Model in Diversification
Developing our region Signs are positive www.prairiebizmag.com
Volume 11 No. 11
Facility changing fading 16 rural landscape
Rural community in South Dakota hopes new facility designed to educate will help with new and innovative opportunities. By Alan Van Ormer
Mergers strengthen 22 business
Combining two different cultures key component when two different business groups merge together. By Alan Van Ormer
26 Black Swan Cooperage: 28 Talk your way to the top Resurgence of an old process. By Nancy Leasman
The ability to get up and speak in front of people and speak is important. By Michael McAllister
Things happening in 38 energy sector
30 18 42
Cover Story: Developing our Region Our three-state area is seeing signs of economic and rural development. By Alan Van Ormer
Speakers believe North Dakota could be a leader as the nation shapes its energy needs. By Alan Van Ormer
40 Dakotas America project
The South Dakota Wheat Growers Association is completing three projects to upgrade ag businesses at North Dakota and South Dakota locations. By Lin VanHofwegen
58 Pricing Mistakes 61 Bring back trust
Company Profile: Ulteig
Examples of good and bad pricing policies. By Dennis Brown and Per Sjofors
Ulteig has emerged to become a diversified company with a solid reputation across the nation. By Alan Van Ormer
Building trust in our working environment. By Roger Hall
Community Profile: Yankton, SD The southeast South Dakota community steps up to the plate when there are solid ideas. By Alan Van Ormer
48 ND PUC interview Blender pumps making 50 transition
North Dakota ranks high in most energy development categories
IN THIS ISSUE 6 From the Editorâ€™s Desk 8 Women in Business 8 Matthew Mohr
10 Prairie News 14 Prairie People 56 Q&A: Tom Schabel
NEXT MONTH The December issue is our annual tribute to 40 under 40 business leaders. Prairie Business magazine will look at some successful business leaders in the Northern Great Plains and what has helped them become successful.
60 Viewpoint 62 By the Numbers
ON THE AIR Join Prairie Business magazine Editor Alan Van Ormer and host Merrill Piepkorn on Tuesday, Nov. 9 at 3 p.m. on any Prairie Public radio station to hear more about the November cover story on rural and economic development. To listen to Prairie Public, visit www.prairiepublic.org/radio/hear-it-now.
Three states in the region are doing what is possible to make blender pumps part of the landscape. By Alan Van Ormer
Company analyzes 52 Bakken oil
Oil companies are calling Neset Consulting Services to evaluate drill rigging operations in the Bakken. By Alan Van Ormer
efficient ways 54 toFinding live
Hunt Utilities Group is finding ways to live efficiently using what is around them. By Alan Van Ormer
ALAN VAN ORMER
FROM THE EDITOR’S DESK
Business of perception
s you might imagine, the Prairie Business magazine staff spends hours of road time each month traveling throughout Minnesota, North Dakota, and South Dakota to meet with people that have stories to tell in the business community. In late September, I took a day-long road trip to do some interviews and take photos for a couple of stories that are appearing in this issue. On my trek from Alexandria, MN to Pine River, MN, I was able to admire the beauty from the fall foliage. It was so relaxing and comforting just to make that 2 to 2 ½ hour drive up to northern Minnesota. Another great thing about our job is seeing the beauty in the three-state region as we head from place to place. Now, outside of the fact that we travel for stories, many of you are probably wondering what a 2 ½ hour trip has to do with the business world. Seeing the beauty started me thinking about what a couple of people I talked to had said. Perception! In Alexandria, there is a business park that has some shovel-ready lots located along I-94. If you are like me, your first impression of the community is what you see as you enter. Trees and organized buildings are eyeappealing. That is what is happening with this business park in Alexandria. When you drive by along the Interstate, the trees provide a perception that this might be a place a business might want to build or relocate to. Once you get inside the park, Jason (Murray) and Tim (Wagner) are working to make the business park both attractive and in an organized way. The perception is that this is a business park that a company would be happy relocating into. On the other end of the drive was Pine River. Not only are there swarms of trees with different colored leaves running along the road, my end destination brought me to a company called Hunt Utilities Group or HUG for short.
An SBA Award Winning Publication Mike Jacobs, Publisher Alan Van Ormer, Editor Scott Deutsch, Sales Manager Tina Chisholm, Production Manager Jen Braaten, Marketing Coordinator Beth Bohlman, Circulation Manager Kris Wolff, Layout Design, Ad Design
NATIONAL ACCOUNT SALES/SALES MANAGER:
This group is all about energy conservation; something that businesses are working to get a handle on throughout the region. HUG has been doing research and might have found a way to deal with that issue by using what the land has given to us. Each building on the campus is all about energy conservation. For example, the main office has solar windows that are facing south, which allows it to conserve heat. Then another building has a greenhouse attached that could allow the owners to grow their own food on sight. Paul Hunt has assembled a group of people that are finding creative ways to conserve energy; mainly in homes, but also in other structures. The main concern is a marketable facility, but they have hope that it will be something that works in the future. Again, when you look at the perception, the large home where Paul and is wife live is beautiful. The other buildings on campus are models of what could be if a person or group uses a collective creativity to develop something unique. In a larger view, some might think the perception out there is that business is struggling. In few instances or certain types of business sectors, there are some struggles. For example, in the manufacturing field, owners are finding it tough over the last couple of years. But there are some signs that manufacturing is picking up. For example, in Madison, SD, Gehl Company has been hiring employees to fill jobs; something that wasn’t being done in the past couple of years. But overall, the perception I get when traveling, is that communities and businesses are working together to make the best out of this situation. Many say that there are positive signs that the economy is turning around. In the end, it is all about your perception.
701.232.8893 Grand Forks/Fargo/Moorhead/northwestern MN
800.641.0683 Bismarck-Mandan/ west central ND/north central SD
701.232.8893 Fargo/Moorhead/eastern ND/western MN
605.212.6852 Sioux Falls/southern SD/southern MN
EDITOR: Alan Van Ormer
Ann Reich, North Dakota Bankers Association, Bismarck; Hiram Drache, Historian-In-Residence, Concordia College - Moorhead; James Ferragut, Fargo,ND; Tom Shorma, President, WCCO Belting - Wahpeton; Karen Froelich, Professor, College of Business Administration, NDSU Fargo; Bruce Gjovig, Director, Center for Innovation, UND - Grand Forks; Steve Rendahl, Associate Professor, UND School of Communication Grand Forks; Matthew Mohr, president/CEO, Dacotah Paper Company Fargo; Julie Fedorchak, Communications Manager, North Dakota Department of Commerce - Bismarck, ND; Mary Batcheller - Greater Fargo Moorhead Economic Development Corporation, Fargo, ND;Megan Olson, President/CEO, Watertown (SD) Area Chamber of Commerce Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 808 3rd Ave. S., Ste. 400, Fargo, ND 58103. Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.
Subscription requests: Free subscriptions are available online to qualified requestors at www.prairiebizmag.com.
Prairie Business magazine PO Box 6008 Grand Forks, ND 58206-6008 firstname.lastname@example.org
Online: www.prairiebizmag.com On the cover:
Rural and economic development is important to manage what is happening in a booming oil field in western North Dakota
Patience. Let’s wait a second. And think for a minute. As fast as business moves, patience plays a big role, too. Growth takes care and effort. But most of all, time. Bremer Bank is here for the long haul. We’ve helped businesses flourish for generations. Let’s get to know each other. Let’s grow together.
Call 1-800-908-BANK or visit Bremer.com. Member FDIC. ©2010 Bremer Financial Corporation. All rights reserved.
WOMEN IN BUSINESS CANDY HANSON – PRESIDENT AND CEO SIOUX FALLS AREA COMMUNITY FOUNDATION What do you attribute the success of the Sioux Falls Area Community Foundation? There are many things and even more people that deserve credit for our growth into a successful community foundation. Two things top that list. The first is an incredibly caring and generous community. The second is an active and passionate board of directors. Considering that six civic leaders each invested $2,000 to get the foundation started in 1984, and that today our assets stand at $68 million, there are many people who share in this success. What is the synergy between business and philanthropy? While 75% of philanthropy comes from individuals, it’s business leaders who set up the systems that make philanthropy happen. That kind of leadership created our foundation and gave area businesses, families, and individuals a way to invest wisely in our community’s well being and quality of life for the long term. After all, businesses only prosper when their communities prosper. It’s a fact that companies that practice generous corporate philanthropy improve their hometowns and are also
rewarded by positive consumer behaviors and enhanced corporate reputations. What trends are you seeing in business philanthropy? In the late 1990s, companies became much more intentional in their giving. They’re more deliberate in aligning their corporate giving with their business strategies. Today, larger, national companies typically give less philanthropic autonomy to their local offices. That’s led to local executives having to work harder to get corporate foundation support for their communities. The good news is that these executives do go to bat for their hometowns and still step up to share their time and talent to address local causes. What effect has the recession had on giving? I can only speak specifically to our own foundation, but over the past five years SFACF has grown by $13 million. We, and really the Prairie Business Magazine region, enjoy a high level of social capital. We live in towns where we still have close ties to our neighbors. We care about what happens to them. So when times are tough, our natural instinct is to help. What has prepared you for this position? I’ve had a wonderfully eclectic background. As an Army brat, I went to kindergarten in Hawaii, middle school in Germany and high school in Virginia. I earned a degree in English at the University of Kansas and picked up another major in education at Augustana College. A Bush Leadership Fellowship sent me to Harvard for a Masters in Public Administration. In between, I managed a database for an environmental newsletter publisher, consulted, worked in Washington, D.C. for Peace Corps, served as a county commissioner and was a stay-at-home mom. Each experience added something new to the tool box I use to help grow and manage the foundation.
MATTHEW D. MOHR
Meeting payroll G
reat business owners want to expand payroll along with offering great pay and benefits to all employees. Doing so takes continual growth, strong revenues, and reinvested profits. If you can’t handle losing sleep about how you will be able to pay all your employees, you probably are not cut out to be a business owner. Similarly, if you generally want your employees to live better lifestyles and earn higher wages, you are most likely to succeed in business. Individual business owners, no matter how successful, live with the constant worry of being able to meet weekly payroll needs. From initial start-up to wild success and throughout all phases of growth, a business must generate enough revenue to meet ongoing and on-growing payroll costs. It’s been said every successful entrepreneur has spent sleepless nights worrying about how to meet payroll in the morning, and this is probably a very accurate statement. The great desire or really wanting to be able to pay all employees is one thing; being able to pay them is another. The positive side to the payroll challenge is feeling confident about the future and allowing pay enhancements. Great entrepreneurs get excited when they see success in their business endeavors and are able to improve the lives of employees. Mohr can be reached at email@example.com. 8
PRAIRIE NEWS CONCORDIA COLLEGE NAMES SCHOOL OF BUSINESS
Concordia College, in Moorhead, MN, has named its School of Business after 1964 alumnus and businessman Ronald D. Offutt. Offutt provided the lead gift for a $50 million campaign to support the undergraduate business program and facility. The chairman and CEO of R.D. Offutt Company and RDO Equipment, Offutt has served as a long-time member and chair of the Concordia Board of Regents. Nearly $37 million has been raised to date, with Offutt’s confidential contribution representing the largest single gift in Concordia’s history. The Offutt School of Business will emphasize leadership, global reach, ethics and practical experience. The curriculum will be infused with four critical themes: leadership development, global understanding, an entrepreneurial perspective and an ethical standard. Students will interact with business leaders and apply what they learn in real-world settings.
MINNESOTA HOSTS DEVELOPMENT CONFERENCE
(Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to firstname.lastname@example.org for consideration)
AIA NORTH DAKOTA CONVENTION HONORS ARCHITECTS Several awards were presented during the annual AIA North Dakota 2010 Convention in Grand Forks, ND. The Honor Award was presented to the Gary Tharaldson School of Business at the University of Mary in Bismarck, ND, designed by EAPC Architects Engineers. Three merit awards were presented. One went to Chateau de Mores Interpretive Center in Medora, ND, designed by JLG Architects. Another was presented to Prairie Wetlands Learning Center Expansion in Fergus Falls, MN, designed by Shultz & Associates. The third award went to the South Dakota State University Wellness Center in Brookings, SD, designed by EAPC Architects Engineers. EAPC also received the Juror’s Choice Award for its design of the St. Thomas Aquinas Newman Center in Grand Forks, ND. The Test of Time Award was given for Central High School in Grand Forks. The original architect was W. J. Edwards, AIA with later additions by Joseph Bell DeRemer, AIA, Samuel Teel DeRemer, AIA, as well as the firm of Johnson, Halverson, Anderson Architects, P.C. Receiving 2010 Scholarships were Malini Foobalan, Kevin Gamelin, Peter Kuelbs, Sara Lillegaard, and Ashlynn Zeien.
SIOUX FALLS LAW FIRM IS ON BEST LAW FIRMS LIST The Sioux Falls law firm Boyce, Greenfield, Pashby & Welk, LLP is among the nation’s top law firms, according to the 2010 US News & World Report’s annual ranking of the nation’s law firms. The firm received the highest ranking, Tier 1, in 16 practice areas. In addition, nine of the firm’s attorney’s were named to the publication’s Best Lawyers list. The rankings, including 30,322 rankings of 8,782 law firms, are posted online at www.usnews.com/bestlawfirms. The rankings were the result of an extensive national survey of more than 52,000 law firm clients and nearly 44,000 lawyers. To be eligible for the Best Law Firms list, firms must have at least one lawyer listed in Best Lawyers. At least nine lawyers from the firm met that criterion.
SD PUBLIC UNIVERSITIES HAVE $2 MILLION IMPACT A research report says that the six South Dakota public universities generate almost $1.97 billion a year in annual economic impact from a state investment of $176 million. According to lead researcher, Dr. Michael Allgrunn, an assistant professor of economics at USD’s Beacom School of Business, the study shows the public universities directly support 5,326 full-time jobs in the state. An additional 9,342 jobs are located in the state because the universities generate business locally and indirectly support workers in other industries.
RESULTS UNLIMITED NOMINATED FOR FOUR EMMY® AWARDS Results Unlimited has been nominated for four Emmy® Awards from the Upper Midwest Chapter of the National Television Academy. The advertising and marketing agency, with offices in Minot, ND, Fargo, ND, and Moorhead, MN, has been nominated for Trinity Health’s Life Reinvented Commercial Campaign, Short Form Editing Composition, Short Form Photography Composition, and Location Lighting Composite.
