2 • IN BUSINESS
DECEMBER 2010 • GLOBE GAZETTE
FOCUS: COPING WITH CHANGE
‘Grow Your Own’
In This Issue:
COPING WITH CHANGE: • How communities can battle back from adversity/Page 2
Communities must be flexible, resilient in tackling plant closings, layoffs By TIM ACKARMAN For In Business any economic development experts are encouraging communities to take a “grow-your-own” approach to job creation. North Iowa has enjoyed a strong manufacturing base for decades. Yet this strength also creates vulnerability as globalization and the “great recession” buffet U.S. manufacturers. Reports of layoffs and plant closings have dominated the economic news locally and nationally. Communities must be flexible and resilient in tackling these challenges, said Win-Worth Betco Executive Director Teresa Nicholson. “Businesses come and go. It doesn’t mean the community dries up and blows away,” she said. “Find a way to do business differently and keep people here.”
lenges and obtaining capitol through grants or loans. “We are facilitators and advoBusinesses come and cates for our businesses,” Gillman go. It doesn’t said. Communities can also take steps mean the comto encourage new small-business munity dries up development as well as to recruit and blows away. outside companies. Providing appropriate infrastructure is critiFind a way to do cal, Nicholson said. business differ“Communities need to have available industrial development ently and keep people here.” land with utilities,” she said. — Teresa Nicholson, Win-Worth In addition to infrastructure, Betco executive director Borich suggested providing venture capital funds and business with two employees than to bring incubators to attract new firms. In in one that employs 100,” Borich that regard North Iowa is “blessed said. to have the Pappajohn Center,” “Eighty-five percent of job growth comes from small compa- Gillman said of the John Pappanies,” Nicholson said. “The major- john Entrepreneurial Center at North Iowa Area Community Colity of economic development (effort) is spent working with small lege. start-ups and expansion of small ALL THREE EXPERTS agree companies.” that a comprehensive economic development approach must conTRADITIONAL ECONOMIC NORTH IOWA CORRIDOR sider more than the immediate DEVELOPMENT has revolved Executive Director Greg Gillman needs of the business sector. around initiatives to attract major shares this view. “Companies look at the overall employers. While such efforts have “Everyone wants the new facilinot been abandoned, “recruiting ty to come to town, but most of the community” when deciding where the next big plant is somewhat job growth will come from within,” to locate, Nicholson said. Quality-of-life considerations problematic,” said Tim Borich, he said. “The No. 1 issue is to such as appearance, available director of Iowa State University remain very, very close to your housing, schools and recreational Extension Community and Ecoexisting business and industry.” amenities are key factors considnomic Development and assistant Gillman noted that of 16 ecoered by many business owners. dean in the College of Design. nomic development projects he “If you don’t want to live there “There aren’t that many compahas worked on in the past two and you can’t see your employees nies looking for new sites.” years, 12 have involved existing staying there, why would you want Economic development officials businesses. are increasingly turning to “ecoWhile the needs of each firm are to move your business there?” Borich asked. nomic gardening,” an effort to different, economic development “I’m a huge believer that ecoencourage entrepreneurship and leaders can help businesses in foster growth in existing small areas such as addressing workforce nomic development and community development cannot be sepabusinesses. development issues, overcoming “It’s better to start 50 businesses technical or infrastructure chalContinued on next page
keys to landing CGS Tyres in Charles City/Page 33
TECH: Netbooks: Novelty or necessity? Page 32 • KOFAB the ‘ultimate family business’/ Page 4 • Preparing for leadership transition/Page 6 • Mason City-Clear Lake: Recovering one piece at a time/Page 6 • Franklin County proves its resiliency/Page 7
ADVICE: • Finding quality employees — and handling those who aren’t/Page 34 • Deterring and detecting financial reporting fraud/Page 35
HEALTH: • Coping with downsizing in your workplace/Page 37
• Britt and Garner feel pains of Winnebago’s HEALTH: slump but the gains of • Alliance promotes recent growth/Page 8 growth throughout North Iowa/Page 39 • Building, location
