longer would they have to drive to Minneapolis for clothing and home décor. For Ahmed, obtaining the American dream was a winding and difficult road, but what once was a very foreign place has become something she has embraced. She especially loves Minnesota’s climate. “I love winter. The first time when I came I was surprised. But I got used to it. Mankato is now home for the long term.” MV

MN Valley Business • SEPTEMBER 2017 • 17

Eric Poppler, left, and Clay Sharkey of Beans Coffee Company in Mankato

Locally roasted

Beans Coffee Company focuses on fresh roasted beans

By Nell Musolf | Photos by Jackson Forderer

he owners of Beans Coffee Company, Clay Sharkey and Eric Poppler, have a lot in common. They both work at banks. They are both married with young children. Neither grew up in Mankato but they’ve adopted the city as their own. And they both love coffee. “I like it black but Clay takes it with cream and sugar,” Poppler said at Beans Coffee Company’s home base located at 1051 Madison Avenue. “Of course, he can’t have cream and sugar when we’re test-tasting a new batch. That wouldn’t work.” The java loving duo met over coffee after church one day a few years back. While sipping the brew offered after the service, they looked at each other and agreed that the coffee they were drinking was pretty bad. “We both kind of said, ‘wow, this really isn’t good,’” Poppler recalled. That chance meeting led to a discussion of what is necessary to make a truly good cup of coffee, one without bitterness and with a whole lot of flavor. After doing their homework, the two decided to try roasting their own beans as a hobby. They started with a

popcorn popper in the garage, then to a converted BBQ Grill, and then to an official coffee roaster. With the change in roaster, they also upgraded from the garage to their current location. What began as a hobby for themselves, then coffee for family and friends, has grown to a fullfledged business, Beans Coffee Company. It hasn’t taken long for Sharkey and Poppler to compile a list of customers who appreciated good coffee as much as they did. As Sharkey and Poppler learned the art of roasting coffee beans, they began to create their own unique blends. Their first coffee, which they named De Novo was a nod to both of their banking backgrounds. The term De Novo is a Latin phrase meaning to start something new. The term is routinely used in the banking industry to describe a newly opened bank, and the pair thought there was no better name for their first roast. “We thought that was appropriate,” Poppler said. Beans Coffee Company currently offers eight different blends. “We want to have our coffee known

Profile

18 • SEPTEMBER 2017 • MN Valley Business

Eric Poppler roasts a batch of coffee beans at the Mankato facility.

as coming out of southern Minnesota,” Sharkey said. “We want it to reflect Mankato.” As a result, several of the blends have names that were chosen as an homage to Mankato including Key City Espresso and River Valley Blend. Don’t worry, Beans Coffee Company also has a decaffeinated option. To ensure their coffee is as fresh as possible, Sharkey and Poppler roast the coffee on Wednesdays and deliver them within the next two days. It is the freshness that makes their coffee experience unique. “When you’re roasting coffee, grinding it and then brewing within a couple days, your coffee’s flavor doesn’t have a chance to fade. Our coffee is about as fresh as you can get,” Poppler said. “It really makes a huge difference in taste.” Beans Coffee Company sells its wares online through one-time purchases or subscriptions, and despite whatever option is chosen, the pair offers free deliver in Mankato and Eagle Lake. In addition to the online store, their coffee is available at the Mankato Farmers Market during the summers as well as various local grocery stores including Hy-Vee, St Peter Food Coop and New Ulm Community Market. The entrepreneurs’ wives and children have joined in the hobby turned business as well. “Our wives are each other’s best friends and they’ve both been incredibly supportive of our business,” Poppler said. “My wife, Kandi, designed our packages and Clay’s wife, Britta, is starting to do our books.” “My son even helps out at the Farmer’s Market,” Poppler said. “He pours samples. It’s a real family affair.” For the time being, Sharkey and Poppler plan to expand their client base. Recently Beans Coffee Company’s coffee has begun to be served at Old Main Village as well as Terrace View Golf Course. Their five year plan? “Crush Starbucks,” Poppler said. MV

MN Valley Business • SEPTEMBER 2017 • 19

Christina Schwab purchased the old Lambrecht’s in Feb. 2017 and added new flooring, paint and fixtures to the renamed Inspired. Schwab said the store sells women’s clothing and accessories, home decor, children’s toys, Made in Minnesota products and has an artificial floral department.

Inspired

New owner moves former Lambrecht’s forward By Amanda Dyslin Photos by Jackson Forderer

hile still very much rooted in its proud German heritage, the winds of change have hit downtown New

Ulm. Bars, restaurants and retail stores – such as Lola – An American Bistro, The Grand Kabaret and Gallery 512 Boutique, among others – have added a modern vibe to North Minnesota Street. And the businesses’ draw to downtown is not at all in spite of those traditional New Ulm staples. Tourists and locals alike are still filling up on wiener schnitzel at The Kaiserhoff and getting their annual German Christmas ornaments at the Guten Tag Haus. But now they have the option of also picking up a Lola Latte or a funky new piece of jewelry while they’re at it. This immersion of traditional and contemporary has also been happening within one of downtown’s long-standing businesses, Inspired, formerly called Lambrecht’s. For more than 30 years, Curt

20 • SEPTEMBER 2017 • MN Valley Business

and Donna Lambrecht owned the store that housed an eclectic and elegant mix of gift displays, cooking utensils, clothing, jewelry, year-round Christmas décor and a great many other items. Part of the fun of shopping there was not knowing what to expect when you’d walk in from month to month, said customer Sheri Hanson. “It epitomizes what makes downtown New Ulm so fun – the mix of fun stuff on display,” Hanson said. “I thought maybe that would change when Lambrecht’s sold, but it really hasn’t.” Christina Schwab and her husband, Randy, bought the store last winter from the Lambrechts, who had been hoping to retire for several years. The two had owned the store since 1983 when they purchased it from Ralph Vogelpohl, who had operated it as a harness shop, luggage, leather goods and gift store. The Schwabs are just the fourth owners of the store in 122 years. It opened as a harness