The 15th Annual Minnesota Development Conference touched on different aspects of economic development that provided various breakout sessions to discuss issues that help Minnesota’s communities grow and prosper. In addition, the National Governors Association held a forum to talk about increasing postsecondary credential attainment for adults. In his welcoming speech, Department of Employment and Economic Development (DEED) Commissioner Dan McElroy pointed out Minnesota would be facing four long-term trends: changing demographics and technology, globalization, and the challenge of replacing fossil fuels (renewable energy.) 10
SMALL HOSPITALS RECEIVE FUNDS THROUGH UND CENTER FOR RURAL HEALTH The Center for Rural Health at the University of North Dakota School of Medicine and Health Sciences will distribute over $318,000 from the Small Hospital Improvement Program (SHIP) to 36 rural hospitals in North Dakota. Administered by the Center for Rural Health, SHIP is funded through a grant from the federal Office of Rural Health Policy. The purpose of the program is to support rural hospitals in providing quality care to rural residents and to fund financial studies designed to help with complex health care billing, coding and reimbursement processes. Funds have been used to upgrade equipment for financial operations and information technology, and for staff training, consultation, and educational materials.
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(Press releases and photos about business news and events in North Dakota, South Dakota and western Minnesota can be e-mailed to email@example.com for consideration)
DIGI-KEY APPLICATION AVAILABLE WORLDWIDE
EAST MEETS WEST
Design engineers and purchasers around the globe can conduct business with Digi-Key Corporation wirelessly with the availability of Digi-Key’s application for Android phone users. Digi-Key’s Android app is the second in a series of Digi-Key mobile applications. It provides easy access to Digi-Key’s expansive product offering and resources. Similar to the Digi-Key iPhone application, the Digi-Key Android app also allows customers to create Digi-Key orders and view them in local, Digi-Key supported currencies. This free application, available in the Android Market, is the passkey to one of the world’s largest inventories of electronic components in stock. Providing instant access to Digi-Key, this new application is designed to help design engineers and purchasers source the electronic components they need anytime, anywhere. Community leaders from western North Dakota traveled to Grand Forks, ND to meet with leaders from eastern North Dakota to explore ways to capture opportunities and solve infrastructure needs that comes with growth. It also helped understand energy, construction, and government issues involving western North Dakota. In addition, there were presentations on understanding oil and gas activity, explaining why contractors work in North Dakota, as well as a tour of the University of North Dakota School Of Engineering and Mines petroleum engineering program and UND’s core library.
TWO NORTH DAKOTA MARKETING FIRMS PART OF WIND MARKETING ALLIANCE
SOUTH DAKOTA TECH SCHOOLS HAVE RECORD ENROLLMENT For the second straight year, South Dakota’s four technical institutes are recording record fall enrollment. The secondary institutions have topped more than 6,000 students for the first time ever. Lake Area Tech in Watertown, and Mitchell Tech, in Mitchell, saw the largest increases. The programs that saw the biggest enrollment increases were architecture and construction, health science, information technology, and science, technology, engineering, and math.
NDSU RESEARCH FACILITIES RECEIVING $5 MILLION GRANT North Dakota State University (NDSU) will receive a $5 million federal grant for the university’s Advanced Nanomaterials Research Facility. The federal funding will be used to help build a new state-of-the-art research facility at NDSU to provide needed laboratory space for its ongoing nanomaterials research and greatly enhance the efforts of the Red River Valley Research Corridor. The federal grant was awarded by the National Institute of Standards & Technology at the Department of Commerce with funds appropriated by Congress.
MINNESOTA COMPANY EXPANDING TO SOUTH DAKOTA
Fredricks Communications, West Fargo, ND, and Advertising Marketing, Fargo, ND, have joined a German marketing and public relations firm to launch the Wind Marketing Alliance to provide branding and marketing strategies and services that connect wind energy clients to new and established markets on both continents. The two North Dakota companies joined Lorenz Kommunikation, Grevenbroich, Germany, in announcing the venture during the HUSUM WindEnergy Trade Fair and Congress in Husum, Germany. Independently, the Wind Marketing Alliance’s founding organizations have worked in the wind energy industry for nearly 20 years and have represented some of the best-known companies in the world. Their experience includes manufacturers of turbines, towers, internal systems, precision gears and specialty tools; construction, installation and maintenance contractors; heavyhaul providers; and industry consultants. Its members also have been public relations partners to HUSUM WindEnergy in Europe since 1998 and in North America since 2008. For more information, go to www.windmarketingalliance.com. 12
Anderson Seed Company, headquartered in Mentor, MN, is expanding to Redfield, SD. The company has broken ground on a sunflower processing and hulling plant in Spink County that is slated to open in 2011. The new facility will bring along 20 jobs including mill operators, quality control positions, office staff, forklift operators, baggers, and maintenance staff. The plant will have a 260,000 bushel capacity. The $3 million project was partially financed with a REDI Fund loan and the pooled-bond program, administered through the Governor’s Office of Economic Development in South Dakota.
NEW UPPER GREAT PLAINS UAS WEB SITE LAUNCHES The Grand Forks Region Economic Development Corporation has launched a new Unmanned Aircraft Systems (UAS) web site. The website, titled “Upper Great Plains UAS,” provides the latest news and information related to Unmanned Aircraft Systems in Grand Forks and the surrounding region. The Upper Great Plains UAS web site can be found at www.uppergreatplainsuas.com. This new web site works to keep the community, region, and UAS organizations and companies around the nation and world effectively up to date and aware of our regional UAS potential, resources, projects, partners, and general happenings. The web site provides UAS information needed by outside companies and organizations to gain better insight on how well equipped our region is for becoming the leader in UAS technology, education, training, business development, and more.
(Please e-mail photos and press release announcements of hirings, promotions, awards and distinctions received by business leaders in North Dakota, South Dakota and western Minnesota to firstname.lastname@example.org for consideration)
MINNESOTA CHANCELLOR WINS 2010 PACESETTER AWARD
LINDHOLM BECOMES PRESIDENT OF MINNESOTA MEDICAL ASSOCIATION
Minnesota State Colleges and Universities Chancellor James McCormick has received the 2010 Pacesetter of the Year Award. The National Council for Marketing and Public Relations District 5 recognizes a chief executive officer at a two-year college for exceptional leadership and support of college communications and marketing. District 5 includes Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, the Canadian province of Manitoba, Puerto Rico, and the Virgin Islands.
Dr. Patricia Lindholm, who practices medicine at Lake Region Healthcare in Fergus Falls, MN, is president of the Minnesota Medical Association. She started her duties at the association’s annual meeting in September. She will be the external face of the organization acting as a spokesperson for the media and the legislature. In addition, as president, Lindholm will focus on the wellbeing of physicians, as well as spearhead the association’s focus of improving the science and art of medicine, and to advance community welfare, community health, and education.
BETTER BUSINESS BUREAU HIRES HIEBERT Lisa Dinzeo Hiebert is the new Director of Strategic Marketing for the Better Business Bureau of Minnesota and North Dakota. Hiebert will coordinate marketing efforts throughout Minnesota and North Dakota and work to raise brand awareness for the Better Business Bureau and its 6,800 Accredited Businesses. She has an Accreditation in Public Relations from PRSA. Previously, Hiebert served as Director of Marketing and Communications for Girl Scouts of Minnesota and Wisconsin River Valleys.
SIMS APPOINTED DIRECTOR OF OPERATIONS AT THE NWROC Dr. Albert Sims, Ph.D. is now the Director of Operations at the Northwest Research and Outreach Center. Sims’ background is in nutrient and fertilizer management in crop production. He has been with the NWROC since 1995; he earned tenure and was promoted to associate professor in 2001 in the Department of Soil, Water and Climate in the University of Minnesota’s College of Food, Agricultural and Natural Resource Sciences. Sims replaces Larry Smith, who stepped down as head of the NWROC after 27 years of dedicated service. Sims is a member of the American Society of America, Soil Science Society of America, Crop Science Society of America, Soil and Water Conservation Society, and the American Society for the Advancement of Science. Sims holds a doctorate from North Carolina State University in Raleigh in soil science and both his master’s and bachelor’s degrees are in agronomy from University of Nebraska in Lincoln. 14
OLSON IS CHAMBER AMBASSADOR OF THE YEAR Larry Olson was unanimously named the Fargo Moorhead Chamber of Commerce 2010 Ambassador of the Year at the September Ambassador’s meeting. The distinction is based on attendance, professionalism and both committee and Chamber involvement. Olson is the president of Talent Productions and has been producing events, managing artists and entertaining audiences for more than 30 years. This is Olson’s sixth year as a Chamber Ambassador. During the 200910 year, he attended 104 out of 120 ribbon cuttings.
DAKOTA MEP HIRES SENIOR ADVISORS Dakota MEP has hired two senior business advisors, Dwight Dexter and Tony Haugen. Dexter has more than 30 years of senior level experience in sales, marketing, operations, and industrial engineering. He has professional knowledge in domestic and international markets and has led negotiation teams in the European and Asian markets. Haugen has experience in manufacturing companies that includes engineering, management, and ownership. He also has works for large Fortune 500 companies, private companies, turnarounds, startups, and was part of the executive team that went through an initial public offering.
LEEDING THE WAY IN
LEED Silver means GREEN for UND and North Dakota
A new day is dawning for the Education Building at the University of North Dakota. Originally built in the 1950s, the building was little changed until this summer. Thanks to Stimulus funding appropriated by the North Dakota Legislature, a renovation and expansion of UND’s Education Building is setting the standard for merging efficiency, environmental protection and educational impact. The LEED® Silver-certified project has been designed for optimized energy efficiency. That means, in part, the renovated and expanded building will use 24 percent less energy than other buildings of comparable size and type. More energy efficiency means better stewardship of state resources, lower water use, environmental protection, and improved climate controls for comfort and economy. If you would like to partner with us on this groundbreaking project, please contact Dan Rice, Dean of the UND College of Education and Human Development, or Jena Pierce, Director of Development, at 701-777-2674. To learn more about the project, visit our Web site at:
The LEED® Green Building Rating System TM is the national benchmark for design, construction and operation of high-performance “green” buildings. It promotes a whole-building approach to sustainability. Visit the U.S. Green Building Council’s Web site at www.usgbc.org to learn more about LEED rankings and standards. (Renderings courtesy of JLG Architects Ltd., Grand Forks)
Creative. Innovative. Entrepreneurial. Spirited. AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION INSTITUTION
The College of Education and Human Development is proud to be working on the project with these North Dakota businesses: JLG Architects
AE2S Engineering Heyer Engineering Obermiller Nelson Engineering Grand Forks Heating Air Conditioning Bergstrom Electric
Facility changing fading rural landscape By Alan Van Ormer rural community in South Dakota is hoping that a new $6.5 million facility designed to help educate people and groups will change the mentality of a fading rural landscape to a place of new and innovative opportunities. By “We Alanfeel Vanrural Ormer communities need to look for ways to create a positive future. Our construction of the Maroney Rural Learning Center will enable us to host meetings and events around that vision of the future for rural communities,” explains Randy Parry, President of the Rural Learning Center in Howard, SD. The entire Rural Learning Center complex is estimated to provide a local economic
Randy Parry, President, Rural Learning Center
impact of over $6 million on an annual basis and is anticipated to directly create between 17 and 20 new jobs. The conference training space will support 180-220 trainees annually who will be placed in new jobs in the wind energy industry. The availability of this facility will continue to attract and invite new businesses and visitors to “Reimagine Rural” through their association with the Rural Learning Center and its outreach work. “Having a world-class facility like this in Howard is huge- economically and socially. It will create jobs and offer new amenities that will further enhance residents’ quality of life,” says Keith Thompson, senior project manager for Koch-Hazard Architects, the firm that is designing the facility. “The building is designed to reinforce and reinvigorate Howard’s Main Street, and a new plaza will create public space for festivals, farmers’ markets and other events.” According to Kathy Callies, Vice President of Advancement at the RLC, the project’s impact is more than just economic. “The project provides a living demonstration of what the future could look like for other small rural communities who are working to identify and grow their own local leadership,” she explains. “It is also a living demonstration of what renewable energy systems are and how they work. We also hope to display and exhibit energy efficient building materials and equipment.” The 32,000 square foot Maroney Learning Center Complex includes a conference center, smart classrooms, on-site lodging, and wellness center. In addition, the facility will support the green energy training program. The facility will feature green technology in its design and operations and will be constructed to meet LEED Platinum certification.
The Maroney Learning Center Complex has several funding sources including Heartland Consumers Power District and USDA Rural Development. The facility will receive assistance from the American Recovery Reinvestment Act funding through a USDA Rural Development Business and Industry loan. The Miner County Bank in Howard is the lead bank allowing the project to have a 90 percent federal guarantee. Miner County Development Corporation will own and operate the building. Construction is underway in downtown Howard and is expected to be completed in 2011. The 24-room hotel will have a 75-foot tower with an elevator that leads to the second floor. Those participating in conferences can go outside and walk on a green garden path that will show all the South Dakota indigenous plants and learn about the plants. Also, they can go inside to a gathering place where they can talk, learn, discuss, and relax, before they head to their meetings or training. The project will feature special effects related to community and rural. For example, materials from the former American Legion building and gymnasium were salvaged for reuse in the project. There will be six grain bin tops located down the corridor. At the top of each grain bin is a skylight to
bring natural light into the hallway. Water will be reused from a water tank above the elevator in the tower. In addition, a 3.4 kilowatt Falcon vertical axis wind turbine sits on top of the tower where wind will be coming in for energy. Also, PV cells are being built on the top floor and at the back of the building are 44 wells, which will be 250 feet deep tying into a geothermal heating and cooling system. “This will be 50 percent more efficient than a traditional building,” says Parry. While the facility will be energy efficient, it is the training inside the facility that will be critical. Much of it will be on solar and wind education allowing people to receive training and become certified in those fields. There will also be a learning corridor. For example, there will be kiosks throughout the facility where those participating can touch a screen and learn more about a different energy system. “It is a place that people will be able to come and learn about rural. It is a place that where you are talking rural, this is rural. It is not Minneapolis,” Parry says. “This is a place that people can interact and learn from one another. We want to have individuals in communities to come to a place where they can learn from each other and with the help of some of our work be able to identify ways in which their community can grow and be sustainable. Learn from our failures, as well as our successes. It will be a place where they can be welcomed and be part of a learning process who wants to change. Change can happen.” Callies says local leadership is a key element to the development of a strategic vision for what a community wants to be and look like for its citizens now and in the future and in marshalling the courage to make it happen. “This facility is our invitation to come to understand “rural” in a firsthand fashion and to be welcomed to understand what it takes to be a vibrant rural community,” she adds. “The facility provides us with the space and support services to create a hosting place that provides for the kinds of learning and discussion that many communities and visitors to Miner County seek.”
