Prairie Business April 2014

April 2014

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|INSIDE| April 2014 VOL 15 ISSUE 4

DEPARTMENTS

FEATURES

6 Editor’s Note

BY KRIS BEVILL

The heart of the matter 8 Business Advice

BY MATTHEW D. MOHR

Keeping up with technology to remain competitive 8 Management Matters

BY JOHN GIRARD

Rethinking rural economic development 10 Finance

BY ANDY CHRISTENSEN

Why entrepreneurial programming matters 3D printers are frequently used by architecture students at North Dakota State University.

PHOTO: KRIS BEVILL, PRAIRIE BUSINESS MAGAZINE

12 Research & Technology

BY DWAINE CHAPEL

Tools for business growth 14 Economic Development

26 Energizing the Core REDEVELOPMENT

Downtowns are being redeveloped into vibrant, unique community hubs

BY BRIAN RITTER

Building on a stable base 16 Prairie News 22 Prairie People 24 Business Development Company builds housing, funds daycare to keep workers

DAIRY 32 Got Milk?

SD calls for more dairy producers to support growing industry

38 Talk of the Town Coming into its own 40 Architecture/Engineering Making a difference

EVENTS OTA-Pollen Sioux Falls.......................................................................................................................April 4 Sioux Falls, S.D. ..................Information: eventbrite.com/e/ota14-sioux-falls-tickets-9441404495 North Dakota Tourism Development Workshop.......................................................................April 14 Fargo, N.D..............Information: ndtourism.com/north-dakota-tourism-development-workshop Governor’s Business Forum ...........................................................................................................April 15 Grand Forks, N.D...Information: ndchamber.com/programs-events/governors-business-forum/ Governor’s Economic Development Conference.................................................................April 15-16 Sioux Falls, S.D. ...............................................................................................................................................

Information: sdreadytopartner.com/Documents/TrainingConferences/2014Conference_PDF.pdf North Dakota Trade Office Global Conference ....................................................................April 29-30 Fargo, N.D.............................Information: ndto.com/2013/12/global-business-connections-2014/

46 Finance Evolving employee expectations prompt office redesign 50 Energy 53 Energy: Drilling Data 54 Business to Business 56 By the Numbers Follow us on Twitter https://twitter.com/PrairieBiz Check us out on Facebook https://www.facebook.com/PrairieBusiness

Main Street Square's summer concert series draws thousands of visitors to downtown Rapid City, S.D. PHOTO: RHEA LANDHOLM

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Prairie Business Magazine April 2014

Scan this with your smartphone's QR Reader to visit our website.

Next Month The May issue of Prairie Business magazine will include articles on the workforce shortage at area transportation firms and tips for starting tourism businesses.

|EDITOR’S NOTE|

The heart of the matter his issue’s cover feature takes a look at some of the redevelopment activities taking place in downtowns throughout our region. Downtown revitalizations are happening throughout the country and it is exciting to see the same trend happening locally, in our region’s hubs as well as in our smaller communities.

Downtowns are the heart of their communities. If the town’s downtown (or Main Street) is vibrant, the rest of the town is likely to be healthy as well. Every downtown has its own unique features to embrace, yet they all serve the same ultimate goal — to create a thriving community and support local businesses. The downtown redevelopment movement can be seen in various stages throughout our region, from Rapid City, S.D.’s Main Street Square to Grand Forks, N.D.’s budding downtown development group. Read “Reviving the Heart” to learn what downtown groups have planned and how businesses can play a role in the movement.

In “Making a Difference,” we talk to several architects who recently added 3D printers to their firms. The dropping cost of the technology has allowed technology-savvy architects and engineers to begin incorporating 3D printers into their practices, giving the early adopters a competitive advantage, at least until everyone else gets one. The increasing popularity of 3D printers is also prompting new businesses to emerge to serve the growing market. We talk to the founders of Fargo 3D Printing, a startup launched in January to distribute and service the machines. The company expects to soon grow to serve customers in the Dakotas and Minnesota, with plans to also open a retail store later this year.

This month also includes an article on South Dakota’s ongoing work to grow its dairy industry. Most of the state’s efforts are focused on encouraging existing producers to expand their herds, but officials are also actively recruiting out-of-state producers to consider the pastures of South Dakota. This February marked the third year that Gov. Dennis Daugaard and other state officials have traveled to the World Ag Expo in California to recruit dairy farmers. Contributing writer Rob Swenson examines why the state needs a larger dairy industry and how successful its efforts to date have been in “Got Milk?”

Finally, we include a pair of articles that approach workforce issues in completely different ways. Gate City Bank recently renovated part of its downtown Fargo corporate building to create a collaborative workspace, meant to attract the millennial generation. In Killdeer, N.D., Killdeer Mountain Manufacturing subsidized a local daycare and built its own apartment building rather than face losing workers or risk not attracting new workers because of a lack of either of those necessities. Workforce shortages are the top concern for businesses in all industries throughout our area and we will continue to cover unique approaches taken by businesses to combat that issue. Look for more in coming issues.

T

KRIS BEVILL Editor kbevill@prairiebizmag.com

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Prairie Business Magazine April 2014

Business Prairie

northern plains business resource

MIKE JACOBS, Publisher RONA JOHNSON, Executive Editor KRIS BEVILL, Editor BETH BOHLMAN, Circulation Manager KRIS WOLFF, Layout Design, Ad Design Sales Director:

JOHN FETSCH 701.212.1026 jfetsch@prairiebizmag.com Sales:

BRAD BOYD - western ND/western SD 800.641.0683 bboyd@prairiebizmag.com SHELLY LARSON - eastern ND/western MN 701.866.3628 slarson@prairiebizmag.com Editor: KRIS BEVILL 701.306.8561

kbevill@prairiebizmag.com

Editorial Advisors: Dwaine Chapel, Executive Director, Research Park at South Dakota State University; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Vice President, Marketing and P.R., Greater Fargo Moorhead EDC; Tonya Joe (T.J.) Hansen, Assistant Professor of Economics, Minnesota State University Moorhead; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaard’s office; Brekka Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 375 2nd Avenue North, Grand Forks, ND 58203.

Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.

Subscriptions Free subscriptions are available online to qualified requestors at www.prairiebizmag.com Address corrections Prairie Business magazine PO Box 6008 Grand Forks, ND 58206-6008 Beth Bohlman: bbohlman@prairiebizmag.com Online www.prairiebizmag.com

www.prairiebizmag.com

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|BUSINESS ADVICE|

Keeping up with technology to remain competitive

BY MATTHEW D. MOHR n today’s commercial environment, if you are significantly behind in technology, you are likely to be in trouble. Businesses that have not used new methods or added computer compatibilities are often so far behind, a major leap is needed to stay viable.

Unfortunately, many of these same laggards pick the wrong product when trying to get back on track.

Technological advancements involve a learning curve for an organization. Even taking a step at a time approach can be costly if you are too far behind. Some organizations embrace change and some fight against anything different.

New technological advances can be welcomed or may cause undue disruptions to an organization.

As an example, a long-standing, profitable business found itself far behind its competitors, so the owners decided to embrace a technology initiative to regain their market position. A simple customer management program

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was purchased for everyone involved with sales. Even this relatively simple technology was so foreign to the employees it went unused and became a costly failure.

Upon realizing the technology was not producing results as expected, the software and equipment cost had to be written off, costing the company a full year’s worth of profit. This single disastrous year put financial strain on the company, even though it had a long history of success.

Eventually the company was sold to a competitor for pennies on the dollar.

A smart approach to technological advances is to do your best to stay current one step at a time. One doesn’t start an exercise program by running the Boston Marathon. PB Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

|MANAGEMENT MATTERS|

Rethinking rural economic development

BY JOHN GIRARD n February, the Obama administration announced the “Made in Rural America” export and investment initiative. Many of the most important details of the program remain a mystery; nevertheless, the initiative seems to be reinvigorating a crucial and spirited dialog.

The initiative is good news, and this is especially true for many of you, who live and work in communities that should benefit from Made in Rural America.

For many years China, and to a lesser degree India, have been exporting products to meet the needs and wants of middle-class Americans. Our so-called disposable income has been lining the Chinese coffers. Perhaps it is time for rural America to turn the table and start capturing the disposable income of middle-class Chinese and Indians, now totaling at least 500 million people.

Gone are the days where it takes a Fortune 100 multinational company to compete in the international environment. One of the real, but often overlooked, benefits of

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globalization is that innovative small businesses or even creative individuals can achieve global greatness while remaining at home on the prairie.

The Made in Rural America program may be the catalyst for many rural entrepreneurs to learn about the tremendous export opportunities of the coming years.

Hopefully, it will also be a call to action for regional venture capitalists and business angels to invest in prairie entrepreneurs. Let’s hope the government creates the environment for this dialog, facilitates the necessary relationship building, eliminates unnecessary bureaucratic obstacles, and fully supports the globalization efforts of rural Americans.

PB

John Girard Professor of Management, Minot State University Founder, Sagology John@JohnGirard.net Twitter: @JohnGirard

New Minot

Internationa

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One of the nation’s most promising investments isn’t a company, but a city.

Minot—North Dakota’s Gateway to the Bakken™.

Minot investment opportunities are smart, grounded, and proven.

That’s what happens when a city has added more than 10,000 residents in the last several years. And is home to 53 energy and oil companies with almost 3,000 employees—in a city where more than half the business community is affected by the oil industry.

Because of energy’s impact on Minot, we have more than $350 million slated for improvements to roads, our airport, water and sewer mains, the landfill, buildings, and more. There’s no better region in the nation to put your investments. As a city, we're doing our part to keep pace, and continued state investment feeds an economic engine.

To learn more on the amazing potential of Minot, please email madc@minotusa.com or call us at 1-701-852-1075 to sign up for our comprehensive e-newsletter to stay informed on all of our latest news.

AREA DEVELOPMENT CORPORATION

|FINANCE|

Why entrepreneurial programming matters

BY ANDY CHRISTENSEN

ver the past year, Fargo-Moorhead has witnessed dramatic entrepreneurial growth.

