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CAPITAL Card Services develops credit card servicing niche - pg.18

Region partially insulated from hotel building slowdown - pg.24

Tourism Regional officials upbeat about 2010 tourism outlook

www.prairiebizmag.com

Brainerd, MN, looking forward despite recession's impact - pg.34

Melissa Bump (left), director, South Dakota Office of Tourism John Edman (middle), director, Explore Minnesota Tourism Sara Otte Coleman (right), director, North Dakota Tourism


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CONTENTS

Volume 11 No. 4

Renovation projects 28 preserve historic hotels

Restoring a landmark is no easy task. But two high-profile hotels in the region are putting the finishing touches on renovation projects that have managed to maintain the properties’ historical charm. A multi-million dollar restoration project of the Hotel Alex Johnson in Rapid City will be finished by early May and an extensive restoration and expansion of the Rough Riders Hotel in Medora, ND, will be complete in April. — By Ryan Schuster

Canad Inns attracting 30 Canadians, events to Grand Forks, ND

24

The mammoth 13-story, $50 million Canad Inns Destination Center hotel and entertainment complex in Grand Forks, ND, includes 201 guest rooms, the state’s largest indoor water park, an arcade, three restaurants, a gaming lounge, health club and gift shop all connected to the Alerus Center. The hotel and attached events center have helped make the city a more attractive destination for a number of visitors, many of them from north of the border. — By Candi Helseth

Cover Story: Region partially insulated from national hotel building slowdown A recent hotel growth spurt in the region appears to be drawing to a close as financing is becoming more difficult to secure and local developers begin to pull back and wait for more favorable market conditions. The national hotel building market is even worse. But hotel construction has yet to slow down in red-hot western North Dakota, which is experiencing a prolonged building boom. — By Ryan Schuster

Company Profile: 18 CAPITAL Card Services

Upbeat regional tourism 32 outlook for 2010

The regional outlook for the 2010 tourism season looks to be improved in Minnesota, North Dakota and South Dakota, three states that fared better than the rest of he nation last year. As travelers continue to look closer to home for affordable family vacations, regional tourism officials believe they are well positioned to take advantage of the trend towards more low-cost vacations. — By Sarah McCurdy

Sioux Falls-based CAPITAL Card Services serves 43 financial institutions, comprising a combined 500,000 card holders. The company’s initial business plan focused on the subprime card market, but a few years ago the company recognized the need to expand into other markets. — By Alan Van Ormer

Community Profile: 34 Brainerd, MN

40

Despite feeling the effects of the national recession, the Brainerd, MN, area is looking to the future and continuing to diversify its economy. The local population base has swelled by more than 37 percent in the last two decades. — By Ryan Schuster

IN THIS ISSUE 6 From the editor’s desk 8 Letters 10 Business Briefs 12 Prairie News

16 22 41 44

Prairie People Q&A: Tom Stinson Jack Geller Women in Business Q&A

NEXT MONTH The May issue will include a look at the health care industry in the region. The Rapid City, SD, area will also be featured in the May issue.

44 Matthew Mohr 46 By The Numbers

ON THE AIR Join Editor Ryan Schuster and host Merrill Piepkorn on Tuesday, April 13 at 3 p.m. on any Prairie Public radio station to hear a discussion about the tourism industry. To listen to past Prairie Business radio shows on Prairie Public, visit www.prairiepublic.org/radio/hear-it-now.

Semi wraps promote South Dakota tourism Images promoting tourism in South Dakota are literally being trucked across the nation like giant moving billboards. Last year the South Dakota Office of Tourism added a new tool to market the state to visitors — colorful semi truck trailer wrap displays. South Dakota’s tourism office has placed wraps on seven semi trucks owned by K&J Trucking, a Sioux Falls-based commercial trucking company. — By Loretta Sorensen

45 renovation under way

Buxton, ND, bank building

The small Buxton Bank building in Buxton, ND, has been vacant for decades. But new life is being breathed into the structure. An effort is under way to restore the circa 1893 building to its former glory. — By Amanda Hvidsten

Prairie Business

5


FROM THE EDITOR’S DESK

RYAN SCHUSTER

A double shot of caffeine

An SBA Award Winning Publication Mike Jacobs, Publisher Ryan Schuster, Editor Scott Deutsch, Sales Manager Tina Chisholm, Production Manager Jen Braaten, Marketing Coordinator Beth Bohlman, Circulation Manager Kris Wolff, Layout Design, Ad Design

NATIONAL ACCOUNT SALES/SALES MANAGER:

Scott Deutsch

ot that long ago getting a cup of coffee meant brewing a pot of Folgers before leaving the house for work in the morning. Taking a coffee break usually involved grabbing a Styrofoam cup and heading for the break room. Now, we pull up to drive thru windows and fork over $4 for a flavored latte to get our morning caffeine fix. For many the morning commute to work isn’t complete without a detour to the local coffee shop. In today’s non-stop world, a cup of coffee with a plastic cover is part energy drink to keep you alert, along with some carmel and whip cream while you’re at it. It also doubles as breakfast. I never really understood the coffee drinking craze before I started working early mornings and needed a shot of caffeine to keep me going. Now it’s difficult to drive past a coffee shop without feeling the urge to stop. The retail coffee industry has become big business. The coffee and ready to drink coffee market is now a more than $47 billon industry, up from about $40 billion just two years ago. Coffee is now the United States’ most imported food item. Despite the recession’s impact, coffee shops represent the fastest-growing segment of the restaurant business with a 7 percent annual growth rate, according to coffee-statistics.com. In the space of a few decades, American consumers have become hooked on something they never thought they needed before — purchasing coffee at retail outlets. This is not the first time consumers have been convinced they couldn’t live without buying something at a store that they used to make at home (see fast food), but the transformation is still remarkable. Somehow coffee has morphed from something that was often prepared with little or no sugar or creamer, to a long litany of flavors and toppings. I was surprised a few weeks ago when my wife ordered a regular coffee at a chain store that coffee shops

N

6

April 2010

actually still sell straight coffee. Coffee shops were once a small cottage industry populated mostly by mom and pop operators. Suddenly in the 1990s, chain stores like Starbucks, Caribou Coffee, Dunn Bros. Coffee and a bevy of others began springing up across the country. Now it’s difficult to drive more than a few blocks in many places without passing one. Global giant Starbucks, which opened its first store outside of the Seattle area in 1987, has grown to nearly 17,000 stores in 50 countries. The economy’s downturn has hurt coffee shops and other businesses that sell nonessential goods and services that consumers tend to cut back on first when times become tight and they feel the need to trim their discretionary spending. Needing a morning (and sometimes afternoon) coffee fix has forced me to explore other less expensive alternatives to cut down on my number of trips to the neighborhood coffee shop. When baristas start calling you by your first name and remember how you like your coffee, it might be time to cut back a little. My wife (who buys coffee shop gift cards so she doesn’t need to rummage through her purse whenever she goes through the drive thru) is also trying to cut back. So instead of shelling out $4 a cup, I’ve started brewing coffee at work every day in a little 4-cup coffee maker on my desk. It doesn’t look as pretty, there’s no foam, carmel or whip cream, but it gets the job done. I still make occasional trips to the coffee shop, but when I do it is more of a treat, instead of an every day occurrence. Can I get a venti latte, please? Better make it a double. And don’t forget the carmel and whip cream.

SALES:

Rick Killion

701.232.8893 Grand Forks/Fargo/Moorhead/northwestern MN

701.232.8893 Sioux Falls/Fargo/Moorhead/southeastern SD

Judy LaJesse

Brad Boyd EDITOR: Ryan Schuster

701.232.8893 Fargo/Moorhead/eastern SD/western MN 800.641.0683 Bismarck-Mandan/ west central SD/west central ND

Editorial Advisors:

701.780.1107 rschuster@prairiebizmag.com

Ann Reich, North Dakota Bankers Association, Bismarck; Hiram Drache, Historian-In-Residence, Concordia College - Moorhead; James Ferragut, Fargo,ND; Tom Shorma, President, WCCO Belting - Wahpeton; Karen Froelich, Professor, College of Business Administration, NDSU Fargo; Bruce Gjovig, Director, Center for Innovation, UND - Grand Forks; Steve Rendahl, Associate Professor, UND School of Communication Grand Forks; Matthew Mohr, president/CEO, Dacotah Paper Company Fargo; Julie Fedorchak, Communications Manager, North Dakota Department of Commerce - Bismarck, ND; Mary Batcheller - Greater Fargo Moorhead Economic Development Corporation, Fargo, ND;Jeff Hanson, Sioux Falls;Megan Olson, President/CEO, Watertown (SD) Area Chamber of Commerce Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 808 3rd Ave. S., Ste. 400, Fargo, ND 58103. 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.

Subscription requests: 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 bbohlman@gfherald.com

Online: www.prairiebizmag.com


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LETTERS MAGAZINE’S NEW REDESIGN

COLUMN ON MULTITASKING

I am enjoying the updated layout of Prairie Business, including the expanded treatment of the Prairie News section. Nice work! Paul Ten Haken, president Click Rain Inc., Sioux Falls

Ryan, Thanks for your column on multitasking (“The myth of multitasking,” February 2010 issue). I resolve again to do one thing at a time. Of course I was glancing at my e-mail and eating breakfast while I read it. As our little communications shop looks at getting more into social networking, one of my colleagues said to me, “but you’re better at multitasking.” Not really. I think you’re right that it just nurtures my ADD tendencies — almost like a nervous tick. I’m so busy, busy, busy. It’s like my favorite line from that movie with Billy Crystal where they’re playing cowboys, when they’re herding the cattle by themselves, “great, we’re lost but we’re making good time.” Becky Jones Mahlum Bismarck

Great (January 2010) issue of Prairie Business. The content on energy is very informative. I like the new layout as well. Keep up the great work! Robert A. Wharton, president South Dakota School of Mines and Technology, Rapid City

RETAIL IMPACT STORY I enjoyed “Retail’s economic impact” by Amanda Hvidsten (February 2010 issue), highlighting the importance of retail in economic development in both large and small communities. More community leaders and residents need to recognize that a healthy and vibrant local economy depends upon the well-being of their community’s retail base and provide the necessary incentives to develop it. Even though it is estimated that 60 percent of the workforce has at one time been employed in the retail industry, the impact retailing has on our lifestyle and business experiences is often taken for granted. The recent economic slowdown highlights the significant contribution of the industry to our prosperity that we have enjoyed over the years. Retail is critical to the broader economy, ringing up $4 trillion worth of sales annually, not including the sales of automobiles and repairs. In addition, retailing is the second largest single industry in the nation, as approximately one of every nine employed persons (24 million) in the United States works in retailing in some capacity. It was reported that January 2010 employment numbers decreased by some 20,000. However, according to the Labor Department, retail trade employment climbed by 42,000 in January from job increases at food, clothing and general-merchandise retailers. Health care employment rose as well. As the article points out, “the importance of the addition of a couple new stores or restaurants can have a profound impact on a smaller town.” There is an unlimited opportunity because even though the majority of retail sales take place within large retail chains, most retailers are small businesses. The fact is of the almost two million retail firms in the United States, 95 percent of them run only one store. Less than 1 percent have more than 100 stores. Another important factor to consider is that retail companies give away 1.7 percent of their profits each year before taxes, compared with approximately 0.9 percent by companies in other industries. Retailing offers opportunities for exciting, challenging careers, whether by working for a retail firm or starting your own business. The history of retail has always been about entrepreneurs who have a dream to deliver new lower-cost, higher-inventory turn, and consumer excitement. Community leaders take note — retail: the economic engine. Chuck Chadwick, business liaison Greater Fargo Moorhead Development Corp., Fargo