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800-323-7583 www.dacotahpaper.com Prairie Business
COMPANY PROFILE - ULTEIG
A business model in diversification
By Alan Van Ormer
Ulteig Management: Brian Long, Executive Vice President/Chief Development Officer; Eric Michel, President and CEO; and Steve Maag, Executive Vice President/Chief Financial Officer.
lteig has emerged from a business that started during the rural electrification administration to what has become a diversified company that has a solid reputation across the nation. The Fargo-based company is built around its four core sectors: energy, civil services, buildings services, and land services. “All have a strong role to play,” explains Brian Long, Executive Vice President/Chief Development Officer. “With the economy now, the energy sector is the largest at this time. In the past all have played a prominent role in our development.” Ulteig had its start in 1944 when Mel Ulteig, who was a general field representative with the Rural Electrification Administration, started the business in his garage in Fargo. At the start, the business was involved in rural electrification in North Dakota, parts of South Dakota, and western Minnesota planning and designing how to build infrastructure for electrical cooperatives. Today, the company generates $50 million in revenue, has nine offices, and 350 employees. Along with its headquarters and another office in Fargo, Ulteig has facilities in Bismarck, Cedar Rapids, IA, Denver, Detroit Lakes, MN, Grand Forks, ND, Minneapolis, and Sioux Falls, SD. There has been small growth in the last couple years because of the economy. The economy was hard to deal with, but Steve Maag, Executive Vice President/Chief Financial Officer, says the company remained stable because of its diversity. “With the economy, the commercial service area is flat,” he explains. “The others are picking up the business.” In 2005, Ulteig became an employee-owned company, which provided tax advantages and also helped build its reputation. The employees participate in a stock ownership plan. “We try to establish an ownership culture where everybody thinks that the extra effort that they put in ultimately puts profits in the company and they share in those profits to increase value of the company,” Maag explains. “We’re trying to have employee owners understand that the company’s success is their success.”
In addition, Eric Michel, President and CEO, says becoming an S Corporation helped from a business standpoint because it is an indicator of who the company is. “Other companies recognize the benefit that goes along with it. We demonstrate a certain level of standard of care to our clients,” he says. “ESOPs are a quick indicator that says everyone is on board. They care and are taking care of us and themselves at the same time.” Recent energy contracts have provided the company opportunities around the region. “Renewable energy shifts and how we generate power in the country have changed and has helped,” Long explains. “It has created a lot of demand for services that we do in that area.” The growth in the civil services sector has been based on local flooding and changes in weather patterns causing wetter years. “This has created a need for growth and need for our services to come up with solutions.” Long adds that civil services, as well as building services, have seen a shifting toward government contracts and that has been successful. Finally, the land service sector has seen growth due to heavy interconnection to the company’s civil services and energy work. “The largest growing group is our land rights or right of way group,” Long says. “We have great solutions for these problems.” Ulteig has been involved in major projects in its 46 years. Here is a list of some of the most recent projects: Xcel Energy Delivery System Engineering, Oak Port Flood Protection, Vermont Smart Grid infrastructure, Northwood/Wadena Recovery, Wind Farm Collection and Utility Interconnection projects throughout the country, North Dakota Department of Transportation Engineering, Telecommunications Right of Way procurement system wide over multiple states, US General Services Administration Project Coordination, City wide improvements (city of Park Rapids), and City of Fargo Multiple projects. “Some markets are up,” Michel explains. “We move toward where the money is going to be. Staying flexible is how we would characterize our business.” (continued on page 20)
COMPANY PROFILE - ULTEIG
(continued from page 18)
Ulteig has a sizable presence in the state and in the region, according to Michel. “Ulteig has been responsible for designing nearly 25 percent of all wind capacity in the United States,” he says. “We are deep in some markets, as they dry up we use other areas.” Gerald Van Amburg is a manager on the board that Aaron Faiman viewing paper diagram for building. handles the Buffalo Red River Watershed District and has been involved with Ulteig’s work on the Oak Port Flood Control Project. “They are very good, very professional in their approach,” he says. “They are knowledgeable on what they do. I am impressed in general with the engineering companies in the area. Ulteig Ryan Watson updating electrical plan. is one of them.” Van Amburg also states that the Ulteig employees are concerned about doing it the right way. “They go out of their way to solve sticky problems and watch out for those that they are working for,” he adds. Ulteig has been involved in major municipality projects in the region. “FargoMoorhead is a growing area,” says Van Amburg. “There are a lot of engineering problems that need to be solved. They are right in the middle of it helping out.”
Detroit Lakes, MN office
Fargo, ND office
Sioux Falls, SD office
ULTEIG NOT WITHOUT CHALLENGES One challenge is finding quality employees. “Our resources are the universities,” Michel states. “In some areas the market has been so depleted. Technology has robbed a lot of the intellectual capacity.” Michel adds that in the engineering field, science, technology, engineering, and math have fallen below the lines of where the needs are. “Resource has been a challenge.” Maag adds that training staff in technology to keep up with the latest trends is a challenge. “We meet that challenge by hiring the best people that we can,” he states. Michel said the company is meeting the challenges head on. “Problems are diminished quickly by addressing them immediately rather than waiting for them to resolve,” he explains. The Ulteig management team says they are confident in the company’s abilities. It starts with the energy sector, because as Michel states, energy goes back to the company’s roots. “We enjoy a solid area and are able to maintain that,” he explains. “In other areas there is not as long a history. I think we have been successful in integrating technology to bring us up to speed with the strongest competitors.” The challenge for the future is to remain diversified. “That model has worked well and helped us sustain through some of these economic McNamara browses difficulties,” Michel says. “Geographically we are servicing the national Cassie through project plans. front from current locations, but developing additional partnerships.” For Michel, company success will not be gauged on head count or BOTTOM LINE: material acquisition as much as working on solving clients problems. “Our Headquarters: Fargo, ND growth is based on trying to provide opportunity,” he explains. “We want to be diversified, be busy, be solving our client’s problems, we want to be Founded: 1944 excited and engaged employees that are able to come up with innovative Employees: 350 On the web: www.ulteig.com ideas.” 20
Surveying a project.
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Mergers strengthen business By Alan Van Ormer hen the Fergus Falls Medical Group and Lake Region Healthcare discussed merging one of the key discussion points was establishing a new culture for the combined organization taking the best from both organizations. “We were able to work through that,” explains Larry Schulz, CEO/Administrator for what is now Lake Region Healthcare. “Both organizations had historically good working relationships. That provided the foundation to lead to the discussion to make things move fairly smoothly through the process.” Combining two different cultures is just one of the key components when two different business groups decide to merge together. Rick Davis, Chief Marketing Officer, Insight Technologies, says his company looked at their recent merger from the perspective that they didn’t want to acquire or merge with an entity that did exactly the same things as they did. On July 1, Insight Technologies merged with Ignus. The new company has offices in both Fargo, ND, and Grand Forks, ND. The company moved to a new office in Fargo on Sept. 1. Insight Technologies provide IT support services in network assistance, server planning, network support, and conferencing. Ignus brought the additional disciplined of web site development, e-commerce, and software development capabilities that allowed Insight Technologies to do migration and evolve existing databases. “Ignus is a really good company. We had different clients, which was really attractive,” explains Davis, adding that the company could see a rapidly developing market for web site design and software development. “We have come to appreciate that the Ignus team was extremely good at what they do and have a great reputation. There is an attractive blend of cultures, skills and capabilities. We thought combining the two companies would enhance both.” On Oct. 1, the West Fargo Chamber of Commerce and Fargo-Moorhead Chamber of Commerce joined forces. President and CEO Craig Whitney says joining the two provides a strong business association for members. “Now we will have as many as 2,000 members,” he explains. “We are excited about the message this sends to the community. The business community is unified, stronger, has a larger voice, and people are thinking about other ways and different ways to collaborate and work together.” The Fergus Falls Medical Group and Lake Region Healthcare finalized their merger on May 1. The Fergus Falls Medical Group is a multi specialty clinic made up of 46 physicians and Lake Region Hospital, provides acute medical care, acute rehab care, an inpatient psych unit, and an assisted living facility. One of the significant reasons for the merger involved healthcare reforms and how impacting reimbursement for state and federal funding for healthcare services would affect a growing elderly population in the region. Shortage of physicians and moving toward electronic health records were other factors in the move. “In order to best serve our patients and best position ourselves to be successful in future we were stronger working together,” says Schulz. Lake Region Healthcare serves 57,000 people in a primary service area of west central Minnesota that includes Fergus Falls, MN. Schulz explains that the merger helps increase quality health
(continued on page 24)
Craig Whitney, President and CEO, Fargo, Moorhead, West Fargo Chamber of Commerce
Insight Technologies provide IT services.
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Doctors and nurses work together to provide healthcare services at Lake Region Healthcare.
services to our area. One of those ways is by increasing the medical staff. The merger will increase the number of providers from 46 to 61. The merger will also help with recruiting and retaining physicians, and accessing additional federal dollars that are available through the Medicare program. When the chambers of Fargo-Moorhead and West Fargo discussed a possible merger, Whitney says that the one thing he learned was that the communities wanted this to happen. “The members wanted it,” he adds. “It is going to fit in very well.” It was almost a dozen years ago when Fargo and Moorhead chambers merged, according to Whitney. He says it was less than six months after he started as the President and CEO of the FargoMoorhead Chamber of Commerce when he was approached about a merger. “We have so many programs, business training and educational programs, events, and committees,” he explains. “It obviously makes sense for the West Fargo chamber to have access to all of those opportunities.” Whitney is excited about all aspects of the merger, but he states that it also provides the chamber an opportunity to focus on the public policy arena. “We have an expanded group of employees that would provide a larger voice,” he says. “We can speak to our elected officials at all levels of government on issues that are important to business.” For now, the Fargo-Moorhead/West Fargo Chamber of Commerce name will exist. However, Whitney says a firm will be hired to help provide a new name to show the representation of the valley. “One of our goals is to become a stronger, more visible leader in the two-state area,” he explains. As the chamber moves forward, Whitney says that most of the challenges have been worked through. Now, there is still work to be completed on combining the two chambers’ databases into one system, as well as reaching out and welcoming unique members. “We’re trying to let them know what the benefits are and in some cases, clarify some of the misconceptions that may have existed about the differences between the two organizations,” Whitney states. Insight Technologies and Ignus had their issues to work through as they worked toward a merger. One of them involved melding their people and processes. “We went through an evaluation process,” Davis explains. “The end result was that the combined whole of the two companies has a greater value than the two individual parts.”
Insight Technologies now can provide IT services and web site development.
The technology company services clients in the Red River Valley region – 100 miles on either side of the valley – as well as western North Dakota and western Minnesota. It is estimated that annual revenues will be more than $4 million. “We are now a one-stop IT center for our clients,” says Davis. “In our positioning to our clients, we offer an alternative to the expense of hiring internal people. We become an outsource option that can fill and support all of their IT needs.” The new company moving forward will continue to be known as Insight Technologies and will offer a wider variety of IT support and managed service capability. Our ability to grow our business is going to be felt in two directions,” explains Davis. “We will be able to expand the depth of our relationships with our existing clients by offering a wider array of services and capabilities. We will also be able to attract new clients who want one company that they can depend on for IT support.”
