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January 2014

Harnessing the Heat Industry, researchers collaborate to utilize Bakken natural gas pg. 30

ALSO Connecting the Disconnected Bringing together business communities in northern Plains, Twin Cities

pg. 22

Smooth Transition Eide Bailly excels in succession, expansion plan

pg. 26


Photo courtesy of Blaise Energy

North Dakota. Doing Business Better. With support from the state of North Dakota, Blaise Energy is working to transform excess gas from the oil drilling process into a profitable source of electricity. Learn how the North Dakota Department of Commerce and companies in the state are doing business better at www.NDBusiness.com


|INSIDE| January 2014 VOL 15 ISSUE 1

DEPARTMENTS

FEATURES

6 Editor’s Note BY KRIS BEVILL

New year, new additions 8 Business Advice BY MATTHEW D. MOHR

Making and marketing 8 Management Matters BY JOHN GIRARD

Thinking beyond the next quarter 10 Finance BY CURT EVERSON

Level the playing field for lending institutions 12 Research & Technology BY KELLY RUSCH

The energy to find answers An aerial view of the nearly complete Williston Area Recreational Center and the Williston State College campus. PHOTO: VERN WHITTEN PHOTOGRAPHY

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LEADERSHIP

Passing the Torch Transition to new management team at Eide Bailly just one part of firm’s longevity, expansion plan

30

FLARING

Beating the Heat Multiple solutions expected to combat Bakken flaring and utilize the region’s natural gas

14 Economic Development BY JARED STOBER

New Innovate ND program provides right resources at right time 16 Prairie News 20 Prairie People 22 Business Development Connecting the disconnected 24 Manufacturing Taking welding training where it’s needed 34 Research I Digital Edition Only Benchmarking boomtowns 36 Talk of the Town From boom to business

EVENTS NDSU Executive Education Business Owner Solutions Series ................................................Jan. 15 Fargo, N.D.................................................................................................................ndsu.edu/dce/execed N.D. Women's Startup Weekend .............................................................................................Jan. 24-26 Fargo, N.D. .........................................................................................northdakota.startupweekend.org

38 Finance Private equity fund takes hands-on approach to investments 40 Entrepreneurship 125 years and counting

2014 Precision Agriculture Action Summit ...........................................................................Jan. 20-21 Jamestown, N.D. ...........................................www.theresearchcorridor.com/precisionsummit2014

42 Energy

The Bakken/Three Forks Shale Oil Innovation Conference & Expo .......................................Feb. 10 Grand Forks, N.D. .................................................................................www.bakkenoilconference.com

48 Business to Business

Small Business Innovations Summit ............................................................................................Feb. 21 Fargo, N.D.............................................................................www.theresearchcorridor.com/sbsummit

50 By the Numbers Follow us on Twitter https://twitter.com/PrairieBiz Check us out on Facebook https://www.facebook.com/PrairieBusiness

Natural gas is flared in McKenzie County, N.D., on Friday, Sept. 6, 2013. Amy Dalrymple/Forum News Service

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Prairie Business Magazine January 2014

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

Next Month The February issue of Prairie Business magazine will cover the area's workforce shortage and the role universities can play in attracting and training new workers. The issue will also cover a group formed to provide small business guidance on a selective basis. Other topics include agriculture and health care.


|EDITOR’S NOTE|

New year, new additions here is no better time to make a change than at the beginning of the New Year. I’ve never been a stickler for resolutions, they just don’t last, but I do believe that the start of a new year is a great time for change — things like a product launch, a new job or a fresh outlook. So we’re happy to direct your attention to several changes we’re making in the magazine, beginning with this first issue of 2014. Each issue will include a short list of upcoming area events, which you will see on the contents page. There are many high-quality, unique and interesting events in our region every month and we know what a great opportunity in-person events provide to learn about specific topics and connect with other business people. We want to help keep you informed on the growing number of great business-related events in the area, so be sure to check out the list each month. And if you are planning an event, let us know so that we can help spread the word. We also post a full list of upcoming events on our website, prairiebizmag.com. This year also brings new faces to our line-up of columnists. I’m happy to welcome John Girard to our fold as a monthly columnist. Girard is the founder of Sagology, a firm dedicated to the art of connecting people, and is a professor of management at Minot State University. His monthly column, Management Matters, will provide words of advice and encouragement specifically for business leaders in our region. We’ll also be rotating in several new columnists to our monthly finance, research and technology, and economic development columns. I’m particularly excited to learn more about the goings-on at the Sanford Underground Research Facility, located deep below the Black Hills of South Dakota, in the May issue, but I truly look forward to reading the varying viewpoints of all of our columnists, whether they are new to the magazine or old friends. Finally, you’ll notice that our energy section includes a new page of data generated by the U.S. Energy Information Administration. In October, the agency updated its approach to assessing the productivity of drilling operations in the country’s producing regions and launched a new monthly report to relay those updated statistics. The agency says new technology for drilling and producing oil and natural gas has rendered obsolete the traditional method of counting drilling rigs to estimate future production, so the updated data takes into consideration production rates from the first month of well operation, when production is typically higher, and estimated changes in production from existing wells. We’ll provide you with some of that data specific for the Bakken each month, as well as the EIA’s comparative data on all oil and gas-producing regions of the country. We will continue to deliver additional content through the magazine’s digital edition and provide you with business news from the region on a daily basis through our website and our weekly e-newsletter, Talking Points. We also recently began offering sneak peeks of our upcoming issues in a video post that we share online about a week before the issue becomes available. Stop by the website or interact with us via social media to check it out. Looking ahead, we’re unveiling the magazine’s first-ever Top 25 Women in Business in our March issue. Nominations are due Jan. 17. It’s been a busy time as we have prepared these additions and changes for you and we hope you enjoy them. Also, staying busy keeps us warm.

T

KRIS BEVILL Editor kbevill@prairiebizmag.com

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Prairie Business Magazine January 2014


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|BUSINESS ADVICE|

Making and marketing BY MATTHEW D. MOHR roducing a valued product is not simple, nor is it easy to sell something just because it is a good item. Our region has produced some spectacular products and a number have become worldwide successes. The Bobcat skid loader is known worldwide, and the mighty Steiger tractor was a sensation when it was in full production. Of course, Mr. Bubble became a household word in the years it was marketed by North Dakotans, as did Great Plains Software. These are four great examples of super successful design, manufacturing and marketing, but there are dozens more which have failed to become successful despite being a great product. We produce the world’s best agricultural products and it seems natural we should turn these raw materials into finished goods and have an easy road to prosperity. We can turn our agricultural output into useful household and

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commercial food products, but we will need to go to market with them in a professional way. During a discussion with the late Judge Rodney Webb (one of the smartest men I have known), he said, “We create a lot of great products and businesses in North Dakota, but we just don’t market them very well.” Judge Webb was a brilliant man in many ways and not someone to argue with, and he summarized in one sentence an issue we all need to face in every business if we are going to succeed. If you have a great idea, product or invention; before you build a factory to make it, be sure you build an organization which can sell it. PB Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

|MANAGEMENT MATTERS|

Thinking beyond the next quarter BY JOHN GIRARD enerations of wise businessmen and women from across our region have understood the importance of cultivating long-term relationships. To many of these prairie sages, investing time and other resources in building strong, trustworthy partnerships was much more important than closing a shortterm deal. They recognized the value of these relationships far and away exceeded the value of most assets listed on the balance sheet. Of course this relationship wisdom is no longer commonplace across our country. It seems the closer one gets to an ocean, the shorter the planning horizon becomes. Lately we have seen too many examples in Washington, New York, and Silicon Valley where leaders are much more focused on the short-term wins than longterm success. Let’s hope our regional younger professionals are not learning bad lessons from watching the management blunders by leaders myopically focused on

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Prairie Business Magazine January 2014

reporting quarterly results. To be truly successful, leaders must have the vision to think and act strategically. This truism moves from good advice to absolute certainty in the global arena. The longterm orientation of many international partners is rooted in the same strong relationships that are woven into the fabric of prairie leadership. As you consider the future of your organization, remember that in most cases your business was built on a solid foundation of relationships. So don't allow the lure of a short-term gain to blur your longterm vision. This is not the time to mimic the antics of those breathing salt air. PB John Girard Professor of Management, Minot State University Founder, Sagology John@JohnGirard.net Twitter: @JohnGirard


|FINANCE|

Level the playing field for lending institutions BY CURT EVERSON

bout six months ago, the South Dakota Bankers Association board of directors decided it was time to increase general awareness about a couple of very old provisions in the federal income tax code which may not make as much sense today as they did 80 to 100 years ago. Since 1916, lending institutions that are part of a little known federal government sponsored enterprise, the Farm Credit System, have been totally exempt from paying federal income tax and state income taxes on any income derived from loans secured by agricultural real estate. Likewise since 1934, federally chartered credit unions have been totally exempt from paying federal and state income taxes and from payment of state and local sales taxes on purchased products and services. Supporters of continuing the status quo for these tax-favored financial companies have been quick to criticize bankers as being nothing more than greedy, profit-hungry competitors. Bankers do not fear competition, but would like to be able to compete on a level playing field. The primary motivation behind the SDBA’s awareness campaign is to inform the general public about changes that have taken place in the business models of the Farm Credit System and credit unions over the past 80 to 100 years. Those folks can make up their own minds about whether or not Congress should take an objective look at the present-day justifications for continuing or changing these old provisions in the federal tax code. Why did the SDBA decide that now is the right time to raise these issues? In the wake of the subprime mortgage-driven financial crisis and subsequent passage of the Dodd-Frank

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Prairie Business Magazine January 2014