DAKOTA GROWERS PASTA ARTICLE Thank you for the article in the December issue of Prairie Business outlining the success story of our own Dakota Growers Pasta Company (“Pasta company becoming a major player,” December 2009 issue). Indeed, Dakota Growers Pasta Company is a bright shining star out here on our rural prairie. Carrington would not be where we are today without the successful foresight of those durum growers back in the 1990s. I always enjoy my copy of Prairie Business and look forward to it each month. Laurie Dietz, executive director Carrington (ND) Area Chamber of Commerce & CVB

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April 2010

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BUSINESS BRIEFS POSITIVE JOB OUTLOOK FOR SIOUX FALLS Sioux Falls area employers expect to increase hiring in the second quarter of 2010, according to the results of a Manpower Inc. employment outlook survey. Between April and June, 18 percent of the Sioux Falls area companies who participated in the survey said they plan to hire more employees, while only 8 percent said they expect to reduce payroll. The majority of employers, 70 percent, plan to maintain current staffing levels, while 4 percent were not sure about their second quarter hiring plans. By comparison, 15 percent of the companies interviewed in the Minneapolis-St. Paul, Bloomington, MN, Metropolitan Statistical Area said they plan to increase staffing, 2 percent expect to decrease staffing and 80 percent expect to maintain current employment levels. In the Duluth, MN, metro area, 22 percent of employers surveyed expect to increase staffing, 10 percent plan to reduce staffing and 65 percent expect to maintain current staffing levels, during the second quarter. Of the approximately 18,000 companies surveyed nationally about their second quarter hiring plans, 16 percent anticipate increased hiring, 8 percent expect to decrease payroll and 73 percent do not plan to change current staffing levels. Manpower’s first quarter 2010 employment outlook survey for Sioux Falls showed that 15 percent of employers surveyed planned to increase staffing, 4 percent expected to cut staff and 78 percent anticipated maintaining existing staffing levels. Sioux Falls’ second quarter 2009 employment outlook survey, which was released a year ago, showed that 22 percent of employers planned to increase staffing, 8 percent anticipated cutting staffing and 69 percent expected to maintain the same staffing levels.

NORTH DAKOTA COMPENSATION PER JOB RISES North Dakota’s average compensation per job has increased an average of 4.4 percent per year since 1998 — the sixth-largest average annual growth rate in the nation, according to the North Dakota State Data Center. Despite recent improvement in employer compensation, which includes wages and other compensation, contributions to pensions, insurance and federal programs, North Dakota’s 2008 average compensation per job of $43,372 was the fifth lowest in the nation. South Dakota had the nation’s lowest compensation per job in 2008 at $40,726. The national average compensation per job was $56,116 in 2008.

PRIVATE EMPLOYMENT COST INDEX Private industry Employment Cost Index for total compensation and wages and salaries, not seasonally adjusted 3.5 3.0 2.5 2.0

STATE OF THE U.S. RECOVERY

1.5 1.0

U.S. total compensation

0.5

Minneapolis-St. Cloud metro total compensation

0.0 -0.5 Dec 2007

In Recession Moderating Recovering Expanding

MINNESOTA NORTH DAKOTA Fargo — recovering Bismarck — recovering Grand Forks — recovering Source: Moody’s Economy.com

SOUTH DAKOTA Sioux Falls — recovering Rapid City — recovering

Minneapolis — moderating St. Cloud — moderating Duluth — moderating Mankato — recovering Rochester — recovering

Mar

Jun

Sep

Dec

2008

Mar

Jun

Sep

Dec

2009

Source: U.S. Bureau of Labor Statistics

QUOTE OF THE MONTH “THINGS CERTAINLY SEEM TO BE TURNING AROUND IN MANY ASPECTS OF THE ECONOMY. I REALLY DON’T THINK EMPLOYERS ARE 100 PERCENT CONFIDENT YET, BUT I DO THINK THEIR CONFIDENCE IS BUILDING.” — Melanie Holmes, vice president, Manpower Inc.

MINNESOTA MANUFACTURING JOB OUTLOOK IMPROVES A recently-released survey indicated that manufacturers in Minnesota are much more optimistic about the economy than they were a year ago. More than one fourth (26 percent) of the 500 manufacturing executives interviewed in January for the State of Manufacturing research project said they anticipate economic expansion in 2010, compared with 19 percent who expect a continued recession. The 2010 survey results reflected an 18 percent jump in those who predicted economic growth and a 37 percent decline in executives predicting a continued recession for the state’s manufacturing industry. 10

April 2010

A total of 44 percent interviewed said they expect their company’s annual gross revenues to increase in 2010, up from 23 percent who said the same thing a year ago. Other findings from the survey included: — 68 percent said that health care costs are their top concern — 55 percent said more can be done at the state level to make Minnesota a more competitive location for business — 45 percent said they expect wages to increase in the next two years.


PRAIRIE NEWS

(Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to rschuster@prairiebizmag.com for consideration)

VITERRA TO ACQUIRE DAKOTA GROWERS PASTA Carrington, ND-based Dakota Growers Pasta Company Inc. has signed a definitive merger agreement and will be acquired by Viterra, a Canadian grain handling and food processing company. Viterra will purchase all of Dakota Growers Pasta’s outstanding shares. The all-cash transaction represents a total enterprise value of $240 million. The acquisition has been approved by the board of directors of both companies. Dakota Growers Pasta is North America’s third-largest producer and marketer of dry pasta products and owns a durum mill and pasta production plant in Carrington and a pasta production facility in New Hope, MN.

STECK WHOLESALE FOODS GROWING IN NORTH SIOUX CITY, SD An expansion project being launched by Steck Wholesale Foods Inc. of North Sioux City, SD, is expected to create 10 new jobs in the next year and an additional 14 jobs in the next three years. Steck Wholesale Foods Inc., a commercial wholesale baker that makes English muffins for retailers, warehousing divisions and food service companies, is adding a new line of baking powder biscuits at the urging of its major customers. “Not only is this announcement great news for Steck Wholesale Foods, but it is very good news for South Dakota,” South Dakota Governor Mike Rounds said in a prepared statement. “Whenever a company changes with the times and grows as a result, both the company and the state benefit.”

POLARIS DEFENSE AWARDED NEW GOVERNMENT CONTRACT Polaris Defense, a division of Medina, MN-based Polaris Industries Inc., has been awarded a contract with the federal General Services Administration to sell the Polaris EV LSV to government customers. Polaris, which has a production plant in Roseau, MN, introduced the new electric Low Speed Vehicle that is meant for both on- and off-road use in January. “The award of this contract allows Polaris Defense to provide an innovative, leap-ahead four-wheel drive, electric vehicle to our government customers, while giving them a centralized purchasing point to buy our products,” Mark McCormick, the managing director of Polar Defense, said in a prepared statement.

NEW EXPANSION DEDICATED AT SIOUX FALLS TECHNOLOGY INCUBATOR The South Dakota Technology Business Center in Sioux Falls has expanded its high tech incubator facility by 7,000 square feet. The 45,000-squarefoot building is located next to Sioux Falls’ Southeast Technical Institute. The expansion was made possible by a grant from the Economic Development Administration, a branch of the U.S. Department of Commerce. The South Dakota Technology Business Center has also upgraded its communications system and added videoconferencing capabilities to allow for constant external nationwide links and the continued sharing of information and teleconferences with other business incubators in South Dakota. 12

April 2010

NDSU RESEARCH AND TECH PARK INCUBATOR GAINS NEW TENANT Triton Systems will open a new facility inside the North Dakota State University Research and Technology Park’s incubator building. The company and its affiliates have two locations in Massachusetts, a life science group in California and a manufacturing facility in Switzerland. North Dakota Senator Byron Dorgan secured $3.6 million in fiscal year 2010 funding for the partnership between NDSU and Triton Systems. The collaboration will develop a group of antimicrobial coatings capable of being embedded on fabrics to block toxins, kill bacteria and control pathogenic biological agents. The fabrics will be used in the manufacturing of military uniforms and bed nets used to protect U.S. Army soldiers from insects and microbial pollutants.

FIRST ETHANOL BLENDER GAS PUMPS OPEN IN SIOUX FALLS Four new ethanol blender gas pumps have been installed at the King’s Mart gas station, offering motorists in Sioux Falls a variety of fuel blend options for the first time. The collaboration between the Sioux Falls-based American Coalition for Ethanol and the South Dakota Corn Utilization Council allows the station to provide motorists with options including unleaded gasoline, E10, E30, and E85 for Flexible Fuel Vehicles. “This is a huge accomplishment for the corn and ethanol industry to unveil a blender pump in Sioux Falls,” David Fremark, president of the South Dakota Corn Utilization Council, said in a prepared statement. “Corn farmers take great pride in helping to produce over a billion gallons of ethanol in our great state and installing infrastructure like this moves our industry in the right direction.” The new blender pump site in Sioux Falls is one of 41 locations across South Dakota and approximately 150 nationwide offering the ethanol blending service.

CONTACT CENTER FACILITY TO OPEN IN RAY, ND Mohall, ND-based Midwest Teleservices International Inc. has announced that a new contact center that will be located in Ray, ND, will employ up to 45 workers within its first three years of operation. State officials said the new facility will help recover positions that were lost in January when Medical Arts Press closed its office in the small northwestern North Dakota town. The new contact center will include business and residential sales and customer service and may provide additional services in the future.


PRAIRIE NEWS

(Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to rschuster@prairiebizmag.com for consideration)

LAKEWOOD HEALTH OPENS CLINIC IN BROWERVILLE, MN Staples, MN-based Lakewood Health System’s new clinic in Browerville, MN, opened last month. The 6,400-square-foot clinic includes six exam rooms, physical therapy services and a second medical provider. The new facility replaces an older Lakewood Health clinic in Browerville and was built to accommodate the community’s growth and the need for additional services.

ENERGY & ENVIRONMENTAL RESEARCH CENTER PLANS EXPANSION The University of North Dakota’s Energy & Environmental Research Center has announced plans for a $14 million expansion on its 15-acre campus in Grand Forks, ND. The proposed 60,000square-foot of additional laboratory and office space would be located just north of the EERC’s current office facilities. The new building would provide office space for about 100 additional employees for the EERC, which has been hiring an average of one new employee per week. The EERC also plans to expand its National Center for Hydrogen Technology facility by 7,000 square feet. The expanded facility will host the development and demonstration of technologies used in the production of nonpetroleum-derived liquid fuels and hydrogen, making use of North Dakota’s available energy resources.

MINNESOTA WIND PROJECT SECURES 25,000 ACRES Nearly 25,000 acres of leased land in Minnesota’s Meeker and Kandiyohi counties have been secured for a planned 340-megawatt community-owned wind project, more than three fourths of the land needed to complete the project’s site control effort. Officials with Lake Country Wind Energy and National Wind have a goal of securing 30,000 acres for the project. Construction of the planned wind farm is expected to take place in three or four phases, beginning in 2011.

RED RIVER VALLEY RESEARCH CORRIDOR SUMMIT HELD IN FARGO The Red River Valley Research Corridor’s third annual Life Sciences Summit was held in February at the Hilton Garden Inn & Convention Center in Fargo. The conference attracted more than 150 attendees and included panel discussions and a keynote presentation by Steven Burrill (pictured), the CEO of Burill & Company, which specializes in financial packages for pharmaceutical and biotechnology companies from around the world. Burrill mentioned that the Red River Valley Research Corridor is beginning to attract more attention from leaders within the $2.3 trillion health care industry, especially those who are exploring new models for the development of vaccines and other drugs.