MADE IN THE REGION: PAGES 12-29! ON THE COVER: At the KOFAB fabrication plant, Jake Eischen of Ledyard works on a food-grade screw-auger Utrough. (Photo by TIM ACKARMAN)
In Business: Vol. 8, No. 4, December 2010 Publisher: Howard Query 641-421-0500 firstname.lastname@example.org Managing Editor: Tom Thoma 641-421-0566 tom.thoma @globegazette.com Associate Editor: Jane Reynolds 641-421-0564 email@example.com Associate Editor: Bob Steenson 641-421-0530
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GLOBE GAZETTE • DECEMBER 2010
GROWTH/From Page 2 rated,” Gillman said. other setback. Communities can take advantage of “You may fast-track things, but the grants from the North Iowa Area Coun- general approach is the same.” cil of Governments to help finance A major layoff can be turned into a improvement projects. Agencies such recruiting tool for new businesses, Gillas the Iowa Department of Economic man said. Development and the Iowa Department “It’s a tough situation when a comof Natural Resources pany closes,” he said. can also offer finan“But the next day we cial assistance or are talking about in There aren’t that many our presentations technical expertise with certain procompanies look- and proposals that jects. we have workers ing for new Cultivating a with those kinds of diverse economy and skills who have been sites. ... It’s beta desirable commudownsized.” ter to start 50 nity can help blunt Gillman acknowlbusinesses with the impact of an edged this strategy economic downturn. may be less effective two employees Yet there are cases in the current ecothan to bring in one that when the loss of a nomic climate. major employer creemploys 100.” “When you have a ates significant national recession, — Tim Borich of Iowa State Universichallenges, particueveryone is doing the ty Extension. larly for a smaller same thing. How are community. we differentiating In some cases those challenges can- ourselves? We sharpen our pencils not be avoided. every day as it relates to that.” “If you’re heavily reliant on an industry that’s in decline on the DESPITE THE ROUGH ECONOMY, national or international level, there’s Borich expects growth in some sectors not much you can do,” Borich said. over the next year, including health care software, clean energy and technology IN THE IMMEDIATE aftermath of a infrastructure. business closing, the Iowa Workforce Borich also sees opportunity in Development Center can provide Iowa’s changing demographics. While extended briefings on all services avail- many view the aging of the baby able to laid-off employees, Gillman boomer generation as an economic crisaid. sis, Borich encourages communities to Community leaders should consider consider the potential financial benean assessment of the situation to help fits. predict outcomes, Borich suggested. “Studies tend to show a retiring cou“Look to the ISU Economics Depart- ple moving to your community is worth ment to model the economy and see (as much as) a manufacturing job. I’m what the effect will be. What can be not sure those active retirees are being absorbed? What will be the secondary looked at as an asset. There’s money to impact?” be had in industries or services geared In addition to ISU, Borich also sugtoward that population.” gested UNI’s Institute for Decision Borich views growth within the HisMaking (IDM) and USDA Rural Develpanic community similarly. opment as potential resources. “The Latino population has doubled Nicholson said Winn-Worth Betco, and is expected to double again in the in cooperation with the seven-county next 10 years,” he noted. North Central Iowa Alliance, has studThere may be an opportunity for ies ongoing with IDM. She said such some communities to develop busiefforts do not change appreciably nesses catering to that population. because of a single plant closing or “Is that something we should be
IN BUSINESS • 3
TIPS FOR DEVELOPMENT SUCCESS: 1. MAKE ECONOMIC DEVELOPMENT AN ONGOING PROCESS. “Even when times are good … you have to be proactive,” said Teresa Nicholson of WinWorth-Betco.“Things don’t always stay good.” “It’s often what proceeds the bad times that drives your situation,” said Tim Borich, director of Iowa State University Extension. 2. LOOK TO DIVERSIFY. While success breeds success, concentrating on a single business sector also leaves a community vulnerable in the event of a downturn. Nicholson encourages communities to ask, “What do we have a small amount of that we can grow?” 3. COOPERATE RATHER THAN COMPETE WITH NEIGHBORING COMMUNITIES. “Somebody getting jobs is better than nobody getting jobs,” Borich said.