Feature

A section of the new Inspired store in New Ulm that features home decor items, artificial flowers, eco-friendly products and children’s toys. shop and leather goods store in 1895. Vogelpohl began working there in the 1930s as a teenager and eventually took it over from the original owner, Mr. Janni. The store’s tradition is important to the new owners, said Christina Schwab, whose family moved to the area 12 years ago to farm. Schwab became a regular Lambrecht’s customer. “There was always so much to look at. It’s just such a beautiful store with so many ideas to decorate my own home,” she said. Schwab had wanted to own her own business since she was in high school and had a background in banking and insurance. She took the New Ulm Chamber of Commerce’s Smart Start Seminar, which connected her to the Small Business Development Center in Mankato. She wanted to open a gift shop with eco-friendly, natural and Minnesota-made products. All the pieces seemed to fall into place when she learned the Lambrechts were interested in

Alexis Petersen picks out some dresses for her mother Deborah to try on at Inspired in New Ulm. One section of the store is dedicated to women’s clothing and accessories and the other section is dedicated to home decor, children’s toys and Made in Minnesota products.

“There was always so much to look at. It’s just such a beautiful store with so many ideas to decorate my own home,” she said. MN Valley Business • SEPTEMBER 2017 • 21

Sharon Hubly (center) makes a few final adjustments to an artificial bouquet of flowers being purchased by Jean Anderson (left) as Marilyn Reinhart (right) rings up the purchase.

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“It’s something I had always wanted to do,” she said. “I didn’t want to hold off any more.” selling. “It’s something I had always wanted to do,” she said. “I didn’t want to hold off any more.” Early this year, Lambrecht’s inventory was sold, and it closed for six weeks while the Schwabs made some changes and refilled the store with products. They redid flooring, painted the store, lowered the displays so there was a more open feel and added new lines of products. The year-round Christmas displays on the second floor were removed, and the children’s section was expanded. The store quietly reopened March 24 under the new name Inspired, and a grand opening was held in April. But longtime customers still see plenty of familiar items when they come back to the store. The women’s fashion accessories and many home décor items, among other things, have remained. “All the sales staff stayed,” Schwab said. “That’s been a huge bonus for me.” As tourist season picked up this summer in New Ulm, Schwab has been excited by the foot traffic and the future of the business. She hopes to add wedding registries, and she hopes to have an online retail component to the business so customers can shop remotely. “It’s still such a beautiful store,” Hanson said. “I can hardly remember a Christmas season I haven’t shopped there, and this year I hope will be no different.”

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■

Business and Industry Trends

Energy

U.S. to be net natural gas exporter

State wind power strong

Wind power in Minnesota has grown to nearly 18 percent of the electricity generated in the state, ranking it seventh in the nation for wind power. Minnesota Public Radio reports that the U.S. Department of Energy found a growth spurt in the wind power industry last year, both in Minnesota and nationally. Minnesota wind energy capacity increased about 9 percent. Minnesota added enough new wind energy last year to power about 150,000 homes. The cost of wind power rivals other forms of electricity generation, said Minnesota Commerce Commissioner Mike Rothman. “Wind is now turning out to be one of the lowest cost alternatives — competitive with natural gas,

and with other forms of electricity,” he said. “That’s why we’re seeing such a huge growth in the wind energy in Minnesota. Texas continues to lead, with about six times more wind power than Minnesota. Iowa, which has about twice the Minnesota capacity, ranked second

The federal Energy Information Administration projects that the United States will export more natural gas than it imports in 2017. The United States has been a net exporter for three of the past four months and is expected to continue to export more natural gas than it imports for the rest of 2017 and throughout 2018. The United States’ status as a net exporter is expected to continue past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing exports of liquefied natural gas. The United States is currently the world’s largest natural gas producer, having surpassed Russia in 2009. Natural gas production in the United States increased from 55 billion cubic feet per day in 2008 to 72.5 Bcf/d in 2016. Most of this natural gas — about 96 percent in 2016 — is

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24 • SEPTEMBER 2017 • MN Valley Business

consumed domestically. Abundant natural gas resources and large production increases have created opportunities for U.S. natural gas exports. With a near doubling of U.S. export pipeline capacity to Mexico by 2019, EIA expects U.S. natural gas exports to increase, though they should remain well below the available pipeline capacity.

Crude prices up

North Sea Brent crude oil spot prices averaged $48 per barrel in July, $2 higher than the June average and almost $4 higher than in July 2016. Brent spot prices should average $51 a barrel in 2017 and $52 in 2018. West Texas Intermediate crude oil prices are forecast to average $2 per barrel less than Brent prices in both 2017 and 2018.

Pump prices steady

U.S. regular gasoline retail prices averaged $2.30 per gallon in July, down 5 cents from the average in June but 6 cents higher than in July 2016. During the April-through-September summer driving season of 2017, U.S. regular gasoline retail prices are forecast to average $2.37 a gallon, 14 cents higher than last summer. Annual average U.S. regular gasoline retail prices are forecast to be $2.33 in both 2017 and 2018.

Oil production strong

U.S. crude oil production averaged an estimated 8.9 million barrels per day in 2016 and is forecast to average 9.3 million barrels a day in 2017. Crude oil production should average 9.9 million b/d in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.

Natural gas prices steady

In July, the average Henry Hub natural gas spot price was $2.98 per million British thermal units, about the same as in June. Higher natural gas exports and growing domestic natural gas consumption in 2018 contribute to the forecast Henry Hub natural gas spot price rising from an annual average of $3.06/ MMBtu in 2017 to $3.29/MMBtu in 2018.

Electric output shifts

The share of U.S. total utility-scale electricity generation from natural gas should fall from an average of 34 percent in 2016 to about 31 percent in 2017 as a result of higher natural gas prices, increased generation from renewables and coal, and lower electricity demand. Coal’s forecast generation share rises from 30 percent last year to almost 32 percent in 2017. The projected generation shares for natural gas and coal are nearly identical in 2018, averaging between 31 percent and 32 percent.