Act, bank regulators decided to take a closer look at the challenges and threats facing the nation’s remaining community banks. During 2012 the FDIC (Federal Deposit Insurance Commission) conducted a formal study to better understand the many forces putting pressure on the community bank model. Last year, the Conference of State Banking Supervisors collaborated with the Federal Reserve on a second study of challenges facing community banks. In addition to pressures created by increasingly complex, expensive regulations, the studies reported that community banks are also concerned by the aggressive, growthfocused business model used by some of the largest of these tax-favored financial service providers and believe it poses a real threat to their continued viability. It is hard to imagine that Congress ever envisioned a $1 trillion dollar tax exempt industry dominated by multibillion dollar credit unions when it granted a 100 percent tax exemption to the single, common-bond credit union charter back in 1937. By the same token it is difficult to believe that Congress could have envisioned that the Farm Credit System would grow to be the $250 billion system it is today, a system that enjoyed a combined federal and state income tax rate of only 5 percent in 2012. Congress is talking in a bipartisan way about reforming the federal tax code. Don’t these old exemptions deserve a second look? PB Curt Everson President South Dakota Bankers Association ceverson@sdba.com


|RESEARCH & TECHNOLOGY|

The energy to find answers BY KELLY RUSCH

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esearch serves to make building stones out of stumbling blocks,” according to noted chemical engineer Arthur D. Little. At research universities such as North Dakota State University, faculty, staff and student researchers help businesses work to succeed, advancing the region’s quality of life. Researchers, similar to business leaders, are motivated to answer questions and overcome challenges. We provide needed expertise to ask questions, compile and analyze data that can lead to solutions for a variety of market challenges. We provide expertise to assist governmental entities to develop strategies as the region adapts to an ever-changing environment. After spending two decades working as an engineer in the oil and gas state of Louisiana, I appreciate the tremendous growth North Dakota is experiencing. At NDSU, there are numerous ways we use research to provide options to assist companies and government in this economic boom. Researchers at NDSU investigate workforce characteristics in the Bakken of western North Dakota, assisting cities with population projections to plan for the future, compiling data on jobs and investment, and mapping historical sites. Faculty researchers assist law enforcement and community leaders as they work to match enforcement needs to population changes. Other NDSU scientists analyze North Dakota clay samples to determine composition and suitability for processes used in oil extraction. Additional scientists offer expertise in sensors that can monitor equipment and expertise in corrosion that can lead to pipeline degradation. NDSU representatives, particularly from the Extension Service, are among those participating with the state to find answers to challenges such as dust that affects crops, animals and people. Natural resources expertise of NDSU faculty is being used to evaluate native grassland reclamation

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Prairie Business Magazine January 2014

methods to reestablish native vegetation and restore landscape in partnership with a pipeline company. Research findings will be published to help support future land reclamation related to the state’s energy boom. NDSU researchers are also looking at nanoscale energy harvesting of the future, through quantum dots or nanowires to generate solar energy. Others are evaluating coatings for wind turbine blades and unmanned aerial vehicles. Still others work in areas of biofuels and biomass, looking at ways to use agricultural waste as building blocks for additional energy resources. The energy, finance and manufacturing sectors and many others bring opportunity to the state. As a land-grant university, NDSU can play a substantial role in enhancing that success — through research, through educating the state’s current and future workforce, and through technology-led economic development. The relationship between a land-grant research university and the students and region that it serves, truly represents a mechanism to provide opportunity. Through research, we strive to provide an innovative and scholarly human enterprise to solve today’s challenges, anticipate those of tomorrow and impact the economic well being of the region and beyond. Put simply, we want to help you make positive things happen. We are opening new laboratories to continue working with private sector partners to enhance products and to bring NDSU-developed technologies to market. We invite you to contact us to learn more. PB

Kelly Rusch Vice President for Research and Creative Activity North Dakota State University Kelly.Rusch@ndsu.edu Twitter: @NDSU


|ECONOMIC DEVELOPMENT|

New Innovate ND program provides right resources at right time BY JARED STOBER

ince 2006, Innovate ND has served over 450 entrepreneurs, startups, and early-stage ventures by providing a comprehensive educational program and coaching through entrepreneurial centers to help entrepreneurs build new ventures. The vision of Innovate ND is to grow a statewide entrepreneurial community/ecosystem that is supported by educational content, technical expertise and business resources to encourage, promote and support innovation. In an effort to further develop the program, research findings were evaluated to develop a new Innovate ND strategic plan. Innovate ND’s new program is now a reality and is intended to capitalize on previous successes and brand development efforts, and move to the next level in fostering innovation and accelerating venture formation/growth in North Dakota.

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“Every successful business begins with an 'A-ha!' moment (the spark of an idea) and an 'It' moment (when the business forms into something special). For me, Innovate ND was my 'It' moment. It provided a solid educational base, clear mentored guidance and instilled the confidence in me to allow everything else to unfold.” -Aaron Lamb, general manager, Lift’n Buddy, A Southworth Co.

New Innovate ND Features Innovate ND vouchers – Each participant receives up to $2,500 that can be used to advance their business. The money can be used for coaching and consulting services at an entrepreneurial center, creating a business plan or developing a prototype. Additional vouchers are available to grow with the business. Educational services: Entrepreneur Boot Camps will be held in the spring and fall of each year and an online class will be available when you sign up for Innovate ND. The educational services address key topics and Innovate ND participants can attend at any stage in their business development. The educational content is valued at over $2,200. Online resources: The newly developed Innovate ND website will serve as a resource to entrepreneurs looking to start or expand their business. Visitors will have access to new content and an online forum to help build their entrepreneurial resources and contacts. Business competitions: Innovate ND will hold an annual competition in the spring of each year. There will be two categories for participants to compete: an Idea competition and a Venture competition. The Idea competition will provide an opportunity for startups to compete based on their business ideas. This will also serve as a starting point for Innovate ND participants to gain feedback and serve as a launch pad to take their ideas to the next level. The Venture competition is targeted toward businesses that are ready for venture capital

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Prairie Business Magazine January 2014

or at an advanced stage. Innovate ND will work with venture capital and angel investment firms so there may be an opportunity to make a business deal during the competition. The new Innovate ND program costs $250 and offers the opportunity to access up to $2,500 worth of services to help in the development of business ideas through access to multiple resources. For more information visit www.InnovateND.com or one of the following entrepreneurial centers: • University of North Dakota Center for Innovation Foundation - Grand Forks at www.innovators.net • North Dakota State University Research & Technology Park - Fargo at www.ndsuresearchpark.com • I.D.E.A. Center - Bismarck at www.ideacenternd.org • Strom Center for Entrepreneurship & Innovation - Dickinson at www.stromcenter.com • MiSU Severson Entrepreneurship Academy - Minot at www.minotstateu.edu/business/ent_academy.shtml PB Jared Stober Entrepreneurship Program Manager North Dakota Department of Commerce jstober@nd.gov Twitter: @InnovateND


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Prairie News

Industry News & Trends

Connect Minn. releases business tech data A 2013 business technology survey conducted by Connect Minnesota found that 76 percent of the state’s businesses have access to broadband technology. An estimated 35,000 businesses do not have access to broadband technology, compared to 40,000 businesses in 2011. Of the businesses surveyed that do have broadband access, nearly 40 percent says they earn revenues from online sales, amounting to a combined $38 million in annual revenues. Seven out of 10 businesses surveyed says it is important for new employees to have Internet-related skills, but nearly 40 percent of respondents says they also have a “difficult” or “very difficult” time finding those skilled employees.

Fitness program targets mind, body wellness in schools

RDO buys ag irrigation company

Patrick Kasper, founder of Fargo-based Positive Motion: Movement with a Message, an in-person health fitness, motivational, anti-bullying program, recently launched an interactive version of the program aimed at providing daily programming for school students. PositiveMotionTV.net is a collaborative effort between Kasper and local fitness trainers that will allow schools to access a variety of programs, including Morning Motivation, Health Helpers and Words of Wisdom, in a digital format, reducing the cost of the program and enabling schools to streamline the content to meet their needs. The program fee is currently based upon the number of students in the school. Through corporate sponsorships, Kasper hopes to eventually provide the program at no cost to all K-12 students in North Dakota. Fargo-based National Hospitality Services, the Ramada Plaza Fargo, Mezzaluna restaurant and Forum Communications are among the program’s initial sponsors.

RDO Equipment Co. acquired Water Tech Ag Supply, a California-based company that provides total agricultural irrigation solutions, on Nov. 1. The company has multiple locations throughout California and in Yuma, Ariz. RDO CEO Christi Offutt says the acquisition was a significant strategy move for the implement provider and will expand the solutions it is able to offer its customer stakeholders.

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Prairie Business Magazine January 2014

Basin Electric signs wind contracts Basin Electric Power Cooperative has agreed to purchase wind energy from two new wind generation developments planned in North Dakota. Santa Barbara, Calif.-based Infinity Wind Power is developing the 106-megawatt Sunflower Wind Project in Morton County and the 172-megawatt Antelope Hills Wind Project in Mercer County. Both projects are expected to be complete in 2015. The total capacity of these

projects — 278 megawatts — will increase Basin Electric’s total renewable portfolio to more than 1,000 megawatts.

Sioux Falls web developer, ad agency announce merger Sioux Falls, S.D.-based Gage e-Services, a website development and support company, has merged with Sioux Falls-based advertising agency The A Team. The new company is known as The Gage Team and is co-owned by Matt Gage of Gage e-Services and Brooke Christensen of The A Team. Fred Gage will serve as CEO. The merger will focus on website development and management as well as full-service advertising and marketing services.

NDSU, Sanford partner for nursing education The Sanford College of Nursing board of directors and the Sanford Health Bismarck board of directors recently signed a memorandum of understanding with North Dakota State University to partner to provide nursing edu-


|PRAIRIE NEWS|

Grand Forks, N.D.-based JLG Architects designed the University of North Dakota Gorecki Alumni Center, which recently received LEED Platinum certification from the U.S. Green Building Council. PHOTO: JLG ARCHITECTS

UND alumni center becomes ND’s first LEED Platinum building The U.S. Green Building Council recently awarded LEED (Leadership in Environmental and Energy Design) Platinum certification to the University of North Dakota Gorecki Alumni Center. Designed by JLG Architects, it is the first Platinum-certified building in North Dakota and the first Platinum alumni center in the country. The center reduced energy use by 40 percent compared to similar buildings during its first year of operation, saving more than $38,000 in energy costs. The building also uses nearly 40 percent less water than traditional buildings of similar size and brings in 25 percent more outside air than comparable buildings. Waste was reduced by about 98 percent during construction, cutting waste costs in half.

cation at Sanford’s nursing college in Bismarck. The partnership stems from a Higher Learning Commission decision to require all colleges to become separately incorporated to retain accreditation.

ND Housing Incentive Fund receives multiple contributions Bremer Bank contributed $750,000 to the North Dakota Housing Incentive Fund in December, targeted toward family-friendly workforce housing projects in Burlington, Grafton and Minot, a homeless housing development in Bismarck, and a senior apartment complex in Fargo. In November, Gate City Bank contributed $3 million to the fund. The bank provided $1.25 million to HIF in 2012. Combined with this year’s donation, Gate City Bank is now the largest overall HIF contributor. This year’s contribution will be divided between projects in Bismarck, Devils Lake, Fargo, Hettinger, Jamestown, Mandan and Minot.