This growth means new companies are being started, existing ones are being strengthened and new opportunities are being created. How did this occur? I believe a tremendous catalyst has been the community’s support of new types of entrepreneurial programming, which I define as events that connect, educate and support a region’s entrepreneurial ecosystem.

Events can be small niche-focused weekly meetups to large conferences that span several days. In Fargo-Moorhead, for example, we have meet-ups like Red River Valley Web Group where web developers meet monthly to collaborate on projects and share best practices about internet development trends. We also have larger events like Startup Weekend, where area participants turn ideas into businesses over the span of 54 hours. In addition, there are other programs like 1 Million Cups, Startup Drinks, Cropped, Fargo Mobile Tech Meetup, Midwest Mobile Summit, Health Pitch, and TEDx Fargo. While each event has a different agenda, they all support entrepreneurial thinking. All of these events are also new to the area, having been launched just within the past two years, and the participant base of these groups has been steadily increasing ever since their introductions to the community.

Entrepreneurial programming can be started and attended by anyone, from business owners, investors or developers to students, teachers or bankers. Events are attended by people for a variety of reasons. Some are generally interested in entrepreneurship (startups to corporate intrapreneurship), creativity and networking. People who are starting a business, looking for a co-founder or partner, seeking a startup to work for or looking for ways to grow their current business have more specific reasons to attend.

Entrepreneurial programming is the recurring glue for a community’s entrepreneurial ecosystem.

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Each event builds on each other, spawning new groups and events while organically recruiting new participants, expanding the ecosystem’s network and knowledge base. An example of this network effect is Startup Weekend Fargo, which directly spawned Startup Drinks. Startup Drinks began with the initial 60 participants of Startup Weekend, but has now turned into a community-wide event that draws anywhere from 60-120 participants every month. Many Startup Drinks attendees have gone on to create their own groups and events.

Building up the region’s startup community is vitally important to upper Midwest venture funds like Arthur Ventures. Without a continuous stream of investment opportunities, we simply couldn’t exist. In just a few short years, the increased level of entrepreneurial programming has directly increased investment activity, primarily because entrepreneurial density attracts investment capital. As a result, Arthur Ventures organizes CULTIVATE.you and supports other events in the Fargo-Moorhead community aimed at growing the entrepreneurial community.

Every week there are events where people meet, pitch ideas, learn, collaborate and build new things that are creating a network of individuals passionate about shaping our future. This has resulted in new business opportunities, additional capital for growing companies and a better ecosystem for the next batch of entrepreneurs to thrive. This isn’t just happening in Fargo-Moorhead, but all over the Midwest. With continuous and additional entrepreneurial programming, I truly believe our region can accelerate the growth and development of our communities so we can create, grow and invest in the businesses today that will create our tomorrow. PB Andy Christensen Associate Arthur Ventures andrew@arthurventures.com Twitter: @achristensen017

|RESEARCH & TECHNOLOGY|

Tools for business growth

BY DWAINE CHAPEL

diversified economy for a community and region is accessible with a well-thoughtout plan. For any economic development group, establishing a course of action is essential to success. Several factors enter into the plan design, two of which are tools and assets.

Fortunately, South Dakota communities are located in one of the more favorable and forwardthinking business climates in the country for doing business. The state has provided its communities the following tools and assets: • No corporate income tax • No personal income tax • No personal property tax • No business inventory tax • No inheritance tax • No red tape • Access to capital • Access to workforce training opportunities • Shovel ready industrial sites • Shovel ready science and technology sites • Available build-to-suit buildings This business climate has been embraced by Brookings, South Dakota State University and the Research Park at SDSU. Together, they have developed a strong collaborative partnership. These groups work to assist in new business development, current business expansion and recruitment of science and technology research divisions across many industries.

The partnership has also brought forward local tools and assets to assist business growth and development. SDSU provides a high level of human capital in a variety of areas of expertise, including engi-

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Prairie Business Magazine April 2014

neering, agriculture, human health, pharmacy and chemistry. The community has invested in the Research Park, Research and Technology Center and Rural Technology Labs, along with private investment into science and bio laboratories. They also have buildings available that can be finished to a company’s needs. These investments into infrastructure have been utilized by a large number of successful businesses including state-of-the-art companies like Prairie AquaTech, which converts ag-based materials to high-protein fish meal; TJ Technologies, an ag company focused on developing microbial and micronutrient products to improve plant growth and yields, and EleMech, an Illinois-based engineering firm specializing in the design and build of integrated control systems for municipalities and industrial applications.

Additionally, the partnership has collaborated to establish educational training opportunities to meet the workforce needs of its existing and new businesses. SDSU has worked with companies within the region to set up internships that have also turned into long-term employment opportunities.

There are a number of factors that lead a community to a diversified economy. Identifying its tools and assets is a great place to begin. Incorporating a “think outside of the box” mentality into the planning process may be one of the most important factors to consider. PB Dwaine Chapel Executive Director Research Park at SDSU dwaine@researchparkatsdstate.com

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|ECONOMIC DEVELOPMENT|

Building on a stable base

BY BRIAN RITTER

ou don’t need to consult one of the many “top ten” lists that North Dakota has appeared on recently to know that from the Bakken to the Red River Valley, our state’s economy is booming. And the same goes for us here in Bismarck-Mandan!

In addition to being the state capitol, which provides a stable base of employment, our community is also home to two state-of-the-art health care facilities at Sanford Health and St. Alexius Medical Center, which combine to employ thousands of highly skilled professionals. Our area’s education systems are also growing with four new K-12 schools opening between January 2014 and August 2015 to complement dynamic institutions of higher education at Rasmussen College, United Tribes Technical College, Bismarck State College and the University of Mary. And while it’s easy to focus any discussion on energy to our state’s oil and gas resources, Bismarck-Mandan is also home to the headquarters of MDU Resources Group and Basin Electric Power Cooperative, which have been involved in all facets of energy generation for decades and promise to be for many more.

These four industries alone — government, health care, education, and energy — make for an envious economy. But there’s more.

Bismarck-Mandan is a regional economy that supports the area’s farmers and ranchers whether it be through equipment sales, specialized services or retail amenities. Convention and tourism also play a large role in the community’s economy. This is supported by hundreds of new hotel rooms and multimillion dollar expansions of the Bismarck Civic Center, North Dakota Heritage Center and Bismarck Community Bowl. And our manufacturing sector is expanding with the continued success of MAC Heaters,

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Prairie Business Magazine April 2014

the expansion of Bobcat through its exciting new Acceleration Center and the anticipated construction of Midwest Manufacturing’s newest production facility.

World-class employers like National Information Solutions Cooperative, which develops technology solutions for utility cooperatives; telecommunications companies like Aetna, which employs hundreds of area residents to serve health insurance customers and engineering firms like KLJ, which now has 22 offices in a five-state region, are also an integral part of Bismarck-Mandan’s economy. Employers like this have helped the Bismarck-Mandan metropolitan statistical area (MSA) maintain the lowest unemployment rate of any MSA in the country as of November 2013, increase our population to an estimated 114,000 and set records for airport passenger boardings while we add new carriers and destinations. But we’re not done.

The Bismarck-Mandan Development Association has recently developed a new strategic plan, mission and vision statements.

Focusing on innovation, leadership, commitment and excellence, the BMDA is ready to lead the community to even greater heights. In addition, we’ve partnered with the BismarckMandan Chamber of Commerce to create the Prosperity Agenda, a plan to address community-wide issues such as infrastructure, talent attraction and workforce development.

There’s no denying that things are going well here in Bismarck-Mandan, but the BMDA, our community’s leaders and its residents are committed to ensuring that we do even better in the future.

Brian Ritter President/CEO Bismarck-Mandan Development Association britter@bmda.org

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Prairie News

Industry News & Trends

Spectrum Aeromed employees, shown at the company's 17,000-square-foot manufacturing facility in Fargo, will receive approximately $100,000 in profit sharing bonuses from the company. PHOTO: SPECTRUM AEROMED

Fargo air equipment maker doles out $100K to employees Spectrum Aeromed, a Fargo, N.D.-based designer and manufacturer of custom air medical and air ambulance equipment, announced recently it is distributing about $100,000 in profit sharing bonuses to 21 employees, including interns, at its Fargo location. The bonuses are a reward based on growth in LEAN principals and production initiatives, efficiency, quality, continuous improvement mindset, teamwork and attitude, according to the company.

The company has experienced a three-year revenue growth of 213

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Prairie Business Magazine April 2014

percent and was one of the fastest growing companies in North Dakota in 2013. President and CEO Dean Atchison attributes much of the company’s success and growth to its employees. “We could not have achieved this level of success and growth without their dedication, optimism and drive to reach a level of high performance,” he says.

This is the fourth year Spectrum Aeromed has distributed profit sharing bonuses to its employees. The company has paid out approximately $350,000 since 2010.

|PRAIRIE NEWS| South Dakota launches interactive aggregate website

PAT PEND

The South Dakota Department of Environment and Natural Resources has launched a new gravel, sand and construction aggregate mining website featuring an interactive map with information about every mine in the state. Information now available on the website was previously available only by request through the DENR. To view the website, visit http://arcgis.sd.gov/server/denr/conagg/.

MSU entrepreneurship academy to focus on Bakken business Minot State University’s Severson Entrepreneurship Academy recently announced plans to expand its services and projects to include a focused effort to research business opportunities in western North Dakota to assist area businesses in planning for new business ventures. Students will conduct surveys and interviews under the supervision of faculty. Faculty will also provide expertise in developing research methodology and analyzing information received.

Data collected through the project will be maintained by MSU’s College of Business and will be made available to businesses, students, faculty and staff exploring Bakken business opportunities.

Fargo-Moorhead metro construction sets record Total construction value in the Fargo, N.D.Moorhead, Minn., metro area topped $663 million in 2013, surpassing the previous year’s record by 15 percent, according to the Home Builders Association of Fargo-Moorhead. The metro area includes Fargo, West Fargo, N.D., Moorhead and Dilworth, Minn.

Housing starts in Fargo totaled 521 in 2013, up nearly 30 percent from the previous year. The majority of the growth is attributed to single-family and twin-home construction. West Fargo recorded 487 housing starts in 2013, 399 of which were for singlefamily homes. Moorhead saw 133 housing starts, 91 of which were single-family homes.