Retail/Consumer Spending Vehicle Sales Mankato — Number of vehicles sold - 2016 - 2017

1500

1,101 766

1200 900 600 300 0

Source: Sales tax figures, City of Mankato

Sales tax collections Mankato (In thousands)

- 2016 - 2017 $429

600

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

$416

500 400 300 200 100 0

Source: Sales tax figures, City of Mankato

Lodging tax collections Mankato/North Mankato - 2016 - 2017 70000

$27,978

52500 35000 17500 0

Source: City of Mankato

Mankato food and beverage tax - 2016 - 2017 175000 140000

$63,500

105000

$61,214

70000 35000 0

Source: City of Mankato

C. Sankey

MN Valley Business • SEPTEMBER 2017 • 25

■

Agricultural Outlook

By Kent Thiesse

Farmers air concerns during Farm Bill listening session

n Aug. 3 Farmfest hosted one of six U.S. House Agriculture Committee Listening Sessions that were held in the U.S. The event was hosted by Committee Chairman, Michael Conaway, R-Texas, and Ranking Member Collin Peterson, D-Minnesota, and was attended by nine other members of the U.S. House Ag Committee. The Committee members listened to nearly 50 two-minute presentations from farmers, ag leaders, conservation supporters, and others during the Listening Session. A variety of topics and issues were raised during the session. Following is a summary of some of the main issues that were discussed:

Crop Insurance and Commodity Programs

Many farm operators are concerned about the future of the Federal Crop Insurance program, which is probably the best risk management tool that crop producers have available to them. The federal government currently covers approximately 60 percent of the premium cost paid by farmers for most common levels of crop insurance coverage. Crop insurance has been a financial life-saver in recent years for crop producers in many areas of the U.S. that have suffered crop losses due to natural disasters and poor crop growing conditions. The Trump administration budget proposal would reduce the maximum federal premium subsidy to $40,000 per farm operation. Currently, there is no limit on the maximum premium subsidy. The administration proposal would also eliminate the popular Harvest Price Option for crop insurance that is utilized as a risk management tool by most Midwest corn and soybean producers. In addition, the administration revisions would eliminate federal crop insurance coverage to any farm operation that exceeds $500,000 in adjusted gross income. If all of these changes were implemented, it could drastically change the federal crop insurance program for many crop producers, as we know it today. Most farm operators are just beginning to understand the current Farm Bill and farm programs that were implemented beginning with the 2014 crop year, and will be in place through the 2018 crop year. There has been lot of concern over the payment calculations in the current county-based Ag Risk Coverage (ARC-CO) farm program option, which over 90 percent of the corn and soybean producers in the Upper Midwest are enrolled in for 2014-2018. The ARC-CO payments for a given crop in a crop year can vary widely from countyto-county, due to the payment calculation formula. Most ag groups favor keeping a choice between the revenue-based ARC-CO program and the price-only

26 • SEPTEMBER 2017 • MN Valley Business

Price Loss Coverage program, but would like to see some “tweaks” to the ARC-CO payment calculation formulas.

Dair y Margin Protection Program

The MPP program is a voluntary program that was part of the 2014 Farm Bill, which was designed to help dairy producers offset low profit margins. However, the established MPP payment formulas have not worked in today’s market environment, and as a result the MPP program has not provided the financial support to most dairy producers that it was designed to accomplish. Many producers and dairy leaders are calling for revisions to the MPP program in the next Farm Bill. Livestock producers also expressed the need to develop “vaccine banks” and other measures in the next Farm Bill, in order to protect against “Foot and Mouth” disease and other pandemic livestock diseases.

Conser vation Programs

One topic at the Listening Session that seemed to unite ag organizations, environmental groups, and wildlife supporters alike was continued support for conservation programs. The Conservation Reserve Program (CRP), which has been the cornerstone of USDA conservation efforts since the late 1980s, received the most attention. The maximum acreage in the CRP program was reduced to 24 million acres nationwide in the 2014 Farm Bill, with 23.4 million acres currently enrolled in CRP, as of June 30, 2017. The CRP enrollment was 29.5 million acres in 2012, and was 33.6 million acres in 2001. CRP contracts will expire on 2.5 million in 2017, and another 1.5 million acres in 2018 Many groups are calling for an increase in CRP acreage in the next Farm Bill; however, most would like to see the CRP program continue to be targeted to the most environmentally sensitive land. The biggest challenge with increasing CRP acreage is probably the cost of the CRP program, in an era when the Administration and Congress are trying to reduce the Federal budget deficit. The 33.6 million CRP acres in 2001 required a total budget outlay of $1.6 million, while the 24 million CRP acres in 2017 will require a budget outlay of over $1.8 million. This is largely due to higher U.S. average CRP rental payments, which averaged $46 per acre in 2001, and average $77 per acre in 2017.

Other USDA Programs

Agriculture/ Agribusiness

There are twelve Titles in the current Farm Bill, and comments at the Listening Session also focused on some of the other USDA programs, including:

SNAP Program

Some members of Congress would like to separate the Food and Nutrition Title, which funds the Supplemental Nutrition Assistance Program (SNAP), from the Commodity Title when the next Farm Bill is written. The SNAP program, which utilizes approximately 70-80 percent of the funds expended under the Farm Bill, has been a way to engage both urban and rural members of Congress on the importance of this legislation. For many decades Farm Bills have contained both the Commodity and Nutrition Titles. Experienced ag policy experts warn that funding for ag commodity programs could become much more difficult in the future, if the farm programs and SNAP programs are separated.

Trade Issues

The NAFTA trade agreement with Mexico and Canada, 8 which has been in place for 21 years, is currently being reviewed by the administration and Congress. There are also ongoing trade negotiations 6 with China and many other Countries. Farm organization and ag leaders emphasized the importance 4 of strong export markets to farm profitability and a strong rural economy. 2

Organic Production

0 A number J of F people M A that M made J Jcomments A S during O N the D Listening Session expressed the need for a stronger safety net and more support for organic crop and livestock production in the next Farm Bill.