Dickinson, N.D.-based American Bank Center contributed $220,000 to HIF in November. The contribution will be divided among nine affordable housing projects. American Bank Center has contributed to the fund four times, totaling $420,000. Slawson Exploration, a Denver-based privately held oil and gas exploration company, contributed $300,000 to HIF in October. The contribution is targeted to a 40-unit familyfriendly workforce housing development in Burlington, N.D. Williston, N.D.-based American State Bank & Trust Co. contributed $250,000 to the fund, which will be used for housing projects in Williston and Watford City. The bank has contributed a total of $375,000 to the fund since 2011. HIF was established by the 2011 state legislature to encourage the development of affordable housing projects. Funds are used to provide developers with low-cost financing if units are earmarked for essential service workers and lowto moderate-income households. In 2013, HIF

was allocated $15.4 million in state funds and authorized to issue $20 million in state tax credits for private contributions. By early December, all authorized funding had been committed to a total of 34 projects.

DFC Consultants names customers of the year DFC Consultants, a gold-certified Microsoft partner, has named Bismarck, N.D.based Pride Inc. its cloud customer of the year. Development Homes in Grand Forks, N.D., was named the company’s Dynamics customer of the year. Businesses were selected based on their use and knowledge of software systems as well as their success and productivity within their industries.

Essentia recognized for stroke care Essentia Health-Fargo recently received an award from the American Heart Association in recognition of it meeting eight core stroke meas-

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|PRAIRIE NEWS| ures. Essentia has also been recognized as a Primary Stroke Center. The facility expanded its stroke and neurovascular services in 2012, making it the first hospital in North Dakota to offer 24-hour enhanced care for stroke victims.

Lignite Energy Council, Australia group partner Bismarck, N.D.-based Lignite Energy Council and Brown Coal Innovation Australia have partnered to develop and pursue cooperative opportunities associated with lignite coal. As part of the partnership, representatives from area lignite facilities will travel to Australia to review Australian research and development projects and determine their applicability in North Dakota. The organizations will also establish a travel scholarship to support the cost of travel for researchers working on collaborative projects.

requirements for several of its technical programs, including carpentry, graphic design and communications, welding and automotive collision technology. Content will focus on feasibility, marketing and business plan. The college will also offer a non-credit class to the public.

Sioux Falls Hilton Garden Inn opens The Hilton Garden Inn Downtown, a fivestory hotel located in downtown Sioux Falls, S.D., developed by Sioux Falls-based Hegg Cos. and Lloyd Cos., has opened for business. The hotel includes 136 guest rooms, 6,000 feet of meeting space and a restaurant/bar that features a video wall and an outside patio with fireplace. The restaurant will be managed by Sioux Fallsbased Pinnacle Hospitality. Hegg Cos. will manage the hotel.

Bismarck State College to offer entrepreneur classes

Bell State among best banks to work for in US

Bismarck (N.D.) State College has been awarded a $15,000 grant from the National Association for Community College Entrepreneurship and the Coleman Foundation to integrate entrepreneurship classes into

Fargo-based Bell State Bank & Trust has been ranked among the 35 best banks to work for in the country. The financial institution ranked fifth among banks with assets under $3 billion on a list compiled by America Banker Magazine and

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Prairie Business Magazine January 2013

Best Companies Group, which based their rankings largely on employee surveys.

Sanford Health announces world clinic in China Sanford Health is collaborating with a state-owned company in Kunming, China, to develop a pediatric clinic as part of its world clinics initiative. The two-story, 18,000 square foot Sanford World Clinic in Kunming will have the capacity to hold up to 10 primary care pediatric physicians. State-owned YMCI Calmette will own the facility and Sanford World Clinic will manage the day-to-day operations and provision of medical services. The clinic will also have connection to Sanford Health in South Dakota. Zhiguang Guo, a research scientist with Sanford, previously worked with YMCI Calmette physicians and made possible the connection between the two entities.

St. Paul-based contractor, engineer expands to Fargo area St. Paul, Minn.-based industrial general contractor and engineering firm Corval Group recently opened a location in Hawley, Minn., located about 20 minutes east of Fargo-


|PRAIRIE NEWS| Moorhead. The company said its new location will allow it to more easily market its capabilities to an expanding client base in the area, including oil and gas clients.

California developer relocates to Minot, begins Tioga hotel project Graham Development Co. recently relocated its permanent headquarters from California to Minot, N.D., and has begun construction of an 89-room Mainstay Suites extended stay hotel in Tioga, N.D., located in the heart of the Bakken region. The hotel will be managed by Indianabased Dora Hospitality. Graham Development plans to begin building an identical hotel in Stanley, N.D., in the spring.

DSU offers MBA in flexible format Dakota State University has begun offering a master’s of business administration in a HyFlex format, allowing students to virtually attend face-to-face classes at University Center Sioux Falls. The format was selected to better serve students who also work full-time jobs. The HyFlex format allows students to attend face-to-face

classes if they choose, but will not limit them to one type of course delivery method throughout the program.

Delta adds Rapid City-Atlanta route Rapid City Regional Airport announced Delta Airlines will add nonstop air service from Rapid City, S.D., to Atlanta beginning June 7. Service will run through Aug. 30. Cameron Humphries, airport executive director, said the added service will provide a boost for the area’s tourism industry by allowing more convenient access for tourists from Europe and elsewhere via Atlanta, which is the world’s busiest airport.

ND named best-run state two years in a row An annual survey conducted by 24/7 Wall St. ranked North Dakota the best-run state for the second consecutive year. The survey evaluates fiscal management, taxes, exports and GDP growth by sectors as well as quality of life components. Wyoming, Iowa, Nebraska and Utah filled out the top five slots on the survey. Minnesota ranked seventh among all states. South Dakota was ranked ninth.

Sanford, Beacom donate $5 million for DSU tech center T. Denny Sanford and Miles Beacom have pledged to donate $5 million to Madison, S.D.’s Dakota State University to turn the Madison Community Hospital into the Beacom Institute of Technology building. The facility will include a secure compartmented information facility (SCIF), which will allow faculty and students to perform secure work for the government and will be one of only 20 such facilities in the nation, according to the university. Sanford is the owner and founder of First Premier Bank and the benefactor of Sanford Health. Beacom is the President and CEO of Premier Bankcard and a graduate of DSU. Their $5 million gift makes them the university’s largest donors.

Allegiant adds Fargo-Tampa Bay service Las Vegas-based Allegiant Travel Co. has added service from Fargo to Tampa Bay, Fla., via St. Pete-Clearwater International Airport. Flights are offered twice weekly. The added service brings the number of Allegiant destinations from Fargo to five.

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|PRAIRIE PEOPLE|

Gary Miller

St. Alexius CEO named ‘leader to know’

Ritz receives Spirit of Sioux Falls award

Gary Miller, president and CEO for St. Alexius Medical Center in Bismarck, N.D., has been recognized in Becker’s Hospital Review as one of the 300 Hospital and Health System Leaders to Know. Leaders named to the list are recognized for showing dedication to health care delivery at local, regional and national levels. Miller joined St. Alexius in 1984 as director of fiscal and information systems. In 1988 he became chief financial officer. He served as senior vice president and chief financial officer before being named to his current position in 2011. He serves on a number of boards of directors in the Bismarck area and is a member of many community organizations.

Larry Ritz, a retired partner at the former Henry Scholten and Co. accounting firm, was presented with the 2013 Spirit of Sioux Falls (S.D.) award during the Sioux Falls Development Foundation annual meeting on Nov. 21. The award recognizes leadership excellence and dedication to the Sioux Falls business community and its economic growth. Ritz is a member and past president of the South Dakota CPA Society, former president of the Sioux Falls Chamber of Commerce, and has served on the board of directors for multiple organizations, including the Sioux Falls Area Community Foundation, Junior Achievement, the South Dakota Airshow and others. His fundraising efforts have benefited multiple organizations, including the United Way, South Dakota Achieve, the University of Sioux Falls and Habitat for Humanity, among others. His community leadership has been recognized with honors from Junior Achievement, the South Dakota CPA Society, the Cosmopolitan Club of Sioux Falls and the South Dakota National Guard. He is also a recipient of the South Dakota Governor’s Philanthropist of the Year award.

Larry Ritz

Engelman named NDGT vice president, commercial services

Andrew Engelman

Andrew Engelman has been promoted to vice president of the commercial services unit at North Dakota Guaranty and Title Co. in Bismarck, N.D. His promotion coincides with the launch of the new commercial services unit, created to address the growing title needs of the commercial, industrial and energy segments of North Dakota’s economy. Engelman joined NDGT in 2009 as a residential title officer and served most recently as commercial title officer.

NDSU architecture professor among most admired educators

Wangler named assistant controller at St. Alexius

Nathan Wangler

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Nathan Wangler recently joined St. Alexius medical center in Bismarck, N.D., as the assistant controller in fiscal operations. In this role, he will assist in the completion of the annual budget preparation, complete quarterly bond disclosure information and coordinate activities with independent auditors in addition to other duties. Wangler is a certified public accountant and earned a bachelor’s degree in finance from Minnesota State University Moorhead. Before joining St. Alexius, he was a financial analyst with the North Dakota Insurance Department.

Prairie Business Magazine January 2014

Stephen Wischer

Stephen Wischer, associate professor of architecture and landscape architecture at North Dakota State University, has been named by DesignIntelligence as one of the 30 Most Admired Educators for 2014. The award honors excellence in education and education administration. Honorees are selected by DesignIntelligence staff with input from thousands of design professionals, academic department heads and students. Wischer joined NDSU in 2005. He is a graduate of the University of Alberta and the University of Calgary.


|PRAIRIE PEOPLE|

Wells Fargo names new business banking managers, Sioux Falls market president

Skabo, Kivisto promoted at MDU

Jay Skabo

Jay Skabo has been appointed vice president of electric supply at Montana-Dakota Utilities Co. Nicole Kivisto has been appointed vice president of operations. Skabo served most recently as vice president of operations, a position he has held since 2008. He joined the company in 2003 as an environmental manager. He will replace Andrea Stomberg, who will retire Jan. 3 after working 23 years with the company. Kivisto served most recently as vice president, controller and chief accounting officer, a position she has held since 2010. She joined the company in 1995.