GRAND OPENING HELD FOR NEW CANCER CENTER IN FERGUS FALLS, MN Lake Region Healthcare’s new Cancer Care & Research Center in Fergus Falls, MN, opened in January and a grand opening ceremony was held last month. The $9.5 million comprehensive cancer care center on the Lake Region Healthcare campus includes a chemotherapy infusion area, radiation department, chapel, healing garden, boutique and fitting rooms and a library in addition to an administration and conference area. The facility also features natural lighting provided by 468 windows and two large skylights. 14

April 2010

APARTMENT COMPLEX TO BE BUILT IN FARGO’S URBAN PLAINS DEVELOPMENT A new 132-unit apartment complex will begin construction in Fargo’s Urban Plains development this spring. The apartment’s first 66 units are expected to be completed by December, with the final 66 units completed by August 2011. The three-story, two-acre complex will include vaulted ceilings, above ground parking, brick outdoor accents, outdoor water fountains, green spaces and ponds.

EXPANSIONS MAY HELP EASE NORTH DAKOTA PIPELINE CONSTRAINTS TransCanada officials said last month that they would consider allowing crude oil from North Dakota and Montana access to the company’s proposed Keystone XL pipeline that would transport oil from Canada to the Gulf of Mexico. North Dakota Governor John Hoeven and Montana Governor Brian Schweitzer were both present at the meeting to press their case for allowing an “on ramp” onto the pipeline that will run through Montana near the southwestern border with North Dakota. Governor Hoeven is also working with Enbridge officials to expand pipeline capacity in the state. Enbridge recently announced that it is evaluating an up to $300 million pipeline expansion that would increase capacity by about 115,000 barrels of oil per day from the Beaver Lodge Looping Station in northwestern North Dakota through Stanley, ND, and into an existing portal in Berthold, ND.

SOUTH DAKOTA JOINS EFFORT TO GREATLY INCREASE COLLEGE COMPLETION RATES South Dakota is one of 16 states nationwide that has teamed up with a nonprofit organization in an effort to significantly increase the number of young adults in the state who graduate with a college degree. Complete College, a national nonprofit organization, and the states are working to increase college completion rates, set degree goals and develop and implement more aggressive state and campus-level action plans to meet those goals. Roughly half of the students who begin school at a public or private four-year college in South Dakota graduate within six years. The South Dakota university system is working to re-enroll adults who have started college, but dropped out before graduating. “Less than 40 percent of young adults in this country hold an associate degree or higher,” Jack Warner, executive director and CEO of the South Dakota Board of Regents, said in a prepared statement.


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Prairie Business

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PRAIRIE PEOPLE

(Please e-mail photos and press release announcements of hirings, promotions, awards and distinctions received by business leaders in North Dakota, South Dakota and western Minnesota to rschuster@prairiebizmag.com for consideration)

NOLTE RECEIVES SPIRIT OF DOWNTOWN AWARD

POMEROY NAMED CHAIR OF SOCIAL SECURITY PANEL

Evan Nolte, president and CEO of the Sioux Falls Area Chamber of Commerce, received the city’s Spirit of Downtown Award for 2009 in late February. The award was presented by the Downtown Sioux Falls organization. Nolte, who joined the Sioux Falls chamber’s staff in 1979 as executive vice president, has been president and CEO of the chamber since 1992. “Evan has been a very steady leader in the Sioux Falls community for many years as well as an active supporter of Downtown Sioux Falls and our mission,” Scott Gullickson, chairman of the Downtown Sioux Falls group’s board, said in a prepared statement. “He has been a very effective member of Downtown Sioux Falls’ development committee along with many other accomplishments that make him a very deserving recipient of the Spirit of Downtown award.”

Congressman Earl Pomeroy of North Dakota was named acting chairman of the Social Security Subcommittee last month. The Social Security panel is a subcommittee of the powerful House Ways and Means Committee. As chairman, Pomeroy will have significant influence over Social Securityrelated legislation. Pomeroy says he will use the post to improve the system that provides Social Security benefits, including reducing the backlog of Social Security disability claims, finding ways for the Social Security Administration to provide better service to seniors, reinforcing the system’s position as a retirement safety net and protecting against fraud and abuse of the system. “The Social Security system has been a critical part of millions of Americans’ retirement plans,” Pomeroy said in a prepared statement. “I think that will remain the case for decades to come. My goal as chairman will be to strengthen the program and find ways that it can provide better service to the folks who depend on Social Security benefits.”

CRANE NAMED DIRECTOR OF NEW CAMPUS IN ROME Kathleen Crane has been announced as the director of the University of Mary’s new campus in Rome. As director of the new Rome campus, Crane will teach and direct organized travel as well as advising students about living in Italy and traveling in Europe. She will also assist in developing the new campus’ curriculum and serve as a liaison between the Bismarck-based University of Mary and the Handmaids of Charity, who manage the facility that houses the university’s new campus facility. Classes at the University of Mary’s new campus in Rome will begin in the fall. Crane, a native of Mott, ND, is a graduate of the University of North Dakota. Since late 2008 she has served as an academic research assistant to Father Antonio Lopez, an assistant professor of theology at the Pontifical John Paul II Institute in Washington, D.C. “It is my hope that this unique liberal arts experience will allow U-Mary students to enter deeply into an investigation not only of Italian history and culture, but also of the ongoing relevance of the Catholic Church to the modern world,” Crane said in a prepared statement. “Such an opportunity will uniquely prepare U-Mary students to be leaders in service of the truth in every facet of society.”

HORNBACHER RETIRES FROM GROCERY CHAIN Dean Hornbacher, the president of the Hornbacher’s supermarket chain in the Fargo-Moorhead area, has retired after more than 40 years in the grocery business. Dean’s father, Ted Hornbacher, opened the chain’s first store in Moorhead, MN, in 1951 along with partner Jim Custer. The Hornbacher’s chain was acquired by Supervalu in 1975. Matt Leiseth has succeeded Dean Hornbacher, who retired at the end of February, as president of the Hornbacher’s supermarket chain. 16

April 2010

HUNTER RECEIVES NATURAL FOODS INDUSTRY AWARD Karlene Hunter, the CEO of Kyle, SD-based Native American Natural Foods, has been named as the 2010 recipient of the Cliff Adler Heart in Business Award, one of the natural food industry’s top honors. Hunter is the first Native American to win the award in its 21-year history. The award, which was established in 1989 and is named for former Eden Foods vice president Cliff Adler, is given annually to a member of the natural foods industry who exemplifies integrity, humor, problem solving, hard work and heart. “This is such an honor, and I am truly humbled,” Hunter said in a prepared statement. “Mr. Adler set such a high standard in the industry, and I consider it an award to our entire organization. We wouldn’t have been able to accomplish what we have these last three years if not for our hard-working team.”


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COMPANY PROFILE - CAPITAL CARD SERVICES

Sioux Falls credit card servicing firm experiences growth

Sioux Falls headquarters

By Alan Van Ormer n 1998 Jeff Aegerter recognized the need in the marketplace for a contact center that could simultaneously service the myriad needs of a number of financial institutions. With the help of a primary shareholder, Aegerter created CAPITAL Card Services Inc., a Sioux Falls-based company that develops and services portfolios for companies in the financial sector. Aegerter, who had previously worked for Citibank and First PREMIER Bank, is president and CEO of the growing company. CAPITAL Card Services, which operates a 37,000-square-foot Sioux Falls headquarters and a 28,000-square-foot credit card servicing center in Brookings, SD, now employs 225 workers, up from 170 five years ago. While CAPITAL Card Services has grown in size, it is still small and nimble enough to provide efficient and fast service for its clients. “Every credit card company in town is managing their own credit cards,” says Jane Moore, the company’s vice president of human resources. “We are providing our expertise and services to financial institutions who have selected to outsource the customer service, collections, fraud and credit services of their card portfolio. Sometimes that makes a difference.”

I

400 and 850. Lower credit scores are considered subprime, medium scores are near prime and higher scores are deemed prime. The company’s contact center provides 24-hour customer service and collection services to increase recoveries and reduce losses and expense, as well as providing additional cardholder support services and portfolio management. One subsidiary, Capital Preferred Credit, focuses on originating credit card assets. Capital Enhancement Services, another subsidiary, provides card issuers an additional opportunity to generate revenue for their business by providing a travel and merchandise discount program and turn-key products for payment protection. CAPITAL Card Services has invested in call center platform technology that combines hardware and software solutions so that a representative can seamlessly handle multiple call types. “We have multiple clients that we service and every client has different business rules. We are able to accommodate those different business rules,” Gogarty says. “We build their business rules into our online system. We only do what each client has empowered us to do on their behalf.”

BROAD REACH

SERVICING CLIENTS

CAPITAL Card Services serves 43 financial institutions, comprising a combined 500,000 card holders. “Being a technology-oriented company, we invest a great deal in being efficient while ensuring information security at all times,” says Donal Gogarty, the company’s vice president of business development. The company’s initial business plan focused on the subprime card market, which proved successful. A few years ago the company recognized the need to expand into other markets and is now supporting near prime and prime products for its clients. Financial institutions provide consumers’ credit for a credit card, mortgage or auto loan based on their credit score, which can fall between

CorTrust Bank, an independent Mitchell, SD-based community bank, has been a client of CAPITAL Card Services since 1999. CorTrust Bank has utilized CAPITAL Card Services’ customer service, collections, cardholder support, marketing services, portfolio analytics and risk management services. “Their expertise has provided us the ability to grow our portfolio,” says David Brown, CorTrust Bank’s vice president and credit card manager. “And at the same time by using their risk management services, they have helped us mitigate the risks associated with that growth while maintaining a profitable portfolio.” In 1993, CorTrust Bank began issuing credit cards nationally. The new

18

April 2010

(continued on page 20)


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COMPANY PROFILE - CAPITAL CARD SERVICES

(continued from page 18)

service was designed to help customers who were having difficulty obtaining a traditional credit card re-establish their credit history. CorTrust Bank decided to outsource pieces in the servicing of their credit card portfolio. Brown says CAPITAL Card Services provides financial institutions the “complete package” to help them get started in the credit card business without making a huge initial investment in upfront costs, including technology and human resources. Fiserv Card Services has been servicing the credit industry since 1990. In 1997, the company acquired FIS, a financial services firm that provides processing and loan systems for community banks. Today, Fiserv Card Services processes for 40 clients representing more than 14 million accounts. What Fiserv did not provide for its clients was a contact center. In 2008 the company performed a nationwide search for a contact center and narrowed it down to five companies before eventually choosing CAPITAL Card Services. Fiserv has more than doubled its number of clients since CAPITAL Card Services began providing contact services support for the company in 2008. “The people at CAPITAL Card Services are what impressed me,” says Steve Baker, a senior vice president at Fiserv. “They were very friendly, intelligent and were experienced in the business.”

CHALLENGES AHEAD While CAPITAL Card Services has performed solidly and experienced consistent growth, the company and others in the industry are navigating through some unchartered waters. The credit card industry is dealing with new regulations such as the amount of notice required on changes in credit agreements and new age requirements for credit card issuers. The national recession and its effects on pinched consumers also present challenges for companies dependent on credit card use.

A look inside the company’s contact center in Brookings, SD.

Jessie Smith works in the company’s collections department.

“Consumers are now less likely to put things on a card because they’re uncertain about the market or if they are going to have a job long-term,” Gogarty says. “Some consumers are choosing to pay for items in cash. This impacts our clients and indirectly, we are impacted by that.” Van Ormer is a Madison, SD-based freelance writer. He can be reached at avanormer@sio.midco.net.