“We’re getting stronger about promoting the area as a region,” said Gregg Gillman, executive director of the North Iowa Corridor Economic Development Corp. 4. BE PATIENT. “New investment doesn’t lead to the same level of job growth it did five years ago,” Gillman said.“If (businesses) are making those investments, the jobs will come when people are feeling better about the economy.” 5. FOSTER VOLUNTEERISM, COMMUNITY SPIRIT AND A POSITIVE OUTLOOK. “It takes everybody’s efforts to improve a community, not just the community leaders or the people who are paid to do it,” Nicholson said. “A lot of it is believing in yourself,” Gillman said. — By Tim Ackarman
helping along?” Borich asked. On the local level, Nicholson sees some potential for renewed manufacturing growth in North Iowa. She predicts a move away from traditional assembly-line manufacturing in favor of more focused activities such as component production or final assembly. Nicholson also expects additional infrastructure development surrounding the Manly Terminal and the Diamond Jo Worth Casino. Gillman is excited about efforts to market land near the Mason City Airport as well as new marketing initia-
tives to office and flex-space users. As in the past, he is also working on smaller projects involving local firms. “Seven existing businesses and industries are in some level of talks about expansion,” Gillman said. “None might occur, but all seven might occur.” Although such small projects don’t attract significant attention, Gillman believes they are the key to sustainable long-term economic development. “It might not be recognizable to most people, but I think slow and steady growth is what we’re going to see.”
4 • IN BUSINESS
DECEMBER 2010 • GLOBE GAZETTE
COPING WITH CHANGE
KOFAB the ‘ultimate family business’ By TIM ACKARMAN For In Business ALGONA n 1977 Don Schiltz founded KOFAB in an old car wash building by borrowing $500. With hard work and good business sense he built the company into an industry leader, overseeing the acquisition of a second plant and numerous expansions at both locations. “When one thinks of KOFAB they have to think of my husband,” Sharon Schiltz said. “It’s a true American dream.” It’s a dream that’s continuing despite Don’s death from cancer on June 29, 2007, less than a month before KOFAB’s 30th anniversary. Today, with 41 full-time employees at its two Algona plants, KOFAB is a leading manufacturer of conveyor systems and components used in the food, ethanol and pharmaceutical industries. Customers include many nationally and internationally known firms, including several Fortune 500 companies. It is a family business in the truest sense.
TIM ACKARMAN/For In Business
The KOFAB fabrication plant at 300 Kofab Drive includes a recently completed office expansion.
Mayor Lynn Kueck. “He was an integral part of the diversified business community that makes Algona the vibrant community we are,” Kueck said. “If I called Don as mayor, he was always there, willing to help out and do good for the community.” Kueck said Don was admired for his volunteer service in government and community organizations as well as for his financial contributions to many worthy groups and THE FAMILY STARTED activities. More than that, he when Bancroft native Donald was also respected for the E. Schiltz married Sharon example he set. Klocke in 1960. The couple “First and foremost Don was raised four children, Brian, a gentleman,” Kueck said. “He Gary, Bill and Kris. would treat the custodian just Schiltz supported his family as well as one of his top cusworking as a construction tomers. He treated everyone foreman and later as a superviKOFAB AND DON SCHILTZ with respect. That’s the highsor in a food equipment plant. Despite his success working for were also part of the heart and est compliment I could pay soul of the community and the him.” others, Schiltz had another While losing such a dynamic region, according to Algona ambition. “He wanted to create something of his own,” Sharon Schiltz recalled. In 1977 Don founded KOFAB. After his death, Sharon took over the top job in the company. She thinks of her husband every day. “Don and I worked as a couple and a unit,” Sharon said. “I had total respect for my husband and I firmly believe he had total respect for me. I miss him 24/7.” “He was a great dad,” Brian Schiltz said. “He cared very much for his family.” He also cared very much for his company and its employees. “His heart and soul was in this business,” Sharon said.