Sanford Health completes clinic projects in region Sanford Health recently opened new clinics in Dickinson, N.D., and Bagley, Minn. A new clinic in Moorhead, Minn., was expected to open March 3 but has been delayed.

The nearly 11,000-square-foot clinic in Bagley opened in early March. The $1.5 million facility, designed by MJ Architectural Studios and constructed by Kraus-Anderson Construction Co., includes 12

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|PRAIRIE NEWS|

North Dakota Lt. Gov. Drew Wrigley (middle left) and Shandong Provincial Vice Gov. Zia Geng (middle right) sign a memorandum of understanding to enter into a sister-state relationship between North Dakota and the province of Shandong, China.

PHOTO: NORTH DAKOTA TRADE OFFICE

ND, China province strengthen trade partnership North Dakota Lt. Gov. Drew Wrigley recently signed a memorandum of understanding (MOU) with China’s Shandong province, signifying an official sister-state relationship between the two. As part of the MOU, both governments are committing to support and encourage economic and trade cooperation and mutual investment between North Dakota and Shandong, especially in the areas of energy exploration and agricultural

exam rooms, lab space, treatment rooms and office space. The project was developed by Greater Bemidji, which will lease the facility to Sanford.

Sanford’s Dickinson super clinic opened Feb. 17. The approximately $30 million facility is six times the size of Sanford’s previous Dickinson clinic. The clinic offers 62 exam rooms, six procedure rooms, office space and expanded space to accommodate new services and extended walkin clinic hours. The facility was designed by REH Architects and built by Mortenson Construction.

The Sanford Moorhead clinic was initially scheduled to open March 3 but an explosion at the facility has delayed the opening. At press time, a new opening date had yet to be determined. At 49,000 square feet, the $17 million facility is three times the size of the organization’s current Moorhead clinic. Designed by JLG Architects and built by JE Dunn Construction

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Prairie Business Magazine April 2014

development. The agreement also calls for the promotion of multidisciplinary education and science and technology cooperation, especially in clean energy, ag technology and aviation training.

Shandong is a coastal province in eastern China. In 2011, gross domestic product for the province was $711 billion.

Group, it includes 52 exam rooms and room for future expansions. The facility is also the first Sanford location to utilize technology developed

by Fargo-based Intelligent InSites to better manage patients’ and employees’ time. The technology is expected to be rolled out at other Sanford sites later this year.

St. Alexius, CHI to form partnership Bismarck, N.D.-based St. Alexius Medical Center and Englewood, Colo.-based Catholic Health Initiatives recently signed a non-binding agreement to form a new affiliation to build on their strengths in rural and faith-based care to better serve communities in the region. The new affiliation could be created by the end of the year.

CHI is a nonprofit, faith-based health system that operates in 18 states and comprises 87 hospitals. St. Alexius includes a 306-bed full-service medical center in Bismarck as well as hospitals

and clinics in Garrison, Turtle Lake, Mandan and Minot, N.D. The organization also manages the hospital and clinics owned by Mobridge Regional Hospital in Mobridge, S.D.

Dakotas top nation in well-being, Minn., 4th According to a Gallup-Healthways WellBeing Index, North Dakota residents had the best well-being in the U.S. last year. South Dakota ranked second in the index, followed by Nebraska and Minnesota. Montana rounded out the top five. Survey results were based on participants ranking six domains on a 1-10 scale, including life evaluation, emotional health, work environment, physical health, healthy behavior and basic access.

Gallup also ranked North Dakota first in the nation for job creation for the fifth consecutive year in 2013.

|PRAIRIE NEWS| TOTAL GIVING

SDSU Foundation smashes fundraising record

(including planned gifts and pedges)

$65,000,000 $60,000,000 $55,000,000 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0

Donors committed more than $63 million to the South Dakota State University Foundation in 2013, topping the previous single-year fundraising record by more than $10 million. The recordbreaking year comes on the heels of a six-year campaign which generated more than $255 million in gifts and pledges. The campaign, called “It Starts with STATE,” officially ended April 24, 2013.

2004

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2007*

2008

2009

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2011

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2013

*Comprehensive campaign begins

Fargo construction firm opens David Karels and Paul Johnson recently launched G6 Construction Services LLC, a construction management, development, consulting and general contracting services firm based in Fargo.

Karels most recently served as chief operating officer and partowner of Nor-Son Inc. and has nearly 25 years of industry experience. He serves as president of G6 and manages the day-to-day operations.

Johnson worked most recently as construction manager and superintendent at Nor-Son and has more than 35 years of experience in the construction industry. He serves as director of field operations for the new company.

According to G6, its core markets will include municipal, production/manufacturing, light industrial, education and financial.

Paul Johnson

David Karels

Western State joins Minn. housing lender network Western State Bank has been approved as a Minnesota Housing Start Up and Step Up lender and will join a network of more than 80 lenders statewide that work with the programs to offer affordable home financing for low- to moderateincome Minnesotans. Start Up is the Minnesota Housing first-time homebuyer loan; Step Up provides purchase and refinance loans for nonfirst-time homebuyers. Western State Bank’s participation in the programs is expected to benefit the Moorhead, Minn., community.

USDA’s ND investments top $500M in 2013 An annual progress report released by North Dakota’s U.S. Department of Agriculture Rural Development office shows the agency invested more than $500 million in projects throughout the state last year.

Of the money invested through loans and

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Prairie Business Magazine April 2014

grants in 2013, the majority — more than $346 million — supported electric and telecommunications projects.

More than $75 million was invested through housing programs. Nearly $29 million was invested through business and cooperative programs to support rural business development. About $33 million was invested in community programs to support various projects including hospitals, nursing homes and child care facilities. Water and environmental programs received about $22.5 million in financial support.

The North Dakota USDA Rural Development office manages a loan portfolio of more than $4 billion.

MSUM graduate program enrollment climbs Minnesota State University Moorhead reported in February that new student enrollment in its graduate programs has more than doubled compared to the previous year, up to 87

new students this year. A total of 500 graduate students are enrolled at the university.

MSUM has added new graduate programs in the past year including master’s degrees in business administration with health care emphasis, health care administration, nursing administration and accounting and finance. The majority of its graduate programs are available online or in hybrid formats.

Cirrus Aircraft reports strongest sales in 5 years Cirrus Aircraft delivered 276 new aircraft in 2013, marking a nearly 10 percent increase over 2012 and making it the company’s best aircraft shipment performance year since 2008. The key driver to the company’s increase has been strong customer response to its Generation 5 model, which was introduced in 2013, according to the company. Cirrus Aircraft’s customer base also expanded in 2013, which is expected to continue positively impact the company in 2014.

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|PRAIRIE PEOPLE|

David Wald

Securian ND names Wald advisor of year

Fargo Jet Center flight school manager wins national award

David Wald has been named advisor of the year for 2013 by Securian Financial Advisors of North Dakota. Wald has worked for the firm since 2008 and is based in Bismarck, N.D. He was a recipient of Securian’s President’s Club award in 2013.

The award is given in recognition of outstanding sales growth and commitment to client satisfaction.

He was also named one of Prairie Business magazine’s 40 under 40 for 2013.

Mike Paulson, flight school manager at Fargo Jet Center, recently received the Excellence in Pilot Training award from the National Air Transportation Association.

Paulson has been a flight teacher for more than 30 years and has taught all levels of flight. In addition to serving as flight school manager at FJC, Paulson has also taught aviation classes at North Dakota State University for the past 23 years. He has logged more than 18,500 hours of flight time, of which 11,000 hours have been logged as flight instruction hours.

Mike Paulson

Rasmussen joins Starion Financial

Marc Rasmussen

Marc Rasmussen has joined Starion Financial as its vice president of credit administration. In this role, he works with the chief credit officer to lead and oversee the credit department regarding underwriting, collateral valuation, loan policy adherence, documentation/commercial operations and project administration, among other duties. He is based at the bank’s downtown Bismarck, N.D., location.

NDSU Development Foundation/Alumni Association adds 2

Nonda Mack

The North Dakota State University Development Foundation/Alumni Association has added two people to its staff. The organization appointed Nonda Mack as chief of staff and Julie Wanzek as coordinator of customer care.

Mack will oversee the operations of key association and foundation functions, coordinate internal resources and external partners and assist in the executive goals and activities of the organization. She has served both the NDSU Alumni Association and Development Foundation in previous capacities.

Wanzek brings a background in sales and customer service to her new position, serving most recently as senior retirement consultant/business development at Touchmark Retirement Community in Fargo.

Julie Wanzek

Helgeson joins Starion Financial

Trish Helgeson

22

Trish Helgeson has joined Starion Financial as the marketing and communications manager. In this role, she leads the development and implementation of marketing strategies and oversees advertising, public relations, internal communications, digital strategy, event planning and product development.

She is based at the bank’s Mandan, N.D., location.

Helgeson has more than 20 years of marketing and public relations experience in banking, health care and tourism industries.

Prairie Business Magazine April 2014

EAPC’s Wilke named young engineer of the year

Sam Wilke

Sam Wilke, a structural engineer at EAPC Architects Engineers, has been named the Chapter 3 young engineer of the year by the North Dakota Society of Professional Engineers. Awards are given based on the candidate’s educational achievements, professional society activities, technology society activities, civic and humanitarian activities, continuing competence, engineering achievements and professional experience.

Wilke has worked for EAPC since 2009 and has more than eight years of engineering and project management experience.

Brad Sibson (right)

Sibson becomes Wheat Growers’ operations talent manager Brad Sibson has been named operations talent manager for Wheat Growers and will be responsible for helping the operations group identify and assess employees, create and assist with development plans, mentor team members and participate in succession plannings and other employee-related functions.

Sibson has worked for Wheat Growers for more than 30 years and has served as location manager in six different locations. He most recently served as location manager at Huron, S.D., for 13 years and has also been managing the Wolsey, S.D., location for the past three years.

Kyle Richards

Richards joins Regional Health Network as COO Kyle Richards has joined Rapid City, S.D.-based Regional Health Network as chief operating officer.

He replaces Glenn Bryant, who recently retired after 20 years of service with Regional Health.