Curt Zaske

Curt Zaske has been named business banking manager and market president for Wells Fargo in Sioux Falls, S.D. Amange Aware has been promoted to business banking manager. Zaske joined Wells Fargo in 1977. Since 2006, he has served as a business banking manager for parts of Sioux Falls and Worthington, Minn. Aware joined Wells Fargo in 2002. He served most recently as a relationship manager for the business banking team.

Amange Aware

Nicole Kivisto

Amy Durbin

Kim Settel

Karin Rudd

Janet Mindt

Gate City Bank hires 2, promotes 2 Gate City Bank has hired Amy Durbin as the marketing manager for its headquarters in downtown Fargo. A native of West Fargo, Durbin received an accounting degree from Minnesota State Community and Technical College in Moorhead, Minn. She has 15 years of marketing experience. Kim Settel has been hired as the personal lending assistant manager for the bank’s downtown Fargo headquarters. Settel is a native of Sabin, Minn., and earned a degree in mass communications from Minnesota State University Moorhead. Karin Rudd has been promoted to assistant to the chairman/president. A native of Fargo, she earned a degree in English writing from Concordia College in Moorhead, Minn. She has worked at Gate City Bank since 2007. Janet Mindt has been promoted to senior customer service and sales supervisor of the bank’s Veterans Boulevard location in West Fargo, which will open in 2014. Mindt joined the bank as a teller in 2004 and has since served in a variety of positions, most recently as personal banking supervisor at the bank’s Hornbacher’s at Village West office.

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|BUSINESS DEVELOPMENT|

Connecting the disconnected Nonprofits OTA, Pollen merge to foster network building between Twin Cities, northern Plains communities BY KRIS BEVILL

he leadership of OTA-Pollen doesn’t just want to connect business people. They want people throughout the Dakotas and Minnesota to collide in a petri dish of thought and inspiration, only to come out on the other side with totally new ideas and connections that might otherwise have been improbable, if not totally impossible. In other words, the newly formed organization focuses on network building, not to be mistaken for networking, which OTA-Pollen CEO Hugh Weber views as “just an excuse to hand out business cards and have an adult beverage.” The group wants to connect the previously disconnected business communities of their respective geographical

T Network building group OTA-Pollen employs a shared leadership model. From left, Meghan Murphy, creative executive director; Jamie Millard, executive director, and Hugh Weber, CEO. PHOTO: ABBY BISCHOFF

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|BUSINESS DEVELOPMENT|

focuses — the Dakotas and western Minnesota, and the Twin Cities metro — through a unique online and in-person presence. The effort is already under way at OTA-Pollen.org and will soon be materialized in person as representatives of the organization visit communities and thought leaders across all three states as part of its “We Must Be Bold” tour. Following that, the first group event will be held in April in Sioux Falls and is expected to draw 1,000 people from all sectors of business throughout the region. “We feel our charge is to help create connections across the hubs of leadership, whether they’re geographic or sector based, both in-person and online,” Weber says. “We will have failed if we don’t draw a diverse audience with those diverse backgrounds.”

Sharing Strengths OTA, which stands for the shared last three letters of “Dakota” and “Minnesota,” was formed about five years ago by Weber to connect the widespread and sparse community and business leaders of South Dakota, North Dakota and greater Minnesota. The organization hosts events that typically feature nontraditional speakers and single-track programs so that each attendee has the same experience and is encouraged to interact with people who may not typically reside in the same network channel, but who may produce an unexpected lead or professional relationship. By connecting people in this way, Weber says he has seen new businesses formed, pro bono support converted to direct business results, and long-term relationships launched. The effectiveness of OTA’s style of events garnered the group a $1.5 million Bush Foundation grant earlier this year to further develop its platform. But while OTA’s physical network was successful and had potential for expansion, the group lacked a digital presence and desired to grow that networking aspect in a meaningful way. Enter Pollen. The Twin Cities-based digital networking community was formed several years ago by Lars Leafblad in response to the recession taking a toll on job numbers and a feeling of isolation among job seekers. The group began by producing a digital newsletter featuring job postings, but soon expanded as self-proclaimed group members, dubbed Pollenites, started submitting recognition requests for newly employed members, board of director openings and other items. About two years ago, Jamie Millard and Meghan Murphy, co-founders of literary arts magazine Paper Darts, joined Pollen to expand its digital presence to include storytelling about its members. Pollen now boasts about 7,500 members, primarily in the Twin Cities metro, many of whom work at the CEO/executive level of their profession. About 65 percent of the group’s members work in the private sector, but there is a strong representation of nonprofits and the creative arts community as well.

Like OTA, Pollen received a $1.5 million Bush Foundation grant earlier this year. Opposite of OTA, Pollen exists only in the digital sphere. However, the group has long craved a physical presence to connect its members face-to-face, according to Murphy, who now serves as creative executive director of OTAPollen. Therefore, to achieve each group’s desire to expand into previously unknown territory, they recently decided to merge and share their grant money in order to begin developing a complete connectivity package for thought leaders and business community members throughout the entire three-state region. OTA-Pollen will utilize the digital platform expertise of Pollen with the in-person event expertise of OTA to encourage a more effective, cohesive regional business atmosphere. The group's inaugural tour of the region over the next two months is focused on visiting communities and community members who embody the group’s “We Must Be Bold” ethos. The group began soliciting nominations for community members who fit the mantra in December and planned to identify communities of interest through that process. “We’re really hoping for a self-identification towards the ethos to shape where those spotlights are coming from,” Millard, executive director of OTA-Pollen, says. People who exemplify the ethos could work in any industry or creative field, but should have some type of impact at a national level, she says. “Not necessarily boldness for the region, but something that elevates them to a level that is exciting for the country.” At the core of OTA-Pollen is a shared desire to encourage collaboration between business and civic-minded communities in the Dakotas and greater Minnesota with the Twin Cities metro. “Pollen is an organic, very trusted [organization],” Millard says. “If you’re going to try to break down some of those barriers in the Twin Cities, a partnership with an organization like Pollen is a way to do that organically.” Weber says the group will make it “as easy as possible” for Twin Cities Pollenites to attend OTA-Pollen events in Sioux Falls, Fargo and elsewhere around the region. “We’re going to do everything we can to make sure that they know the value of what’s happening in this direction and that they are a part of the community,” he says. “That’s where the partnership and merger with Pollen is so significant is that it allows us an opportunity to make clear our commitment to the metro, but also the metro’s commitment to the rest of the region.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|MANUFACTURING|

Taking welding training where it’s needed M State’s mobile welding trailer offers on-site training for students, employees BY KRIS BEVILL

ood welders are hard to find and becoming even harder to find. Working welders are often recruited elsewhere and many are nearing retirement age. In western Minnesota, a lack of training facilities has further impacted the region’s welder shortage in recent years. A mobile welding training facility operated by Minnesota State Community and Technical College serves as a sign of change for the region and is expected to help alleviate at least some of the labor issues for area manufacturers. G.L. Tucker, dean of custom training and business and entrepreneurial services at M State, says that while the college offered welding at one time, the program was discontinued several years ago. However, as manufacturers have ramped up operations post-recession, M State recognized the need to provide welding training, not only for students but potentially for working welders as well, and made the decision to invest more than $200,000 in a mobile training unit. “There’s a great need for welding training,” he says. “We felt like this was a good way to give us the flexibility to serve not only one campus or community, but the whole area.” The 53-foot trailer houses 12 training stations equipped to provide a range of training, including gas metal arc welding (MIG), gas tungsten arc welding (TIG) and stick welding, and the training can be customized to fit the client’s needs. “We can work with anybody,” Tucker says, adding that for businesses in need of employee training, the mobile unit offers the convenience of on-site training and is a less-expensive alternative to classroom training. The trailer has been in steady use since hitting the road last May, primarily for training programs offered in collaboration with Rural Minnesota CEP and Northwest Private Industry

G

Minnesota State Community and Technical College’s mobile unit allows businesses to provide on-site welding training for current and new employees. PHOTO: MINNESOTA STATE COMMUNITY AND TECHNICAL COLLEGE

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|MANUFACTURING| Council. Funding for training programs held in Little Falls, Detroit Lakes and Fosston, Minn., was provided through the Minnesota Job Skills Partnership Low Income Worker Grant and enabled more than two dozen previously unskilled workers to become certified welders through a 160hour mobile trailer training course. The vast majority of course participants were employed in the area within about a month of receiving their certification and some had job offers even before completing their training, according to CEP spokespeople. Brian Gapinski, team leader for RMCEP in Little Falls, says the training course held there in late summer filled up within four days of announcing its availability and about 15 people are awaiting a chance to participate in a future training course. In Detroit Lakes, most of the program participants were hired at area businesses, including various dock and lift businesses as well as traditional manufacturing facilities. “There’s a lot of industry in a 50-mile radius that requires welding,” says Kelley Nowell, RMCEP’s Detroit Lakes team leader. Tucker says the college anticipates demand for new welders in the region to remain strong for the foreseeable future. Beginning this month, the trailer will be located at M State’s Moorhead, Minn., campus and will offer a 120-hour noncredit training class to cover the basics of welding for interested parties. The college is also considering adding an on-campus program and will continue to market customized training through the mobile unit to area businesses. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|LEADERSHIP|

Passing the Torch Transition to new management team just one part of Eide Bailly's longevity, expansion plan BY KRIS BEVILL

Dave Stende has been transitioning into the role of CEO/managing partner at regional accounting firm Eide Bailly since May. The former chief operating officer replaces Jerry Topp, who is retiring. PHOTO: JUSTIN EILER, EIDE BAILLY

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Prairie Business Magazine January 2014

or some business leaders, knowing when to step aside is the most difficult decision of their career. Some wait too long, and their companies suffer for it. Others fail to put a succession plan in place and end up ready to retire with an inadequate pipeline of new management replacements. For Jerry Topp, retiring from his role as CEO of firm Eide Bailly after a decade at the helm of the regional accounting firm was a strategic move designed to avoid either of those missteps for the betterment of the company. Yes, age and a desire to slow down a bit were also factors in his decision to retire, he says. But more importantly was the need to ensure that the firm would have leadership with the energy and training to continue its recent impressive growth plan into the future. For those reasons, Topp decided last year to step down from CEO and begin transition-