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Black Swan Cooperage: resurgence of an old process By Nancy Leasman hat do Lyman Baum and Heidi Karasch have in common? Their fathers were barrel makers. While Baum went on to author The Wizard of Oz, Karasch has followed in her father’s footsteps to become a cooper. Heidi Karasch, 23, is the only known female cooper in the Midwest. She started by sweeping the floors of her dad’s cooperage. “She knows 95 percent of the operation,” Russ Karasch proudly says of his daughter who now manages a business with roots in Greif Barrel Company in South St. Paul. Now known as Black Swan Cooperage, the business will be moving to the Park Rapids / Osage area this fall. “I started making parts for the barrel company in 1992,” says Russ, a barrel craftsman and history buff on the industry. “Greif was the biggest and last cooperage in the Midwest,” he says, noting that in the 1800s there were no fewer than 150 cooperages in the St. Paul/Minneapolis area. At that time, most commodities, from fish to nuts, were shipped
COOPERING TERMS Stave - the boards that make up the sides of the barrel Bung hole - the hole in the side, used to both fill and empty the barrel Bilge - the widest part of the barrel Chime hoops – the smallest hoops at the ends of the barrel Bilge hoop - the largest central hoops Quarter hoops - the hoops between the chime and bulge hoops Rivet - used to join the metal hoops Heads - the top and the bottom of the barrel Middle - the middle section of the head Cant - the section on each side of the middle Quarter - the sections after the cant Chime - the parts of the staves that extend beyond the head Croze - the cut in the staves where the heads are fitted 26
in wooden barrels. Russ says that 95 percent of their barrels were decorative or used by the Jamaican Blue Mountain Coffee Company which exported their beans solely in barrels. “Those barrels were made of aspen, had thin staves, were light weight, and didn’t have to be water tight.” Russ’s company constructed 16,000, 20 gallon coffee bean barrels in 2000. Two years later, hurricanes affected Jamaica’s coffee growing region that the need for barrels dropped drastically. “We made only 1,000 barrels in 2002,” he remembers. As the need for coffee barrels plunged, the surge in micro-distilleries popularity has opened up new markets for barrel makers. “There were only six micro-distilleries in 1995,” says Ralph Erenzo of Tuthilltown Spirits in Gardiner, NY who purchases many of Black Swan’s barrels. “Now there are over 200.” Barrel demands are increasing and Erenzo predicts there will be a proliferation of small cooperages and expansion of existing ones. The Barrel Mill in Avon, MN is the only other known cooperage in the three-state area. Heidi Karasch, who took over ownership of her dad’s cooperage in 2009, is riding the crest of the new wave of demand for finely crafted barrels. “I like the quality of the wine and whiskey barrels,” she says. There’s more demand for the barrels than can be produced. The company can only make about 10 a day in their current location north of Clotho, adjacent to the Berkness Saw Mill which produces white oak used in the barrels. A larger building, as well as family connections in the Park Rapids area, is leading the Black Swan Cooperage northward. Their business relationship with Berkness Saw Mill will continue. “It’s hard to find barrel makers that will make what you want. We started with threegallon barrels and now use many 14gallon barrels,” Russ says, noting that the folks at Black Swan are open to experiment and willing to make barrels in whatever size he needs. “They have control of the wood by working directly with the saw mill. They are giving us a
consistent char in a timely way,” he adds, expressing appreciation for the good working relationship they have. Wooden barrels have a quaint and traditional appeal. Construction methods are unchanged for 4,000 years. Dry cooperage produces barrels to contain dry products with no need to be leak-proof. Tight seams, however, are of primary importance for a barrel to be used in aging alcohol. Quarter sawn oak staves of the proper profile, bevel and bend are assembled and held tightly together with galvanized steel hoops. Proper toasting and charring of the barrels makes them in high demand for aging alcohols. Radial arms saws and other mechanizations make stave cutting and shaping, as well as hoop assembly, easier than a century ago. “Each stave is handled seven times,” says Heidi Karasch. Attention to detail is required to make a tight barrel. And lighting a fire in a cresset to caramelize the wood’s sugars and toast a barrel’s interior can only be done properly with a 30-45 minute slow toast. Charring - adding compressed air in a flashfiring of wood shavings directly in the barrel raises the temperature to 1,800 degrees in less than a minute. That controlled conflagration results in a #1 to #5 char, depending on the duration of flame exposure. The toasting and charring of the inside are crucial. “Our focus is on the inside of the barrel. It’s very important,” says Russ. “The difference in the toast levels is huge in the flavoring.” No finish is applied to the barrels’ exterior since the wood breathes and allows microoxygenation. Russ and Heidi’s attention to the flavoring components of barrels may be put to use when Black Swan establishes its own distillery, something that’s on the back burner for now. The Karaschs have a family history of
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involvement in that avocation back in the prohibition days. “All four of my grandparents were bootleggers,” Russ says. “People were poor; they did it to survive.” The whole Karasch family is involved in barrel making. Heidi’s brother, Jacob, is going to school for law enforcement but likes all aspects of coopering. Her 14-year-old sister, Rebecca, is at the floor sweeping stage and Mom helps with the book keeping. Various employees fill out the ranks in the cooperage. “We grew up with sawdust in our hair,” says Heidi. “It’s a great industry to be a part of.” With relatives in the Osage area, Russ and MaryAnn will be moving from Avon to her family home near Big Toad Lake. The business is expected to follow. Leasman is a Long Prairie, MN-based freelance writer. She can be reached at firstname.lastname@example.org. Prairie Business
Talk your way to the top By Michael McAllister f the term public speaking sends a shiver down your spine and generates an impulse to head for the nearest hallway, consider yourself normal. The ability to get up in front of people and speak well is a prime business asset. The person who stands confidently and presents a case forcefully is promoting more than an idea. That person is promoting a career. No matter how valuable speaking ability may be to a career, however, that ability isn’t likely to contribute if it can’t be utilized. And it can’t be utilized if the very thought of doing so is paralyzing. The first step, then, is to rethink what public speaking is.
PUBLIC BE DAMNED Speech instructors Isa Engleberg and John Daly prefer the term presentation speaking. This term, they feel, citing research for support, more accurately reflects the type of speaking demanded in the workplace. Now that the jitters have subsided, how can we utilize presentation speaking to our advantage? We can make it an art we can master by concentrating on six basic tactics.
memorable. What would leave a lasting impression with you? Often a call to action is appropriate. Maybe an inspiring quotation would work. Try to reinforce your main idea in a unique way. An effective presentation will leave a lasting positive impression.
4. LET THE EXPERTS HELP YOU Now that you know what to do, how do you do it? Speaking— whether presentation or public—is big business. There are dozens of books in your local bookstore or at your public library that can provide the rudiments of effective composition and delivery. Likewise, the World Wide Web offers thousands of opportunities. Google public speaking and see what comes up. Finally, there are professional organizations devoted to the cause of speaking, the most notable being Toastmasters.
5. DEVELOP DELIVERY There are two components to every presentation—what you say and how you say it—and they’re as closely connected as identical twins. Even in everyday conversations, think about what you say while you’re saying it. Enunciate clearly. Choose words precisely. Speak as much as possible in full sentences. Force yourself to finish. Practice gesturing, too. The well-placed gesture can be just like a well-placed hammer when it comes to driving a point home.
1. PRACTICE! Think of the speaking opportunities that come our way each day. Your opposition to your tenyear-old daughter’s tongue-piercing request? Your fourteen-point objection to your wife’s suggestion that you spend Christmas with her family? Those are speaking opportunities. Take advantage of them.
2. THINK BEGINNING, MIDDLE, END Hook your audience with the beginning, deliver information with the middle, and close with something memorable. Stated another way, speaking manuals often refer to the Three Tellems: Tell ‘em what you’re gonna tell ‘em; then tell ‘em; then tell ‘em what you’ve told ‘em.
3. PUT YOURSELF IN YOUR AUDIENCE When it’s time to craft what you actually want to say, consider what you would want to hear. What would make you sit up and take notice? A question or a surprising statement? A reference to a current event or a humorous anecdote? These are all legitimate ways of hooking an audience. The middle of your presentation should contain its basic information. The ending? Make it brief and 28
6. CHECK YOUR UH-MOMETER The next time you’re watching someone being interviewed on television, count the number of times the interviewee says uh. You’ll be amazed. Once you’ve become aware of it in others, you can work to curb it in your own speech—uh and other vocal mannerisms that can detract attention from the message. To become even more aware of fillers, tape record yourself in a normal conversational setting. There’s no better way to eliminate speech habits that could prove distracting.
MOVING UP The fear of speaking in front of people may not be a fear you can conquer completely, but it is a fear you can live with. (Michael McAllister has been an office manager, a salesperson, and the owner-operator of a computer store. He currently teaches English and communication at Iowa Western Community College in Clarinda, Iowa, and may be reached at email@example.com.)
COVER STORY -
By Alan Van Ormer
Developing our region 30
November 2010 Month January0000 2009
estern North Dakota continues to experience growth from the oil boom causing communities to find ways to deal with the explosion in economic and rural development. In western North Dakota, oil and energy development has provided another opportunity for economic diversity. “We are conscious about maintaining economic diversity,” says Gaylon Baker, President, Economic Development Association of North Dakota. “We see a window of opportunity to further diversify the economy.” Jasper Schneider, State Director, USDA Rural Development, says there is tremendous excitement in the northwest part of North Dakota. “Growth is great for our economy, but we must carefully manage the development and direct resources for infrastructure to maintain quality of life,” he says. Western North Dakota is not the only region in the threestate area that is seeing signs of economic or rural development. Both North Dakota and South Dakota are using the I-29 corridor as a way to develop a technology Pumping oil (Photo courtesy of Forum Communications) corridor. In Minnesota, Alexandria is using the state’s shovelNorth Dakota through financial packages including grants, direct loans, ready program to develop a business park. All three states are using rural and guaranteed loans with a local bank. The money can be used for broadband to connect homes to the network; just another step in rural communities under 50,000 people. and economic development. Paul Lucy, Director, Division of Economic Development and Finance, notes the importance of recognizing and understanding the diversity of TOP FIVE PERCENT OF GROWTH CITIES needs across North Dakota as the Department of Commerce provides Williston, ND and surrounding communities are considered in the program delivery. top 5 percent in growth cities, says Tom Rolfstad, Executive Director, “We have to recognize opportunities and challenges, and respond to Williston Economic Development. “We are well on our way to doubling them appropriately,” he explains. “For instance, there are significant our population in every town out here,” he states. “We need help to grow infrastructure challenges in western North Dakota that are being as fast as we are. We continue to invest and focus on ag diversification. addressed to support the rapid growth of the region.” We have had some great local successes and look forward to continued Lucy’s definition of economic development is the creation of development in the future.” economic wealth through the implementation of strategies and Since the oil boom, the community has developed or completed the initiatives that will positively impact people in all levels of society. “It is following plans: Comprehensive Master Plan, Annexation Options and about enhancing opportunities, raising the standard of living, improving Implications, Infrastructure Capital Improvement Plan, Regional Water quality of life, increasing jobs, and providing economic stability Study, Transportation Study, Housing Study, Labor Availability, and throughout the area,” he states. Petroleum Needs Assessment Update. Economic development is in the information business. “Our job is to The region has received help from state and federal programs. make sure we are well informed, there is good development, and we are USDA Rural Development is helping with the development by building that tax base,” Baker states. “We’re making sure that the providing support for facilities like hospitals in Crosby and Williston. community is one they want to live in. Those (communities) who are However, many believe it is important to strike a balance. ready will be the desirable place to live.” “We are making critical investments to address the needs in energyLucy states that impacted areas,” Schneider says. “Of equal importance, for North Dakota rapid growth creates to realize its full potential we must also address the needs of all regions.” a variety of needs for USDA Rural Development is committed to the future of rural a community and communities throughout the region and the nation. Schneider says that region, ranging from USDA has invested more than $750 million primarily in infrastructure in
Construction project starts in western North Dakota
Paul Lucy, Director, Division of Economic Development and Finance
basic community infrastructure like housing and roads to the need to address workforce development and attraction. He notes that Job Service North Dakota reports there are presently more than 12,000 jobs available all across the state. North Dakota has continued to see the impact of its economic development efforts in a number of areas. Since the year 2000, average wages have increased by over 45 percent in the state and personal income growth in North Dakota for the recent quarter is at two percent, which led the nation, according to Lucy. There have been nearly 40,000 net new jobs created since 2000 and the per capita personal income has increased 54 percent since 2000, Lucy says. Rolfstad says that certainly the incomes that are being generated in the region are improving the standard of living. “Also, the quality of life initiatives are going to move our image ahead,” he states. “A growing economy is a magnet for investment in hotels, restaurants, retail, recreational, and medical advances.”
SMALL COMMUNITY SEEING ECONOMIC DEVELOPMENT In South Dakota, a small community outside of the state’s capital has seen some economic development of its own. Fort Pierre, SD is located across the Missouri River from Pierre. The community of 2,000 people is connected by a bridge to Pierre. One of Fort Pierre’s most significant business operations is Fort Pierre Livestock. Fort Pierre’s Economic Development Director Dave Bonde says economic development is all about marketing properties to new business prospects and improving business opportunities for existing businesses. “Increasing business development in a small rural community promotes economic growth and improves the quality of life for our citizens,” he states.
Fort Pierre Economic Development Director Dave Bonde
Bonde also believes that Rural America is significant to the economic growth of the United States. “There probably isn’t a great difference in comparing rural development to urban development other than smaller communities who are dependent on the economic success of farming and ranching,” he explains. Even though closely positioned near the state’s capital, Bonde said Fort Pierre is an independent community that will always retain that status. And to make sure the community remains independent, 33 acres of riverfront commercial property have been developed and marketed successfully, according to Bonde. “Businesses that have responded to the new development are elated with the atmosphere, the view, and the business growth they have experienced,” he states. Bonde adds that the Teton Island Development Park has sparked an enthusiasm that Fort Pierre has not experienced. “The increase in new businesses investing in our community has created a pride that is infectious,” he explains. “Fort Pierre is still a farm-ranch dependent community and fast developing the attitude that we are proud of our heritage and excited about our future. “New businesses, new restaurants, more hotel rooms add up to additional taxes in the city’s coffers. New homes, new parks, bike paths, better streets, and utility upgrades insure a better quality of life and the new jobs all lead to the improvement of our standard of living,” Bonde concludes.
RURAL BROADBAND CONNECTING REGION Inter-Community Telephone Co. provides voice and data services to most of the small towns and rural areas surrounding Valley City, ND. ICTC received an award in the amount of $2,338,651. The grant amount is $1,625,362 and the loan amount is $713,289. “We plan on bringing Fiber-to-the-Home (FTTH) service to the towns of Sanborn, Hope and Tower City that will allow those customers (continued on page 34) Main Street construction (Photo courtesy of Forum Communications)
Teton Island Development Park in Fort Pierre. (Photo courtesy of Fort Pierre Economic Development Corporation)
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to receive faster broadband speeds than they currently receive,” explains General Manager Keith Andersen. “Our goal is the same as when the rural telephone companies were formed to provide voice service. We want to provide broadband to everyone that wants it.” According to an article in the October issue of North Dakota Living, approximately 100 million Americans currently do not have broadband at home. The Federal Communications Commission acknowledges broadband is essential to advancements in healthcare, education, smart grid, first responders, and homeland security. The North Dakota Living article also states that “a central feature of the FCC’s broadband plan is to bring 100 megabit actual download speeds to at least 100 million Americans by 2020. The problem is that the plan recommends support to assure only 4 megabit actual download speeds to people in rural areas and other regions that are economically challenging to serve.” ITCT has about 2,300 voice access lines and 1,000 internet customers. The cooperative also provides high speed private line service to several locations in Valley City including Valley City State University and Sanford Health through its relationship with Dakota Carrier Network. Andersen says the cooperative still needs to address the rest of the towns we serve plus the adjacent rural areas to replace as much copper cable as we can with fiber optic cable so these areas can receive faster internet speeds. “By providing broadband to rural areas, existing businesses are more likely to expand and new businesses are more likely to locate in these areas, thereby creating jobs in our small towns,” he says. “As everyone knows, small business is the economic backbone of America and we are trying to do our part.” Griggs County Telephone Company is providing last-mile Fiber-tothe-Home technology to bring affordable and reliable broadband access and video services to underserved North Dakota rural areas. The project includes building facilities to more than 1,700 households, more than 400 businesses, and 17 critical community entities in eastern North Dakota. The project is expected to be completed over the next two to three years. Tyler Kilde, Vice President and General Manager, Griggs County Telephone Company, states that rural broadband helps with economic and rural development because if it is not offered to meet the needs of communities, it is basically shutting the door on opportunity and expansion in rural America. “Our everyday lives are so interconnected to the services provided by broadband,” he explains. “Not having the infrastructure to provide these services will be extremely detrimental to rural America.”
lots in the Heritage Business Park along I-94 will spark growth in an already strong manufacturing sector. “It is a place companies could be seeking because it has excellent visibility,” Murray says. “It is appealing and we have availability.” There are two bypasses centrally located between two exchanges on I94 making it easy for trucks to get in and out from the interstate. Tim Wagner, President, Heritage Transports, considers being part of the shovel-ready program a good marketing tool. “I’m all about exposure,” he says. Recently, the Minnesota Department of Employment and Economic Development (DEED) awarded shovel-ready certifications to Alexandria, Cambridge, Monticello, and Big Lake. Shovel-ready certification means planning, zoning, environmental studies, title work, public infrastructure, and other preconstruction activities have been completed on a site. DEED Executive Director Dan McElroy explains that there is a little confidence in manufacturing in Minnesota because the state has been adding employees. “They are reporting more optimism,” he explains. “Industry clusters seem to be doing well,” McElroy adds. “Packaging, equipment, food manufacturing, and medical devices is a big area that has been doing well in Alexandria.” Murray says the shovel-ready process helps because it cuts down on costs, timeliness, and the construction process for companies who are ready to move right now. There are three business parks in the community and two are at capacity. Murray says economic development is about job creation and tax base. “You want wage base and you want wage retention,” he explains. “Growing tax base in our community is important. “ The business park can hold up to 20 companies, but only five lots are considered shovel ready. The remainder has the entire infrastructure in place, but companies still would have preliminary work to do. On the five shovel-ready lots, companies can build and start work almost immediately. The state of Minnesota has certified an estimated 27 acres as shovelready in the business park. This allows interested companies to expedite the regulatory process. The lot sizes range from 3 ½ acres to 6 acres. Wagner says the business park provides good industrial land and is creating jobs that matter. “We are bringing in dollars,” he says. “It benefits us. It benefits the community.” A lot has not been sold in two years, but there is optimism. “This economy isn’t going to stay down forever,” Wagner explains. “It is not going to get worse than it has, it is going to improve.” (continued on page 36)
SHOVEL-READY BUSINESS PARK COULD SPARK MANUFACTURING In Alexandria, MN, Alexandria Area Economic Development Commission Executive Director Jason Murray feels that placing several
View of land in Heritage Business Park in Alexandria, MN.