BOTTOM LINE: CAPITAL CARD SERVICES INC. Founded: 1998 Headquarters: Sioux Falls Other locations: Brookings, SD Employees: 225 On the web: www.capitalcardservices.com

Brookings, SD, location

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TOM STINSON

Q&A:

The roots of Minnesota’s state budget deficit L By Ryan Schuster

ast month officials projected Minnesota’s state budget deficit for the current 20102011 biennium at $994 million. That deficit is forecasted to swell to $5.8 billion in 2012-2013. While the numbers appear staggering and plenty of wrangling will be required from state legislators to balance the budget by the end of each biennium, state economist Tom Stinson says Minnesota’s budget problems aren’t all that surprising given the severity of the recession. He also adds that the state’s budget situation would be much worse had Minnesota not received $2.5 billion in federal stimulus funding. “We’ve gone through what economists are calling the great recession,” Stinson says. “We’ve had an enormous economic downturn nationally. Minnesota is part of the national economy and the recession hasn’t skipped over the state. That’s the reason for the continuing string of deficits. Those deficits exist in almost every state. They don’t exist in North Dakota, but even North Dakota’s economy is starting to feel some pressure. The economy is very weak.” Stinson says the state’s budget shortfall is rooted in simple economics. Residents pay taxes to the state government, but if their hours are cut back, they take a pay cut or lose their jobs, they pay less income taxes. Dips in personal income also contribute to lower sales tax collections as residents have less discretionary income to spend. Minnesota state income tax receipts in the current 2010-2011 biennium are expected to drop below those during the 2008-09 and 2006-2007 bienniums. “When people’s income is lower, they pay less in taxes to the state,” Stinson says. “But the government’s responsibility doesn’t shrink. In some cases it goes up because there are more people who need assistance.” Minnesota’s state budget shortfall has had a chilling effect on local communities that rely on a certain level of state funding to help fund programs and services. “It is certainly creating problems all across the state in both rural and metro areas,” Stinson says. “The state has to balance its budget. Given that the state provides a lot of revenue to local units of government, particularly school districts, and given that 22

April 2010

state expenditures need to be cut back to balance the state budget, some of the expenditures the state will cut back on include payment to local governments.” Stinson recently took a few minutes to answer some questions from Prairie Business about Minnesota’s state budget deficit, the state’s economy, the economic recovery and how rural and urban areas within the state have been affected differently by the recession. The following are excerpts from the interview:

WHAT TYPE OF YEAR WILL 2010 BE FOR THE STATE’S ECONOMY? It’s going to be a better year than 2009. Last year was the weakest economy we have seen since World War II both in Minnesota and nationally. It will be better, but we don’t think 2010 will be a particularly strong year, certainly not as strong as 2003, 2004 or 2005.

WHAT IS THE CURRENT STATE OF THE ECONOMY? We lost 22,000 jobs nationally in January, down from the more than 700,000 jobs the nation lost in January 2009. We are getting close to breaking even, but it still looks like the first quarter is going to be a negative quarter for job growth. Minnesota gained more than 15,000 jobs in January. The state will probably have another decline in wages in the first quarter of 2010 on a year-over-year basis, though. I expect to see employment growth and total wage growth once we get into April.

IS THE MINNESOTA ECONOMY OFFICIALLY IN RECOVERY YET? Not yet, but we are right at the turning point. By April we should be in recovery. We are just about at the turning point. Starting in April, I expect to see some significant job growth, partially because of Census hiring. That is temporary, but it will hopefully allow the economy to start functioning a little better.

HOW LONG WILL IT TAKE FOR THE STATE ECONOMY TO GET BACK TO WHERE IT WAS BEFORE THE RECESSION? We don’t think jobs in Minnesota will get back to where they were at before the recession

THE STINSON FILE NAME: Tom Stinson AGE: 67 POSITION: Minnesota’s state economist UNIVERSITY INVOLVEMENT: Professor in Applied Economics Department, University of Minnesota (Twin Cities campus) until the end of 2012 or the beginning of 2013. It’s likely to take three years before we get back to where we were, which is an indication of how deep and severe this recession was.

SOME RURAL AREAS IN THE STATE HAVE FARED BETTER THAN THE TWIN CITIES DURING THE RECESSION. WHY? Not all of the state is doing better than the Twin Cities, but the southeastern, southwestern and northwestern part of the state are all doing better. Employment is better, those regions were less reliant on the construction industry, their manufacturing is more dependent on food processing and less dependent on consumer durables. If you are manufacturing food products, the demand doesn’t go down as fast as if you are manufacturing building materials or big ticket household items.

HOW DO THE FACTORS INFLUENCING RURAL ECONOMIES DIFFER FROM THOSE IN LARGER METRO AREAS? Larger metropolitan areas are more diversified, are less tied to natural resources and are more tied to business services and health care. Because they are not as resource based, larger metro areas don’t live or die on the price of taconite, corn, wheat or lumber. Commodity prices are less important to them, which cushions them a little bit from shock. But if you have an economy-wide shock, it can be worse in metro areas than in areas with a substantial dependence on things like food production. We just don’t cut back on food consumption as much as we do on other things during a recession.


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COVER STORY -

By Ryan Schuster

A sign in front of the new Candlewood Suites hotel in Williston, ND, tells of a future Holiday Inn planned next door.

Hotel Construction

REGION PARTIALLY INSULATED FROM HOTEL BUILDING SLOWDOWN 24

Month January 0000 2009 April 2010


currently under construction and is expected to open by the end of June. igns posted in snow-covered fields in Williston, ND, inform passing A Candlewood Suites is also under construction in Minot. Castleman motorists about ongoing and pending construction on a number of says he is aware of as many as four other proposed future hotel projects hotels in the northwestern North Dakota city. in Minot, although he says he is not sure when the other projects might A recent hotel growth spurt in the region appears to be drawing to a eventually be built as the market may be on its way to becoming close as financing is becoming more difficult to secure and local oversaturated. developers begin to pull back and wait for more favorable market conditions. The national hotel building market is drying up, following in the footsteps of the stalled homebuilding and commercial construction REGIONAL HOTEL GROWTH industries. A recent flurry of hotel growth in the region has included the But hotel construction has yet to slow down in red-hot western North openings of Hilton Garden Inn hotels in Sioux Falls and Fargo two Dakota, which is experiencing a prolonged oil- and energy-fueled months apart in late 2009. building boom. The 103-room Hilton Garden Inn in Sioux Falls, which opened last “We’re seeing a surge of new development activity,” says Tom September, has 4,000 square feet of meeting space and is located in close Rolfstad, executive director of Williston Economic Development. “People proximity to Interstate 229, Sioux Falls Regional Airport, The Empire say they can’t find a room in Williston, Minot, Dickinson, Sidney, Mall, the Sioux Falls Arena and the Sioux Falls Convention Center. Montana, or any place in between. Because of our recent oil field activity “There was good demand for it being an upscale Hilton product and we have a real shortage of housing. Hotels and motels are one of the having the banquet facility and convention center,” says Seth Sweeney, the solutions for meeting that demand.” hotel’s general manager. “We have been right in line with our Rolfstad says he has heard of business people who have flown into expectations about occupancy, which has been increasing on a monthWilliston for meetings and been unable to find a room in Williston or a to-month basis as we mature. When the decision was made to move nearby town. As a result, they have forward there was probably more ended up flying to Bismarck to stay demand for it, but even with less the night before flying back to demand, it is still needed in the Williston the next day for more marketplace.” meetings. In November, the Hilton Garden NORTH SOUTH A 79-room Candlewood Suites Inn & Convention Center opened DAKOTA DAKOTA MINNESOTA extended stay hotel opened in in Fargo, bringing an additional Williston in February. Construction 110 rooms and approximately Hotels Rooms Hotels Rooms Hotels Rooms is expected to begin next door this 15,000 square feet of convention summer on the 144-room Holiday center and conference space to the 2007 12 1,423 2 271 4 288 Inn & Conference Center, which Fargo market near the intersection 2008 17 2,489 7 605 8 664 will include convention center of interstates 94 and 29. space. An 84-room expansion of “Fargo was ready for another 2009 14 1,356 3 260 7 611 Williston’s Airport International Hilton brand,” says Dan Hurder, Inn is also expected to begin this the hotel’s general manager. “The Projected 2010 4 428 3 230 2 184 spring. Not bad for a city of less convention center serves a need in than 15,000 residents that had gone the community. There are only so about five years since its last hotel Source: Lodging Econometrics many convention center facilities opening. in town and Fargo is a natural place to host statewide conventions.” “Investors are seeing occupancy levels high enough that they know The Lodge at Deadwood (SD), a Hampton Inn & Suites in their investments will be repaid,” Rolfstad says. “Local banks are willing Watertown, SD, a SpringHill Suites by Marriott in Grand Forks, ND, and to participate in lending. Traditionally the oil scene has been boom and the AmericInn Hotel & Suites in Fort Pierre, SD, have also opened in the bust. But the nature of the Bakken and related formations provide longer last nine months. term stability to the economy than we have seen in the past. I think more The most recent string of hotel openings follows several strong hotels will continue to be built.” construction seasons in the region. But the increase in hotel building in western North Dakota isn’t confined to Williston. Minot has experienced a recent wave of hotel CONSTRUCTION SLOWDOWN openings and a La Quinta Inn & Suites is also under construction in A slower economy has impacted hotel occupancy and revenue in the Bismarck. region and made building new hotels more problematic. Tightened Construction is even under way on a new hotel in Stanley, ND lending and less favorable financing options have also helped to slow (population 1,300). The 72-room LEGEND Hotel & Lodge extended stay hotel growth in the region. hotel in Stanley is scheduled to open in July. The developer behind the The number of hotel openings in Minnesota, North Dakota and project, Sonoma, CA-based Northfields Development Company, is South Dakota increased by two thirds in 2008 to 32, according to the already looking at other potential sites for hotels in western North Lodging Econometrics hospitality research firm. But that number fell to Dakota. 24 last year and is forecasted by Lodging Econometrics to drop to nine Two new hotels are currently under construction in Minot with more new hotel openings in the three-state region in 2010. potential projects on the drawing board. “Construction in our region was really growing in 2007 and 2008,” “The Minot market is very strong,” says Vance Castleman, president says Paul Hegg, president and CEO of the Sioux Falls-based Hegg of the Minot-based Inn-Vestments Inc. hotel development and Companies Inc. “Then September and October of 2008 hit and things management company. “We’re one of the few markets in the United quickly started to slow down. We’re not seeing as much happening now. States that actually had an up year in 2009. Other areas of the country are The capital markets shut the tap off and lending has kind of dried up.” suffering from the economic downturn. Energy has been the stabilizing Hegg Companies develops and manages six hotels in South Dakota, factor in Minot and western North Dakota with increased oil field Minnesota and Wyoming, including the new Hilton Garden Inn in Sioux development and coal and wind.” Falls. But shortly after opening a Courtyard by Marriott and SpringHill Castleman’s firm is developing a MainStay Suites in Minot that is Suites by Marriott in Sioux Falls in the summer of 2008, the company

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HOTEL OPENINGS

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scuttled plans for a Courtyard by Marriott in Grand Forks as a result of the economic downturn. When the Timberlake Lodge opened in Grand Rapids, MN, in 2008, the family ownership group behind the hotel had been aggressively expanding, building as many as one new hotel per year. But the family hasn’t opened another hotel in the last two years, choosing instead to focus on existing properties and waiting for more favorable conditions. “We’ve put the brakes on,” says Burl Ives, who is general manager of the Timberlake Lodge and part of a group that owns and operates 15 hotels in Minnesota, Iowa, Wisconsin and Michigan. “You’re always looking for something that is needed, wanted and a good deal. You need to do a lot of in-depth research before you jump in.”