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|LEADERSHIP|

ing out of the firm as a new management team, led by Dave Stende, takes the reins. “It seemed prudent to do that earlier than later and hope for a good transition in the firm,” he says. “I know the firm is better off with the decision I made.” Topp, who now serves as chief executive partner, began serving as CEO/managing partner of Eide Bailly in 2003. He has since led the firm through an impressive period of expansion, tripling the firm’s size over the course of 10 years, from nine offices, about 650 employees and $54 million in net fees to 22 offices, more than 1,200 employees and net fees of $171 million in 2013. While the firm had a history of growth since its formation in 1998 as a merger between Fargo-based Eide Helmeke & Co., and Charles Bailly & Co., Topp says industry changes spurred the firm’s most aggressive growth plan in the early 2000s. The infamous Enron scandal in 2001 had resulted in the dissolution of Arthur Anderson, one of the world’s largest audit and accountancy partnerships, leaving its clients in need of new audit firms. Meanwhile the accounting industry was also beginning to experience consolidation. “In the profession there was a move to try to get these bigger clients that were falling through the cracks from the bigger firms because everybody was moving upstream with the size of the clients,” Topp says. “Our firm made the conscious decision that we were either going to play in this market or wait for five or six years and all this activity would go by us and we’d look back and say we should have taken advantage of that.” The firm chose to play, and began acquiring other firms in the Midwest and Mountain regions of the country, growing at a rate of about 10 percent each year. It also began adding specialty services to compete with other firms’ expanded service offerings. By the time the global recession took hold, Eide Bailly had grown substantially and was operating successfully, but it was not entirely immune to the economic downturn. Growth slowed at the firm during that time, down to between 3 and 5 percent, as acquisitions and the roll-out of additional service offerings were put on hold, to the dismay of some of the firm’s partners, but unlike many other businesses around the world, the firm was able to continue to operate profitably, thanks in part to Stende, who served as chief operating officer from 2006 until his appointment to CEO/managing partner last May. Topp credits Stende and the rest of the firm’s management team for their careful management of staff and costs during that time, allowing the firm to successfully navigate through the recession. With the recession now in the rear view and the transition from COO to CEO going smoothly, Stende plans to con-

After serving as CEO/managing partner at Eide Bailly for a decade and overseeing an aggressive expansion plan that tripled the firm’s size, Jerry Topp is transitioning into retirement. As part of the transition, he will remain on staff for several years to focus on continuing the firm’s external growth. PHOTO: JUSTIN EILER, EIDE BAILLY

tinue building on the firm’s tradition of growth. “Our five-year vision is to continue growing in the region west of the Mississippi, specifically in the Great Plains and inter-Mountain states,” he says. In fact, the firm’s five-year plan anticipates Eide Bailly doubling in size. Half of that growth is expected to stem from acquisitions of firms in the desired region, with an immediate emphasis on growing its presence in Nebraska, Kansas and Iowa, Stende says. Topp will make use of his industry contacts to aid in this goal over the next two years, concentrating his remaining time at the firm on relationship building and mergers and acquisitions. The firm also operates a group of noncompeting CPA firms called Practicewise, and Topp will continue to provide leadership for this group as well as provide leadership training within Eide Bailly for the short term. One of the firm’s most recent acquisitions speaks to the increasing emphasis on technology in the accounting industry. Denver-based Next Business Systems recently joined Eide Bailly to boost the firm’s ability to provide business management through cloud computing. Owners of Next Business Systems train end-users and Eide Bailly staff on NetSuite Inc. and help the firm consult, promote and implement the web-based busi-

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|LEADERSHIP|

ness software. Stende says technology has been one of the two biggest changes to the accounting industry that he’s witnessed in his 32 years with the firm. Not only has technology drastically changed the way Eide Bailly delivers its services, but the cost associated with implementing technological changes has also altered the industry in that it is not as economically feasible for new accountants to launch firms as it was a few decades ago, he says. “It’s no longer easy to hang out a shingle and start a practice, which creates the opportunity for more industry consolidation,” he adds. The other half of the firm’s growth over the next five years is expected to be achieved internally through additional specialty services, an increase which represents a significant shift in the firm’s focus. In 2013, specialty services accounted for only about 20 percent of the firm’s total revenues. The vast majority of revenues continued to be earned through traditional tax, accounting and auditing services. Within the next five years, however, Stende expects Eide Bailly’s revenues from specialty services to double. Areas expected to experience the most growth include technology consulting, international tax activity and estate planning. “Deep niche” tax consulting services for states and municipalities have also grown in demand recently as a result of the recession and will continue to grow, Stende says. “They’ve become much more aggressive on pursuing companies to make sure they get their fair share of sales tax, income tax, use tax, that sort of thing,” he says. “We have a group where that’s all they deal with is state and local tax issues and the enhanced enforcement that we’re seeing at state levels.” Increased regulations in the banking and health care industries will also require specialized services, and Eide Bailly expects to provide the expertise its clients need. “There has been an explosion of regulations coming from the government and put onto our clients; we are helping our clients through all those issues and, therefore, it is a huge growth area,” Stende says. Changing health care regulations as a result of the Affordable Care Act has represented an area of significant opportunity for the firm. The firm created an analytic tool for its clients to evaluate differences between providing care for employees or sending them to an exchange and on Dec. 10, the firm announced the launch of a private insurance exchange system known as Eide Bailly Private Exchange. The system is geared toward businesses that no longer qualify or can’t afford group health plans, offering them the opportunity to contribute a fixed dollar amount for

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employees’ personal health insurance rather than pay traditional premiums. “Cost and regulations are making group health insurance plans less and less viable,” says Linda Heuer, principal of Eide Bailly Employee Benefits. “This approach allows even the smallest of businesses to offer their employees quality health-related benefits, while maximizing the IRSapproved tax savings for both the employer and employees.” As the firm’s size continues to grow so will its number of employees. Stende says additional employees will be added at the firm’s Fargo headquarters over the next few years, although most new staff members will join the firm through its acquisitions. And while growth through acquisitions can sometimes cause challenges in terms of employee management, Stende and Topp say many of the firms acquired by Eide Bailly have had long-standing relationships with the firm and are easily “tucked in” with existing Eide Bailly offices. The firm has also fostered a strong culture that emphasizes work-life balance and professional growth which has helped to attract and retain quality employees and firms that blend well with the existing staff. “Eide Bailly is very proud of the culture we’ve created over the past 15year period and most of these firms are looking to aspire to our culture, not pull us toward what they may have had prior to that time,” Topp says. “The firms that we have expanded into know that we take the culture pretty seriously. We walked away from a huge deal in the past two years largely because we didn’t believe it was going to be a culture fit, so we’ve been pretty serious about that.” As any good manager knows, positive culture starts with management. Topp and Stende convey that through a commitment toward bettering the firm which stems from a true love for the company and career. Both men say the highlights of their careers have been receiving the opportunity to lead the firm. For Topp, the opportunity resulted in a successful run that he will now be able to look back upon with pride. Stende’s run as CEO may have just started, but it signifies the height of success after a long career which began as a job at an accounting firm and soon became something more. “When I started here in 1981, interest rates were 20some percent, the job market was terrible, I was just happy to get a job and was just going to do the public accounting thing for a few years,” he says. “But I’ve loved every day I’ve worked here.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com


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|FLARING|

Beating the Heat Multiple solutions expected to reduce Bakken flaring and utilize the regionâ&#x20AC;&#x2122;s natural gas BY KRIS BEVILL

Flaring of natural gas in the Bakken continues to hover at around 30 percent while producers and researchers explore a variety of potential utilization methods. PHOTO: US DOE ENERGY AND ENVIRONMENTAL RESEARCH CENTER

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|FLARING| o one wants to set $1 billion on fire and watch it disappear into the atmosphere in a fantastic display of flames. And yet that is precisely what has been happening in the Bakken region as the rate of natural gas flaring continues to outpace the infrastructure and technology needed to harness its potential as an economic resource. A study released in July by nonprofit research firm Ceres concluded that flaring at Bakken oil wells in 2012 resulted in the loss of approximately $1 billion in fuel. Further, the study determined the flaring of that gas added 4.5 million metric tons of carbon dioxide to the atmosphere, which is the equivalent of adding 1 million cars to the road. Monthly statistics released from the North Dakota Department of Mineral Resources have shown the percentage of natural gas flared from Bakken wells hovering at around 30 percent since reaching a historical high of 36 percent in 2011. Efforts have been under way to reduce that percentage, but Ceres researchers cautioned that while the percentage of gas flared may be reduced as new infrastructure comes online and utilitization technologies are introduced, the overall amount of gas flared in the Bakken will continue to increase as the gas-to-oil ratio increases at aging wells. “Some individual companies have shown leadership in curbing flaring, legislators have introduced incentives to limit flaring and several billion dollars have already been invested in additional gas pipeline and processing infrastructure. In addition, the state has set a goal to limit flaring to no more than 10 percent of produced gas,” Ceres report authors Ryan Salmon and Andrew Logan said in the study. “However, Ceres’ analysis of North Dakota oil and gas production data indicates that absolute volumes of flared gas have more than doubled between May 2011 and May 2013. … even if the state’s goal of 10 percent flaring were achieved, total volumes of flared gas in 2020 would still exceed the amount flared in 2010. These findings underscore the importance of solving the problem of flaring in order to limit both environmental impacts and economic waste.”