Jason Murray, Alexandria Area Economic Development Executive Director
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DEVELOPING RESEARCH CORRIDORS The Red River Valley Research Corridor is on its way to becoming a national hub for federal academic research and development activity. Since 2002, more than $700 million of federal investments in research, training, advanced services and manufacturing contracts have been directed to universities, colleges, and businesses throughout North Dakota. According to the National Science Foundation, federally funded academic research and development in North Dakota is up 46 percent since 2003, making the state the third fastest growing state in the nation. “We’re just getting going. We certainly have come a long way,” states Delore Zimmerman, Executive Director, Red River Valley Research Corridor. “We need to start bearing down on some of these areas that we are working on such as advanced codings and microelectronics. There are a lot of growth opportunities.” It all started in 2002 when North Dakota Sen. Byron Dorgan met with North Dakota college and university presidents to outline a vision for the research corridor. The focus was on cutting-edge research and building capacity in areas that would attract new industries. Since that point, research is being conducted in micro technology, nano technology, energy, deep brain research, and vaccine research. In addition, the federal funds have established several research and training centers including the Center for Nanoscale Science and Engineering at North Dakota State University, Neurosciences Research Center at the University of North Dakota’s School of Medicine, Rural Crime and Justice Center at Minot State University, Center for Nanoscience Technology Training at North Dakota State College of Science, and National Energy Technology Center at Bismarck State College. At the third annual Milestones and Horizons in October in Fargo,
National Energy Center of Excellence (Photo courtesy of Bismarck State College)
An apartment complex in western North Dakota.
ND, at least 20 research companies provided an update on what has been happening in their companies. Zimmerman says that the hope was to create a world class research center and new economic opportunities that would lead to higher paying jobs. “We’ve done both,” he explains. “ Not that we don’t have a lot of work to do, but there has been a really good foundation laid for that.” From a business perspective, Zimmerman states that the research corridor has developed more of a collaborative environment than we’ve ever had before. “That really serves us well and helps us move all these initiatives forward,” he states. The research corridor is also about economic development because as Zimmerman says it increases the prosperity of people, it creates new jobs, and it creates a lot more opportunities. “In economic development you always want one thing to always lead to another,” he explains. “That’s what this is all about. We put the research in place that becomes commercializable technologies, that creates new companies, that creates new jobs. The research is the fundamental part of it; the seed for all of it. We have been successful in turning or translating that research into new businesses and business opportunities.” In South Dakota, a group is determining the next step in developing the I-29 corridor from Watertown to Sioux City, IA. Al Heuton, Executive Director, Brookings Economic Development Corporation, states that some of the quick wins that could be achieved would be the development of South Dakota Manufacturing Extension Partnership (MEP), marketing the corridor, organizing private sector led industry cluster efforts, and enhancing higher education involvement in corridor economic development efforts. Counties, cities, and economic development organizations along the I-29 corridor and the South Dakota Governor’s Office of Economic Development contributed to a survey conducted by the Regional Technology Strategies, Inc. The North Carolina-based group interviewed economic development officials, community leaders, company owners and executives, venture capitalists, technical college and university presidents and faculty located along the corridor. Representatives from Sanford Research and the Avera Research Institute were also consulted. Key components of the study included identifying the existing economic base, its present condition and outlook for future growth. The study also included an evaluation of current research activities within higher education and emerging economic development opportunities based upon that research. South Dakota State University President Dr. David Chicoine states that collaboration and cooperation has the opportunity to be impactful. “The total (as has been demonstrated elsewhere) can be greater than the sum of the parts,” Dr. Chicoine explains. “Scale is important and the regional approach in the northern Great Plains is an approach to achieving scale.” Another challenge is the workforce. “Workforce availability has been an issue for certain industry sectors across the entire corridor in the past,” Heuton says. “Although the recession has eased workforce shortages, demand for various skilled positions is increasing.” Heuton says that “Two primary challenges going forward will be to better match industry workforce skill requirements with workforce training efforts, and creating an economic base that provides additional employment opportunities meeting the demands of the corridors human capital.” The corridor development effort is also focusing on building relationships and exploring opportunities to build awareness of the corridor.
Bowman Rhane Scranton Gascoyne At the heart of thriving energy development, Bowman County is known for its accessible land government and abundant natural resources. A leader among rural communities. Bowman County is known for its growth and progressive spirit. Top it off with a low cost of living and high quality of life, and youâ€™ll see why Bowman County is the ideal place to do business.
2010 Entrepreneurial Community of the Year For more information about Bowman County and the cities of Bowman, Rhane, Scranton and Gascoyne, please visit www.bowmannd.com or call (701) 523-5880.
Things happening in energy sector By Alan Van Ormer here is no question that the United States has challenges in energy. Some believe it will be a difficult journey to put our nation on a path where other sources can be part of the mix to provide energy needs in the future. However, those speaking at different energy conferences in September feel that North Dakota could be a leader as the nation shapes its energy needs. Diversification is a key element in the energy mix. The United States uses a quarter of the world’s oil supplies, but only produces 10 percent of the world’s needs, North Dakota Sen. Byron Dorgan told those attending events focusing on hydrogen in Grand Forks, ND, recently. “We’re far too vulnerable on oil that comes from outside this country,” he states. “We need to look at other sources at home.” At the Great Plains Energy Expo and Showcase in Bismarck, ND, one week later, Dr. Aran Majumdar, Director, Department of Energy’s Advanced Research Projects Agency-Energy says that North Dakota has become a good example for the rest of the nation because of the impact it has made in creating jobs. Those attending the Hydrogen Economy Action Summit and Mountain States Hydrogen Business Council discussed the future hydrogen economy, as well as explored different strategic topics including production of hydrogen from fossil fuels, hydrogen infrastructure and utilization, and production of hydrogen from renewable energy sources. The Great Plains Energy Expo and Showcase was aimed at bolstering energy production and use in this region to help reduce the nation’s dependency on foreign oil. What was evident at both conferences is the different possibility of
energy mixes to help reduce the dependency on oil. For example, during the events associated to hydrogen, it was stated there is 50 million tons of hydrogen produced in the world; 9 million tons in the United States. There are at least 100 hydrogen vehicles in operation. In fact, two separate memoranda of cooperation between the Energy & Environmental Research Center and Israel Energy Partnership, Pelham, NY, and between the EERC and the Alliance of US India Business, Washington, DC, regarding the development of alternative energy systems for transportation and technologies for hydrogen infrastructure and transportation, was signed during the Hydrogen Action Summit/Mountain States Hydrogen Business Council Hydrogen Implementation Conference. General Motors is also working on a fuel cell program. Currently, there are at least 100 fuel cell Equinox vehicles made that range up to 200 miles at a top speed of 160 kilometers. General Motors is looking at increasing that range to 300 miles. The benefits are zero emissions, efficiency, and synergy with renewable energy sources. Dr. Mark Mathias, Director, Electrochemical Energy Research Lab, in Honeoye Falls, NY, says fuel cell technology is achievable and has established momentum. However, Mathias states that a stable government is key to continuing the program. In his address in Bismarck, Dick Gephardt, Former Democratic Leader, U. S. House of Representatives, and now President and CEO, Gephardt Government Affairs, says there are three principles that the nation should use to guide an energy policy. Does the policy promote domestic sources of energy? Is the energy source clean environmentally? Every part of the country is different and the policy should be sensitive in what it means in terms of policy. He admits he has never seen an issue like energy in his political life. Gephardt feels that even if we get an energy policy ½ ways right it must achieve three important goals. One is to become more energy dependent. A second involves economics. The third is the environment. “To get policies in place we need to work hard to build bipartisan consensus that has to be there to get this done,” he says. For businesses involved in the energy economy, conferences provide an opportunity for them to showcase what they can do. For example, the Northern Plains Commerce Centre, located in Bismarck, had a booth to showcase its facility during the two-day event. The facility serves as a transload and staging area for wind towers, blades, nacelles, and other large equipment and machinery associated with the energy industry. In addition, the facility handles rebar, lumber, pipe, utility poles and other products. So far in 2010, Northern Plains Commerce Centre has handled 400 tons of rebar. That is expected to double by the end of the year. In addition, it is estimated that 1 million board feet of lumber will ship through the facility. Cathy Spencer, Mallory Alexander International Logistics, says she participates in energy shows because it helps showcase her company, as well as make contacts with those doing business in the energy field. “It is important to have a presence,” she says. ‘We learn about new projects and it benefits our business.” Finding out more about energy companies.
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Dakotas America announces multi-million dollar Wheat Growers projects By Lin VanHofwegen tilizing a $17 million New Markets Tax Credit allocation from Dakotas America LLC, the South Dakota Wheat Growers Association (SDWGA) is completing three projects to upgrade agricultural businesses in North and South Dakota locations and bring jobs and economic strength to those areas. “Projects like this one are the reason Dakotas America exists,” said Beth Davis, managing director of Dakotas America. “By using New Markets Tax Credits, we can bring a new economic vision to distressed and rural areas of our two states.” The New Markets Tax Credit (NMTC) program, established by Congress in December 2000, gives individual and corporate taxpayers the opportunity to receive a credit against income taxes by investing in qualified investment entities. For more information on the NMTC program and its application in your area, go to www.dakotasamerica.com. Wheat Growers is upgrading and modernizing the facilities in Berlin, ND, so that they can become competitive and serve farmerowners in the long-term. It is proposed that the grain facilities be upgraded with a new dryer, legs and conveying equipment to improve efficiency and service. SDWGA also built a new 19,000-ton fertilizer plant at Oakes, ND. This location will provide modernized facilities for both the members of Berlin Farmers and Norway Spur Farmers. SDWGA is already operating a grain facility at this location in a joint venture with Norway Spur. The plan also includes construction of a new 20,000-ton dry fertilizer plant at McLaughlin, SD. SDWGA has already added rail shuttle load-out capability and larger amounts of storage to the McLaughlin facility, with Dakotas America LLC providing an allocation to help finance that expansion. Nearly half of the members now served from the McLaughlin location reside in North Dakota, with fertilizer currently being delivered as far north as Bismarck. Construction of the two fertilizer facilities and rehab of the Berlin elevator created as many as 50 jobs for three to six months for contractors, welders, millwrights, electricians, and other construction workers. Those workers came from the local area and supplies were purchased locally. This demand helps retain jobs at a time when other construction is at an all-time low. SD Wheat Growers has created 12 new jobs at the three locations, including warehouse workers, agronomists and equipment operators. These positions will create jobs for trucking firms, service repair and added retail, with a potential of 548 direct and indirect jobs. The two proposed fertilizer plants are projected to produce total sales of about $20 million per year. This volume will produce a margin of $2.3 million annually that will be applied to costs that are incurred by SDWGA within the local community. The Berlin Elevator, with upgrades, is projected to originate 2.8 million bushels of grain annually at a forecast price level of $17 million to $18 million annually. Total economic output from the three projects is expected to reach $170 million, with farmer benefits of $1.3 million. “These projects significantly impact the economies of our partner communities,” said Dale Locken, Chief Executive Officer of the SD
Wheat Growers. “Thanks to the infusion of capital implemented by Dakotas America, we were able to maximize the efficiency and the impact of our expansions in these markets to better serve our farmer/owners in their operations.” South Dakota Wheat Growers Association is a farmer-cooperative serving both South and North Dakota. It is owned by over 16,000 members across the two states, and provides grain marketing and agronomy products/services to approximately 5,000 active producers. Historically, the cooperative has served the James River Valley, with the bulk of its membership residing in North Central South Dakota. VonHofwegen is the Vice President of Operations for the South Dakota Rural Enterprise. She can be reached at firstname.lastname@example.org.
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COMMUNITY PROFILE - YANKTON, SD
Stepping up to the plate
Aerial view of Yankton, SD (Photo courtesy of Dakota Aerials)
By Alan Van Ormer cott Sandal felt he had a great idea with his data center concept of space, power, and bandwidth. He was just hoping his new-found home in Yankton would accept the idea. Sandal says that the community of Yankton is more willing to look at things that are different than the norm as long as there is substance to it. “The community of Yankton stepped up and built the project,” says Sandal, who recently opened DataVator and is a partner on the Dataware Green (DWG) facility. “They said they felt more comfortable with my idea if I worked with an established company. They stepped up and truly put it together.” Once designated as the territorial capital, Yankton has evolved into a community that is willing to take a chance to improve its business prospects, as well as quality of life for the 14,000 residents that live in the community that lies along the Missouri River in southeastern South Dakota. Like Sandal, Bruce Cull was another one who saw firsthand what an idea can do.