WORSENING NATIONAL OUTLOOK A total of 717 hotels representing 82,620 rooms have been forecasted to open nationally in 2010, a 56 percent drop from 2009, according to Lodging Econometrics. The number of projects under construction in the fourth quarter of 2009 fell to its lowest level in four years with new project announcements dropping to five-year lows. Lodging Econometrics projects that the 767 projects and 95,900 rooms that were under construction in late January will continue to decline throughout 2010 as lending continues to disappear nationally and a number of active projects in the pipeline are halted. The total active U.S. hotel development pipeline of projects under construction or in the planning stages declined 36 percent from February 2009 to February 2010, according to Smith Travel Research.

Hilton Garden Inn, Sioux Falls

Future LEGEND Hotel & Lodge, Stanley, ND

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April 2010

“The availability of financing just isn’t there for projects, or if it is, it is too costly for developers to obtain,” says Joe McInerney, president and CEO of the Washington, D.C.-based American Hotel & Lodging Association. “You used to be able to have 20 percent equity and get 80 percent financing. Now it is about 40-60. We’re not seeing a lot of new properties breaking ground.”

BETTER REGIONAL PICTURE McInerney says some small pockets of the country, like this area, have not been hit as hard by the building slowdown. He says secondary markets may fare slightly better with some local developers who have personal relationships with banks in the community continuing to build at a slower rate. “We haven’t been hit as hard as the national market,” Hegg agrees. “Over the last year, national occupancy is about as low it has ever been. We are a little insulated from that, but we are definitely feeling the pinch. Everyone in the industry believes we have hit the bottom.” Hegg says hotel building will be “pretty flat” regionally in 2010, but he expects the market to begin recovering in the fourth quarter of 2010 or the first quarter of 2011. Hegg says it may take some time before hotel construction returns to pre-recession levels, though. “We don’t have any other hotel developments in the pipeline,” he says. “You probably won’t see much hotel construction in the next three years.”

Hilton Garden Inn & Convention Center, Fargo


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Two renovation projects preserve historic hotels R By Ryan Schuster

estoring a landmark is no easy task. But two high-profile hotels in the region are putting the finishing touches on renovation projects that have managed to maintain the properties’ historical charm. A multi-million dollar restoration project of the Hotel Alex Johnson in Rapid City that will be completed by early next month includes the exterior, guest rooms, ballroom, front desk, lobby and hallways. “The renovation was sorely needed,” says Rich Dunkelberger, CEO of the Rapid City-based ISIS Hospitality company that owns and operates five hotels and an indoor water park resort in Rapid City and a casino resort in Deadwood, SD. “The property had lapsed into a very poor state of disrepair. The hotel, once the renovations are completed, will provide its guests with the finest location of any hotel in Rapid City, an unparalleled historic experience, aesthetic beauty, a comfortable guest environment and all of the modern amenities available in the best hotels in the nation.” This month a renovation and expansion project will also be complete at the Rough Riders Hotel in Medora, ND, that added 68 rooms in a threestory tower at the back of the building, two new conference rooms, a fitness center, an outdoor patio and also renovated eight historic rooms. “We’re hoping to make the hotel a year-round destination, especially for groups and conferences,” says Annette Schilling, public relations and marketing director of the nonprofit Theodore Roosevelt Medora Foundation, which owns and operates the hotel. “The new onsite conference center is just another opportunity and a way for us to expand our market area. We will be able to host many events throughout the year.” The refurbishing of the Hotel Alex Johnson, which opened in 1928 and is listed on the National Register of Historic Places, added fresh coats of paint to the top Tudor floors of the exterior and parts of the interior, new awnings and outside signage, new flooring and lighting. The hotel’s English pub was refreshed with new hardwood flooring, a new copper top bar, new tables, chairs and barstools. A Seattle’s Best Cafe franchise is

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April 2010

also replacing the Landmark Restaurant. All renovation plans were approved by the Rapid City Historical Society and several parts of the old hotel were restored, including a tile floor in the new lobby bar, the terrazzo dance floor in the ballroom and some exterior features. Renovated lobby Maintaining a connection to the hotel’s past was important to its owners, providing a connection to its history, which has included visits from six U.S. presidents. In addition to preserving the past, the Hotel Alex Johnson renovation also added 32-inch flat panel high-definition television sets in each guest room and new HDTV sets in the English pub as well as other modern amenities like iPod alarm clocks in rooms. Great pains were taken to preserve the historic look of the Rough Riders Hotel, which opened in 1885 as the Metropolitan before changing its name in honor of Teddy Roosevelt’s Rough Riders volunteer cavalry regiment in 1903 when Roosevelt visited the hotel. Schilling says preserving the hotel’s exterior and its historic entrance that has remained virtually unchanged since 1903 was a priority. She says despite the new three-story addition in the back of the hotel, many visitors may not notice the changes while driving or walking down Medora’s main street. Bricks that had been saved from the North Dakota capitol building, which burned down in 1930, and were purchased by former owner Harold Schafer were used to construct a new fireplace in the hotel’s enlarged dining room. The economy’s downturn and tightened lending standards complicated the renovation of the Hotel Alex Johnson. ISIS Hospitality had secured a firm commitment from a lender to help fund the project, but Dunkelberger says the bank changed its mind last summer right before the renovation was about to begin. Attempts to secure financing elsewhere in Rapid City also failed. Dunkelberger says his company recorded record profits last year and is conservatively leveraged. He blamed the firm’s difficulty attracting financing on the national and regional financial crisis. The company was finally able to secure financing for the project with some assistance from the Small Business Administration and private funding sources. Schilling says the Rough Riders Hotel project didn’t have a difficult time attaining financing, as it was funded through a combination of Theodore Roosevelt Medora Foundation reserve funds, public support and a long-term financing package.


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Canad Inns helping attract Canadians to Grand Forks, ND

By Candi Helseth Canadian company’s partnership with the city of Grand Forks, ND, has benefited parties on both sides of the border. The Canad Inns Destination Center hotel complex has drawn a strong contingent of Canadian visitors to Grand Forks and along with the attached Alerus Center has become a growing destination for travelers and conventions. The city-owned Alerus Center, a multipurpose events and convention facility that opened in 2001, has had more success attracting large conventions since the Canad Inns opened in 2007, according to Steve Hyman, the Alerus Center’s executive director. “Being able to offer a package deal with the hotel and convention center all together means we are capturing more multiple day events such as conventions,” Hyman says. “We used to have a lot of small afternoon or one-day meetings. Duration has increased with the hotel attached. We’ve also seen an increase in catering revenues. We’re becoming more regional in nature and attracting corporate events that bring in people from multiple states. We continue to work on making our packaging more seamless for the customer.”

A

HOTEL AMENITIES The Grand Forks hotel is the first U.S. location for the Winnipeg-based Canad Inns hotel chain. The mammoth 13-story, $50 million hotel and entertainment complex includes 201 guest rooms, the state’s largest indoor water park, an arcade, three restaurants, a gaming lounge, health club and gift shop all connected to the Alerus Center. Antonio Rossini, who became general manager of the Grand Forks Canad Inns in December, says the hotel is a strong weekend 30

April 2010

draw for travelers and locals, who book parties in the water park and frequent its restaurants. Inside the hotel’s 40,000-square-foot indoor water park, adults lounge on inner tubes gliding through a lazy river while screaming children zip down curving water slides. Under a 500-gallon dumping bucket, a grinning grandfather holds a slippery toddler while his wife captures the Kodak moment. Five water slides, a kiddy pool, giant hot tub, play structures, a fountain and geysers greet visitors. A large arcade next door offers more things to do and places to go. The hotel’s three eateries also offer variety for guests and locals. AALTOS Garden Café specializes in family style dining and traditional American food, ’l Bistro features Mediterranean and Italian cuisine and the Tavern United bar and grill is styled after an English pub.

THEME ROOMS Canad Inns’ limited number of unique themed suites are particularly popular with families. In the family suites, children discover a playhouse, a small room inside the suite with pocket doors that open to reveal bunk beds, a TV with a PlayStation video game console and kid friendly murals on the walls. In the University of North Dakota suite, bold Fighting Sioux colors brighten the room. The university’s logo is emblazoned everywhere, even on the room’s upholstered chairs. The peaceful South Seas suite features wicker furniture, soft colors and a full-wall ocean mural. Flat screen televisions, wireless internet access, mini fridges and rolling tables to extend working space are standard in all rooms.

HISTORICAL CONNECTIONS Grand

Forks’

history

is

displayed

throughout the hotel. At least two historical photographs are displayed in each guest room. Large photos visible in general access areas of the hotel depict Grand Forks’ historical highs and lows, including the epic 1997 flood that had a devastating impact on the city. Since the flood, Grand Forks has reestablished itself as a regional economic engine. The additions of the Canad Inns hotel and the Alerus Center have played a role in the city’s transformation into a stronger tourist attraction for Canadians as well as helping to grow the local economy.

PARTNERSHIPS Canad Inns and the city are working together to market and promote Grand Forks to potential visitors in Manitoba. Hyman and Rossini say the partnership between the hotel and arena is not only good for both facilities, but also pays dividends for the city as a whole. “We are seeing some events that are filling Canad Inns and spilling over into hotels nearby, putting them up to 80 to 90 percent occupancy on work days,” Hyman says. “We have an enormous amount of vacant acres surrounding us. It’s our hope to create a destination neighborhood entertainment and shopping district. We want to become further established as the Canadian/American destination center. That’s the city’s desire, too. What’s happening here is good for the entire region.” Helseth is a Minot, ND-based freelance writer. She can be reached at candi@srt.com.

ON THE WEB: www.canadinns.com/stay/grandforks.php www.aleruscenter.com


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Prairie Business

31


Upbeat regional tourism outlook for 2010 By Sarah McCurdy s the recession starts to fade and the recovery begins, the national tourism industry is looking forward to a stronger year after taking its lumps last year. Twenty percent of the 2,200 travelers questioned by D.K. Shifflet & Associates in a recent survey said they are planning more leisure trips in the first half of 2010 compared with last year. The regional outlook for the 2010 tourism season also looks to be improved in Minnesota, North Dakota and South Dakota, three states that fared better than the rest of the nation last year. As travelers continue to look closer to home for affordable family vacations, regional tourism officials believe they are well positioned to take advantage of the trend towards more low-cost vacations. “The economic situation is going to continue to shape travel decisions,” says Sara Otte Coleman, the director of North Dakota Tourism, a division of the state department of commerce. “People are looking for deals. Packages that allow for easy planning will continue to be important. People will look for destinations closer to home, including wholesome travel like state and national parks.”

A

MINNESOTA

FAIRLY POSITIVE OUTLOOK IN MINNESOTA Tourism is a $11.2 billion business in Minnesota, with the leisure and hospitality industry employing more than 245,000 Minnesotans. “The tourism industry as a whole is more optimistic than it has been in some time,” says John Edman, director of Explore Minnesota Tourism, the state’s tourism office. “Last year was a very different year for many states, including Minnesota.”

NORTH DAKOTA

Photo courtesy of Explore Minnesota Tourism

Edman says as a whole Minnesota’s tourism industry performed better than most states across the country in 2009. He says that Explore Minnesota Tourism saw signs last year that people still wanted to get away despite the recession, but observed that they traveled differently. Tourists didn’t travel as far on vacations, stuck closer to home, were more price conscious and looked for value. Edman expects the “conscious travel” trend that started last year to continue into the 2010 travel season. There is also hope that 2010 will be stronger year for tourism in Minnesota than last year. “We are seeing that people are becoming more confident in the economy and they realize they need to get away,” Edman says. While spending may remain on the cautious side, Edman expects many will rediscover areas and pastimes closer to home such as fishing, biking and hiking. Different parts of Minnesota experienced differing travel numbers in 2009. The Minneapolis-St. Paul metro area was affected by a downturn in business travel, while some segments and areas outside the Twin Cities metro held their own and even performed better last year than in recent years. Edman says business travel in the Twin Cities area has been increasing in 2010 and the trend is expected to continue in both the business and leisure segments. “Our forecast for the year is people are going to take their vacations,” Edman says. “They just need that reminder.”