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Flaring Factors Currently, North Dakota law allows producers to flare natural gas for the first year of the well’s production in order to give the producer time to collect data and determine the gas-gathering requirements for the well site. After 12 months, the producer must cap the well, connect to a gas gathering system or deploy a gas utilization process in order to avoid financial penalties. Producers may also request an extension to the well’s flaring allowance if they can demonstrate that connecting gather-

ing infrastructure to the well site or deploying an on-site utilization technology such as a bi-fuel electrical generator is uneconomical. Because of the high cost of installing pipelines to the Bakken’s remote well sites, the vast majority of extension requests are granted. In fact, according to the Ceres study, the North Dakota Industrial Commission approved 95 percent of the extensions requested between 2011 and 2013. In addition to the expense associated with installing gas gathering infrastructure is a short but complex list of other factors contributing to the Bakken’s flaring problem. A North Dakota Petroleum Council task force on flaring cites several key factors that it says are making widespread collection of Bakken gas difficult. Factors hindering widespread utilization include the chemical make-up of the gas, the time required to build out gathering and processing capacity, and the harsh climate and widespread geography of the Bakken region, according to the group. And, ironically, while technology is what has made the Bakken boom possible in the first place, technological advances are also outpacing infrastructure capacity, so even some well sites that are connected to gathering infrastructure are flaring because the infrastructure wasn’t built large enough to handle the well’s actual output. Flaring on tribal lands presents another unique hurdle to overcome, according to the task force. Ron Ness, president of the NDPC, says the task force was created in September at the direction of the group’s board of directors and urging by Gov. Jack Dalrymple and the Industrial Commission to bring together various parties involved with the production, capture and processing of natural gas. The goal of the task force is to address the situation and improve the Bakken’s overall flaring rate. “Individually, companies feel like they’re doing well at addressing it, but holistically the number is likely too large,” Ness says. By bringing involved parties together on a regular basis to discuss the challenges and potential remedies, the group hopes to more quickly identify solutions to Bakken flaring. The 35-member group met 15 times between September and early December to discuss potential technological solutions, according to Ness. The task force plans to present its recommendations to the Industrial Commission this month. (A value-added study being commissioned by the Empower Commission will also be complete this month and should provide further information related to potential uses for Bakken gas.) Ness says the natural gas task force represents the first time he’s seen such a concentrated focus by the industry to address a specific issue and is unique in that companies which historically have kept their best practices tightly held for competitive and anti-trust reasons are now coming together with the intent of

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|FLARING| transparency regarding flaring mitigation tactics. The industry's new effort at transparency is largely because the Bakken’s natural gas is a one-of-a-kind challenge. “Bakken gas is a unique gas that’s really unlike other gases anywhere in the world, so the types of equipment, the processes you can utilize to remotely capture that gas, the things that work all vary here in the Williston Basin versus what they see across the country and the rest of the world,” he says. One of the things that make the Bakken’s gas so unique is its liquids content. Liquids such as propane, ethane and butane that can be extracted from the gas have more value than the gas itself, so the Bakken’s liquid-rich gas is a boon in that sense. However, the technologies required to separate the liquids from the gas are quite costly and don’t economically scale down to well-site size. Therein lies just one of the struggles associated with making Bakken gas capture an economical process.

Utilization Efforts There are “an amazing set of great minds” from around the world working on the entire utilization issue, Ness says, but the stand-outs so far appear to be the North Dakota-developed solutions, which he believes is because they have a better understanding of the region’s weather extremes and other unique considerations. At the U.S. DOE Energy & Environmental Research Center (EERC) in Grand Forks, N.D., researchers have been exploring Bakken-specific gas utilization technologies for several years already. This summer, the center launched a more concerted effort to address the issue via the Bakken Production Optimization Program. The program is a joint venture between the EERC, the NDIC and several of the Bakken’s major producers. It seeks to evaluate the issue using a systems engineering approach in order to develop solutions that adequately address the overall challenge, according to John Harju, associate director for research. To accomplish this, the center is communicating directly with producers to learn what their needs are and what types of solutions they would like to see developed. Results from the request for information are expected to be rolled out in conjunction with the task force’s report. Harju says that by “drawing a box around the challenge instead of the technology,” as the EERC seeks to do, the odds of developing economical solutions are improved. “I think this is what has frustrated technology providers over the long haul is that they believe they have some solution and they don’t really evaluate the solution in terms that their customer evaluates it,” he says. “Part of this is technology and the capital side of things, but another part is the business model.” For example, he says, a technology that utilizes well gas might address the producer’s desire to reduce flaring, but if the technology costs $3 million to install at a well that produces a few thousand dollars worth of gas each day, the producer may never break even on the investment. Harju firmly believes there is not one solution to the Bakken’s flaring problem, but that several gas utilization solutions will be

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required to effectively address the challenge, including non-technological solutions such as innovative leasing or service offerings from technology providers that will reduce costs for producers. Harju believes the EERC’s research program will help to shed light on the various types of solutions that can be put to use. “I think we’ll begin to elucidate some of these variables that I don’t think have been thoroughly investigated from a systems engineering perspective,” he says. On the logistical side of the issue, the task force intends to continue working to address the need for new gas gathering lines and the expansion of existing gathering systems to handle production capacity. To accomplish that goal, the task force must also address landowner fatigue and the increasingly significant issue of right-ofway and easement approval. The task force has also set its sights on coordinating with the various entities involved in approving right-ofway needs on the Fort Berthold reservation, where the rate of flaring is currently double that of elsewhere in the Bakken.

Long-Term Potential Long-term utilization plans primarily center on the widespread installation of gathering and processing infrastructure, but it will be some time before that infrastructure is in place. Oklahoma-based ONEOK Partners has invested billions toward this effort, most recently announcing plans to build its sixth and largest Bakken natural gas processing plant in McKenzie County, increasing the company’s natural gas processing capacity to about 800 million cubic feet per day. But it will be more than a year before that plant, along with other infrastructure expansions planned for the region, will be complete. Other large projects such as the proposed fertilizer plants near Jamestown and Grand Forks, N.D., offer additional significant longterm uses for the fuel, which Ness says encourages natural gas producers to continue building infrastructure and processing plants. Harju and Ness both expect significant headway to be made toward utilizing Bakken gas this year. Harju predicts a combination of various well-site and multiwell pad technologies will begin to reduce flaring and will be aided by the creation of a regional market for the product. “There won’t be one solution, there will be a tool crib of solutions and there’s going to be a multitude of them,” he says. Ness also says that the more the state and region can utilize Bakken gas, the better the market will be and the greater the chances that flaring will be more quickly reduced. “It’s a remarkable resource and it’s going to have a substantial impact on North Dakota’s energy future,” he says. “Yes, it’s frustrating that it’s flared right now, but at the end of the day when we end up with a couple of billion-dollar fertilizer plants and some of these other projects that we’re beginning to hear about across North Dakota, it’s going to be a huge economic driver in our state.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com


EXCUSE OUR MESS PROGRESS

Will ston ! Progress happens here! www.willistonlife.com

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|RESEARCH| DIGITAL EDITION ONLY

Benchmarking boomtowns Strom Center webinar series evaluates similar boom cycles to provide insight into western North Dakota’s future BY DEBORA DRAGSETH

usinesses use benchmarking to improve performance by identifying and applying best demonstrated practices. Communities can do the same thing. By analyzing the successes, failures and lessons learned by other energy-impacted communities, perhaps western North Dakota can more effectively and successfully navigate the challenges and opportunities it faces today as well as those it will undoubtedly face in the future. The Western North Dakota Energy Project's Boomtown Series is a webinar series that focuses on answering questions and offering solutions. The series is hosted by the Strom Center for Entrepreneurship & Innovation at Dickinson State University; project partners include DLN Consulting Inc. and the Center for Rural Entrepreneurship. The series is made possible with financial support from the Bush Foundation. Don Macke, the Center for Rural Entrepreneurship’s director of entrepreneurial communities, notes that he began working with western North Dakota when he was asked over a decade ago to research and speak on the challenging issue of depopulation of western North Dakota at Dickinson State University’s Population Summit. Today, western North Dakota has changed in a way that very few people could have expected, creating immense challenges and immense opportunities for the region. The project’s goal is to bring information to leaders in the impacted communities by looking at benchmark regions both nationally and globally that have dealt with similar situations in a positive way. Macke calls these “solution models” — models that can provide insight into short-term management and ensuring long-term prosperity. The first step in developing the webinar series was to undertake research to locate areas that had experiences with boom cycles. The next step was to decide how to make these solution models widely accessible. Webinar technology was selected as the communication method. The webinars, all available electronically to anyone inter-

B

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ested in bettering their communities, address topics such as other areas’ experiences in energy policy, taxation and positioning for long-term development. For example, the Marcellus Shale development in Pennsylvania and the Pennsylvania legislature’s experience in creating policies and programs via state government are offered as insight. The Sublette County Wyoming Case is discussed as an example of the Boomtown Syndrome by a Cornell University faculty member who has intensively studied the boomtown literature. The Iron Range Resources and Rehabilitation Board experience is shared by that program’s director. More discussion on the IRRRB model and how it might be adapted into western North Dakota is featured on the just-released webinar, “Western North Dakota Regional Legacy Trust.” The project is open to public feedback. Comments are sought on what type of information or research local, state and national leaders feel is essential as western North Dakota moves through what researcher Jeffrey Jacquet calls the Boomtown Process.

The boomtown process The team believes that western North Dakota is currently moving from “crisis” to the “adaptation” phase. Crisis is the phase in which the boomtown struggles to catch up in areas where it is overwhelmed. Adaptation is catching up and even getting ahead of the development. One of the areas the team is particularly interested is in post-boom prosperity issues. The “crowding out effect” means that the total focus on energy can begin to divert attention away from other things the region needs to ensure its long-term prosperity. The region, according to Macke, wants to avoid a postboom economy that is weaker than it was prior to the boom. Debora Dragseth Professor of Business Dickinson State University dr.dragseth@gmail.com


Border States “Here for the Long Haul” States has provided innoB order vative products and supply chain solutions for the construction, industrial and utility markets for more than 60 years. Throughout the U.S., our 1,600 employee-owners proudly serve our customers with industry and product knowledge, making us a powerful supply chain partner. Through the ups and downs in the Bakken oilfield of North Dakota, we have built solid relationships with longstanding customers by providing the materials and technical expertise needed to keep their electrical and automation systems up and running. We offer products and services for industrial automation; industrial maintenance, repair and operation (MRO); electric and natural gas utility; electrical construction; data communications; and plumbing.

high-speed Internet wirelessly from the customer’s closest existing telephone cable. An especially unique part of this solution is that all of the equipment is powered remotely via the existing telephone cable. Even with the hills and rough terrain of the Bakken oilfield, we managed to create a workable and re-deployable e solution.