Richards most recently served as CEO at Waverly Health Center in Waverly, Iowa, a role which he had held since 2011. He has more than 15 years of leadership experience and is a certified Lean Healthcare facilitator.

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|BUSINESS DEVELOPMENT|

Company builds housing, funds daycare to keep workers Proactive approach to shortages pays off for western ND manufacturer

BY KRIS BEVILL orkers, housing and daycares. All three are in tight supply throughout the region and many businesses are finding it difficult to expand their operations because of it. The situation is most dire in the Bakken region, where some companies have decided the best solution to the problem is to provide their own housing and child care options for employees.

Killdeer Mountain Manufacturing Inc. has been making equipment for the aerospace industry for 25 years and is headquartered in Killdeer, N.D., about 40 minutes north of Dickinson, N.D., amid the region’s bustling oil boom. A few years ago, employees at the Killdeer office began losing child care for their children as high-paying energy industry jobs lured daycare workers away from their businesses.

“We were at the point where we were going to lose some of our key employees because they couldn’t find daycare,” says Don Hedger, president of KMM.

W

Killder Mountain Manufacturing Inc. President Don Hedger, fourth from left, and his wife are joined by project partners at the grand opening of Prairie Gold Apartments in Killdeer, N.D., in July 2013. PHOTO: NORTH DAKOTA HOUSING FINANCE AGENCY

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Prairie Business Magazine April 2014

KMM decided to subsidize a daycare facility in order to keep its employees and help other workers in the community who were also facing daycare shortages. For the past three years, the company has provided rent-free space and covered the utility and insurance costs for a child care facility, which otherwise operates as an independent business. Hedger says the arrangement allowed his employees to stay on the job and has provided a needed service for the entire community, which has made it worth the expense. “The main thing we need are employees, and particularly key employees, so we’re happy to do it,” he says.

Housing also became an issue a couple of years ago as KMM sought to fill open positions in Killdeer, but no housing was available for new employees. KMM opted to build its own 24-unit apartment building and made it an affordable housing project, which allowed the company to utilize several state programs, including the popular Housing Incentive Fund, which is administered by the North Dakota Housing Finance Agency. A $1

million HIF allocation for the $3.3 million project helped make it a feasible option for the company, Hedger says. Additional partners in the project included the Bank of North Dakota, the city of Killdeer, Dacotah Bank, Roers Development and Stark Development Corp.

“We’re glad we did it, and with the help from the state we can make it work,” he says. “When you need employees — and we’ve had a certain drain on our employees due to the energy boom — you have to do something. That was one of the key things we did.”

The apartment building opened last July.

Hedger estimates that about seven of the building’s 24 units are currently occupied by KMM employees. A KMM sister company owns and operates the property.

The U.S. Department of Agriculture’s North Dakota Rural Development agency provided guidance for KMM’s housing project and Director Jasper Schneider says he has noticed an uptick recently in the number of inquiries his office has received from businesses regarding both employee housing and daycares.

“Employers are recognizing that in order to recruit and retain talent, finding solutions to the limited number of options in the housing and child care market is important,” he says. “These two issues have very much become workforce issues and the reality is that the communities and employers that figure it out are the ones that will be able to retain talent.” USDA Rural Development can provide assistance for housing and child care projects through its business and community programs, he says.

KMM’s operations also include locations in Dickinson, Hettinger and Regent, N.D., and Hedger says the company would consider building more housing to accommodate its workforce if needed, but it has no immediate plans to do so.

Business has been “mushrooming,” according to Hedger, and the company has nearly doubled its annual sales in the past five years, from about $25 million to an anticipated $44 million this year. To further address the lack of available workers, the company has invested in automation to reduce its manpower requirements and is making the most of its current workforce. “We’re adopting every LEAN principle that we can put our hands on to become more efficient with the number of people we have,” he says. PB

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Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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25

|REDEVELOPMENT|

Reviving the Heart Downtowns are being redeveloped into unique community cores

BY KRIS BEVILL

Since its opening in 2011, Main Street Square has powered the revitalization of downtown Rapid City, S.D., bringing thousands of people downtown for outdoor events such as the Autumn Nights concert series, seen here. PHOTO: RHEA LANDHOLM

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Prairie Business Magazine April 2014

|REDEVELOPMENT|

owntowns throughout the U.S. are experiencing a period of rejuvenation as residents and visitors seek out the local products, businesses and unique experiences that only downtowns can offer. The national trend is readily on display in this region in communities from Fargo, N.D., to Rapid City, S.D., as whole districts are renovated and new businesses open while development groups devise long-term strategies to ensure their downtowns continue to grow and thrive.

“Downtowns in North Dakota are really picking up steam,” says Kate Herzog, marketing and assistant director of the Downtown Business Association of Bismarck (N.D.).

Herzog credits much of the region’s recent rampedup downtown redevelopment activity to young professionals who have returned to this area for its strong economy but still crave the urban amenities they’ve experienced elsewhere. “A lot of those young professionals have brought back experiences with them from living outside of the state, specifically, supporting urban, local businesses and looking for that downtown element in their personal life,” she says. “We’ve also noticed that the millennial generation would rather live in a great city and have a mediocre job than [have] a great job in a city that they are not having a great experience in. We need to be aware of that and market activities to those young professionals. That’s really what downtown offers.”

Downtowns also offer an attractive development opportunity for communities because the mixed-use developments typical to downtowns produce significant tax revenues without requiring significant infrastructure investments, according to Herzog. “From an economic standpoint, you can’t get much better than redeveloping a dense, urban core in terms of return on investment,” she says.

Bismarck’s downtown has made great strides in its redevelopment efforts recently. Multiple unique eateries and retail stores have opened recently and large developments, including Pine Properties’ three-story Broadway Centre project, will provide more office/retail, restaurant and residential spaces when fully complete later this year. But there is still much more that could be done. A recently completed downtown master plan identifies more than a dozen projects that could be carried out over the next few years. In March, the city was in the process of forming a committee to explore implementation and possible public-private partnerships for projects highlighted in the plan.

One of the items highlighted in the plan is the potential redevelopment of a parking lot at the city’s historic

D

Northern Pacific Depot into a public gathering space dubbed Depot Plaza. Herzog says a public gathering space is an important component of downtown Bismarck’s longterm vitality. “That is extremely important, not only for the community to gather but to also make the downtown more family friendly,” she says. “We don’t have that iconic gathering space where you might have a Christmas tree lighting or where the public gathers in the summer time.”

She points to Rapid City’s Main Street Square as an example of how a gathering space can drive a successful downtown district. “We love what Rapid City has done and we’re hoping to have that piece in downtown Bismarck come up soon,” she says.

Success, Squared Downtown Rapid City has indeed experienced a rebirth within just the last five years, and Main Street Square has been the engine driving the growth, says Dan Senftner, president and CEO of Destination Rapid City, the city’s downtown development association. The one-acre square includes ample green space, an interactive water fountain and an outdoor stage for summertime events. In the winter, the square’s lawn is converted to an ice skating rink measuring 7,200 square feet.

Senftner estimates up to 700,000 people pass through Main Street Square every year. That number is likely to increase as the number of events held in the square continues to grow. Last year, 170 events were hosted in the square. This year, Senftner says more than 200 events are scheduled.

Since its opening in 2011, Main Street Square’s success in rejuvenating downtown Rapid City has garnered attention from throughout the U.S. and Senftner says he often fields inquiries from business owners and groups looking to create similar outdoor spaces in their own communities. He has one piece of advice to offer: Don’t expect the city to do it all.

“The biggest mistake people have is they expect the city to pay for everything,” he says. “The city won’t pay for everything, and if you expect the city to do everything, it ain’t gonna happen.”

The idea for Main Street Square was initially suggested in 2008 as part of a study conducted to evaluate downtown Rapid City, but it was a group of downtown business owners, including Senftner, who took the notion and ran with it. After the outdoor space was suggested, the business owners formed Destination Rapid City and financially

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|REDEVELOPMENT|

Fargo's downtown street fair is billed as North Dakota's largest free outdoor event, attracting more than 100,000 people to the downtown area throughout the three-day event. PHOTO: FARGO-MOORHEAD DOWNTOWN COMMUNITY PARTNERSHIP

committed to developing the square. The group ultimately split the project’s $7 million bill with the city and also formed a Business Improvement District to fund the square’s operations.

That fund was scheduled to support Main Street Square through the end of this year, but Senftner says funds generated this year will instead be funneled to other downtown projects because there is already enough private sponsor interest to support the square. “I’m not going to say we don’t need the money, but we have enough supporters now to do it on our own,” he says. “So we want that money to be used to enhance something else downtown.”

Long-term, Destination Rapid City’s plan calls for renovating and improving Rapid City’s entire 50-block downtown area. “We’re not done,” Senftner says. “Main Street Square has been successful to date. That doesn’t mean you can rest on what you did last week or last month. You still have to plan for next year.”

Other projects planned for downtown Rapid City

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include the Memorial Park Promenade, a 40-foot-wide walkway which will link Memorial Park and the Rushmore Plaza Civic Center to downtown. Private capital is funding the promenade’s construction. A large play area to be constructed in Memorial Park near the promenade is expected to cost $3 million and will be entirely privately funded, Senftner says.

Senftner says businesses are ready and willing to support Main Street Square and the continued evolution of downtown Rapid City because they have already seen firsthand the results of their efforts through increased business and property values. “They love it. They don’t ever want to see it go away, and it takes money,” he says.

Trending Topic Outdoor gathering spaces are a popular item on the wish lists of many of the area’s downtown groups, including Fargo, which Senftner says “has a great thing going” and is primed for a Main Street Square-type project.

An outdoor skating rink/gathering space has been

an occasional topic of discussion in Fargo for years, but recently resurfaced as city leaders develop plans for a new city hall and flood protection along the Red River. Mike Hahn, president and CEO of the Fargo-Moorhead Downtown Community Partnership, says the development of those projects presents an opportunity to also add outdoor gathering space downtown. “Now is the time to do it,” he says.

Hahn sees potential for multiple gathering areas to be scattered throughout smaller districts within the metro’s 100-block downtown area, perhaps including a large space similar to Main Street Square near the river. “We have multiple different neighborhoods downtown, but we all recognize that we are part of the same district,” he says.