Corn prices — southern Minnesota 8

Many 100 at the Listening Session commented on the need for 6 continued support for agriculture research and extension programs through the Land-Grant 85 University system. 4 One70overriding issue of the farmers attending the Listening 2 Session, is the current very tight margins 55 and low profitability in crop and livestock production today.400Farm operators stressed the need for USDA to F M safety A MnetJ program J A for S producers, O N D maintain Ja strong 25 through Federal J F Mcrop A insurance M J J and A the S crop O N and D livestock commodity programs. The other overriding issue with farm families and rural residents is the high cost of health insurance coverage, and access to adequate health care coverage. Congress and the 100 administration will now need to find a balance between the many needs and priorities for the next Farm Bill 85 and the growing Federal budget deficit.

$2.84

Soybean prices — southern Minnesota — 2016 — 2017 208 100 166 85 12 4 70

Kent Thiesse is farm management analyst and vice president, MinnStar Bank, Lake Crystal. 507- 381-7960; kent.thiesse@minnstarbank.com

(dollars per bushel)

$9.29

Iowa-Minnesota hog prices

Milk prices

Minimum prices, class 1 milk Dollars per hundredweight

— 2016 — 2017 25 22

$17.48

$15.50 J

20 25 16 22 12 19 8 16 4 13 0 J 10

185 pound carcass, negotiated price, weighted average

20 100 25 16 $80.26 85 22 12 70 19 8 55 16 4 $64.67 40 13 0 J F M A M J J A S O N D 25 10 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

8 55 2 $8.89 4 40 0 0 J F M A M J J A S O N D 25 J F M A M J J A S O N D J F M A M J J A S O N D Source: USDA

Source: USDA

12 8

$3.10

— 2016 — 2017

8 Ag Research

(dollars per bushel)

— 2016 — 2017

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

MN Valley Business • SEPTEMBER 2017 • 27

25 22 19 16 13 10

Construction/Real Estate Residential building permits Mankato

Commercial building permits Mankato

18000

12000

- 2016 - 2017 (in thousands)

10000

13500

$5,579 $1,943

9000

4000 2000

Source: City of Mankato

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

Existing home sales: Mankato region - 2016 - 2017 (in thousands)

Median home sale price: Mankato region - 2016 - 2017 (in thousands)

250

300

240 204

240

$159,450

$189,500

200 150

180

2017

100

120

2016

0 J

Source: Realtors Association of Southern Minnesota

Source: Realtor Association of Southern Minnesota

Interest Rates: 30-year fixed-rate mortgage

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

Housing starts: Mankato/North Mankato

— 2016 — 2017

- 2015 - 2016

5.5

5.0

4.5

3.9% 20

4.0 3.5 3.0

$1,222

6000

4500

$1,928

8000

3.6% J

Source: Freddie Mac

Source: Cities of Mankato/North Mankato

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Gas Prices

Gas prices-Mankato

— 2016 — 2017

54 43 $2.29

32 21 10 0

A $1.97 S O

Gas prices-Minnesota

— 2016 — 2017

5 54 43

$2.30

32 21 10

$2.06

C. Sankey

Source: GasBuddy.com

Stocks of local interest Archer Daniels Ameriprise Best Buy Crown Cork & Seal Consolidated Comm. Fastenal General Growth General Mills Hutchinson Technology Itron Johnson Outdoors 3M Target U.S. Bancorp Wells Financial Winland Xcel

July 18

Aug. 15

Percent change

$41.31

$42.05

+1.7%

$135.78 $56.43 $60.49 $17.99

$144.79 $58.97 $58.35

+6.6% +4.5% -3.5%

$19.00 $42.76 $21.10 $57.31 $4.00 $73.05 $61.31 $207.18 $54.35 $52.98 $50.20 $1.27 $48.73

+5.9% +0.4% -10.2% +6.5% 0.0% +0.5% +24.2% -2.1% +1.2% +0.9% +0.4% -0.8% +4.9%

$42.60 $23.49 $53.79 $4.00 $72.70 $49.36 $211.61 $53.69 $52.50 $50.00 $1.28 $46.47

C. Sankey

MN Valley Business • SEPTEMBER 2017 • 29

Minnesota Business Updates

■

■ Land O’Lakes buys company

■ Hy-Vee adds Twin Cities store

Land O’Lakes, Inc. acquired Philia Foods, maker of feta cheese spreads, as part of the company’s dairy innovation and development strategy. Land O’Lakes said it was attracted to the company “because of its entrepreneurial spirit and high-quality specialty dairy products, which is fully aligned with Land O’Lakes’ nearly 100-year history of creating delicious, highquality dairy products.”

One glance into the new Hy-Vee store that opened in Cottage Grove reveals where supermarkets are headed, according to the Star Tribune. A shrinking center store yields space to oodles of grab-and-go choices — heatand-serve meals, grab-to-grill and fully cooked entrees — all to tempt shoppers on the run. “We’re expanding grab and go even more,” said HyVee’s Chairman and Chief Executive Randy Edeker.” The Cottage Grove store is the Des Moines-based supermarket chain’s 245th store and its seventh in the Twin Cities since entering the metro area in 2015. The stores are about 30 percent larger than a typical Cub Foods and offer an amenities assortment found nowhere else among its local competition, including a juice and smoothie island; several made-to-order grills and delis; two sit-down restaurants and a bar; a cut-toorder produce station; a bath and beauty department; a bagel shop; fast fashion for men, women and kids; a drive-up pharmacy; a health clinic; dry cleaning; and postal services.

■ Mayo cutting back in Albert Lea Mayo Clinic will stop delivering babies and accepting inpatient and intensive-care admissions at its Albert Lea hospital. Over the next few years, those services will move a half hour away to the Mayo facility in Austin, according to Minnesota Public Radio. Mayo says it needs to move the services to stop the two hospitals from hemorrhaging money — they’ve racked up combined losses of $13 million over two years. But the changes are prompting anger and anxiety in Albert Lea

■ ADM laying off workers Archer Daniels Midland Co. is laying off an unspecified number of workers. The Chicago-based global agribusiness giant, which has its North American headquarters and more than

Employment/Unemployment Initial unemployment claims Nine-county Mankato region Major June Industry 2016 2017 Construction Manufacturing Retail Services Total*

71 252 42 219 584

Local non-farm jobs Percent change ‘16-’17

64 83 33 193 373

127,259

130,983

133000 122000

2100 1400

111000

700 100000

Minnesota initial unemployment claims

Minnesota Local non-farm jobs

Major Industry 133000 133000

2016

2017

Percent change ‘16-’17

Construction 122000 122000 Manufacturing Retail 111000 Services 111000 Total*

2,081 2,573 1,069 5,406 11,129

2,154 1,488 795 5,228 9,665

+35% -42.2% +4.1% -3.3% -13.2%

Services consist of administration, educational, health care and social 100000 assistance, food andJ otherF miscellaneous services. M A M J J A S O 100000 J don’t F equal M total A because M Jsome Jcategories A not S listed. O N *Categories

30 • SEPTEMBER 2017 • MN Valley Business

3500 2800

-9.9% -67.1% -21.4% -11.9% -36.1%

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.