Scott and Heidi Sandal, DataVator
Cull, the president of the National Field Archery Association, is working to designate a new field archery facility as the NFAA Easton Yankton Archery Complex. It couldn’t have been done without the support of those who work for the city and county. “The entrepreneurial spirit in Yankton is great. It is nice having the different people help,” he explains. “When you get down the grassroots level, South Dakotans love to help each other. The thing I found most interesting about entrepreneurism in South Dakota is how many people research and use their minds to find things to keep them here because they love it so much.”
HISTORY PART OF GROWTH Yankton was known as the territorial capital for several years during the development of the Dakotas. Gurney Seeds, Yankton College, WNAX, the Human Services Center were all part of the history that laid the groundwork for what has become known as the “The River City.” Mayor David Knoff states that Yankton was the hub of development for all of the Dakotas. Businesses like WNAX and Gurney Seeds was real innovation, built up Yankton and made Yankton a big player, says Knoff. “Gurney has gone away, but the manufacturing industry has built up well,” he adds. “We have a strong manufacturing base.” Yankton has a unique and successful mix of medical, manufacturing, tourism, and agricultural industry that Month 0000 Mayor David Knoff (continued on page 44)
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Viewing the Missouri River in a balloon. (Photo courtesy of Dakota Aerials)
16 percent during that period and retail trade increased almost 13 percent.
Mike Dellinger, Executive Director, Yankton Office of Economic Development (continued from page 42)
HEALTHCARE LARGE PART OF COMMUNITY
make the community a hub in the region. Knoff adds that in Yankton there has been a steady, sustained growth in all aspects of the economy. “Part of that reason is that Yankton is keeping young people in the community because of its technical college and Mount Marty College, as well as keeping the school numbers up,” he says. Mike Dellinger, Executive Director, Yankton Office of Economic Development, does not think the community is reinventing the wheel. “There are higher wage opportunities, a skilled workforce and older workforce,” he states. “We are targeting high quality people and that is the outcome of this workforce.”
DIVERSITY IS THE KEY Carmen Schramm, Director of Chamber Services, first moved to Yankton 30 years ago and she has seen many things change. “We’ve grown in a lot of aspects,” she says. “I think we are poised to step up to that next level in many areas of the business community.” The strength of the community is its diversity, says Doug Russell, Yankton City Manager. “Yankton is still a retail hub in the region,” he explains. “We just need to continue to enhance and identify the sectors that we are lacking in.” The community is targeting certain sectors. “We are trying to target companies that take advantage of the high quality that we find in our workforce,” Dellinger says. This includes higher wage opportunities for a skilled workforce and targeting those older members who have the skills to work part-time. Avera Sacred Heart Hospital is the largest employer with more than 1,000 people. The South Dakota Human Services Center employs more than 620 people, while KolbergPioneer, Inc, a construction machine manufacturing company has more than 500 employees. Hy-Vee and the Yankton Public Schools each have more than 400 employees, while Sapa Extrusions, Inc., Walmart, and Vishay Dale Electronics, an electronics manufacturing company each top 300 employees. According to the Yankton Office of Economic Development, educational services, healthcare, and social assistance saw the largest business growth increasing more than 23 percent between 2006 and 2008. Manufacturing increased more than Carmen Schramm, Director of Chamber Services
Month 0000 November 2010
It is estimated that almost 3,000 people are working in medicine in Yankton. This includes 140 doctors. Avera Sacred Heart Hospital has been associated with the community for more than 113 years providing regional healthcare services for those living in southeastern South Dakota and northeast Nebraska. There are 331 beds: 144 acute beds and 187 long-term beds. More than 1,000 employees provide healthcare to the community as well as outreach sites. The geographic location and long history of medical education has spurred growth in the hospital. Yankton is only one of three communities in the state that has a campus for medical school that provides a positive learning environment, says Pam Rezac, Director, Avera Sacred Heart Hospital. “Providing healthcare is a very important mission,” Rezac explains. “All of us contribute to community leadership.” Since 2000, the hospital added new facilities and programs. The first came in 2000 with a state-of-the-art facility overlooking the bluffs that meets elderly needs. The next year the hospital purchased a private nursing home and turned it into a 75-bed facility. Then in 2002, came a wellness center, 2004, a building addition, and 2006 the hospital doubled the size of its former emergency department with a new one. In 2007, a pavilion was constructed that became a center of campus housing for medical education. Now, a $10 million renovation project is in progress that is redoing the main hospital surgical units, making it 50 percent larger. “Everything is still very challenging, but we are better able to manage,” Rezac states. Chuck Aman, CEO, Yankton Medical Clinic, for the past 10 years, adds that healthcare is important in Yankton stating that the clinic hospital is (continued on page 46)
Gavins Point Dam (Photo courtesy of Lisa A. Scheve)
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(continued from page 44)
an integral part of the community. “We are all kind of the backbone of the community and have been for many decades,” he says. “We’re able to attract people from the surrounding areas.” In 1982, the two community clinics merged into one. There were at least a dozen physicians, now that number has grown to at least 40 physicians. The clinic has also added services over the year including a full laboratory facility, home healthcare, and specialty care like pulmonalogy and cardiology. There are more than 250 employees. One challenge is recruiting physicians to the state, but the healthcare facilities are able to use their uniqueness to draw those quality physicians. “Once they are here, we have a good chance of recruiting them,” Aman says. What also helps is that a third of the third year medical students from the University of South Dakota spend their third year in an outpatient program at the clinic and hospital in Yankton. In addition, nursing students from the region also do internships at the healthcare facilities. Of the current clinic radiology staff, an estimated 75 percent attend radiology programs in the area and did internships in Yankton. In addition, it is estimated that 50-60 percent of the physicians came from the USD Medical School. Another challenge is healthcare reform and reimbursement. “There are no answers to where that is going,” Aman acknowledges.
MANUFACTURING STILL A HUB Manufacturing has always been an important part of the growth of the community. Recently, it has also been a struggle for many in the community. One of the unique manufacturing outfits in Yankton is The Freeman Company, a manufacturer that started providing simple turned airplane parts for general aviation during World War II, but has diversified into the turning, milling, and machining of complex assemblies for the commercial aircraft markets. In two years, the company could be generating as much as $12 million in revenues. In 2008, it had $7.6 million in revenue and in 2009 that increased to $8.6 million. The 42 employees, working in a 30,000 square foot facility, manufacture an estimated 20,000 individual parts each year. “Our business is cyclical,” states Seth Graves, General Accounting Manager for the past four years. “It tends not to trend with the rest of the economy.” Graves explains that it is a dynamic environment and there is something different each day. “Most of our operators are not college educated,” he adds. “It takes 24 months to
get them up to speed.” The Freeman Company has an impact on the community. It includes $2 million in salary each year, as well as an educated workforce that allows the machinists who work at the company to be able to find a job anywhere in the community, Graves explains. “We have to hire around the country because it is such a specialized product,” he adds. “It is a lot more exact work compared to other types of manufacturing companies.”
MISSOURI RIVER STILL IN THE MIX The community is promoting programs and opportunities involving the Missouri National Recreation River. In addition, Yankton is also considered a family vacation destination because of the three Game, Fish and Parks campgrounds, two U. S. Army Corps of Engineers campgrounds, and 11 privately owned campgrounds that provide more than 1,100 campsites. Yankton is known for Lewis and Clark Lake and great camping. Visitor attendance averages between 1.4 million and 1.6 million to the Lewis and Clark Recreation Area each year, trailing only Mount Rushmore and Custer State Park for largest attendance in the state. “There are a lot of repeat customers who plan annual trips to Yankton each year,” explains Lisa Scheve, Director, Yankton Convention and Visitors Bureau. “With great backdrops, like Lewis and Clark Lake or Yankton’s Missouri River, the Convention and Visitors Bureau has seen an increase in outdoor weddings or destination weddings over the past three years.” The future looks bright for recreation in Yankton. “Not just archery, but sports in general, is something Yankton will continue to expand upon,” Scheve states. “With the coordination of multiple entities Yankton will be able to utilize new facilities, for the archery center for additional sporting events, like soccer. The Lewis and Clark Recreation Area is going to add additional camping sites to their main State Park, due to the high demand for camping in the area.”
PROVIDING A CREATIVE BUSINESS ENVIRONMENT Then there are the unique sectors like archery and data centers. DWG went live in July with its first building and is just starting to get companies into the data center. One of the unique elements of the data center is that the clients can be billed for three items: space, power, and bandwidth. The building has 5,000 square fit that will easily add another 5,000 feet and another until it reaches up to 45,000 square feet. Each will have its own power supply. “We want to build a data center that can use South Dakota power,” Sandal says. “We made a functional data center and proved that it can be operational and exist in Yankton.”
Lisa A. Scheve, Director, Yankton Convention and Visitors Bureau
Mount Marty College students share a cup of coffee downtown. (Photo courtesy of Lisa A. Scheve)
Sail boating on the water. (Photo courtesy of Lisa A. Scheve)
Kayaking on the river. (Photo courtesy of Lisa A. Scheve)
Sandal admits there is a challenge in finding the right design model for each client’s request: a balance of power, cooling, and space. Consequently, DataVator has taken off in its ability to offer power metering and capacity planning for clients not yet in the data center space, as far away as Atlanta, GA. Cull has also seen his unique archery business take off. There is a 10,000 square foot Olympic indoor archery range that can also be used for other events. There is another 5,000 square foot headquarters building with two training classrooms of 100 plus seating and 75 plus seating. There are three offices in a 1,000 square foot area for startup businesses. Currently, there is one company in the incubator. His hope is all of this will allow Yankton to be a hub for archery in the region. The opportunity started in 2005 when Yankton hosted a successful national archery tournament. An estimated 600 competitors, as well as 400 support staff, came to Yankton for the tournament. The economic impact showed up immediately.
“It was six days of competition, one day to practice, and one to two days on each side of it,” Cull says. Yankton was the host again in 2006. “In the history of organization never had national tournaments back to back in one community,” Cull continues. That started talk about moving the national headquarters to Yankton and involved one of the largest cooperative efforts Cull says he had ever seen. “City and county subgroups worked together to give us 40 acres of ground in city of Yankton,” he says. “Having a location centrally located was a big thing.” After the national headquarters was moved to Yankton, then came the pursuit of becoming an Olympic training center. A reason the facility was built in Yankton is because archery tournaments are becoming more frequent. “It has brought the community closer together,” Cull states. “This is unique. People took ownership in this. It impacted everybody.”
Archers are on the ready to fire arrows. (Photo courtesy of Lisa A. Scheve)
DECEMBER Wahpeton/Breckenridge JANUARY Fergus Falls FEBRUARY Aberdeen Editor Alan Van Ormer will report on these thriving metropolitans in upcoming issues. To advertise your business in the spotlight contact: Wahpeton/Breckenridge & Fergus Falls Aberdeen
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Energy development North Dakota Ranks high in most energy development categories EDITORS NOTE: Over the next three months, Prairie Business magazine will be talking to a Public Service Commissioner from Minnesota, North Dakota, and South Dakota to get their thoughts on the energy sector. North Dakota Public Service Commission Chairman Kevin Cramer discusses what is happening in the state. What are the responsibilities of the Public Services Commission: The North Dakota Public Service Commission has varying degrees of jurisdiction over electric and natural gas utilities, telecommunications companies, weights and measures, grain elevators, auctioneers, reclamation of mined lands, the siting of energy plants and electric and natural gas transmission facilities, and, to a lesser degree, railroads. The Commission does not have jurisdiction over the rates of rural electric or telephone cooperatives or small telephone companies. What is the state’s energy program and what are you hoping to accomplish: The state’s energy program for development is a policy set by the Empower Commission which is appointed by the governor. The Public Service Commission is a regulatory body whose responsibility is to see to it that energy remains affordable and reliable to retail customers and that the build out of energy production and transmission is done in a manner that produces minimal adverse impacts on cultural and natural resources and people. As a major energy producing and exporting state, it is critical that we create a regulatory framework and climate that is conducive to investment and development as well as to maintaining a healthy, clean environment. Where are you at? Where do you want to be: North Dakota ranks high in nearly every category of energy development as well as every category of environmental protection. We are first in lignite production, fourth in oil production, sixth in electricity exports, 10th in wind energy production. We meet all ambient air quality standards as prescribed by the EPA and many of our cities receive an A rating from the American Lung Association. Our reclaimed coal lands meet or exceed productivity levels prior to mining. North Dakota has become the state of preference for energy investment resulting in the fasting growing personal income and lowest unemployment rate in the nation. We are the envy of the world and are positioned to continue this rapid yet prudent pace of developing our rich natural resources to the benefit of our people and our nation.
Energy Month 0000
What are some challenges? How have you responded to each of these challenges: America’s national security and America’s economic security are tied directly to America’s energy security. North Dakota has shown the nation how to develop our rich energy resources in a responsible manner that will help reduce our dependency on the Middle East and other nations. I would like to see continued responsible development while finding ways to perpetuate the revenue stream being enjoyed by our government. We should work hard to lock up much more of the largess generated by energy development going into state coffers and resist the temptation to spend it. By growing government at our current pace, we virtually guarantee we will one day be dependent on a revenue stream that no longer exists. Policy makers must exercise the spending discipline required of businesses and families. Let’s use this moment in time to lower tax rates and save money while growing the economy. With more attention paid to growing the economy and less on growing the government, we will find the need for more government will actually diminish. What does the future hold for energy: The greatest threat to energy development is the overreach of the federal government, and I see it every day in my work. We are seeing non-elected bureaucrats imposing their anti-business bias on regulations that have been rejected by Congress and the states. The current administration in Washington seems determined to shut down coal and oil and gas production. They use the Environmental Protection Agency, the Bureau of Land Management, the Department of the Interior and other agencies to circumvent the will of Congress. As an elected official, charged with overseeing the orderly development of North Dakota’s energy sector, I stand up to this intrusion on my authority and on our state’s sovereignty with great passion. Nobody loves North Dakota land and air more than North Dakotans. What impact will energy have on businesses: Energy’s impact on business is two-fold. First of all, energy costs are one of the top concerns of business today. In North Dakota, we have the lowest retail electricity rates in the nation. This goes straight to the bottom line of our personal and business budgets and improves our competitiveness. Energy development creates thousands of high paying jobs and countless opportunities for business spin offs. Whether servicing the energy sector directly, or providing retail services to the employees, North Dakota entrepreneurs have more opportunity than ever.