leader was hard for the family, the company and the community, the example Don set left others well-prepared to fill the void, according to Kueck. “His sons are keeping his spirit alive. They’re true gentlemen as well.” SHARON AND HER SONS are also keeping KOFAB alive and growing. Although there were opportunities to sell the company, the family didn’t even consider it. “I would have felt like I was letting Don down had I done that,” Sharon said. Sharon is CEO. Brian manages the 32,000-square-foot machine plant. Gary manages the 48,000-square-foot fabrication plant where Bill also serves as sales manager. As CEO, Sharon handles most financial matters. At the fabrication plant, Gary and Bill oversee the design, manufac-
ture, marketing and installation of material-handling systems and other equipment for their corporate customers. Key product lines include lifts, dumpers and conveyors, including the registered trademark Curveyor and Eleveyor. The plant also offers customdesigned tanks, enclosures, product chutes and hoppers, stairways, catwalks and platforms. The machine plant manufactures conveyor components, most notably the patented K-V Drive system designed to eliminate conveyer belt slippage and tracking problems. “The K-V Drive has changed the way our customers convey product,” Brian said. “If there’s a part of our business that’s changed KOFAB, it’s that system.” While many of the components from the manufacturing plant are destined for the KOFAB fabrication plant, the company also sells directly to end-users as well as to other fabrication firms. Having two locations has worked well at KOFAB, with each plant generating new business for the company. “One operation complements the other,” Gary said. DESPITE THE CHALLENGES of the economic downturn, KOFAB has continued to thrive and expand. The company was one of four to receive an Iowa Global Export Awards from the Iowa Department of Economic DevelopContinued on next page
GLOBE GAZETTE • DECEMBER 2010
KOFAB/From Page 4 ment in 2010. “Business has been strong,” Brian said. “We’ve benefitted from food-safety changes and higher standards,” Gary added. A recent office expansion at the fabrication plant, planned by Sharon and Don, was carried out after his death. Each family member working at the facility has continued in or expanded his or her role to allow the company to move forward much as it did under Don. Serving a diverse customer base in a variety of industries has helped to keep business stable at KOFAB regardless of the economic climate, Brian said. “Thirty-four years in business and we’re still growing.” Don fostered that growth through his dedication to the customer, Sharon said. “Don always preached quality, service and ontime delivery.” KOFAB is still committed to those
ideals, the Schiltz family said. The family has also carried forward Don’s commitment to treating employees well which has allowed KOFAB to attract and retain a quality staff, according to the Schiltz family. “The workforce around here is fantastic,” Bill said. “They’re not only our employees, they’re our friends as well,” Brian said. Don Schiltz is still very much a part of KOFAB in the eyes of his family. “We feel Dad’s presence almost every day,” Gary said. The Schiltz family expects Don’s business legacy to continue at KOFAB. “I think it will be what it’s been,” Gary said, “slow, steady growth.” “Our biggest challenge is going to be how we keep up with product demand,” Brian said. “We’re all excited about the future.”
IN BUSINESS • 5
TIPS FROM KOFAB: 1. Value customers and employees. “I think life is pretty simple,” Sharon Schiltz said. “Treat people with kindness and respect.” 2. Find the best people rather than the best-qualified people. “We hire at this facility more on attitude than on skill,” Brian Schiltz said.
3. Train employees to per“We wouldn’t give our form multiple functions employees anything we while avoiding the assembly- wouldn’t do ourselves.” Brian line mentality. said. “Our guys are craftsman,” Gary Schiltz said. “They start a project and see it through.” “If someone is sick or injured or on vacation, someone else can step in and do the job,” Brian said. 4. Lead by example.
Preparing for leadership transition: Page 6
with the bank thats been