June

- 2016 - 2017

Nine-county Mankato region

(in thousands)

8000 3500 3500 6000 2800 2800 4000 2100 2100

2,929

- 2016 - 2017

2,987

2000 1400 1400

700

700 0 J F M A M J J A S O N D 0 J F M A M J J A S O N D J F M A M J J A S O N D

200000 150000 100000 50000 0

4,000 employees in Decatur, said affected workers were being notified of “reductions of certain positions.” “This is part of an effort to ensure we have the right resources in the right places and continue to be an agile and streamlined organization focused on growth,” said ADM spokesman Colin McBean. “Our priority during this process is the respect and care of our employees and, therefore, we are not sharing any additional details at this time.” ADM, which moved its global headquarters from Decatur to Chicago in 2014, has approximately 32,000 employees in 160 countries

may not be the sole source of the contamination.

■ 3M pushes back on agreement

■ Johnson profits up

Minnesota Pollution Control Agency officials say manufacturing company 3M Co. has violated a decadeold legal agreement that outlines how the business pays for clean drinking water in Minneapolis. About 200 residents in the city’s southeastern suburbs were directed to drink bottled water last year because their well water was contaminated by toxic chemicals once used at 3M’s nearby facilities, the Star Tribune reported. According to 2007 agreement between the state and the company, 133000 the company must provide clean drinking 133000to Cottage Grove, Oakdale, Woodbury and St. Paul water Park if water exceeds any safe level established by the 122000 state Department of Health. 122000 The company’s attorney, William Brewer, said the company wants more information regarding the source 111000chemicals. 3M officials said the company of the toxic 111000

■ Target improves kids’ snacks Target is removing artificial ingredients from store brand snacks. The plan is to remove all artificial flavors, preservatives, sweeteners, and colors— as well as any artificial trans fats and high fructose corn syrup — from Target-owned brands of kids’ foods by 2018. About 75 percent of the current store-brand offerings for tots are already free of such substances. 133000

100000 J F

J M

Racine-based Johnson Outdoors reported record third 2100 quarter profits on strong demand for its new products. 1400 The outdoor recreation equipment manufacturer 111000 recorded net income of $16.6 million, or $1.65 per 700 diluted share, up 142 percent from $6.8 million, or 68 100000 0 cents per Jshare, F in M the A third M quarter J J of A 2016. S O N D J Revenue totaled $155.3 million in the third quarter, up from $139.4 million in the year-ago quarter. Fishing sales drove the revenue increase, up from $88 million to $104 million year-over-year. Operating profit was $24.7 million, up from $13.6 3500 8000 in the same period a year ago. 200000 3500 million 2800 Johnson Outdoors makes watercraft, fishing, diving 2800 and camping equipment. The new products were 150000 6000 2100 2100 introduced under its Minn Kota, Humminbird, Cannon, SCUBAPRO and Jetboil brands. 4000 100000 1400 1400

700 2000

M J

J A

J S

Local number of unemployed

4000 2100 1400 2000

A O

S N

O D

8000

5,256

6000

4,314

J F M A M M A M J J M A M J J

J A A

J S S

A S O N O N D O N D

121,352

150000

106,122

100000 50000 0

M MJ

J JA

J JS

A AO

S N S

O D O

N N

D D

(includes all of Blue Earth and Nicollet Counties) 200000 150000

June

100000

0 F

J M

F M A A M J

M J

J A

2016

2017

3.3% 56,013 1,914

3.0% 57,000 1,763

J S

A O

S N

O D

Unemployment rates Counties, state, nation County/area

- 2016 - 2017

200000

F M A M AJ FA M

Unemployment rate Number of non-farm jobs 50000 50000 Number of unemployed

100000

2000 0 F F

0 0 J F JM

Mankato/North Mankato Metropolitan statistical area

150000

4000

700 0 J 0 J

D 0

200000

Minnesota number of unemployed

- 2016 - 2017

Nine-county Mankato region 8000 3500 6000 2800

50000

Employment/Unemployment

F M A A M J

2800

122000

700

100000

3500

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

June 2016

June 2017

3.5% 3.9% 4.1% 3.9% 4.4% 2.9% 3.8% 4.1% 5.5% 3.6% 3.8% 5.1%

3.1% 3.3% 3.8% 3.6% 3.5% 2.8% 3.0% 3.5% 4.3% 3.3% 3.4% 4.6%

Source: Minnesota Department of Employment and Economic Development C. Sankey

Minnesota initial MN Valley Business • unemployment SEPTEMBER 2017 claims • 31

Sponsored by the Carl & Verna Schmidt Foundation

The importance of bigger earnings for stock funds

By Stan Choe | Associated Press

his earnings season is off to a good start, and the encouraging run is expected to keep going. Instead of excitement, though, the reaction so far from Wall Street has been more like quiet relief, and funds that track the broad stock market have only edged higher since earnings reports began arriving in earnest last week. That’s because the strong reports that are forecast would be more a justification for the big moves that stock prices have already made rather than reason for further gains. Stock prices have risen more quickly than earnings in recent years, and the two tend to track with each other over the long term. Stocks even rose when profits were shrinking from mid-2015 into 2016, which has the market at more expensive levels relative to corporate profits. Stock prices for companies in the Standard & Poor’s 500 index are trading at close to 21 times their earnings per share over the last 12 months, for example. That’s well above their average priceearnings ratio of 15.5 over the last 10 years, a period that includes both the Great Recession and the long run-up for stocks following it. Of course, interest rates are still low, and investors are willing to pay a higher price for each dollar of earnings in stocks when bonds are offering small yields. But rates are expected to continue climbing modestly, as the Federal Reserve raises short-term interest rates and begins paring back its massive trove of bond investments. So, depending on how high interest rates climb and other factors, corporate earnings may need to keep rising just to keep stock prices where they are today. This reporting season, analysts are expecting S& P 500 companies to report a roughly 6 percent rise in earnings per share from a year earlier. That would be less than half the growth