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Blender pumps making transition By Alan Van Ormer Alan Van Ormer thanol blender pumps are somewhat new By in the three-state region. However, Minnesota, North Dakota, and South Dakota are doing what they can to make blender pumps part of the landscape. “There is so much emphasis in today’s society on green living and decreasing our dependence on foreign oil,” says Andrea Holl Pfennig, Program Administrator, Energy Outreach and Special Programs for the state of North Dakota. “The increased use of renewable fuels is a trend that will only continue. Hopefully, this program will help retailers in the State have a head start.” Hunter Roberts, South Dakota’s Energy Policy Director, states that ethanol blender pumps are still relatively new, so a large portion of the public needs to be educated on them. “Ethanol blender pumps give retail fuel stations the opportunity and the flexibility to serve several different types of customers,” he says. “Whether the customers want to utilize E85, a mid-level ethanol blend such as E30, the standard E10 blend, or just regular unleaded, ethanol blender pumps allow them to serve all of those different types of customers.” Nicole Garrison-Sprenger, Communications Director, Minnesota Department of Commerce, states that fuel locations with e-blenders can offer a greater variety of fuels. Minnesota has an estimated 60 ethanol blender pumps across the state mainly located in greater Minnesota at co-op facilities, says Garrison-Sprenger. It is estimated that there are 30 blender pumps installed across South Dakota. In North Dakota, the State’s Energy Outreach and Special Programs have received requests for 181 pumps and have provided reimbursements for 68 pumps. North Dakota’s program’s purpose is to increase biofuels usage. Pfennig says it is designed to be a ‘win’ in several ways: North Dakota growers benefit by increased demand in their crops; ethanol plants have an increased demand as well, which helps provide good paying jobs to rural areas; retailers receive assistance in purchasing new pumps that are equipped to deal with the new ‘green’ focus; and blender pumps allow the consumer a choice in which fuel to put in flex fuel vehicles. She adds that E85 sales in North Dakota have more than doubled when comparing the time period of January through August 2009 to January through August 2010. “The increased sales of blender pumps have helped pump money into the economy,” Pfennig says. “While we help defray the cost of the pump and associated hardware, there are other costs such as labor that the retailer is responsible for. It can be a significant investment on their part, which can be a drawback. The advantage of this is more money in the economy.” In South Dakota, Roberts explains that the state’s program has allowed retail fueling stations to invest in new infrastructure and are now providing customers with more options at the pump. “Many of the stations that have already installed the pumps have told me that E30 has been selling really well and that their customers have given positive feedback on the blender pumps,” he adds. Roberts believes more ethanol blender pumps will be part of the landscape in the future. “I think we are moving into an era when transportation fuel customers are going to be more informed on where their fuel comes from and are going to demand more options at the pump, choices that blender pumps can offer.” Garrison-Sprenger agrees that there will be an increase of e-blenders installed in greater Minnesota. “Metro-area stations may also take an interest in installing e-blenders,” she explains. “We have 21 ethanol plants in Minnesota. We are also a state of corn producers. Selling blended fuel supports both of these industries.”
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Consulting company analyzes oil in Bakken By Alan Van Ormer
athleen Neset visited offices around the country and knocked on doors to jump start her consulting business in western North Dakota. Now, companies are calling Neset Consulting Services to hire her mudloggers and geologists to evaluate the drill rigging operations in the Bakken. Currently, Neset has 60 crews working throughout the Bakken. A crew consists of a mudlogger and a geologist who handle 24 hour shifts. The geologist operates a 12-hour day shift and the muddlogger continues the duties during the evening. The crews evaluate the operations while the well is drilling by recording the drill rate, the drill cutting (every 30 feet of drilling a rock sample is collected and evaluated,) and evaluate the gas that is being liberated out of the formation during drilling operations. “The oil has been established with the amount of oil that is recoverable, the amount of leases, and the amount of wells to develop the play,” Neset says. “Those things are coming together so that there is a need for well site geologists.” Neset, who has a degree in geology from Brown University, moved to North Dakota in 1979 and has not left. She is involved in geology because she enjoys the independence. Her goal when she started in 1979 was to be the best in her field. “I like the independent living,” she says. “I like the environment.” She started her own consulting group, starting by doing all the work herself out of her house near Tioga, ND. Then it was a building in Tioga, followed by a doublewide trailer, and now her work has increased so much that she has had to hire other employees and is looking at a new building to expand her gas detection division and research and development group. The company has gone through the boom and bust cycles in the Bakken since 1979. However, since 2000, Neset has seen oil production take off and she has been busy. She has nationwide contracts with oil
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Dan Griffin checks on Unit 234 for American Oil and Gas. (Photo courtesy of Neset Consulting)
companies and also hires out to subcontractors. Her main business is in the Bakken where she has crews out in Saskatchewan, Canada, eastern Montana, South Dakota, Wyoming, as well as western North Dakota. Today, her business has grown to 135 employees. Neset says that everyone knew there was oil in the Bakken, but not to what extent, and not until a study was released in 2008 that showed just how much oil could be in the area. “The technology is improving constantly. We are getting better at drawing horizontal wells. We are getting better at fracture simulating,” she says. “We didn’t miss it. Technology caught up to it.” The changes in oil drilling have been driven by technology. The same style of rigs in 1979 are still around, but now there are walking rigs where it drills down and then moves 30 feet and drills down once more. In addition, maybe the largest change has been communication. “We communicate the data from the well site to the oil company’s office in another city,” says Neset. Then there is also more math involved in calculating where to put the drill. There are also challenges in the Bakken for Neset’s consulting company. Is it going to last? How do you plan ahead? How do you cash flow a business that is growing so quickly? How does the company plan for the future and take those risks? Neset admits that the oil play has not plateaued yet. “I see it continuing to build,” she explains. “More rigs are coming in. Permitting continues. I want to continue to provide stronger service.”
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Finding efficient ways to live By Alan Van Ormer n a 70-acre wooded area in Pine River, MN, employees of the Hunt Utilities Group are finding ways to live efficiently using what is around them. “It started out as energy conservation, and then we realized it was resilient living,” Paul Hunt says. “If energy isn’t available you would do just fine anyway.” HUG chose the location because of its walking distance from downtown allowing the employees to cut down on transportation. It also permits them to continue researching on finding resilient ways of living. “We are looking at all changes in climate and economy,” Hunt explains. “There is a potential for the perfect storm. We are finding ways to make housing communities much more stable as that storm blows through. With or without the storm it is a healthy way to live.” HUG’s first goal was to construct a house that would heat and cool itself with little or no fossil fuels, as well as providing nutrients to feed the occupants. The first five years focused on the housing side and learning how to better construct buildings. Then the company acquired a windmill to learn more about it. Other programs followed. “One key element of the entire campus is that it is a destination point that people can see things that are functioning and working,” says Robert McLean, COO/GM, Hunt Utilities Group. “We do hands-on experience, as well as see how things operate efficiently.” McLean adds that so many homes are inefficient and consumers are paying more to heat their homes. “If you are able to use designs that decrease the amount of heat used in the first place and then optimize the free heat you get from the sun you are really helping narrow the gap on
Hunt Utilities Group has a complex in Pine River, MN.
the fuel poverty; making comfortable living much more affordable,” he explains. HUG is a for-profit group that is researching methods to provide affordable housing that can heat and cool itself without fossil fuels, process its water and waste, as well as help feed the occupants. Then on the same 70 acre campus there is the Happy Dancing Turtle, a non-profit organization dedicated to promoting sustainable living. HDT offers hands-on classes, special events, tours of the HUG campus, collaborations with community organizations, and research and experimentation opportunities. In addition, RREAL (Rural Renewable Energy Alliance) is a nonprofit organization dedicated to making solar power accessible to all income levels. Its flagship program, SolarAssistance, installs solar heating systems in partnership with qualifying low-income families. There is no cost to the qualified participants the homeowner. RREAL has manufactured the SRCC certified Solar Power Furnace, a building-integrated solar air heating panel for residential and commercial installations. In addition, RREAL offers solar electric, solar water heating, and solar space heating contracting services to the residential and commercial sector. Also, the non-profit organization provides hands-on trainings and seminars in the solar energy field. McLean states that having non-profit and profit businesses are highly complementary in a campus vision. “There is a lot of synergy happening in this field. On the campus, one of the advantages of having a for-profit is that it can concentrate on research while the nonprofit focuses on outreach and education. This collaboration allows us to create a demonstration site and with that demonstration site provide people an
opportunity to come in and learn by doing or by observing what we are doing,” McLean explains. “We still have the opportunity on the business side to continue our work on research; developing new designs or new technologies.” The company does face challenges. The main challenge is generating revenue. The Hunts had some revenue from a recent business sale. In addition, HUG is participating with other organizations to develop research grants for energy technology solutions. A third source is selling homes. “In the long run our expectations are to be a profitable research company,” Hunt says. Hunt says with the price of energy climbing, HUG is looking at every type of energy source and it is important to keep that going. “We are developing a niche that doesn’t need an outside source of energy, but uses an indigenous source of energy as much as possible,” he says. McLean agrees. “We’re not creating an isolationist mind set, but more recognizing the less you are dependent on the outside resource the better off you will be,” he concludes.
nds ergy Alliance, be . ral Renewable En Ben Kechlin, Ru used for a solar heating system be ll wi at th e ec pi a
An energy efficient two-story home.
Q&A: Manufacturing challenge in Minnesota
By Alan Van Ormer om Schabel, president and CEO of Alexandria Extrusion Company in Alexandria, MN, didn’t have to think much about joining the Enterprise Minnesota Board of Directors because of the organization’s significant help to manufacturers in out-state Minnesota. “Enterprise Minnesota has given so much to us, I thought I should reciprocate,” Schabel states. Enterprise Minnesota works with manufacturing companies to improve efficiencies, contain costs, and achieve growth in sales revenue and earnings. Schabel will be on the board of directors for three years. Schabel moved to Alexandria in 1987 and has been CEO of the manufacturing company that manufactures products to a customer’s satisfaction. His company ships around the country and around the world. However, a majority of the product is a domestic product. Schabel states that manufacturing was absolutely fantastic until November 2008. “From then until January 2010 it has been horrible at least from our business standpoint. Generally speaking, since the first quarter of 2010 we have seen nice improvements in business level and activity,” he explains. “We’re starting to get back to the point moving forward looking and planning for the future, rather than maintaining from a month to month standpoint. Schabel took time in September to do a phone interview with Prairie Business magazine. The following are excerpts from the interview:
EXPLAIN WHAT ENTERPRISE MINNESOTA DOES: The main focus is helping manufacturing companies in Minnesota. They do this by networking, sharing best practices,
and consulting services. Minnesota Enterprise is Minnesota’s representative for Manufacturing Extension Partnership (MEP). It also helps Minnesota manufactures bring a dynamic set skills abilities and services that we can access. They have specialists located around the state who have a strong manufacturing background that can immediately connect the dots.
WHAT ARE THE CHALLENGES IN MANUFACTURING IN MINNESOTA: One challenge is competing with a global supply chain. We need to find ways to operate in a lean environment, reduce costs, and be responsive to customers to give those reasons to look at the total value. Another challenge is the escalation of raw material costs. The issue is that the manufacturing companies are still operating in an economy that has excess manufacturing capacity. Due to excess capacity, manufacturing companies find it difficult to pass on increased costs to their customers. In addition, we have to educate our high school and college systems on the availability of good jobs in the manufacturing sector. A fourth challenge involves dealing with
THE SCHABEL FILE Name: Tom Schabel Title: President and CEO, Company: Alexandria Extrusion Company Age: 55 Hometown: Fond Du Lac, WI Years with the company: 33 (23 in Alexandria, MN) the escalation of raw material costs and its relationship to operating a manufacturing company. With this challenge, how do we put the investment back into people and equipment? How do we maneuver through this?
HOW CAN ENTERPRISE MINNESOTA HELP WITH THESE CHALLENGES: They have the skills and expertise to come into an organization, do an evaluation, and help that organization formulate initiatives to reduce costs. If we do those things we will reduce those margins. The challenge for Enterprise Minnesota is determining their customer base and how they supply them. Minnesota has a lot of territory to cover. We have limited resources, so the challenge is how they provide service to all of their customers effectively.
WHERE DO YOU SEE MINNESOTA GOING IN THE FUTURE: I think the future can be very bright for Minnesota manufacturing. We have to continue to invest and utilize new technology that gives us a response better or capability more advanced than our competition. There needs to be a significant amount of investment in equipment, training and people. Minnesota has the reputation for doing that. Questions are will we have the resources to do that in slow times.
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10 mistakes for pricing services & products By Dennis Brown and Per Sjofors lines. For any single product, profit is optimized when the price reflects the customer’s willingness to pay. Results: Companies are unable to optimize its pricing, leading to lower profits
4 n the course of our engagements, we have seen examples of good and bad pricing policies. The following is a list of 10 of the most common mistakes companies make when pricing their products and services.
COMPANIES BASE PRICES ON THEIR COSTS, NOT CUSTOMERS’ PERCEPTIONS OF VALUE.
Prices based on costs invariably lead to one of the following two scenarios: (1) if the price is higher than the customers’ perceived value the cost of sales goes up, discounting increases, sales cycles are prolonged and profits suffer; (2) if the price is lower, sales are brisk, but companies are leaving money on the table, and therefore are not maximizing their profit. Results: Higher cost, lower revenue, lower profits.
COMPANIES BASE THEIR PRICES ON “THE MARKETPLACE.”
By resorting to “marketplace pricing,” companies accept the commoditization of their product or service. Instead, management teams must find ways to differentiate their products or services so as to create additional value for specific market segments. Results: Products sold on price alone leads to lower profits.
COMPANIES ATTEMPT TO ACHIEVE THE SAME PROFIT MARGIN ACROSS DIFFERENT PRODUCT LINES.
Some financial strategies support a drive for uniformity, and companies try to achieve identical profit margins for disparate product 58
January 2010 November 2010
COMPANIES FAIL TO SEGMENT THEIR CUSTOMERS.
Customer segments are differentiated by the customers’ different requirements for your product. Your price realization strategy should include options that tailor your product, packaging, delivery options, marketing message and your pricing structure to particular customer segments, in order to capture the additional value created for these segments. Results: Companies fail to maximize its market potential leading to lower revenue and profits.
COMPANIES HOLD PRICES AT THE SAME LEVEL FOR TOO LONG.
Most companies fear the uproar of a price change and put it off as long as possible. The process of keeping customers informed of price changes can, in reality, be a component of good customer service. Results: Companies endures ever-reduced profits, and when they make a price change, it is large and they may lose their customers. Each is leading to lower revenues and lower profits.