NORTH DAKOTA TOURISM ON THE RISE North Dakota is outpacing the rest of the nation in tourism growth. In a study conducted by IHS Global Insight between 2006 and 2008, North Dakota’s core tourism grew by 10.7 percent, compared to national growth of 8.1 percent during the same period. Canadian travel to North Dakota also increased by 32.1 percent during the same timeframe in another study, yielding 1.5 million trips from 2006 to 2008. Every county in North Dakota saw tourism growth and 46 counties experienced double-digit growth between 2006 and 2008, according to the survey. Otte Coleman says North Dakota’s status as an affordable, close-to-home destination has made the state an attractive tourist destination given the current economic climate. “It’s really what’s in style right now and we fare well Photo courtesy of North Dakota Tourism

32

April 2010


are also running ahead of last year with visitors booking longer stays. with that,” she says. “I think what we’re seeing is people who were maybe being cautious The state had increases in state park visitation, business and leisure before are tired of it now,” says Melissa Bump, director of the South travel and hotel profitability in 2009. North Dakota was also the only Dakota Office of Tourism. “They want to get state in the nation to post an increase out and they can do it economically in in revenue per available room in 2009 South Dakota.” compared with 2008. South Dakota also saw a sizeable jump in National park attendance “The tourism industry as a whole is more the number of visits to the state’s tourism increased by 19 percent in 2009 and optimistic than it has been in some time” website from residents of nearby states Otte Coleman says she expects John Edman, director, Explore Minnesota Tourism Minnesota, North Dakota, Wisconsin, tourists will continue to look for ways Colorado, Iowa and Nebraska in the last to get back to nature this year. year. Family travel continues to be Bump credits South Dakota’s tourism important, but Otte Coleman says success with a continued, consistent advertising message delivered the dynamic is changing. She says more people are now traveling with throughout the recession. She says the state’s many educational and extended family members. historic places, including its national and states parks, are a great draw Otte Coleman says the tourism department’s marketing strategy, for families. which has focused most of its efforts regionally throughout the last “Our state is very affordable, which encourages those who may be decade, has made the most out of its limited budget. working off a tighter budget to consider us for a vacation,” Bump says. “We get the message out into the markets where we know we can Bump says there are too many external factors to make concrete make an impact,” she says. statements regarding trends in the upcoming tourism season. But she says South Dakota is an affordable destination, which is what travelers VISITOR NUMBERS UP IN SOUTH DAKOTA are looking for right now. “South Dakota can give travelers more value South Dakota had a record number of visitors last year, according to for their dollar,” she says. an IHS Global Insight study. The state experienced a 1.2 percent increase When their vacations are over, she wants visitors to leave knowing in visitors in 2009, despite a national 7 percent drop in tourism last year. there is more to see and do in the state. Tourism taxable sales have also held steady so far this year in South “Come for a week if you can,” Bump says. “It’s a large state and there Dakota. are things to do in all corners of the state. If they didn’t book their trip Custer State Park reached a record 1.8 million visitors in 2009 and long enough, we will welcome them back.” reservations are running 20 percent ahead on nights reserved for this summer compared to the same time last year. Nights in parks statewide McCurdy is a Fargo-based freelancer writer. She can be reached at sarah@sarahmccurdy.net.

SOUTH DAKOTA

At the Alerus Center we appreciate the importance and the burdens placed on the event planner. Our staff has coordinated thousands of events from conventions to receptions to luncheons. You will be treated with the utmost respect and professionalism.

The Alerus Center boasts 12 individual meeting rooms ranging from 600 sq. ft. to 1,300 sq. ft. along with the extravagant 20,000 sq. ft. ballroom. The ballroom can be set as a whole or divided up to five separate gathering areas to create the intimate setting needed for your event.

Photo courtesy of South Dakota Office of Tourism

Prairie Business

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COMMUNITY PROFILE - BRAINERD, MN

Despite slowing economy, tourist destination looks to the future By Ryan Schuster urrounded by hundreds of crystal clear lakes, tall pine trees and intersected by the Mississippi River, the Brainerd, MN, area has always been a popular destination for those seeking an escape from big city life. Attractions include the area’s high-end resorts, outdoor activities like golf, fishing, boating and hiking as well as events, cultural activities and shopping. “There is something going on every weekend,” says Lisa Paxton, CEO of the Brainerd Lakes Chamber, which has offices in Brainerd, Crosslake, MN, and Pequot Lakes, MN. “When visitors come here they are not coming to just one community, they are coming to a number of communities. No matter where you go, there will be a lot to do within half an hour of where you are staying.” The Brainerd area’s tourism industry has remained fairly strong despite a national drop off in tourism spending and a slowing local economy. “We’re getting a lot of calls,” says Kathy Reichenbach, a spokesperson for the seasonal Madden’s resort on Gull Lake just west of Baxter, MN, that reopens this month. “We’re hoping for a good season.” The area has continued to diversify its economy, adding new firms as the local population base has swelled by more than 37 percent in the last two decades and now boasts more than 90,000 residents combined in Minnesota’s Crow Wing and Cass counties.

S

throughout the larger Brainerd lakes area. The Brainerd Micropolitan Statistical Area, which includes all of Minnesota’s Crow Wing and Cass counties, had a nonseasonally-adjusted unemployment rate of 12 percent in January — down from 13 percent a year ago, but up from 8.8 percent in January 2008. A number of industries, including the manufacturing and construction sectors, have been hurt by the economy. Minnesota’s state budget deficit and its impact on local funding sources haven’t helped, either. “We’re trying to grow, but the economy has slowed us down,” says Bruce Buxton, a principal and the chairman of the board of Lisa Paxton, CEO, Brainerd Lakes Chamber Widseth Smith Nolting. “We do a lot of SLOWING ECONOMY government work. It has affected us. We’re looking for things to get Like many communities throughout Minnesota, though, the better, but we have done what we needed to do to keep going.” Brainerd, MN, area has not avoided the impacts of the national recession. Even the region’s typically recession-proof health care industry has Brainerd had a non-seasonally-adjusted unemployment rate of 19 been affected. percent in January, but business leaders say only looking at the city’s Brainerd Lakes Health, the largest health care system in north central economicMonth performance 34 0000 can be deceiving, pointing to better conditions (continued on page 36) 34 Month 0000 34

April 2010


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(continued from page 34)

Minnesota and one of the area’s largest employers, has instituted hiring and wage freezes, resorted to modest job cuts and added a high-deductible health insurance plan and other measures as it works to close an estimated $5.5 million funding gap. The revenue shortfall has been caused by a number of economic factors, including declining patient volumes, increasing charity care, cuts in government reimbursement rates and less state health care funding for poor residents. But Jani Wiebolt, president of St. Joseph’s Medical Center in Brainerd, which is part of Brainerd Lakes Health along with eight clinics throughout the area, remains optimistic about the future of health care and the economy in the growing area. “Being in a growth area is always good, particularly during a recession,” Wiebolt says. “We have an optimistic outlook. We have a number of projects under way and we are not done yet with our development since integrating the hospital and clinics. There will be more to come in terms of new specialty services. We just need to find ways to continue that growth while still managing the impact of the recession.” The recovery may take awhile, but some local business professionals expect the economy to slowly show signs of improvement. “We are starting to see some interest in commercial, which we haven’t seen in two years,” says Buxton of Widseth Smith Nolting, which has eight offices in Minnesota, North Dakota and South Dakota, including one in Baxter. “People have been in this down economy long enough that they are starting to look at doing things they haven’t done in a long time. I don’t expect to see any real improvement this year, but next year should be better. Demand has been pent up for so long that it will have to eventually break.”

EXPANSIONS AND CAPITAL INVESTMENTS Despite the economy’s impacts, a number of construction projects and expansions have recently been completed or are in the planning stages in the area. Wausau Paper recently announced a $27 million capital investment in equipment to upgrade its capacity to produce tape-backing paper in addition to other paper products in its Brainerd paper mill. The machine rebuild is expected to be complete by the first quarter of 2011. “We were thrilled when we found out that it will happen here,” says Sheila Haverkamp, executive director

of the Brainerd Lakes Area Development Corporation. “It will solidify the company’s presence in the economy. It also sets us apart from other communities.” A four-block core area of downtown Brainerd completed its first major renovation project in about 30 years last year with the addition of streetscaping, utility renovations and landscaping that spruced up the appearance of existing older buildings and helped make downtown a more appealing destination for visitors and residents alike. Emily Northey, the Sheila Haverkamp, executive director, Brainerd Lakes chamber’s Brainerd main Area Development Corporation street coordinator, says the project resulted in business and property owners working together with the city and community and has led to more of a sense of ownership among downtown stakeholders. “This was only finished last year and we have already seen some building owners repaint and replace their facades,” Northey says. The $12 million Brainerd Lakes Heart and Vascular Center, which is attached to the St. Joseph’s Medical Center in Brainerd, opened earlier this year and has led to the addition of 30 jobs. Despite budgetary constraints, Brainerd Lakes Health still plans to open its new Baxter Medical Park facility in 2011. The 40,000-squarefoot facility, which will employ 25 physicians, is currently in the design phase and is expected to cost between $8 million and $10 million. The project will need to receive final approval from Essentia Health after final design and cost estimates become available. “The Baxter community has been growing rapidly,” says Wiebolt of St. Joseph’s Medical Center. “We have outgrown the physician space that is currently available.” Staples, MN-based Lakewood Health System recently completed a (continued on page 38)

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April 2010


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2,850-square-foot expansion of its Pillager (MN) Clinic. The Cuyuna Regional Medical Center in Crosby, MN, and the Riverwood Healthcare Center in Aitkin, MN, have also recently expanded their health care services. Last year a former middle school in Brainerd reopened following a $10 million renovation into 25 live and work lofts for artists and space for community programs and commercial uses. A $60 million renovation of the Crow Wing County campus in Brainerd was completed three years ago, including the construction of new jail, judicial center and community services buildings and renovations of other county facilities.

HIGHER EDUCATION The economy’s struggles have been a boon to Central Lakes College, a community and technical college with campuses in Brainerd and Staples. Central Lakes Brainerd International Raceway College has experienced record enrollment, which is expected to reach 6,000 with 3,400 full-time equivalents by the end of the year. The community college offers more than 70 degree and career education programs. The institution’s degree and diploma programs are designed to transfer to four-year universities or prepare graduates for immediate employment in high-demand fields. Cooperative programs are linked with local four-year colleges like Southwest Minnesota State University (Marshall, MN), the University of North Dakota, Minnesota State University (Mankato), Bemidji (MN) State University, the College of St. Scholastica (Duluth, MN) and Concordia College (Moorhead, MN). Central Lakes College is also involved in a unique partnership with area school districts, local businesses and the chamber to connect businesses and the education sector to prepare students for the labor market and provide businesses with an available trained workforce. Courses in the Bridges program focus on high-demand and well-paying career fields available in the Brainerd area. Students receive dual high school and college credit in three or four courses during a two-year period, helping prepare them for future employment. “When I first got here I was struck by the high level of collaboration between the college, school districts and other groups,” says Larry Lundblad, Central Lakes College’s president. “In addition to education, part of our mission is economic development and making connections. There is a wealth of expertise in the community that benefits students.”