Energy-related activityour andability the to customers and expand challenges that follow continue serve them, we built new facilitiesto our company to find innovaindrive Dickinson, Minot and Williston, tive products and logistical solutions North Dakota; Midland and Lubfor our customers across U.S. bock, Texas; and added newthe locations match Minnesota; the demandand from our inToDuluth, Greeley, customers and expand our ability to Colorado. Most recently we expanded serve them, built new facilities into Utah withwethe purchase of Elecin Dickinson, Minot and trical Wholesale Supply ofWilliston, Utah. North Dakota; and Midland and Lub bock, andtoadded new location We lookTexas; forward continued in Duluth, Minnesota; and Greeley, mutual growth and success. With Colorado. Most recently we expande unmatched local sales, inventory, intoservice Utah with thecustomers, purchase of and to our weElecwill trical Wholesale Supply of Utah. be there with the tools, technology

But, it’s not just about being a great supplier—we are also a good neighbor. When the Red Cross was looking for help when they needed to and know-how to help our custompurchase a critically needed vehicle, Wesuccessfully look forwardmeet to continued ers their business trailer and first aid supplies for mutual growth and success. With goals. Western North Dakota, they came to unmatched local sales, inventory, us. Working with our key customers and service to our customers, we wi in the area we responded by raising o be there with the tools, technology enough to purchase a vehicle, trailer and know-how to help our customand supplies. ers successfully meet their business goals.

Our services are tailored to meet our customers’ needs. When faced with limited manpower and getting material on site, we provide job site trailers to ensure our customers have the material when and where they need it. Job site trailers keep material secure and protected from the weather. And, by ensuring crews have the material they need at the job site helps our customers increase productivity and reduce labor costs. Energy-related activity and the challenges that follow continue to drive our company to find innovative products and logistical solutions for our customers across the U.S. To match the demand from our

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|TALK OF THE TOWN|

From boom to business Williston development begins to catch up with breakneck growth BY KRIS BEVILL or several years now, overwhelming growth related to the Bakken oil boom has pushed Williston, N.D.’s infrastructure and amenities to its breaking point. But in 2013, the community began to see a light at the end of the tunnel. Shawn Wenko, assistant director of Williston Economic Development, says development has begun to catch up with demand in the oil hub and the town has moved “from a boom to a business model.” That’s not to say business activity or interest in new ventures has slowed. The Williston Economic Development office logged more than 1,500 developer contacts in 2013, including in-person inquiries, phone calls and emails. And the business climate continues to be the envy of the nation. “I would say it’s almost extraordinary,” Wenko says. The oil and gas industry grew by 10 percent or more in 2012-’ 13, but other industries logged even larger growth numbers, which Wenko says is an indicator that Williston is settling in for long-term growth. He sees it as part of a succession plan of growth to saturation which began several years ago with crew camp housing, followed by hotels, then apartments and other housing and, finally, supporting service industries. In the last three years, 1,600 hotel rooms have been added to Williston and a record number of apartment units are coming online. Wenko dubbed 2013 as “the year of the restaurant.” Thirteen restaurants opened in Williston in

F

An aerial view of the Williston Area Recreational Center, center, and Williston State College. PHOTO: VERN WHITTEN PHOTOGRAPHY

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the past year, including national chain restaurants and individual eateries such as Williston Brewing Co., which plans to model a national franchise on its flagship location in Williston. Wenko believes this year will be the year of retail. “We should see some big announcements in 2014 for retail and that’s going to be exciting because it’s what the people of Williston have wanted for a long time and they’ve been very patient,” he says. Other quality of life improvements are on tap for Williston in the coming year, including the opening of the Williston Area Recreational Center in March. The impressively sized $70 million facility, designed by JLG Architects, will feature a water park, tennis courts, basketball courts and an elevated walking track among other amenities. When finished, it will be the largest facility of its kind in North Dakota. The economic development office and community leaders are also focusing more intently on combating some of the negative perceptions regarding the community. Not all issues can be immediately remedied, however. One of the biggest challenges facing developers in and around Williston is what Wenko calls the “area energy inflation factor.” Land prices and goods and services generally cost 10 to 15 percent more in that area compared to elsewhere in the region, and labor shortages are an ongoing concern. Other issues, such as crime rates and housing, are


|TALK OF THE TOWN| often exaggerated through misinformation, according to Katie Long, communications director of Williston Economic Development. In an effort to alleviate misconceptions about the town, Long is spearheading an initiative known as “The Real Williston” which will focus on providing in-depth information on 10 major issues in Williston. The initiative will cover each topic in three parts, providing details on the past, present and potential outcome of each issue. Issues to be covered include housing, crime rates, infrastructure, quality of life, city government, medical care, education, area economics-inflation, the energy industry’s impact on economic development and advocating state support for oil impact funds. The initiative will launch this month with a three-week series on housing. Long says the goal of the campaign is to give temporary and long-term Williston residents a feeling of pride about their community and provide them with accurate information on those issues. “I think it’s going to alleviate a lot of concerns and misinformation,” she says. “The more informed we can make a resident, a citizen or a business owner, that’s one more person who knows the real Williston.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Williston Statistics Building permits issued in 2013 (as of Nov. 30):

674 Building permit valuation in 2013 (as of Nov. 30):

$349 million

(SOURCE: WILLISTON BUILDING DEPARTMENT)

Estimated 2012 permanent population:

18,000 Projected 2017 permanent population:

28,500 (SOURCE: NORTH DAKOTA STATE UNIVERSITY AGRIBUSINESS AND APPLIED ECONOMICS DEPARTMENT)

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|FINANCE|

Private equity fund takes hands-on approach to investments Sioux Falls’ Badlands Capital emphasizes active involvement in portfolio companies BY KRIS BEVILL

fter spending 17 years in Chicago’s investment banking and private equity sector, South Dakota native Blaine Crissman returned to his home state two years ago and launched his own private equity firm, Badlands Capital. The Sioux Falls-based firm is focused on investing in mid-sized ($10 million to $40 million in revenues) value-added manufacturing and business services companies located in the Midwest and northern Plains. Crissman says his experience in managing portfolio companies scattered throughout the country during the recession taught him that private equity investors need to be actively involved in their companies, so he plans to take a hands-on approach to the management of Badlands Capital companies. Therefore he will cap his investments at two to three companies located within a 400-mile radius of Sioux Falls, primarily in second-tier communities in the Dakotas, western Minnesota, Iowa, Nebraska and Colorado. “Once you get into central and eastern Minnesota, there’s plenty of money there already,” he says, adding that a key part of his investment strategy is finding niche manufacturing or business services companies located in communities that are large enough to enable growth and attract a talented workforce, but small enough to avoid auction-type scenarios where the highest bidder wins. “I’m looking more to partner with a current owner or owner-founder who started a business 30 years ago

A

Blane Crissman, partner, Badlands Capital

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and doesn’t know how to monetize and retire or maybe doesn’t have a manager to buy the business from him,” he says. In late October, the firm, along with Sioux Falls-based Nordic Venture Partners and Chicagobased Aldine Capital Partners, bought its first company — Sioux Falls-based fiberglass storage tank manufacturer Design Tanks LLC — from a private equity firm in Philadelphia. The company, which generates about $10.5 million in revenue annually and employs about 45 people, designs and produces 50,000-gallon liquid storage tanks for the agriculture and industrial wastewater treatment industries, and both industries are stable and growing. However, the company has a history of only passively marketing its products and Crissman saw an opportunity to change that. “They have a good reputation and the phone keeps ringing, but I think there are ways to be more outbound in sales and marketing, so I’ll be involved in that,” he says. One area of immediate potential growth for the company is in supplying the Bakken region, although Crissman is realistic in his demand expectations. “They’re the closest fiberglass tank manufacturer to the Bakken, which has had meaningful growth in demand for steel and fiberglass tanks in the last five to eight years, and Design Tanks didn’t sell any to the Bakken — tank manufacturers from outside the region did,” he says. “Some of that was strategy, some of it was they just didn’t have the relationships. Just because there’s a demand for


|FINANCE| product doesn’t mean you can go up there and sell it. It is an opportunity but everyone is trying to glom onto it.” Shortly after Badlands Capital purchased Design Tanks, the company began hiring for a second shift, a process which has been difficult due to the state’s manufacturing workforce shortage. Crissman says that while he’s long believed the Great Plains could compete with China as the U.S.’s main supplier of manufactured goods, the lack of workers could soon hinder the sector’s recent growth in South Dakota. “We’re at the functional floor for employment,” he says. “One of the things we’re running into as a challenge with adding a second shift is there are a lot of jobs like that, so everyone competes for the same labor pool. People are just trading employees and having to pay more for them.” And with typical wages for modestly skilled laborers at $10 to $14 per hour, Crissman is skeptical of the industry’s ability to attract new workers. Marcia Hultman, South Dakota’s labor and regulation department secretary, confirms that manufacturers throughout the state are struggling to find welders and other production workers and are increasing wages in order to remain competitive. Kim Olson, policy adviser to Gov. Dennis Daugaard, stresses that the skilled worker shortage is not an issue unique to South Dakota, however. “Although the tight labor market in the manufacturing industry challenges growth nationally, the state of South Dakota supports manufacturing development by working with businesses to increase the skills of our incumbent workforce, train additional individuals entering the labor market and recruiting skilled workers from other regions,” she says. Meanwhile, Crissman will continue seeking investments in the northern Plains and beyond, focusing on his niche area and the advantage he has in being a local investor. “What I’ve certainly found is this region does not like carpet baggers,” he says. “They want to be able to check you out by making two phone calls, not running a background check and talking with 10 people. There are millions of dollars of capital available, and I think larger companies in our region could certainly attract interest from larger funds, but as far as people who live here and work here there are few funds focused on this area.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

www.prairiebizmag.com

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|ENTREPRENEURSHIP|

125 years and counting Five generations contribute to floral business’ long-running success BY KRIS BEVILL hen Alvin T. Shotwell opened a floral landscaping shop in downtown Fargo in 1888, the city was young and growing and in need of trees. A.T. Shotwell Floral and Nursery Store supplied the need and grew his business along with the town, eventually adding several small greenhouses as the floral shop expanded. His son joined the company in 1908 and the business changed its name to Shotwell Floral Co. The floral shop continued to thrive and evolve with the community for the next several generations of family members, sustaining a gas explosion at one of its locations and several other location changes along the way.