COMPANIES OFTEN INCENTIVIZE THEIR SALESPEOPLE ON REVENUE GENERATED, RATHER THAN ON PROFITS.
Volume-based sales incentives create a drain on profits when salespeople are compensated to push volume at the lowest possible price. Companies need to redefine the salesperson’s “job” as maximizing profitability, and incentivize profitability, while also providing the salespeople the necessary “tools” to do so. Results: Higher sales volume on lower cost
products and overall lower profits.
COMPANIES CHANGE PRICES WITHOUT FORECASTING COMPETITORS’ REACTIONS.
Any change in your prices will cause a reaction by your competitors. Smart companies know enough about their competitors to forecast their reactions, and prepare for them. This avoids costly price wars that can destroy the profitability of an entire industry. Results: Danger of costly non-profitable price wars
COMPANIES SPEND INSUFFICIENT RESOURCES MANAGING THEIR PRICING PRACTICES.
Cost, sales volume and price are the three basic variables that drive profit. Many companies, however, only utilize simplistic price procedures. Results: Lower revenue and lower profits.
COMPANIES FAIL TO ESTABLISH INTERNAL PROCEDURES TO OPTIMIZE PRICES.
In some companies, the hastily-called “price meeting” has become a regular occurrence—a last-minute meeting to set the final price for a new product or service. The attendees are often unprepared, and research is limited to a few salespeople’s anecdotes, perhaps a competitor’s last year’s price list, and a financial officer’s careful calculation of the product’s cost structure across a variety of assumptions. Results: Lower revenue and lower profits.
COMPANIES SPEND MOST OF THEIR TIME SERVING THEIR LEAST PROFITABLE CUSTOMERS.
Most companies do not even know who their most profitable customers are. Such failure also deprives the company of the loyalty that more attention and better service would provide. Results: Lower revenue and lower profits.
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VIEWPOINT CAMI GILBERTSON
False driving logs? Who’s fooling who?
If you drive for a living or employ drivers, I invite you to take a look at why it’s important to comply with Federal Motor Carrier Safety Administration (FMCSA) regulations. As drivers, it’s not uncommon to hide compliance violations by misrepresenting information on required paperwork. That may have worked in the past, but today, the risks outweigh the rewards. The first risk of exposure comes during roadside inspections. A local inspector told me he now confirms driver information, not only with the paperwork handed him during the inspection, but with phone calls to verify the driver’s story. If the driver says they have been off-duty for the last seven days, the inspector will call the office and ask. If the driver says he or she took a 10-hour break and didn’t load or start working until 6 a.m., the inspector will call both to confirm. The bigger risk is the compliance review—the dreaded audit of company records. In 2008, the FMCSA changed procedures for verifying the accuracy of records and logs. Nowadays, matching fuel records is the least of our worries. The new inspection procedures include verifying 30 days of logs for each selected driver, against multiple supporting documents, such as trip records, bill of ladings, invoices, and other receipts. Previously, drivers sought out receipts without the purchase times recorded. Now, the FMCSA has a separate violation for “not maintaining supporting documents.” Without thorough documentation, they call fuel stop cashiers and ask what type of documentation is given when a driver pays for fuel. They may even stop in and buy some fuel themselves. It’s also becoming common for inspectors to call multiple drivers and management personnel during an audit to see if their stories match up. Rather than trying to stay one step ahead of inspectors, I suggest drivers learn to win the game by being compliant and profitable at the same time. It can be done. Cami Gilbertson is the president of Compliance and Safety Services, Inc. She can be reached at firstname.lastname@example.org 60
Ethanol supporters ‘guardedly optimistic” about EPA decision
On October 13, the Environmental Protection Agency issued a partial approval of a request that gasoline with 15% ethanol - E15 - be allowed for use in vehicles currently on the road in the United States. EPA gave a green light to cars in model years 2007 and newer, and said it would rule on earlier models when testing on those vehicles is completed. They will not rule on anything made in 2000 or earlier, having performed no tests on any vehicles of that vintage. The headlines the following day were predictable. Ethanol supporters were guardedly optimistic. The anti-ethanol folks who said they wanted the decision based on science said almost two years of science was not sufficient, even as they continued to offer no science to contradict EPA and DOE data. Food manufacturers predicted prices will go up, and made plans to raise them to prove they are correct, just as they did two years ago. Small engine people said people would damage their weed whackers because they will use E15 even if it isn’t approved. Most of the anti-ethanol articles talked about the decision as though it were a mandate. It is not. In reality, ethanol’s opponents know that E15 is likely to be less expensive, and consumers will want to use more of it. The phrase “first step” appeared in several pro-ethanol releases, with differing opinion on how big that step is. If nothing else, EPA’s decision made E15 “real.” In time, that will create new demand and improve the financial health of existing ethanol plants. There are many regulatory hurdles that folks in the ethanol industry have been working on for many months. Those hurdles will have to be cleared before E15 can be sold at gas stations. Some regulators were hesitant to even talk about changes, because “there is no such thing as E15.” Now there is. For our part, just as we did for the last 10 years as E10 was adopted nation-wide, ACE’s Market Development Program will be talking to petroleum marketers about what E15 is and isn’t, and what they need to know to sell the new fuel. Ultimately, the market will embrace E15, mainly because consumers will demand it, and ACE will be there to help stations add this new fuel. Ron Lamberty directs market development efforts, working with petroleum marketers to facilitate the use of ethanol nationwide for the American Coalition for Ethanol. He can be reached at email@example.com.
Bring trust and loyalty back to the workplace … really! By Roger Hall nce upon a time in corporate America people actually liked going to work every day. They enjoyed the camaraderie of their co-workers, and they truly believed their work was making a difference, not only in the organization, but also in the world. Today, this past reality is nothing more than a fairy tale, and both employees and employers know it. According to a Wall Street Journal article, 70 percent of people don’t like their job. In addition, employees at all levels feel there is no trust or loyalty in their company. Many people feel as though they must ‘watch their back’ at all times, resulting in high turnover, high stress, and declining productivity. If you want to retain your key talent, increase customer satisfaction, and boost your company’s bottom line, then you need to focus on reestablishing trust and loyalty in your organization. Why? Because studies have shown that there is a direct and positive correlation between employee satisfaction and customer satisfaction. Additionally, happy employees are stable employees, meaning they won’t jump ship and go to work for your competitor after you’ve spent all that time and money training them. The question then remains, ‘How do you build trust in loyalty in an economic environment that is very different from those fairy tale days and that has slimmer margins and greater competition?’ The following guidelines will help you build better communications, thus increasing both trust and loyalty.
SCHEDULE ‘FACE TIME’ WITH EACH EMPLOYEE Many managers and business owners would rather send an email or leave a voice mail than actually talk to their staff face-to-face. But realize that your employees need real time communication from you, and they need to actually talk to you in person. This is important, because many employees today feel they aren’t contributing and using their real talents. The bottom line is that if you and your management team don’t help your employees understand where the organization is going, then your employees will never feel they’re working in an environment of trust and loyalty.
CHOOSE APPROPRIATE CHANNELS In all companies you have different levels and various types of employees. In order to ensure that all employees not only get your message but also understand it, you have to first determine which channel to use to communicate with each group. You will likely need to communicate to various departments in different ways to make sure everyone is on the same page and aware of the company’s commitment to building trust and loyalty.
OFFER ACKNOWLEDGMENT AND PRAISE When it comes to building trust and loyalty, some companies believe the best approach is to offer new things, such as added health benefits, on-site daycare, in-office massages after a stressful quarter, etc. Realize that what people really want is to be acknowledged for a job well done. People want their opinions to matter. They want to feel valued. Acknowledgement and praise are the best ways to help people realize how important they are to the organization, and this approach goes much further than any dollar amount ever could.
BE HONEST Every company and industry faces bad news and challenging times. Employees know this and expect it. So when something negative is happening that affects your company, be upfront about it. Even if you’re sugar coating information in an attempt to protect your employees, they’ll still feel that they’re being lied to. On top of that, the grapevine has a tendency to twist facts even more, making people feel that the company is being deceitful. To avoid this, always tell the truth, even if the truth hurts. Your employees will appreciate your honesty, despite the bad news, and they’ll actually trust you more.
WALK THE TALK If you want your employees to display trust and loyalty, then you and your managers need to do the same. True leaders who inspire trust and loyalty keep their word. And since employees see their direct supervisor more often than the executive team, if the manager doesn’t trust the company or display loyalty, then that person’s staff won’t be trusting or loyal either. So make sure all your managers and executives display the behavior they want the staff to emulate. Your people are watching you, and they do notice!
A HAPPY ENDING FOR ALL While the fairy tales days of business may be over, you can still have a company filled with both trusting and loyal employees. In fact, the more you communicate with people, acknowledge them, and be truthful with them, the more trusting and loyal they’ll be. Remember, your job as a manager or business owner is to ignite the passion of your people. You can’t do that without communication. So take an honest interest in the talents your employees bring to the table and be a role model of the behavior and company culture you desire. Only then will you have employees who want to be with you for the long haul, and who positively impact your company’s bottom line. (Roger Hall is a founding partner of Porcupine Communications. With more than 30 years of experience in marketing and communications, he can be reached at www.PorcupineCommunications.com.) Prairie Business
BY THE NUMBERS EMPLOYMENT (NOT SEASONALLY ADJUSTED) UNEMPLOYMENT RATE Aug. 2010 North Dakota 3.5% Fargo MSA 3.7 Bismarck MSA 3.1 Grand Forks MSA 4.2 Minot MiSA 2.4 Dickinson MiSA 2.4 Williston MiSA 2.0 Jamestown MiSA 3.2 Wahpeton MiSA 4.3 South Dakota 4.4 Sioux Falls MSA 4.4 Rapid City MSA 4.2 Aberdeen MiSA 3.1 Brookings MiSA 4.2 Watertown MiSA 3.8 Spearfish MiSA 4.1 Mitchell MiSA 3.6 Pierre MiSA 2.8 Yankton MiSA 4.2 Huron MiSA 3.3 Vermillion MiSA 3.9 Minnesota 6.9 Minneapolis-St. Paul MSA 7.0 Duluth-Superior MSA 7.5 St. Cloud MSA 6.7 Rochester MSA 5.6 Mankato-N. Mankato MSA 6.1 Brainerd MiSA 8.2 Fairbault-Northfield MiSA 7.9 Winona MiSA 7.2 Fergus Falls MiSA 6.3 Red Wing MiSA 6.8 Willmar MiSA 6.0 Austin MiSA 5.8 Bemidji MiSA 8.1 Alexandria MiSA 5.8 Hutchinson MiSA 8.8 Owatonna MiSA 7.6 Albert Lea MiSA 7.8 Marshall MiSA 5.5 New Ulm MiSA 6.0 Worthington MiSA 5.0 Fairmont MiSA 7.1
Aug. 2009 4.2% 4.1 3.3 5.0 3.3 3.2 2.3 3.6 5.1 4.6 4.7 4.1 3.1 3.8 5.6 3.8 4.1 2.6 5.0 3.1 4.3 7.8 7.9 8.8 7.4 6.3 6.8 8.4 8.5 8.0 7.1 7.5 6.5 6.0 8.3 6.1 9.7 8.7 8.5 5.7 6.5 4.8 8.3
EMPLOYMENT Aug. 2010 Aug. 2009 363,623 357,946 117,220 116,407 62,835 61,573 52,617 51,566 34,340 33,119 14,953 14,764 13,738 14,103 12,837 11,973 11,513 11,446 431,985 431,445 122,535 122,060 67,420 67,335 22,560 22,540 17,480 17,905 18,435 18,520 13,430 13,420 12,830 12,830 12,390 12,310 11,375 11,430 9,570 9,630 6,890 7,015 2,783,441 2,755,717 1,753,684 1,721,137 137,408 134,661 102,383 100,694 103,230 100,577 54,350 53,559 43,957 41,773 31,069 30,775 25,211 27,157 28,329 28,568 24,074 24,116 22,632 22,493 19,785 20,212 19,538 20,080 19,969 20,390 17,272 18,677 18.370 19,272 14,772 15,260 13,534 3,954 14,152 14,129 11,614 11,426 10,549 10,795
MSA — Metropolitan Statistical Area MiSA — Micropolitan Statistical Area Sources: U.S. Bureau of Labor Statistics, Minnesota Department of Employment and Economic Development, Job Service North Dakota, South Dakota Department of Labor
NORTH DAKOTA OIL ACTIVITY
July 2010 June 2010 May 2010 April 2010 March 2010
July 2010 June 2010 May 2010 April 2010 March 2010 February 2010
Sweet Crude Price/BBL
$67.35 $63.14 $60.10 $71.26 $71.20
9,952,296 9,434,312 9,189,084 8,531,666 8,599,506
145 128 102 106 120 94
5,541 4,977 4,893 4,810 4,736 4,655
135 125 114 107 102 93
Source: North Dakota Office of Management and Budget
GAS PRODUCTION JULY 2010 JUNE 2010 MAY 2010 APRIL 2010 MARCH 2010 FEBRUARY 2010 JANUARY 2010
MCF/MONTH 9,931,000 9,097,331 9,277,532 8,477,116 8,606,391 7,895,346 7,894,018
MCF/DAY 320,371 303,244 299,275 282,571 277,626 281,977 254,686
Source: North Dakota Office of Management and Budget
CANADIAN EXCHANGE RATE 9/24/09
U.S. to Canadian Dollar-
$1.0869 or $0.9200
$1.0563 or $0.9467
$1.0263 or $0.9744
U.S. to Euro
$0.6805 or $1.4695
$0.7889 or $1.2675
$7421 or $1.3476
U.S. to Chinese Yuan
$6.8273 or $0.1465
$6.7973 or $0.1471
$6.7035 or $0.1492
U.S. to Japanese Yen U.S. to Mexican Peso
$91.183 or $0.0109 $13.462 or $0.0743
Source: Bank of Canada
$84.167 or $0.0119 $12.920 or $0.0774
$84.2611 or $0.0119 $12.551 or $0.0800
Data provided by Kingsbury Applied Economics
AIRLINE BOARDINGS AUGUST 2010 % CHANGE/AUGUST 2009
Minneapolis-St. Paul Fargo Sioux Falls Rapid City Bismarck Duluth Grand Forks Minot
1,580,442 31,534 30,443 35,549 16,311 16,671 10,351 8,798
1.8% - 4.8% 6.4% 6.4% 9.3% 22.3% 26.4% 44.0%
Published on Nov 16, 2010