32 • SEPTEMBER 2017 • MN Valley Business

rate of the first three months of the year, but the slowdown is understandable given that the first quarter’s growth rate was the fastest since 2011. Coming into this year, many expected President Donald Trump’s “America First” policies to mean companies that do most of their business at home would be the biggest winners. But the companies that get most of their sales from abroad may end up this earning season’s stars, now that Europe and developing economies around the world are showing more life after years of disappointment. Those economic upturns, coupled with a weakening dollar, spell stronger results for companies that sell a lot to customers in Asia, Europe and elsewhere. The euro has climbed about 10 percent against the dollar this year, for example, which means that each euro of sales at the Apple store in Amsterdam is worth more dollars than before. Like Apple, the technology sector broadly gets most of its revenue from outside the United States, and analysts expect tech stocks to report the secondstrongest earnings growth of the 11 sectors that make up the index, at nearly 11 percent, according to S& P Global Market Intelligence. The strongest growth this reporting season is expected to come from the energy sector, where analysts say profits more than quadrupled from a year earlier. Energy is the only area of the market that’s more international than technology in terms of where it gets its revenue, but the biggest factor is the higher price of oil. After plunging below $30 per barrel early last year, crude has remained between $45 and $55 for much of this year. MV

Sponsored by the Carl & Verna Schmidt Foundation

With 401(k) accounts booming, what should investors do? Associated Press

id you notice that your toe doesn’t hurt because you didn’t stub it today? We tend to pay the closest attention to things when they’re going badly, and the same is true of the stock market. When stocks crashed during the financial crisis in 2008, phone lines for financial advisers and 401(k) providers were jammed with panicky investors. Now stocks are at record highs, and the market is tranquil. It’s easy to feel comfortable leaving your account on autopilot. Don’t get lulled into complacency. Stocks may have become an outsized portion of your portfolio following their terrific run. And don’t let the quiet times fool you: Wild swings are part of the market’s DNA. Just ask investors who weren’t paying attention a decade ago and let stocks build up in their 401(k) accounts as the S& P 500 set record after record, only to see the index get wiped in half by the Great Recession from late 2007 into 2009. “Now is a good time to check” whether too much of your 401(k) is in stocks, said Jeanne Thompson, a senior vice president at Fidelity Investments. “You don’t want to wait until the market tanks, because by that point, it’s probably better to ride it out.” Fidelity says 40 percent of savers who are managing their own 401(k) accounts without the help of professional guidance have a higher percentage of their portfolio in stocks than it recommends. Find out how much of your portfolio is in stocks and ask yourself how you’d react to a 10 percent drop in its value, something that’s relatively common. If your first reaction would be to sell — and lock in the losses — you may have too much of your portfolio in stocks and not enough in bonds and other more stable investments. Bonds have risks, too, given their low yields and the

Federal Reserve’s goal of slowly lifting interest rates higher. But fund managers say bonds should still continue to be more stable in price than stocks. So what’s the right percentage of stocks to hold? It depends on your age and how much risk you’re willing to stomach. People decades away from retirement have the luxury of waiting out any drops in the market. Workers closer to retirement By Stan Choe still need stocks — albeit in smaller proportions — because they have historically provided the highest returns over the long term and a retirement can last decades. It’s easy to see how much stock mutual-fund companies recommend that retirement savers hold. Check their target-date retirement funds, which are built to help investors divvy up a nest egg over time. For people 30 years away from retirement, the average target-date retirement fund has nearly 88 percent of its portfolio in a mix of U.S. and foreign stocks, according to a recent review by Morningstar. For those 20 years away from retirement, they keep 79 percent, and the percentage drops again to 61 percent for workers hoping to retire in a decade. Analysts and professional investors disagree on where the stock market is headed. It could keep climbing as profits for companies continue to increase due to an improving global economy, and as inflation remains low. But stocks are also pricier, raising their risk. In addition, the Federal Reserve is slowly pulling the plug on the stimulus it has pumped into the economy since the Great Recession. Regardless, make sure that you’d be comfortable with a 10 percent move, up or down, in the stock portion of your 401(k). In the meantime, watch your toes. MV

MN Valley Business • SEPTEMBER 2017 • 33

VIKINGS TRAINING CAMP: By Katie Adelman, Marketing and Communications Coordinator

MEMORIES OVER THE YEARS

Greater Mankato Growth

he score at the end of the “season” for Minnesota Vikings Training Camp in Mankato is 52-0. While the Greater Mankato community will experience their first loss in 2018, when the Vikings will begin using their new Eagan facility for Training Camp, a look back at the previous 52 years has proven to be an overall win for Mankato. “I have had the privilege to work with the Minnesota Vikings for more than 10 years, and on behalf of Visit Mankato and the entire Greater Mankato community, we are so thankful for the opportunity to work with them,” said Anna Thill, President of Visit Mankato. “Our relationship was a symbiotic one in which we worked to get the welcome vibe going for the players and fans, and they helped us engage with fans through The score at lots of giveaways, the end of the alumni relations, autographed items “season” for and more.” For Shirley Piepho, Minnesota State University, Mankato’s Assistant Director of

Up close and personal with the fans.

Minnesota Vikings Training Camp in Mankato is 52-0.

34 • SEPTEMBER 2017 • MN Valley Business

University Scheduling and Conference Services, her first run-in— literally and figuratively— with the Vikings in Mankato was in 1974.