Central Lakes College, Brainerd campus

Community leaders say the innovative program is just one example of strong partnerships that exist between industry, city, county and community groups. “We have tremendous partnerships in how we work together to avoid duplication of services,” says Paxton of the chamber. “That’s really what sets this community apart. When I look at the partnerships, everyone in the community is at the table.”

PLANS FOR THE FUTURE Economic development officials are looking to build on the area’s amenities, an available labor force and cheaper business costs than in the Minneapolis-St. Paul metro area to attract more businesses. Relocating companies can take advantage of a 10-gigabyte capacity fiber optic network in place in Brainerd, Baxter and Nisswa, MN. Brainerd is one of only three communities in the state to be designated as Shovel Ready certified, allowing businesses to avoid delays in obtaining needed approvals to begin construction. The Vision 2020 Economic Vitality Task Force, which was made up of local leaders, worked with a consulting firm to develop a three-year economic development plan for the region. The task force targeted the health care, financial services and insurance, professional and technical services, and metal, plastics and wood products manufacturing sectors for future growth. Community leaders are working on developing a regional transportation system and seeking financing to create a joint transportation plan for road improvements in both Crow Wing and Cass counties. The Brainerd Lakes Regional Airport offers daily Delta Air Lines service to and from Minneapolis-St. Paul, but local officials point out that attracting more air service in the future is needed to facilitate future growth. “For a community its size, Brainerd has one of the finest airports around,” says Dave Anderson, president of Brainerd-based Anderson Brothers Construction. “But air service has become somewhat of a limitation for the area. In the future the airport could handle bigger jets, bigger loads and more people. Right now it isn’t close to its potential.”

BRAINERD, MN, AREA Brainerd U.S. Census Bureau 2008 population estimate: 13,691 Baxter U.S. Census Bureau 2008 population estimate: 8,271 Crow Wing County U.S. Census Bureau 2008 population estimate: 62,172 Cass County U.S. Census Bureau 2008 population estimate: 28,732 Major employers: Brainerd Lakes Health, Grand View Lodge, Maddens Inc., Cragun’s Resort, Brainerd Public Schools, Crow Wing County, Central Lakes College, Brainerd Regional Human Services, Cuyuna Regional Medical Center, Ascensus On the web: www.ci.brainerd.mn.us, www.explorebrainerdlakes.com, bladc.org 38

April 2010


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Semi wraps promote South Dakota tourism By Loretta Sorensen mages promoting tourism in South Dakota are literally being trucked across the nation like giant moving billboards. Last year the South Dakota Office of Tourism added a new tool to market the state to visitors — colorful semi truck trailer wrap displays. South Dakota’s tourism office has placed wraps on seven semi trucks owned by K&J Trucking, a Sioux Falls-based commercial trucking company. The non-traditional marketing strategy of vehicle wraps has been employed by a number of businesses that cover company vehicles with photos, graphics and bright colors. But using giant semis to advertise for another company or group is still a fairly new concept. “When the advertising company approached us, this was something we hadn’t heard of before,” says Melissa Bump, director of the South Dakota Office of Tourism. “We liked the sound of the idea, but had many questions about how we would get the wraps on trucks, how many trucks we wanted to use and how many years we’d employ the promotion. It took some time to work out details but the promotion is getting attention and we think it’s a unique approach that puts South Dakota in a leading position in regard to promoting the state.” The wraps consist of an opaque film that can be imprinted with photos, letters, graphics and bright colors and attached to the vehicle with a special adhesive. K&J Trucking, a specialized refrigerated carrier that operates in 48 states, agreed to place the wraps on seven of its 110 trucks, which travel to 27 different states. “We’ve never done anything like this before,” says Michelle Koch, the Sioux Falls trucking company’s president. “We’ve been approached before to advertise some things that didn’t fit well with our company. Since we deliver food to all types of businesses we don’t advertise food products. We also don’t promote issues that aren’t of a charitable nature.” K&J Trucking doesn’t receive compensation for featuring the semi wraps, but Koch says that didn’t play a part in the company’s decision whether or not to use the wraps. “We had some initial concerns about how the wraps would be applied or how we’d patch

I

40

April 2010

a wrap if it was damaged in a minor accident,” Koch says. “We worked out those details one by one and now our drivers vie for the opportunity to haul with those trucks that feature South Dakota images.”

WRAPS GRABBING ATTENTION From the start, the semi wraps have garnered attention both on and off the highway. Semi drivers have observed cars pull up beside them to view the image on one side, then slow down and pull up next to the opposite side of the semi to view the other side of the wrap. “We had some concerns that blind spots in the truck might be a problem if people were driving slow and trying to read the wraps,” Koch says. “Our drivers are always careful to keep track of all the cars around them and that proved not to be a real issue. When drivers stop at restaurants or rest areas, it’s not unusual for people to ask if they can take pictures of the semi trailer. Some of the photos have shown up on the internet in places like Facebook. We hear comments like, ‘This is pretty impressive,’ and questions about who designed and applied the wraps.” After a few weeks, K&J Trucking drivers requested that South Dakota’s tourism office supply them with brochures about the state because travelers began asking questions out about South Dakota. “The drivers now have a supply of brochures in the truck that they can hand to people who show an interest in more information,” Koch says. “They get requests for the brochures pretty regularly.”

FACES OF SOUTH DAKOTA Determining which images would be used for the promotion wasn’t an easy task, Bump says. The process began by envisioning how the images would look on semi trailers. Tourism staff considered how different images and scenes might be perceived as drivers navigated around semis on the road and onlookers noticed the parked trucks. “Our South Dakota icon is featured with each image,” Bump says. “Each side of the trailer is different. We have such a beautiful state and so many good images it was challenging to select just a few scenes.” After much deliberation, Bump and her

staff selected Mount Rushmore, Crazy Horse Monument, a scene the depicts kayaking and canoeing in Palisades State Park, horseback riding on the prairie, a Native American dancer and a rock climber in Badlands National Park. “We tried to feature different facets of the state and not just the Black Hills,” Bump says. “We believe we were able to include a good mixture that covers areas across the state.”

POSITIVE REACTION K&J Trucking hasn’t had to worry about patching any damaged wraps and has been able to clear up the small amount of graffiti that showed up some on the trucks. “We’ve really enjoyed being part of this,” Koch says. “We’ll certainly consider adding more trucks to the promotion if the state decides to do that. The images are big, beautiful and bright and the project has been very positive for us.” Bump’s state tourism office has also been pleased with the results of the promotion and plans to look into adding more wraps in the future. “K&J’s drivers are giving us some good feedback and we’re seeing some comments on social media such as Facebook from people who’ve seen the trucks,” Bump says. “A common comment is that people didn’t realize how beautiful South Dakota was. We plan to add one more truck to the fleet next year and will give some thought as to where we go from there. We’ve heard from some other states that thought it was a great idea. We’re proud that, for a small state, we can be on the leading edge of this kind of promotion.” Sorensen is a Yankton, SD-based freelance writer. She can be reached at sorensenlms@gmail.com.


JACK GELLER

No more business as usual ith a current $994 million state budget deficit for the 2010-2011 biennium and a lurking $5.8 billion deficit through 2013, Minnesota will no longer be able to meet budget constraints using business as usual tactics. A tweak here and a tweak there won’t be sufficient to solve the state’s budget problems this time around. Successfully meeting the challenge will likely require a serious look at tax and expenditure reform along with an examination of how Minnesota collects tax revenues and how and where the state spends those revenues. State funding shortfalls are affecting communities across the state left with reduced state funding. A number of budget-related issues key to rural communities will figure prominently into how the state legislature balances its budget during the 2010-2011 biennium.

W

LOCAL GOVERNMENT AID Local Government Aid has been a tremendous help to small rural communities. LGA was intended to serve as a statewide

equalizer to assist local governments in meeting essential service needs without overburdening local taxpayers. This is especially true in rural communities with modest property tax valuations and a disproportionate percentage of lower-income and fixed income residents. LGA has grown to account for more than half of the funds in many community budgets. For years legislators have debated how much LGA helps local communities. Rural legislators strongly support the current system, but some in the legislature oppose LGA.

PRIORITIZING CAPITAL BONDING During even numbered years communities from across the state compete in hopes of having a local capital improvement project placed in the state’s capital bonding bill. From community ice arenas to the new Guthrie Theater, legislators carry local requests to the state capitol where there are typically 3-5 dollars of requests for every dollar of available funding. In recent years it has become increasing difficult to secure a place in the bonding bill as local projects have fallen out of favor, replaced by projects deemed to have more regional or

statewide significance. This way of prioritizing projects figures to be used more in the future. But outside of a flood control project or the development of a statewide facility, how many projects from small rural communities can actually meet this funding criteria? We should revisit the goals of a state capital bonding bill and the role local projects play in it.

POTENTIAL CONSOLIDATIONS City-county service consolidation and the regionalization of human services infrastructure will likely be brought up. Don’t be surprised if further consolidation of statewide offices, schools and school districts, college campuses and state-owned infrastructure is also considered. Geller is director of the Economic Development Administration University Center and heads the Arts, Humanities and Social Sciences Department at the University of Minnesota, Crookston. He can be reached at gelle045@umn.edu.

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WOMEN IN BUSINESS SHANNON MCQUADE-ELY — PRESIDENT/OWNER MCQUADE DISTRIBUTING COMPANY INC., BISMARCK

What is it like working in a family business your grandfather started? There is a great sense of pride anytime you are in a family business. I’m third generation now. It is one thing to be the manager or owner of a small company. If it is a family company there is another piece of the puzzle. You don’t want to let everyone down and you want to keep it going strong. There is a little pressure to continue the success of the family business.

Can you describe going through the Anheuser-Busch successor plan and succeeding your father as president? I started in 2000. I was on the truck for about a year as a delivery helper, physically delivering beer. I did a quick follow with sales people and spent about a year selling. I spent time in the office, helped out in the warehouse and went to a lot of seminars by Anheuser-Busch before I was approved in 2004. It has been a pleasure working with the management team around me. They have been great mentors and my father has been as well. What was it like going from a stay-athome mom at one point in your life to a company president? My first children were a set a twins. I was at home for about three years. It is surprisingly similar. It is all about managing and time management. Instead of finding the time to take a shower, I am figuring out how to do my job. Being a stay-at-home mom is a very difficult job. Going to work helps my sanity. I enjoy what I do now, but I did enjoy having that time at home with my daughters. What was your reaction to being named the first female board president of the North

MATTHEW MOHR

INTRODUCTION

GROWTH

Dakota Beer Distributors Association last year? It’s something I didn’t really think about right away. I think I was also the first thirdgeneration owner named president. I was more proud of that because my father and grandfather were also named president of the association. I didn’t even realize I was the first woman until Janet Seaworth, the executive director of the association, told me. We joke about it a little bit because we’re the only women involved in the organization. Was it difficult for you to earn respect as a woman in a male-dominated field? It’s something I don’t think about a lot. It is brought to my attention more than I think about it. I’ve always been kind of a tomboy. I grew up in athletics and I worked for the Fargo-Moorhead RedHawks baseball team their first few seasons before moving back to Bismarck. I was already kind of primed to be in a male-dominated field. The beer distribution business is by far dominated by men. It is nice not having to wait in line for the restroom at conventions. I think I bring a little different perspective, but it isn’t something that I think about that much.