Downtown Fargo has experienced a vibrant rebirth over the course of several years and is trending toward continued growth, helped along by the fairly recent expansion of North Dakota State University facilities into downtown and developers like Doug Burgum’s Kilbourne Group that are willing to invest in expansive redevelopment projects.

“We’re very blessed to have developers that really get it and are committed for the long term,” Hahn says.

More than 4,000 people live in Fargo’s downtown area, in residences ranging from low-income housing to half-million-dollar condominiums. Hahn says the eclectic mix is heavy on millenials and empty nesters, both of which are attracted to downtown living because they desire an active neighborhood without the upkeep requirements of a suburban household.

Potential large projects on the horizon for Fargo’s downtown include a retail/parking structure and, perhaps, a convention center, although both projects are realistically several years from fruition. In the meantime, the partnership is in the early stages of implementing a Business Improvement District to fund continued maintenance of the downtown area.

Hahn credits the local artist community for fueling downtown Fargo’s continued revitalization and says he wants downtown to be the metro’s “cultural entertainment district,” filled with restaurants and various entertainment options and activities, something which has already begun to occur. “We’re seeing a lot of people who want to do events and activities downtown,” Hahn says, adding that the area’s culinary sector continues to grow as well.

Culinary activity has picked up pace in downtown Grand Forks, N.D., over the past few years as well, according to The Toasted Frog owner Jonathan Holth, who says the new business growth indicates positive momentum that he and other downtown business owners would like to continue. “When we opened [eight years ago] there were four or five restaurants; now there’s over a dozen,” he says. “So it’s

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|REDEVELOPMENT|

Main Street Square in Rapid City, S.D., serves as an outdoor event venue in the summer and a public ice skating rink in the winter months.

IMAGE: ADAM SENFTNER

becoming more vibrant. We just want to make sure that that work doesn’t go to waste and is built upon.”

Holth is leading the charge for the Grand Forks Downtown Development Association, which is currently in the process of hiring staff and building up membership while formulating a long-term strategic growth plan. Much of downtown Grand Forks has been fairly recently updated as a result of the historic 1997 Red River flood, which gives it a great head start in terms of public art and gathering spaces. Town Square, for example, hosts a lively and popular farmer’s market in the summer months, drawing hundreds of visitors downtown every weekend. “We’ve got an already beautiful downtown that we’d just like to expand on,” Holth says. “We’ve got some great events. We think there could be more.”

Holth is committed member of downtowns in every community he does business in. He’s opened a Toasted Frog in downtown Bismarck three years ago and will soon open another location in downtown Fargo. He is attracted to downtowns both for the unique variety of locally owned businesses as well as the sense of community history that can be found there.

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Prairie Business Magazine April 2014

“Walking through the downtown area of any city, you get a sense of the history and how a community views itself,” he says.

“If you walk through a vibrant, well-maintained downtown, I think that speaks to how the rest of the city is.”

Bonny Kemper, executive director of the Minot Business & Professional Association, agrees and says that sentiment is shared throughout the U.S. “Cities are realizing that if the heart of their city is not thriving, the city as a whole does not thrive and grow and prosper.”

Like Grand Forks, Minot, N.D.’s downtown was devastated by historic river flooding, but it is not yet fully recovered from its Souris River flood, which occurred in 2011. Massive renovations will begin downtown this year to overhaul everything from streets to garbage receptacles. The work will begin on the east end of downtown and move westward, so Main Street, where most of downtown’s retailers are located, won’t be affected until next year. The city’s Broadway bridge will also be renovated next year, which will further limit accessibility to downtown businesses.

Kemper says downtown Minot business owners are

|REDEVELOPMENT|

bracing themselves for a few lean years during construction but she encourages them to focus on the positive end-result.

“You just have to hang on to the thought that it is going to get better,” she says. “When it’s all done it’s going to be beautiful.”

Meanwhile, other downtown projects are contributing to an overall positive feel of the district. Minot Artspace Lofts, a 34-unit affordable live/work space for artists, recently opened and bills itself as “an anchor for continued investment in the creative economy.” The building includes more than 3,000 square feet of retail/commercial space as well as about 1,500 square feet of exhibition/gallery/community space in addition to the apartment units. New retail shops and restaurants have also opened recently, housing is being added and a large multi-level parking structure project being developed by Cypress Developments could be complete by the end of this year, providing three levels of much-needed parking, retail space on the ground level, and multiple levels of apartments, according to Kemper.

This year, Kemper says the association is doing everything it can to help businesses succeed while preparing for next year’s renovations. The group formed a marketing cam-

paign to encourage visitors to explore downtown and runs shuttles from hotels and the city’s auditorium to downtown drop points to alleviate parking headaches for shoppers. The group is also planning events and activities to draw people into the district. With an eye toward post-renovation, Kemper says the group would like to continue adding retail stores, a grocery store, drug store and entertainment options including a movie theater to the downtown area. An outdoor gathering space is also on the list. All of these things require capital and commitment, which Kemper says the association hopes to gain by hosting events and helping the downtown’s small businesses continue to succeed. “We look forward to being bigger and better than ever,” she says. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|DAIRY|

Every dairy cow represents a more than $14,000 annual economic impact on South Dakota, according to the state agriculture department.

PHOTO: SOUTH DAKOTA DEPARTMENT OF AGRICULTURE

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|DAIRY|

Got Milk?

SD calls for more dairy producers to support growing industry

BY ROB SWENSON

outh Dakota is trying to grow its dairy industry, and the state is looking for help inside and outside its borders.

Continued growth will take more cows — ideally, at least twice the current herd size.

Some processing plants might be operating under capacity, but others in or near South Dakota want to expand to take greater advantage of rising global demand for products such as cheese, butter and dry milk.

“Clearly there’s a large opportunity for us to expand just to meet the current and future capacity of these plants,” says Paul Kostboth, director of agricultural development for the state’s Department of Agriculture.

South Dakota is well-positioned to help meet the increasing demand for milk and the production of dairy products, Kostboth says.

“The goal is to add dairy cows to the state because we have the necessary parts to make it a great opportunity,” he says. “We’re just trying to support those who want to grow and those who want to come to South Dakota and be part of the opportunity.”

The most sustainable growth in milk production is expected to come from South Dakota producers who expand their herds. However, state officials also are recruiting producers from other states. State government officials are working with local governments so that no single area will become overly concentrated with cows, Kostboth says.

S

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|DAIRY|

Kostboth, Gov. Dennis Daugaard, Secretary of Agriculture Lucas Lentsch and others attended the World Ag Expo in Tulare, Calif., in February as part of South Dakota’s ongoing campaign to recruit dairy farmers. This was the third year in a row that Daugaard made the trip.

California is the largest milk-producing state in the United States. However, factors such as water restrictions and rising production costs have been putting a financial squeeze on some producers there.

The South Dakota delegation promoted a variety of state advantages to dairy producers in California who might be looking for a fresh start. Among the pluses that South Dakota promotes are a pro-business business climate (no corporate or personal income tax, for example), available land, plentiful water, high-quality feed and forage, and relatively low operation costs.

“With an annual economic impact of over $14,000 per dairy cow, both direct and indirect job creation, a market for locally grown feed, and high-value nutrients (manure) for surrounding cropland, the dairy industry has a very positive influence on the future of the South Dakota rural communities,” says Lentsch.

A study conducted in 2010 by Gary Taylor, an associate professor at South Dakota State University, calculated that each cow on a dairy farm has a $13,594 annual impact on the state’s economy. The total includes direct impact, such as the value of products, as well as indirect and induced benefits, such as business-to-business activity and increased household spending. Dairy officials now estimate the benefit to be more than $14,000 per cow.

History of Efforts Agriculture is considered South Dakota’s No. 1 industry. It generates more than $21 billion in annual economic activity, and it employs more than 122,000 South Dakotans, according to the Department of Agriculture. South Dakota Dairy Producers, a trade group, considers dairy the sixth largest segment in the state’s ag industry.

State and industry leaders have been trying for years — with gradual success — to expand South Dakota’s dairy industry.

Roger Scheibe, executive director of the Dairy

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Prairie Business Magazine April 2014

Producers, used to work for the state as a dairy development specialist. He traces emphasis on growing the dairy industry to the early 2000s and Larry Gabriel, who at the time was the South Dakota’s secretary of agriculture.

Gabriel saw economic potential in developing the dairy industry, Scheibe says.

About the same time, Davisco Foods International Inc. was interested in building a new cheese plant in Lake Norden to complement an existing whey plant, and then-Gov. Bill Janklow’s administration offered to help by promoting growth in dairy herds.

When he worked for state government, Scheibe traveled to other countries to promote dairy opportunities in South Dakota and recruit producers. He recalls taking trips to England, Ireland, Northern Ireland, the Netherlands and Canada. However, in recent years state officials have confined recruiting to the United States.

Efforts to expand dairy herds have included sending officials to ag shows in Wisconsin, which is the No. 2 milkproducing state in the nation, as well as to events in California and Sioux Falls, S.D. South Dakota ranked 20th in milk production among states in 2013, according to data from the National Agricultural Statistics Service. That put South Dakota above the neighboring states of Nebraska, North Dakota, Montana and Wyoming but below Minnesota and Iowa.

The region’s dairy industry is largely concentrated along or near the Interstate 29 corridor, which runs north and south through eastern South Dakota.

The Davisco plant, also known as the Lake Norden Cheese Co., remains one of South Dakota’s largest milk processors today. Valley Queen Cheese Factory in Milbank, which was founded in 1929 and grown through the years, also is a significant player.

The newest milk processor in the state market is a Bel Brands USA cheese plant in Brookings that is preparing to begin operations. Several smaller milk-processing plants also operate in South Dakota. Plants in northwest Iowa, notably an Agropur plant in Hull, also are close enough to South Dakota to influence milk production in the state. Agropur announced in June that its cheese plant had reached production capacity and that it wanted to double its output. At the time, the plant was oper-

|DAIRY|

ating 24 hours a day, seven days a week, and processing 2.5 million pounds of milk per day.