W J.D. Shotwell is the fifth generation of his family to operate the family’s Fargo floral business. Shotwell Floral celebrated 125 years of business in 2013. PHOTO: SCOTT THUEN PHOTOGRAPHY

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Today, 125 years after Alvin opened Shotwell’s doors, the $2 million company has consolidated its four previous locations into one large store in south Fargo in an area that Alvin surely would never have envisioned one day becoming a bustling part of the sprawling community. Other aspects of the business have changed as well. Trees are no longer a primary product for the company. Instead gift products and online ordering have become new areas of focus. But one thing has remained constant throughout the business’s long run — family leadership. J.D. Shotwell serves as vice president of the company and is the fifth generation to have an inter-


|ENTREPRENEURSHIP| est in the floral business. He says he grew up in the business but never felt like he had to take part in it or that he would one day take it over. Instead, his family, for at least the past three generations, has maintained the mentality that the business would be taken over by the upcoming generation only if they expressed an interest in doing so. “It was one of those things over the years I kind of fell in love with and decided that’s what I want to do for a living,” he says. J.D. has been seriously involved with the business since about 1993. His father, John, remains owner of the business and is still somewhat involved in the business. “He’s a worker,” J.D. says. “He loves to work, he still loves his job. If he wants to work forever, I’m going to love it.” John’s wife, Annette, is also involved in the family business and serves as president of the company. There has never been a time in the business’ 125-year history where the family considered closing, J.D. says. “We’ve been very fortunate to have a strong family focus on the business.” J.D. says the floral industry has changed drastically over the years and especially over the past 15 years as online ordering has become more commonplace and customers have dictated changes in the store’s offerings. As a result, the company’s gift shop has grown significantly in square footage while the greenhouse portion of the business is not as strong of a contributor to the bottom line as it once was. In the future, J.D. envisions embracing technology to better serve customers and continuing to focus on making the south Fargo shop a destination location. While the offerings may change over the years, the company remains firmly committed to providing top-notch customer service, a focus which J.D. believes is to be credited for the company’s longevity. “Quality and customer service are the two basic things that help small businesses,” he says. “I think as long as you can stay that way you can be successful in the community.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

www.prairiebizmag.com

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Awaking North Dakota’s ‘sleeping giant’? Company targets area outside oil patch for exploratory drilling BY AMY DALRYMPLE n oil and gas company is working to wake what it calls a sleeping giant in an area of southern North Dakota far outside of the state’s traditional drilling region. Strata-X Energy has received permits to drill four wells in Emmons and McIntosh counties as part of an exploratory program known as wildcatting, the North Dakota Oil and Gas Division announced Dec. 11. The company, headquartered in Denver, says on its website the wells will target natural gas in the shallow Niobrara Formation, a significant petroleum system the company says has been overlooked in the southeastern Williston Basin. The permits, approved Dec. 11, give Strata-X permission to drill two wells near Wishek and two wells near Linton, says Alison Ritter, the division’s spokeswoman.

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|ENERGY| The Oil and Gas Division issued a press release on the permits because it’s so rare for permits to be approved that far east of U.S. Highway 83, says Director of Mineral Resources Lynn Helms. The state has no record of either county ever producing oil or gas, Ritter says. Another company attempted a drilling program in 2006 in Emmons County, but the wells were not economically successful, the Oil and Gas Division says. “It’s pretty exciting to issue some permits that are outside what we consider the 19 oil and gas producing counties,” Ritter says. Strata-X Energy calls its plan the Sleeping Giant Gas Project. “The Niobrara Formation in this area has been overlooked despite gas shows and small flares being reported,” the company says on its website. If the wells are successful, other operators will likely follow and do more exploration, Ritter says. “If successful, any type of serious drilling would really be years away,” Ritter says. “We have to wait and see what they find out before anyone should get too excited.” North Dakota has some natural gas wells, but most drilling in North Dakota targets oil. Strata-X Energy, which did not respond to questions requesting comment, says on its website that two interstate natural gas pipelines run through the area, which could facilitate mar-

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|ENERGY| keting the gas. It’s unknown when the company plans to begin drilling, but Ritter says she anticipates it will be soon because the company was eager to have permits approved. Oil field geologist Kathy Neset of Tioga, N.D., says it’s exciting that the company is exploring and testing the formation. “Niobrara is hugely productive in Wyoming,” Neset says. “To me, this leads toward many different formations that have potential in this Williston Basin.” Neset estimates the Niobrara wells would be less than 4,000 feet below ground in North Dakota, compared to typical Bakken wells that are about 10,000 feet below ground. In Wyoming, the Niobrara Formation is primarily targeted for oil, but also produces significant natural gas, says Mark Watson, petroleum engineer with the Wyoming Oil and Gas Conservation Commission. Operators use horizontal drilling and hydraulic fracturing techniques to produce from the Niobrara, Watson said. “It’d be the same as what you do with the Bakken and the Three Forks,” Watson says. Strata-X is also involved in oil and gas exploration and development in California, Texas, Illinois and Australia. PB Amy Dalrymple Reporter, Forum News Service adalrymple@forumcomm.com

Know a creative, confident, successful businesswoman in the area? Nominate her for Prairie Business magazine’s Top 25 Women in Business issue in March.

We are looking for women who are not only business leaders, but also excel in other areas such as leadership, community service, mentoring, entrepreneurship or balancing family and work. To nominate someone, please go to prairiebizmag.com and click on the “Top 25 Women in Business” tab.

Submission Deadline January 17, 2014

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Prairie Business Magazine January 2014


Down

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evelopm

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

Minot—North Dakota’s Gateway to the Bakken™. Minot investment opportunities are smart, grounded, and proven. That’s what happens when a city has added more than 10,000 residents in the last several years. And is home to 53 energy and oil companies with almost 3,000 employees—in a city where more than half the business community is affected by the oil industry. Because of energy’s impact on Minot, we have more than $350 million slated for improvements to roads, our airport, water and sewer mains, the landfill, buildings, and more. There’s no better region in the nation to put your investments. As a city, we’re raising our own taxes to keep pace, and continued state investment feeds an economic engine. To learn more on the amazing potential of Minot, please email madc@minotusa.com or call us at 1-701-852-1075 to sign up for our comprehensive e-newsletter to stay informed on all of our latest news.

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49


|BY THE NUMBERS|

| SPONSORED BY

|

Oil Average Daily

Producing

Wells

9,682* Sept. '12 7,798

+1,884

Permits

Sept. '13

931,940* Sept. '12 793,548

+138,392

* All time monthly high

Average Rig

Total

Production (barrels)

Sept. '13

+14

Sept. '13

Count

287 Sept. '12 273

-7 218, May 2012

370, Oct. 2012

Price

Gas Aug. '13

per barrel

$92.96 Aug. '12 $84.98

+7.98

+266,832

Sept. '13

1,060,380* Sept. '12 793,548

(% Flared)

-1

* All time monthly high

All time monthly high: $136.29, July 2008

Interest Rates Effective federal funds rate 10-year treasury constant maturity rate

6 5 Percent

4 3

(Thousand Short Tons)

29% Sept. '12 30%

Sept. '13

2,342 Sept. '12 2,279

+63

All time monthly high:

All time monthly high:

36%, Sept. 2011

2,924, March 2004

UNEMPLOYMENT RATE Sept.-13 Sept.-12 North Dakota Bismarck MSA

2 1 Jan2006

Jan2008

Jan2010

Gas Captured/Sold

13%

Jan2012

Jan2014

381,028 59,735 115,949

2.5

3

116,797

3.3

51,545

52,927

Dickinson MiSA

1.1

1.4

22,022

20,349

Jamestown MiSA

2.2

2.6

9,854

10,492

2

2.3

36,438

35,423

Wahpeton MiSA

2.8

3.1

11,439

11,692

Williston MiSA

0.6

0.7

45,912

35,155 425,825

3.70%

4.40%

432,607

Rapid City MSA

3.4

4.1

65,917

64,532

Sioux Falls MSA

2.9

3.6

131,564

125,944

Aberdeen MiSA

3.1

3.2

22,713

22,400

Brookings MiSA

2.7

3.1

18,703

18,070

Huron MiSA

3.1

2.8

9,681

9,749

Mitchell MiSA

2.7

3.1

13,352

12,939

Pierre MiSA

2.8

3.0

11,797

11,737

Spearfish MiSA

3.4

3.9

12,480

12,400

Vermillion MiSA

3.2

3.4

7,147

7,342

Watertown MiSA

2.9

3.1

18,812

18,621

3.2

3.5

11,515

11,295

Minnesota

5.00%

5.60%

2,821,038

2,800,958

Duluth MSA

5.60%

5.90%

135,025

136,189

4.5

5.2

1,784,950

1,765,755

Minneapolis-St. Paul MSA

71%

389,665 60,199

2.9

Yankton MiSA

16%

3.20% 2.3

Fargo MSA

South Dakota Jan2004

2.80% 1.8

EMPLOYMENT Sept.-13 Sept.-12

Grand Forks MSA

Minot MiSA

Jan2000 Jan2002

Sept. '13

Employment

7

0

Coal

Gas

(MCF/day)

183 Sept. '12 190

All time monthly high:

All time monthly high:

* All time monthly high

Sept. '13

Alexandria MiSA

3.6

4

20,277

20,345

Bemidji MiSA

5.6

6.3

20,670

20,834

Brainerd MiSA

5.8

6.2

44,334

44,168

Fairmont MiSA

4.4

5.0

10,765

10,493

Fergus Falls MiSA

4.2

4.5

29,763

29,594

Gas captured and sold

Hutchinson MiSA

4.7

6.0

18,968

18,552

Marshall MiSA

3.7

3.9

14,053

14,518

Flared from wells selling at least 1 mcf

Red Wing MiSA

4.5

4.7

24,330

24,739

Flared from wells with zero sales

Willmar MiSA

3.8

4.4

24,033

23,177

Winona MiSA

4.2

4.6

28,087

28,238

Worthington MiSA

3.5

3.9

11,056

11,120

SOURCE: N.D. PIPELINE AUTHORITY

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

50

Prairie Business Magazine January 2014


Co-ops work for

YOU. Natural disasters happen. Unfortunately, we’ve seen more than our fair share lately. From tornados to fires, floods and blizzards, our region has been hit with destructive force, often destroying the electric system we depend on. Through all of it, the cooperative spirit remains strong. Committed to restoring power quickly, cooperative employees work in some of the harshest conditions to bring electric service back to your homes. They’ve traveled across the country to help fellow cooperatives in times of need, and have even taken in stranded travelers, providing shelter and food at the co-op offices. It’s not a job; it’s a way of life. People helping people. Cooperation among cooperatives. It’s what we do.

24 hours a day, 7 days a week, we’re working for you.

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PBJanuary 2014