MATURE

END OF LIFE

NEW OFFERINGS

Understanding product life cycles Y ears ago marketing professionals observed that most products follow a regular pattern through time. This phenomenon is called the product life cycle. Most products follow this predictable pattern. No set time line exists for products. Some move through their life cycle quickly, while others linger longer. Once a product or service is developed, the inventor needs to determine if it is commercially viable (if it will be a profitable product or service to offer). If it is determined that the new product could be profitable and commercially viable, it is introduced to the marketplace — beginning the introduction phase of its product life cycle. As the product is introduced to the market, innovative consumers begin to recognize its value and start using the product. Once the product is used by early adapters, others notice its existence. More and more consumers or clients realize the product’s value and its use generally grows rapidly, creating the product’s growth phase. After the item becomes part of normal commerce and most users understand it, the rapid sales growth tends to taper off as fewer and fewer new users buy the product each day. While the number of new users decreases, repeat purchases continue to drive demand for the product or service and needed production levels

44

April 2010

become more predictable. Once demand becomes stable and predictable, the product or service is considered to be mature in its life cycle. How long a product can stay in the mature phase depends on its use, cost and who uses it. Some products last a few years, while others last for generations. After a product is considered mature, new inventions are often developed that improve upon it or help to take its place. Eventually the need for the product usually fades away. The suppliers of the original product may attempt to extend its life by making adjustments, often introduced as “new and improved” versions. But over time improvement opportunities wear out and sales decline, eventually leading to the product’s end or death. Understanding the product life cycle is beneficial to business owners as they consider rolling out new offerings and conduct long-term planning. Mohr is president and CEO of the Fargo-based Dacotah Paper Company. He writes occasional articles for the Federal Reserve bank, has authored several books and is a self-avowed angel investor. Mohr can be reached at mmohr@dacotahpaper.com.


AD DIRECTORY Alerus Center 33 ________________________ Anderson Brothers Construction Company 37 ________________________ Bismarck Airport 15 ________________________ Bismarck Civic Center 31 ________________________ Black Hills, Badlands & Lakes 15 ________________________ Brainerd Lakes Chamber of Commerce 35 ________________________ Bremer Financial Services 7 ________________________ Buffalo City Tourism Foundation 21 ________________________ Coldwell Banker Commercial / First Realty 15 ________________________ Dacotah Paper Company 31 ________________________ Dakota Carrier Network 13 ________________________ Dakota Specialty Milling 17 ________________________ Dickinson Convention & Visitors Bureau 17 ________________________ Doublewood Inn & Conference Center 23 ________________________ Fargo-Moorhead Convention & Visitors Bureau 2 ________________________ Forum Communications Printing 37 ________________________ Gate City Bank 23 ________________________ Grand International Inn 37 ________________________ Greater Grand Forks Convention & Visitors Bureau 23 ________________________ Heath Care Insurance Services 21 ________________________ Hector International Airport 19 ________________________ Koch Hazard Architects 17 ________________________ Lake Area Improvement Corporation 19 ________________________ Lakewood Health System / Soulstis Med Spa 39 ________________________ Maddens on Gull Lake 35 ________________________ Mallory Alexander ________________________8 MDU Resources Group 47 ________________________ MeritCare, A member of Sanford Health and MeritCare Family 9 ________________________ Midcontinent Communications 4 ________________________ Minot Convention & Visitors Bureau 29 ________________________ North Dakota Department of Commerce 3 ________________________ North Dakota Department of Tourism 29 ________________________ North Dakota Rehabilitation Consulting & Services 11 ________________________ North Dakota State Fair Center 23 ________________________ Ramada Plaza & Suites 21 ________________________ Rapid City Convention & Visitors Bureau 41 ________________________ Rommesmo Companies 27 ________________________ Rural Learning Center 39 ________________________ Sleep Inn & Suites 29 ________________________ Stop N Go 39 ________________________ Theadore Roosevelt Medora Foundation 48 ________________________ Ulteig Engineers 19 ________________________ UND Athletics 21 ________________________ Wanzek Construction 27 ________________________ Widseth Smith Nolting 35

By Amanda Hvidsten ullet holes remain in one of the building’s doorways from a still unsolved 1933 bank robbery that resulted in the death of one of the bank’s cashiers. The small Buxton Bank building in Buxton, ND, has been vacant for decades. But new life is being breathed into the structure. An effort is under way to restore the circa 1893 building to its former glory. Bobbi Hepper Olson, the owner of Hepper Olson Architects, moved to Buxton after marrying a local fourth-generation farmer and drove past the old building for seven years before deciding something needed to be done to the structure. Between neglect and the effects of the elements since it closed in 1977, the building had fallen into disrepair. Its floors, ceiling and everything in between needed help. Hepper Olson’s background as an architect and her interest in the building made her the perfect person for the job. Her passion for the project also helped sustain the effort. In 2005, Hepper Olson made the leap of faith by forming a nonprofit to acquire the building and restore it to its former aesthetic. “It was really destroyed, but you could see things that were fabulous,” she recalls. “It took a lot of time and funds, but it was a small enough project to handle.” Hepper Olson says she would have spent more on renovating the former bank building if she could have afforded it. “I even wish I had deeper pockets,” she says. “People spend their disposable income on different things and mine happened to be the Buxton Bank.” Hepper Olson funded the early phases of the project through the nonprofit Buxton in Bloom organization and began writing grants to secure additional funding. Former occupant First State Bank, the city, the Traill County Historical Society, the State Historical Society of North Dakota, the National Trust for Historic Preservation and local donors donated funds to the restoration effort. Local board and advisory board members helped Hepper Olson dream up what the bank could look like and how the

B

Buxton Bank building lives on project would progress. “Everything starts with an idea,” she says. Funds have covered cleaning out the building, refurnishing the original teller lines, new windows and floors, repairing the bank’s stained glass window and replacing its roof, among other things. Some of the bank’s unique features have been preserved, including the teller panel and door trim that carry bullet holes from the 1933 bank robbery, parts of the tear gas security system that still remain and the old keys to the building. Walking into the bank now is like taking a step back in time. A wall of history that Hepper Olson plans to create in the future will help evoke memories of the building’s past. She says some residents have already dropped off pieces of memorabilia for possible inclusion, although hasn’t gotten to that part of the project yet. What will the small farming community of Buxton do with a restored granite bank building? Hepper Olson says the goal of the restoration project was to preserve the building that was listed on the National Register of Historic Places in 1978. She says it will be used to house historical artifacts and serve as a small museum and a local meeting place. It also already hosted some meetings, weekly Bible study sessions and a few other small gatherings. The building will be made available to host local events free of charge. The Buxton Bank building stands as a reminder of the past and an example of the creativity and will of a small community to preserve its history. “More than anything,” Hepper Olson says, “I want to say to small towns that you can do these projects if you have a passion for them. It takes time and you can’t do it all at once. You have to plan it all in steps. You can do some aspects and then take time to raise money and write grants. You don’t have to tackle it all at once.” Hvidsten is a Grand Forks, ND-based freelance writer. She can be reached at amandahvidsten@gmail.com. Prairie Business

45


BY THE NUMBERS EMPLOYMENT (NOT SEASONALLY ADJUSTED)

Minneapolis-St.Paul MSA Duluth-Superior MSA Rochester MSA St. Cloud MSA Mankato-N. Mankato MSA Minnesota Sioux Falls MSA Rapid City MSA South Dakota Fargo, MSA Bismarck MSA Grand Forks MSA North Dakota

Source: U.S. Bureau of Economic Analysis

NORTH DAKOTA OIL PRODUCTION

90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000

North Dakota Minnesota

$38,661

Minnesota

11

$39,870

North Dakota

20

$43,047

South Dakota

$37000 $38000 $39000 $40000 $41000 $42000 $43000 $44000

46

April 2010

2009 −

2008 −

2005 −

Source: North Dakota Oil and Gas Division

GENERAL SALES TAX COLLECTIONS (2007)

U.S. Rank South Dakota

2000 −

0

1990 −

10,000,000

MSA — Metropolitan Statistical Area MiSA — Micropolitan Statistical Area Sources: U.S. Bureau of Labor Statistics, Minnesota Department of Employment and Economic Development, Job Service North Dakota, South Dakota Department of Labor

PER CAPITA PERSONAL INCOME (2008)

$193,947 $9,869 $8,725 $7,529 $3,746 $262,847 $14,183 $4,891 $36,959 $10,094 $4,404 $3,774 $31,208

1980 −

January 2009 112,886 57,075 51,727 30,932 14,362 13,941 10,789 11,169 339,476 122,660 61,995 21,560 19,445 18,265 12,655 12,315 11,370 11,205 9,065 7,260 415,860 1,671,632 130,536 98,684 96,721 52,582 40,995 30,243 27,462 27.353 23,163 21,739 18,101 19,134 18,897 19,591 19,305 15,016 13,601 13,690 10,735 11,332 2,693,307

1970 −

January 2010 113,413 58,485 51,988 31,694 13,866 13,863 11,441 11,024 340,706 21,320 61,615 21,860 18,110 17,535 12,685 11,930 11,055 11,875 9,265 7,370 411,715 1,699,101 132,478 100,642 100,171 54,795 40,754 30,673 27,357 26,815 23,185 22,657 20,180 19,572 19,136 18,687 18,658 14,881 13,987 13,917 11,475 10,878 2,713,878

1960 −

January 2009 4.6% 5.5% 5.2% 5.0% 2.4% 3.4% 4.5% 7.5% 5.2% 4.6% 5.0% 3.6% 3.0% 5.2% 4.1% 5.7% 5.6% 3.9% 3.7% 3.4% 5.0% 7.7% 9.9% 9.4% 7.0% 6.5% 13.0% 9.4% 7.2% 10.4% 8.8% 8.5% 7.1% 10.6% 8.0% 8.4% 9.5% 9.2% 7.0% 9.6% 6.4% 7.2% 8.3%

1955 −

Fargo MSA Bismarck MSA Grand Forks MSA Minot MiSA Williston MiSA Dickinson MiSA Jamestown MiSA Wahpeton MiSA North Dakota Sioux Falls MSA Rapid City MSA Aberdeen MiSA Brookings MiSA Watertown MiSA Spearfish MiSA Mitchell MiSA Yankton MiSA Pierre MiSA Huron MiSA Vermillion MiSA South Dakota Minneapolis-St.Paul MSA Duluth-Superior MSA St. Cloud MSA Rochester MSA Mankato-N. Mankato MSA Brainerd MiSA Fairbault-Northfield MiSA Winona MiSA Fergus Falls MiSA Red Wing MiSA Willmar MiSA Austin MiSA Bemidji MiSA Alexandria MiSA Owatonna MiSA Hutchinson MiSA Albert Lea MiSA Marshall MiSA New Ulm MiSA Worthington MiSA Fairmont MiSA Minnesota

January 2010 4.8% 4.9% 5.2% 5.1% 2.5% 3.7% 4.3% 5.8% 5.0% 5.5% 5.6% 4.1% 4.2% 6.1% 4.8% 5.5% 5.3% 3.5% 4.4% 3.9% 5.5% 7.7% 9.1% 8.5% 6.7% 6.5% 12.0% 9.1% 7.3% 9.4% 8.6% 7.8% 6.3% 9.2% 7.7% 9.2% 10.4% 8.7% 6.4% 8.4% 5.8% 7.9% 8.2%

(in millions of current dollars)

EMPLOYMENT

BBL

UNEMPLOYMENT RATE

GROSS DOMESTIC PRODUCT (2008)

25

Source: U.S. Bureau of Economic Analysis

per capita

rank

% of income

Minnesota

$9,879.81

23

2.5%

29

North Dakota

$1,019.89

20

3.0%

17

South Dakota

$1,218.08

12

3.6%

10

U.S. average

$1,007.88

-

2.7%

-

rank

Source: Minnesota Department of Revenue


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Prairie Business April 10  

Northern Plains Business