“I was a student working in the Department of Educational Administration. One day, I was going out a door as Carl Eller was coming in. Needless to say, I was no match for Mr. Eller,” she said. “I was thrown on my assets. He promptly lifted me up, apologized for the mishap and said he was ‘late for class.’ Never did I ever imagine then, I would have more than 20 years of encounters with the Vikings as the Minnesota State University, Mankato Coordinator for Viking Training Camp.” Since that first encounter, the Vikings have become an extension of Piepho’s family. “The Vikings’ operations staff and my family have celebrated birthdays, weddings, loss of loved ones and health issues together,” Piepho said. “When our son, Marcus, was in Afghanistan, they were always checking in to see if there was anything they could do to

MP:

help his platoon. The Vikings were always there for me and for the Greater Mankato community.”

In its 52 years in Mankato, Vikings Training Camp has had an impact that has generated more than fond memories and further professional opportunities. Around 60,000 people have increased Greater Mankato’s population for approximately two weeks each summer in recent years. On average, the economic impact of a single Vikings Training Camp season has been $5 million. For the final Mankato Training Camp this year, an estimated 68,000 people flocked to Greater Mankato to watch the Vikings take to the turf one last time.

The Vikings were always there for me and for the Greater Mankato community.

Like Piepho, Shane Bowyer, Minnesota Vikings Training Camp Coordinator, has a long history interacting with the Vikings. His first memory of Training Camp was in 1977. “It was basically my dad and I taking care of the practice fields,”he said, “until he got in trouble for making his 10-year-old son drive university tractors!” His most impactful memory in his 12 years was working with the Vikings organization to develop a class and internship program for sports management students. “More than 350 students have had the opportunity to put on their resume that they interned with the Minnesota Vikings. What a great experience it has been for them, and many are working in professional and collegiate sports across the country as a result,” Bowyer said.

“The people we worked with over the years will be sincerely missed in the sense of traditional Training Camp, but we hope to continue the relationship in a new way moving forward,” said Thill. Greater Mankato may have seen its last Vikings Training Camp touch down in the community, but some new and existing players may be drafted to help fill out the area’s event roster.

Greater Mankato Growth

Old Training Camp Huddle

MN Valley Business • SEPTEMBER 2017 • 35

Last month was wonderfully bittersweet, as we celebrated the last Business Reception with the Minnesota Vikings. Many thanks to all those who came out to show the Vikings our appreciation for the 52 years they considered Mankato their home away from home. While this may be the end of an era, we look forward to new economic opportunities to fill the gap.

Greater Mankato Growth

Special thanks to our generous sponsor:

36 â&#x20AC;˘ SEPTEMBER 2017 â&#x20AC;˘ MN Valley Business

10.07.17

nce again, the City Center Partnership will team up with Minnesota State University Maverick Hockey to present Hockey Night in the City Center on Saturday, October 7. Hockey Night is a fan-friendly celebration featuring live music, kids’ activities and the highly-anticipated mechanical bull! There’s also great food and drink available. The festivities start at 4:30 pm and continue right up to the puck drop. The party is held on the Civic Center Plaza, which was recently redesigned with events like Hockey Night in mind – the space features a permanent stage and abundant space for vendors, games and the bounce house, as well as hundreds of fans.

In 2015, the Verizon Wireless Center truly became the home for Minnesota State Hockey with both the men’s and women’s programs moving full-time to new facilities built on the west side of the building. Besides locker room facilities and offices, the Verizon Center also features a new weight room, athletic training and equipment facilities, and player and alumni lounge areas. Minnesota State University, Mankato hockey players are training, studying and playing in the City Center, bringing energy and excitement to our downtown. All are welcome to join in the fun on Hockey Night! Saturday, October 7 from 4:30-7:00 pm, Civic Center Plaza. Sponsored by:

Over the past few years, Maverick Hockey has increased its City Center presence and commitment.

PATHFINDER AWARD NOMINATIONS Martin Luther King, Jr. Community Celebration

Submit your nominations today!

embers of the public are encouraged to visit each sculpture and cast a vote for their favorite – the People’s Choice Award. The winner is purchased by the CityArt program for display in the City Center.

The Young Pathfinder Award recognizes the commitment and courage displayed by area young people to achieve fair and equal treatment for all and peaceful resolution to conflicts. The Business Pathfinder Award, presented by GMG, recognizes businesses that strive for equal treatment and nonviolence in the workplace. Event to be held January 15, 2018. Find out more at: mankatodiversity.org

2016 Winner Stand For The Flag - Lee Leuning & Sherri Treeby

Ballots are available in marked boxes along the Walking Sculpture Tour route; they may also be picked up at the Visitor’s Center in Mankato Place Mall and at Twin Rivers Council for the Arts. Vote online at citycentermankato.com/sculpturevote. Voting closes on October 31, 2017 and the winner will be announced at the Greater Mankato Business Awards and Hall of Fame on November 14.

MN Valley Business • SEPTEMBER 2017 • 37

Greater Mankato Growth

The Pathfinder Award recognizes individuals or organizations that, in the spirit of Dr. King, are initiators or action takers in the struggle for equal treatment, human rights and nonviolence.

Vote for People’s Choice

Nominate a Deserving Business or Professional Your opportunity is NOW. Nominate a deserving business or professional for the Greater Mankato Business Awards & Hall of Fame. The 2017 event will be held on Tuesday, November 14 and is a time where Greater Mankato Growth, Visit Mankato and City Center Partnership honor outstanding businesses, professionals and organizations within the Greater Mankato community. Nominations will be accepted until September 1.

Greater Mankato Growth

Growth in Greater Mankato RIBBON CUTTING

NEW LOCATION

RIBBON CUTTING

Hyundai of Mankato 1281 Raintree Road, Mankato

Kato Crossfit 1522 North Riverfront Drive, Mankato

United Team Elite 1420 Lookout Drive, North Mankato

Crossroads Advanced Clinical Massage 530 North Riverfront Drive, Suite 130, Mankato crossroads.massagetherapy.com

Gillette Children’s Specialty Healthcare 1421 Premier Drive, Mankato gillettechildrens.org

The Social Butterfly 424 North Riverfront Drive, Mankato socialbutterflycompany.com

Inner Vitality 301 Madison Avenue, Suite 305, Mankato innervitalitymankato.com

Cavaliers

Cavalier Calls on the Newest Greater Mankato Growth Members

Interim Healthcare 709 South Front Street, Suite 3, Mankato interimhealthcare.com

38 • SEPTEMBER 2017 • MN Valley Business

g al

5:00 - 7:00 pm September 5 October 3 November 7 December 5

7:30 - 9:00 am

Cambria MRCI - East Park Mayo Clinic Heath System Courtyard by Marriott Hotel & Event Center

September 20 October 18 November 15 December 20

Ecumen Pathstone Living True Facade Pictures Old Main Village City of Eagle Lake

2017 Business Before Hours Sponsored by:

July Business After Hours hosted by Unique Speciality & Classics

July Business Before Hours hosted by AT&T

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.