Davisco also has indicated in the past that it would like to expand, if enough milk is available.

Expanding the milk supply will require that more farmers in South Dakota and neighboring states be willing to take on the potentially profitable but work-intensive duty of milking and caring for cows.

South Dakota had approximately 94,000 cows in 2013, according to NASS. That’s roughly a third as many as the state had in 1960, when more small farms were scattered throughout the countryside of rural America.

For decades, the general trend has been that farms are decreasing in number but increasing in size.

The Dairy Producers estimate that there currently are about 275 dairy farms in South Dakota.

Brothers Greg and Jim Moes and their families operate one of the most modern farms, the MoDak Dairy near Goodwin. Their sons represent the fifth generation of the family business. The dairy operation includes more than 3,000 acres of land that is used to grow feed for the cows.

Five years ago, the Moes expanded their operation from 300 to 2,000 cows. Improvements in construction technology, specifically cross-ventilated barn design, made the expansion viable, Greg Moes says. Curtains serve as the south wall of the new facility; the north wall is lined with fans. Sand is used for bedding for the cows.

Temperature inside the mechanized facility can be controlled for the comfort of the cows. For dairy producers, dealing with excessive heat is a bigger problem than cold. “I always say cold is good. It gets rid of the bugs and flies. It’s sort of a cleanser,” Greg Moes says.

MoDak sells its milk to the Valley Queen Cheese Factory in Milbank.

South Dakota is different than some other states in that support for developing the dairy industry runs from producers up through the governor’s office, Greg Moes says. People from other dairies often visit the MoDak Dairy to check out the farm’s use of technology.

“Here in the Midwest, we have a history. We know how to make cheese. We know how to get rid of it,” Greg Moes says.

He suspects the state is just hitting the tip of the ice-

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|DAIRY| berg in terms of growing the industry.

Growth of Processing At times in U.S. history, milk production has exceeded demand. In 1985, the Farm Bill approved by Congress included provisions to buy down dairy herds to reduce production. These days, economic forces seem to be keeping production more in line with demand, which is rising.

Milk prices have approached record highs recently.

However, milk prices, like crop prices, are cyclical.

Producers and processors have to look beyond shortterm prices in making long-range plans.

The $100 million Bel Brands plant in Brookings will produce snack-sized Mini Babybel cheeses. Demand for Mini Babybel cheeses has been rising because the products are nutritious, taste good and fit on-the-go lifestyles, says Francine Moudry, Bel Brands’ project director in Brookings.

Construction of a 170,000-square-foot plant that began in July 2012 was completed late last year, Moudry says. Eighty percent of the equipment has been installed.

The first load of milk came in weeks ago so that equipment could be tested and adjusted. The plant will have 70 to 75 employees by the time production begins in July and 270 employees by the end of the year, Moudry says.

Bel Brands, which is based in Chicago, is a subsidiary of a French company and the producer of one of the biggest-selling cheeses in the world. Moudry, who previously managed a Bel Brands plant in Kentucky, was on the corporate search committee that selected Brookings for a new plant.

The company selected Brookings for multiple reasons, including the state’s business environment and the area’s ability to provide milk now and in the future.

“We have a lot of room to expand, and that is definitely a strong possibility,” Moudry says.

Another important factor in the selection of Brookings was the presence of South Dakota State University, which has a strong dairy science program, Moudry says. In addition to working closely with the dairy science staff, Bel Brands is establishing ties to SDSU’s engineering, nutrition and education programs, she says.

Major dairy-processing facilities in or near South Dakota • Valley Queen Cheese Factory: Milbank, S.D. • Davisco Foods International: Lake Norden, S.D. • Bel Brands USA: Brookings, S.D. • South Dakota State University Dairy Plant: Brookings • DairiConcepts: Pollock, S.D. • Associated Milk Producers Inc. (AMPI): Hoven: S.D. • Associated Milk Producers Inc. (AMPI): Freeman: S.D. • Dimock Dairy: Dimock: S.D. • Dean Foods: Sioux Falls, S.D. • Agropur: Hull, Iowa • Associated Milk Producers Inc. (AMPI): Sanborn, Iowa • Dean Foods: LeMars, Iowa

SOURCE: SOUTH DAKOTA DEPARTMENT OF AGRICULTURE

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Prairie Business Magazine April 2014

|DAIRY| Professor Vikram Mistry, head of the dairy science program, says SDSU is one of two universities in the nation that has programs in both dairy production and dairy manufacturing. The other one is California Polytechnic State University in San Luis Obispo. SDSU also has a dairy plant that is used for teaching and research. The plant produces ice cream, cheese, butter and milk that are sold on campus. SDSU ice cream also is sold in select grocery stores in the region.

“We have faculty members that do research that helps the industry. We have teaching at the graduate and undergraduate level. We produce students that train in dairy, both production dairy and manufacturing,” Vikram says. The dairy program has been placing 100 percent of its graduates in jobs for years, he says. He encourages young people looking for a promising career to consider studying dairy.

“I think it is a very exciting time for the dairy industry in South Dakota,” he says.

Rob Swenson Contributing writer RobSwensonMediaServices@gmail.com

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|TALK OF THE TOWN|

Coming into its own West Fargo expects to continue rapid growth for foreseeable future

BY KRIS BEVILL

New building projects flank West Fargo, N.D.’s bustling Veteran’s Boulevard and Interstate 94, near the location of Sanford Health’s medical center, which is currently under construction.

PHOTO: KRIS BEVILL, PRAIRIE BUSINESS MAGAZINE

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Prairie Business Magazine April 2014

est Fargo, N.D., is growing so quickly that the city’s economic developer wonders how long its developable land will last. In March, the city had about 50 acres of land available in its office park; between 135 and 175 acres of land was available for general commercial use and another 535 acres of property was available for light/general industrial projects. It may sound like a lot, but it’s going fast, says Matt Marshall, economic development and community services director for West Fargo.

“I think 2014 will be a very busy year, just like 2013 was,” he says. “Our only constraint is buildable land at this point.”

For years, West Fargo was overshadowed by its larger neighbor, Fargo, but it has been coming into its own for the past decade or so. The city experienced a growth rate of nearly 73 percent between 2000 and 2010, bringing the total population up to around 30,000. And it’s still going strong.

Last year, the North Dakota League of Cities named West Fargo its city of the year in recognition of the rapid growth of the city’s school system, industrial park and subdivisions.

Mark Housh, West Fargo’s building inspector, says the city issued 883 building permits last year, valued at nearly $183 million. With about 700 residential lots available, a half-dozen apartment building projects in the works and commercial space in high demand, he says he expects this year’s building permit activity to be even busier. “I’m preparing myself for it,” he says, adding that the city’s building department now has three full-time inspectors and may add another in order to handle the workload.

Marshall says some of West Fargo’s growth is a reflection of the recent trendiness of the greater Fargo area, which has attracted young workers and families and translated into a low median age that businesses desire. “There’s demand to come to the region in general, [but] businesses come to West Fargo mainly because of the business-friendly climate,” he adds.

“They get a warm welcome.”

The manufacturing industry is a major player in West Fargo’s business sector. Two of the region’s largest manufacturers, Bobcat Co. and Titan Machinery, are headquartered there. Caterpillar completed a $50 million expansion in West Fargo last summer, increasing its capacity for new and remanufactured components and enabling the company to bring its 300 West Fargo employees under one roof. Weisgram Metal Fabrication Inc., once a twoperson welding shop, employs more than 200 workers.

Midland Garage Door Manufacturing Co. currently employs about 90 people at its West Fargo location. The company has been doing business in West Fargo since 1986 and Doug Geslin, chief financial officer, says the city has always encouraged growth and company expansions. Last year, the company completed a 72,000-square-foot expansion at its West

W

|TALK OF THE TOWN| Fargo production plant and will soon begin aggressively hiring to fill seasonal positions. Workforce availability is a concern, but Geslin says he is optimistic about the company’s growth and West Fargo’s growth in general.

Flood protection is another perk to doing business in West Fargo as opposed to Fargo, Marshall says. West Fargo is protected from Sheyenne River flooding by the Horace-West Fargo Diversion. The F-M Diversion, which focuses on protecting the Fargo-Moorhead metro from Red River flooding, could provide further benefits to the city by making it possible to annex more land into city limits, but it is currently unknown when or if that might happen.

Marshall says there is also growing interest in redevelopment, although he expects available land will continue to be a hotter commodity for businesses because it can be developed more quickly. There are some early takers, however. Energy cooperative Petro Serve USA was not dissuaded by the longer timeline for redevelopment and is relocating its headquarters from Moorhead, Minn., to a building in West Fargo that once housed Smokey’s Steakhouse.

Petro Serve CEO Kent Satrang says the company had outgrown its space in Moorhead and was attracted to North Dakota’s more friendly tax climate as well as the opportunity to revitalize a vacant building. “We’re really excited about the new offices we’re remodeling,” he says. “We like to take old buildings and make them into something classic and revitalized.”

The renovation should be complete by early June and will allow the company to condense four metro offices into one space. About 40 employees will be based at the new location. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|ARCHITECTURE/ENGINEERING|

Making a difference Why 3D printing is growing in popularity among region’s architects, engineers

BY KRIS BEVILL

Ben Bernard, computer services specialist at North Dakota State University’s architecture and landscape architecture department, checks the progress of a model being produced by one of the department’s 3D printers.

PHOTO: KRIS BEVILL, PRAIRIE BUSINESS MAGAZINE

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Prairie Business Magazine April 2014

|ARCHITECTURE/ENGINEERING|

he rapidly advancing three-dimensional (3D) printing industry is making its mark in the architecture and engineering industries as printers have become more affordable and userfriendly, perhaps sparking a sea change in the way building and engineering projects are designed and pitched for clients. It’s too early to say how widely adopted the technology will become locally, but several firms have recently added 3D printers to their offices and higher education institutions are making 3D printers a part of students’ daily lives in recognition of the vast potential for this exciting new technology.