TAKE A TOUR

Thursday, October 5, 2017 9 am - 3 pm & Saturday, October 7, 2017 9 am - 1 pm

Presenting Sponsors:

MN Valley Business • SEPTEMBER 2017 • 39

Greater Mankato Growth

tourofmanufacturing.com

Each year the South Central Tour of Manufacturing Partnership presents the Tour of Manufacturing as part of Minnesota Manufacturers Week. This year we will be expanding the experience and hosting TWO days. The event is similar to a “Parade of Homes” that is FREE to students, job seekers and the general public. Community members will be able to stop by throughout the day for a self-guided or guided tour of any of the participating manufacturers. This events is open to the public.

» C OME JU DGE

for Yourself.

GOLFERS FROM AROUND THE WORLD COME TO CHALLENGE THE JUDGE and the two other golf courses in Prattville at RTJ Capitol Hill. Bring your clubs and come take on Judge hole number 1, voted the favorite hole on the Trail. Complete your day in luxury at the Marriott and enjoy dining, firepits and guest rooms overlooking the Senator golf course. With the Marriott’s 20,000 square feet of meeting space, 96 guest rooms and luxurious Presidential Cottage combined with three world-class golf courses, business and pleasure can definitely interact in Prattville.

THE ROBERT TRENT JONES GOLF TRAIL AT CAPITOL HILL offers three magnificent 18-hole championship golf courses. The Marriott Prattville is part of the Resort Collection on Alabama’s Robert Trent Jones Golf Trail. Visit www.rtjgolf.com or call 800.949.4444 to learn more.

MBA Student Benefits Owatonna Chamber of Commerce, Workforce

Now seeking chamber of commerce project applications for 2017-18 By Joe Tougas

avid C. Olson left a lasting mark on the statewide business community and all Minnesotans through his work and legacy. He served as president of the Minnesota Chamber of Commerce for more than 23 years and built the chamber to represent more than 2,300 Minnesota companies, 130 local chambers and 65 business trade associations. Olson also went on to serve as a trustee with Minnesota State Colleges and Universities (now Minnesota State) and served as chair from 20072010. Olson passed away in 2014 after a battle with cancer.

with the work that chambers do in pulling businesses together and coordinating efforts for the greater good of a community. It’s a unique view, and not one typically given to business majors, MBA candidates or even professionals on the job. As word went out and applications came in, chambers from around the state submitted their proposals based on their unique needs. In the end, the Owatonna Chamber of Commerce was selected as the partnering chamber for the first year.

“They wanted to honor David’s legacy because he was so involved in Minnesota as president of the Minnesota Chamber and he did so many great things around the state,” said Marilyn Fox, director of the MBA program. “They wanted him to be remembered in a way that someone else would benefit and that partnerships were created, because he believed in that so much.” The internship provision of the scholarship – in which the recipient will work in a local or the state chamber of commerce – was designed to give MBA students hands-on experience

Ellie James

Ellie James, a Waseca native, was the 2016-17 recipient of the inaugural David C. Olson scholarship. This was not an MBA student who needed hand-holding in the field – James is a full-time human resources employee for Rice County. She is also on the board of the Elysian, Minnesota, Chamber of Commerce. She received her undergraduate degree from Minnesota State Mankato in management with a focus on human resources.

“They provided me with a number of ideas, and I took it upon myself to do a ton of research identifying what I thought would be the best method to help the community,” James said. She coordinated meetings with business leaders and established key paths to address the shortage. Owatonna Chamber CEO Brad Meier described James as a selfstarter who provided the chamber with great energy and research while learning the intricacies of how chambers and businesses connect with and help each other. “We wanted to give her direction, but then give her the ability to pull it together, to create something out of nothing and give her the opportunity to present her work to really high-level companies, and she was able to do that,” Meier said. “And for us, clearly moving the ball forward on a key issue for the business community, which is workforce. That’s a huge benefit to us.”

Minnesota State University, Mankato College of Business

Last summer, Olson’s sister Mary Claire had an idea to continue his impact on the Minnesota business community indefinitely by partnering with Minnesota State Mankato to raise funds to endow an MBA scholarship and semesterlong internship with a chamber of commerce each year.

As both sides describe it, chamber staff pointed the way and James took it from there. A key issue in Owatonna was much the same as in other communities – building and maintaining a solid workforce to fill job vacancies.

Applications are now being accepted for the 2017-18 scholarship and internship experience. If you are a Chamber of Commerce interested in submitting a project proposal contact the Minnesota Chamber of Commerce at 651.292.4650. Minnesota State Mankato MBA students, either enrolled or interested in pursing their MBA, can learn more about the scholarship at cob.mnsu.edu/olsonscholarship.

To learn more about the Minnesota State Mankato College of Business visit cob.mnsu.edu. MN Valley Business • SEPTEMBER 2017 •

Appointments every 15 minutes

Mayo Clinic Health System Express Care offers care for minor illnesses on a timeline that works for you. Just walk in and sign up for your appointment. *Express Care is for patients ages 18 months to 75 years.

Mayo Clinic Health System Express Care Located inside Hilltop Hy-Vee Monday–Friday, 8 a.m.–8 p.m.

Saturday, 9 a.m.–5 p.m.

Sunday, 10 a.m.–5 p.m.

mayoclinichealthsystem.org/carenow

7.875”x10.375”

MN Valley Business August 2017

MN Valley Business • SEPTEMBER 2017 • 42