T

‘Cool tool’ Fargo, N.D.-based Stroh Architects and Interiors has been using a MakerBot Replicator for a few months, producing 3D models of projects both for internal use and as visual aids for clients. Terry Stroh, founder and principal of the firm, says he purchased the machine after seeing one at global architecture, engineering and construction firm HDR Inc.’s office in St. Paul. He was impressed with the quality and potential usefulness of the printer, and was pleasantly surprised that it only cost about $2,000. “I bought one right away,” he says, adding that the firm recently ordered a second printer. “It’s just been a really cool tool,” he says. “It’s so much better than a drawing.”

Stroh’s firm recently used the machine to produce 3D models for the new Fargo City Hall to show various options and forms for the proposed project. At one meeting, the firm distributed three 3D concepts for city committee members to examine. Stroh says committee members commented that the models were fun and easy to look at and understand. “You can put up renderings and things, and obviously we had those, but when people can touch and feel it’s a huge difference in terms of communicating a project,” he says.

Without 3D printers, architects sometimes build models by hand for clients, but it’s a time-consuming process. Stroh says the 3D printer offers a faster method of creating conceptual models.

Being an early adopter of 3D technology could give his firm a competitive advantage, but only “until everybody else gets one,” Stroh says. “And at the price that they are, I can’t imagine why they wouldn’t.”

Bismarck, N.D.-based übl Design Group purchased its 3D printer, also a MakerBot model, about nine months ago. Principal Jeff Ubl says his team initially became interested in the technology to produce physical models of their 3D designs for clients, but they have also used it internally to study projects. He sees potential to use it for modeling specific details within a building to better describe them to contractors, or for specific product development or even furniture design.

“We’re still in that infancy, if you will, of learning what potential the printer has,” he says. “There may be other things that we haven’t discovered yet because we haven’t played with it enough.”

Both Stroh and Ubl say their staff members love using the machines and have found them to be relatively easy to use and maintain. “Like any piece of technology, you have to embrace it and have fun with it and play with it,” Ubl says.

Stroh agrees. “It’s kind of like going to work and playing all day long,” he says. “We’ve had some disasters and then we’ve had some successes.”

Education and Exploration North Dakota State University’s architecture and landscape architecture department has been utilizing 3D printers for more than a year and provided Stroh and Ubl with advice when they began considering adding them to their firms.

Ben Bernard is the department’s computer services specialist and oversees the department’s 3D printer lab, which opened in December 2012 and currently includes six MakerBot printers, available for use by any of the department’s approximately 300 students.

It was a recent NDSU graduate who introduced Stroh to the 3D printer at HDR. Several of Ubl’s staff members were NDSU students when its 3D lab initially opened and brought that experience with to the firm, which led Ubl to explore the device and eventually purchase one.

That is exactly the kind of result Bernard hopes to achieve through the lab. Bernard was one of several speakers who participated in a recent NDSU Extension Services demo to introduce 3D printing to interested parties in Bismarck, N.D. About 80 high school students, educators, engineers and a variety of other professionals attended the

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41

|ARCHITECTURE/ENGINEERING|

3D printers are frequently used by architecture students at North Dakota State University.

PHOTO: KRIS BEVILL, PRAIRIE BUSINESS MAGAZINE

seminar, including Bismarck-based engineering firm KLJ, which is researching the potential use of 3D printers at the firm. The company became interested in 3D technology late last year and purchased four Cubify Cube 3D printers, three of which it immediately donated to Marketplace for Kids to support the organization’s STEM (science, technology, engineering and math) programs. The firm kept one printer in-house for staff to begin learning the technology and to support Marketplace for Kids activities. Emily Johnson, KLJ corporate executive director, says the firm opted for Cube printers because they are portable and designed for home or classroom use. As they identify professional uses, KLJ is considering purchasing a more advanced model. A small team has been researching options for how best to use 3D printers and has come up with some good ideas, she says, adding that she believes being an early adopter of 3D technology will certainly give the firm a competitive edge and the

firm hopes to implement the technology soon.

“I think people like to see presentations that are outside of the box and I think 3D printing is innovative and exciting,” she says. “People are looking for ways to connect with their project, with their consultants and engineers, and we look to this as a way to make that happen.”

At Your Service NDSU, Stroh and Ubl all purchased their printers and supplies directly from MakerBot, based in Brooklyn, N.Y., because there were no local distributors at the time they purchased their machines. That changed with the January launch of Fargo 3D Printing, a MakerBot distribution company owned by John Schneider and Jake Clark.

Clark says the inspiration to launch Fargo 3D Printing stemmed from his experience using a MakerBot printer in his (continued on page 44)

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Prairie Business Magazine April 2014

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|ARCHITECTURE/ENGINEERING| (continued from page 42)

role as a lead designer for Hawley, Minn.-based Alderon Industries, which manufactures control products for a number of applications, including wastewater and water treatment systems.

“Seeing where the technology is going and the amount of people in the area who are interested but don’t have a way to get educated or a reliable place to get it … we kind of took it upon ourselves to be the first place in the area to do that,” he says.

Business has been good in the first few months of the company’s existence and Schneider says they expect to continue to gain new customers as the popularity of 3D printing technology grows.

“The type of people that already have 3D printers are the ones who are kind of on the bleeding edge of this thing,” he says. “It’s not quite yet mainstream adoption but it’s starting to get to the point where the person’s specialty is in 3D printing or they’re not just professional tinkerers,” he says.

In addition to distributing MakerBot equipment and supplies, the company will also serve as a service provider for customers who desire more assistance with the machines.

The company's target area has quickly expanded to include the Dakotas and Minnesota, with future plans to add Iowa and Nebraska.

Supplies and equipment are already being distributed by Fargo 3D Printing on a global scale through Internet sales. In the first two months of operations the company recorded 43 international sales and shipped products to 18 countries.

Clark and Schneider say they will also offer new technologies and related support as they become available. They intend to offer 3D scanning services soon and are keeping an eye on other specialized 3D mediums such as sugar and lasers. They plan to open a MakerBot retail store in Fargo, hopefully by mid-fall, which would allow cus-

3D EDUCATION South Dakota State University’s 3,500-square-foot Imaging Center includes four MakerBot Replicator printers as well as a MakerBot 3D scanner. The center opened last August in response to suggestions from the school’s graphic design, landscape design, architectural design and interior design departments, but it is available for use by all SDSU students, faculty and staff. The center closes at night, but it is open seven days a week. Bob Carlson, manager of the SDSU print lab, says there is a fee to use 3D printers based on the time the machine is used, but it includes the cost of materials.

tomers to browse the products and see them at work before making a purchase. When open, the store would be one of only a handful of MakerBot retail stores in the nation.

Clark says the company’s sales goal for the year is roughly $100,000. The pair has so far invested only about $13,000 in the company. They hope to be able to finance the retail store on their own.

“We’re bootstrapping this thing,” he says.

For NDSU’s Bernard, whose background includes time spent as an economic developer, the launch of Fargo 3D Printing is just another indicator of the technology’s potential to transform current industries and create new industries. “I’m really excited to see how this technology empowers North Dakotans,” he says. “We’re on the leading edge.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Room to Make Improvement There are several types of 3D printers on the market, but most local users have so far chosen the MakerBot brand for its affordability and high-level of quality. However, there are still some downsides, of course. The print area is relatively small — the MakerBot Replicator 2, for example, has maximum dimensions of about 11 inches long, 6 inches wide and 6 inches high — so large projects must be printed in sections and pieced together.

Another downside, and this applies to all 3D printers currently on the market, is the length of time required to print a model. Bernard says it would take 25 hours for a MakerBot to print a solid block that fills its entire available volume.

Typical projects require several hours to print.

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Prairie Business Magazine April 2014

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|FINANCE|

Evolving employee expectations prompt office redesign Gate City Bank embraces modern design and collaborative workspace to attract millennials

BY KRIS BEVILL ubicles and closed-off offices don’t really cut it for many of today’s office workers, particularly for the millennial generation, which has been raised to work in collaborative settings rather than individual work stations. So when Gate City Bank began developing renovation plans for the executive offices, human resources, accounting, personal/business loan administration and marketing departments on the sixth floor of its downtown Fargo, N.D., corporate office, project leaders veered away from the long hallways, tall cubicles and walled-off

C Recent renovations at Gate City Bank’s downtown Fargo corporate office are designed to create a collaborative and transparent work space.

PHOTO: JOHN BORGE

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Prairie Business Magazine April 2014

|FINANCE|

offices traditionally used in financial institution office designs. Instead, they took inspiration from urban facilities that have embraced collaborative work environments to create flexible, open work spaces and an overall design that focuses on making the workplace more inviting to employees.

“We wanted to be progressive in our design process,” says Jay Krabbenhoft, senior vice presi-

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47

|FINANCE|

Recent renovations at Gate City Bank’s downtown Fargo corporate office are designed to create a collaborative and transparent work space.

PHOTO: JOHN BORGE

dent and office services manager. “My goal was to create a place where everyone would want to work.”

Fargo-based architecture and construction firm Wild CRG designed a space to meet the bank’s goals of breaking down the barriers of a traditional office setting. The entry point of the floor was converted into a space which Krabbenhoft likens to a college student union, complete with a stylish kitchenette and coffee bar where employees from throughout the building gather to engage with co-workers. Standard-sized office windows were replaced with floor-to-ceiling windows and many of the interior office walls and doors were replaced with glass to harvest as much natural light as possible. Work from local artists adorns wall spaces throughout the floor, adding to the warm and welcoming nature of the space.

Individual work stations were redesigned to feature lower partitions and a more aesthetic style. The bank is striving for a paperless work environment, so printers were removed from desks and replaced with just two printing machines. Video conferencing technology has been implemented and is frequently utilized for

48

Prairie Business Magazine February 2012

one-on-one discussions, meetings and training purposes.

The overall goal of the renovation was to create a collaborative and transparent environment that feels like a neighborhood.

Krabbenhoft believes that goal has been achieved. In fact, the redesign has been so well-received that it is being replicated on the building’s third floor, which will house the bank’s “virtual office,” a call center where employees assist mobile banking customers. That project is expected to be complete later this year.

When researching the modernized work environment, Krabbenhoft and other bank executives toured other facilities that had incorporated similar designs and asked for feedback on what aspects were effective or not effective. They learned that employee acceptance of the new spaces depended largely on their leaders reactions. Fortunately, Gate City Bank Chairman, President and CEO Steve Swiontek fully supported the concept from the start and has embraced all aspects of the new environment. He was one of the first to make the commitment to go paperless and believes strongly in a transparent work environment, even encouraging staff to use the meeting area in his office

|FINANCE|

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In addition to changing the feel of the space, the extensive renovation project has also allowed the bank to accommodate an expanding workforce without increasing its footprint. The sixth floor now accommodates about 40 workers, double the number of employees previously housed in that workspace. Likewise, the third floor redesign will allow for an additional 35 to 40 workers in its growing e-banking department.

Kim Meyer, executive vice president and director of human resources and marketing, says Gate City strives to be an employer of choice and because the millennial generation is expected to make up 50 percent of the workforce by 2020, the bank is looking to the collaborative work space as a recruitment tool. Krabbenhoft agrees.

“We see it as an investment,” he says. “I want Gate City to have the best of the millennial generation.” PB

Thank you.

Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

www.prairiebizmag.com

49

SD to fuel state fleet with higher ethanol blend Ethanol maker says state use of E15 demonstrates commitment to industry

BY KRIS BEVILL

n March, South Dakota Gov. Dennis Daugaard announced the state will incorporate E15 into the state’s vehicle fleet for a six-month test period. During the trial, E15 (a fuel blend comprised of 15 percent ethanol) will be available for use in the state’s nearly 2,000 flex-fuel vehicles as well as newer model nonflex fuel vehicles at four major fuel sites, located in Brookings, Pierre, Rapid City and Sioux Falls. The sites previously offered only E10 (10 percent ethanol). After the trial period, the state will evaluate how E15 affected the state fleet and determine how to best utilize ethanol in the future.

I

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Prairie Business Magazine April 2014

“South Dakota is a large ethanol producer, and our state has significantly benefitted from the ethanol industry,” Daugaard said in a statement. “The goal is to use more of our homegrown fuel by using E15, the newest fuel in the marketplace.”

According to the South Dakota Corn Growers Association, the state’s 15 corn-based ethanol plants are capable of producing more than 1 billion gallons of ethanol per year. Poet, one of the world’s largest ethanol producers, is based in South Dakota.

The company operates five ethanol plants in the state, accounting for about one-third of South Dakota’s total ethanol production capacity. Poet

|ENERGY|

“South Dakota is a large ethanol producer, and our state has significantly benefitted from the ethanol industry. The goal is to use more of our homegrown fuel by using E15."

- Gov. Dennis Daugaard

CEO Jeff Lautt says the state’s support of E15 will help demonstrate the value of E15, which was approved by the U.S. Environmental Protection Agency for use in vehicle models 2001 and newer in 2012.

Lautt also expects South Dakota’s use of E15 will help raise consumer awareness for the fuel blend, which the industry needs in order to continue growing its market. “There have been some terrific developments just in the last couple months that have gotten the ball rolling toward nationwide availability,” he says. “South Dakota’s recent commitment is one example, and we’ve seen some commercial commitments from MAPCO stations in the east and Minnoco in the Twin Cities. The early adopters will prompt others to follow suit in order to stay competitive.”

Lautt says the pending decision from the U.S. EPA regarding this year’s ethanol volume requirements as part of the Renewable Fuels Standard will also impact the implementation of E15. If the agency reduces this year’s ethanol volume requirements as proposed, it will slow the adoption of E15 and deliver a blow to the nation’s ethanol producers. Lautt says he expects the agency to deliver its final rule within the next few months and is hopeful that it will reverse its proposal. More than 200,000 comments were sent to the EPA, and much of that was due to a strong effort to provide input from biofuel advocates,” he says. “I think the message got through to the EPA, and I’m optimistic that they will change their proposal accordingly.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

www.prairiebizmag.com

51

|ENERGY|

Scientists develop more efficient natural gas-to-fuels process Discovery could utilize ample U.S. natural gas, displace oil products

BY REUTERS

.S. scientists says they have devised a potentially easier, cheaper and cleaner way to turn natural gas into usable fuels and chemicals — a discovery which could lead to natural gas products displacing oil products in the future.

The process would be less complex than conventional methods to turn natural gas into liquid products and it uses much lower heat and inexpensive materials to get the job done, they say.

Almost anything — fuel or chemical — that can be made from petroleum also can be made from natural gas, but it is not done today because the cost of converting natural gas into those materials is much higher, the researchers say.

"Current technologies to convert natural gas into fuels or commodity chemicals are too expensive to compete with products generated from petroleum," says Roy Periana, director of the Scripps Energy and Materials Center at the Scripps Research Institute in Florida who led the study published in the journal Science.

The United States stands as the world's No. 1 natural gas producer, topping even Russia.

"The U.S. has a glut of natural gas, and there are not that many ways to efficiently use it," says Brigham Young University's Daniel Ess, another of the researchers.

Methane, ethane and propane are the primary components in natural gas. They are members of a class of molecules known as alkanes. But turning alkanes into other useful forms like gasoline and diesel fuel, alcohols or olefins can be costly and inefficient with current technologies.

U

Breaking bonds Alkanes are made up of carbon and hydrogen atoms joined

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Prairie Business Magazine April 2014

together by some of the strongest bonds known in chemistry.

Converting these alkanes in natural gas requires the breaking of these bonds — no easy task.

Conventional conversion methods use very high temperatures — more than 1,650 degrees Fahrenheit (900 degrees Celsius). The method — very much like the original conversion process developed in the 1940s — remains costly, not very efficient and can lead to high emissions of pollutants, the researchers say.

These scientists say their conversion process uses much lower temperatures — about 400 degrees Fahrenheit (200 degrees Celsius) — and fewer steps. It also uses inexpensive ordinary metals like thallium and lead rather than costly precious metals like platinum, palladium, rhodium or gold, they say.

Their process could greatly reduce capital costs of future processing plants, Periana adds.

Periana says the process is not immediately ready for commercialization and that additional research is required, but that if all goes well a practical demonstration could occur within three years and a pilot plant could be in place perhaps a year after that.

The researchers have been in touch with potential corporate partners and venture capital firms about creating a separate company or a collaboration with an existing petrochemical company to commercialize the process, Periana says.

Given vast U.S. and other reserves of natural gas, the new process eventually could help change the world economy from one based on oil to one based on natural gas, Periana says.

"This would lead to a paradigm change in the petrochemical industry, increase energy security and facilitate sustainability, as natural gas is cleaner than petroleum or coal," Periana adds.

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190 Dec. '12 184

All time monthly high: 218, May 2012

Coal

Gas Dec. '13

(MCF/day)

$73.47 Dec. '12 $77.09

+77

Dec. '13

All time monthly high:

Price per barrel

Permits

Dec. '13

+153,216

All time monthly high:

Average Rig

Total

Production (barrels)

Dec. '13

Dec. '13

(Thousand Short Tons)

36% Dec. '12 29%

All time monthly high:

All time monthly high:

All time monthly high:

$136.29, July 2008

1,085,256, Nov. 13

36%, Sept. 2011

+63

Dec. '13

2,277 Dec. '12 2,197

All time monthly high: 2,924, March 2004 *EIA Original Estimate data (data since 2002)

Interest Rates

Employment

7

Effective federal funds rate 10-year treasury constant maturity rate

6

Percent

5 4 3 2 1 0

Jan2000

Jan2002

Jan2005

Jan2007

Jan2010

Gas Captured/Sold 17%

Jan2012

Jan2015

UNEMPLOYMENT RATE Dec.-13 Dec.-12

EMPLOYMENT Dec.-13 Dec.-12

North Dakota

2.70%

3.00%

392,047

Bismarck MSA

2.8

3.3

57,568

57,788

Fargo MSA

3.0

3.7

113,657

114,045

Grand Forks MSA

3.5

4.1

51,491

51,876

Dickinson MiSA

1.4

1.9

21,873

20,092

Jamestown MiSA

3.0

3.8

9,351

9,932

Minot MiSA

2.8

3.4

35,372

34,530

Wahpeton MiSA

3.4

4.2

11,179

11,389

Williston MiSA

0.6

0.9

48,497

37,534

South Dakota

3.60%

4.00%

432,799

429,233

Rapid City MSA

3.8

4.9

62,267

62,063

Sioux Falls MSA

3.1

4

130,230

125,996

Aberdeen MiSA

2.9

3.6

22,930

22,285

Brookings MiSA

2.8

3.4

18,640

18,286

Huron MiSA

3.3

3.9

9,478

9,534

Mitchell MiSA

2.8

3.6

13,173

12,780

Pierre MiSA

2.8

3.4

11,621

11,612

Spearfish MiSA

3.8

4.8

12,136

11,900

Vermillion MiSA

3.2

4.0

7,044

7,252

Watertown MiSA

3.3

3.9

18,564

18,309

Yankton MiSA

3.3

4.1

11,310

11,186

Minnesota

4.70%

5.40%

2,835,183

2,813,548

Duluth MSA

5.9

6.6

135,795

134,652

Minneapolis-St. Paul MSA

4.3

5.1

1,790,025

1,762,494

Alexandria MiSA

4.2

4.9

19,655

19,732

Bemidji MiSA

6.6

7.4

20,338

20,514

Brainerd MiSA

8.1

8.8

40,970

41,246

Fairmont MiSA

4.4

5.1

10,504

10,594

Fergus Falls MiSA

5.5

6.2

28,465

28,585

Hutchinson MiSA

5.3

6.9

17,799

17,800

Marshall MiSA

4.2

4.3

14,253

14,355

Flared due to challenges or constraints on existing gathering systems

Red Wing MiSA

4.6

5.2

24,563

24,560

Willmar MiSA

4.8

5.2

22,681

22,897

Flared due to lack of pipeline connection

Winona MiSA

4.1

4.7

28,011

28,041

Worthington MiSA

3.5

3.7

10,933

11,019

19% 64%

Gas captured and sold

SOURCE: N.D. PIPELINE AUTHORITY

Data provided by David Flynn, chair of the University of North Dakota Department of Economics. Reach him at david.flynn@business.und.edu.

56

386,113

Prairie Business Magazine April 2014