Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Transforming economy takes help from many corners by Elizabeth Martin Bill King has a lot of nice things to say about how the city of Duluth helped his company, Cirrus Design, find a home.
“There’s a couple of people who just ought to be sainted for the work they did,” says King, vice president of business administration for Cirrus. He proceeds to list the city’s mayor and multiple business development professionals on his personal canonization list.
Duluth’s recent business expansion has been aided by a wide variety of community resources, including the city itself. In the 1970s the area’s economy, which had been so dependent on iron ore mining, was suffering. Unemployment hit the high teens and city leaders knew they had to change the area’s economic base.
“In the last several decades, Duluth has made a complete transition to a service sector economy,” says Tom Cotruvo, manager of business development for the city of Duluth, and one of the people on King’s list. “Only 5 percent of our jobs are goods-producing. We’ve really transformed our economy to the 21st century in the last few decades.”
“When they want to be aggressive and do a package, they are very, very talented economic development professionals,” says King of the city’s economic development office. “They just didn’t take no for an answer.”
But the transformation from a single industry-based economy to a more diverse one hasn’t come easily for Duluth.
“It’s been a very aggressive city hall and city administration and issues that have helped bring that about, but it’s also a very strong private sector and particularly the work force that’s enabled that to be accomplished,” Cotruvo says.
Over the past 20 years, the city government has learned how to make itself attractive to business and is continually working to refine its offerings. Cotruvo also serves as administrator for the 1200 Fund, a private, non-profit organization that provides incentives for businesses that are creating jobs.
“It is a separate nonprofit corporation but it is the primary lending program that we have in the city of Duluth for business growth,” says Cotruvo.
The fund requires at least one job to be created for every $10,000 that is loaned to a business. A matching bank loan is also required.
Cirrus, which received money from the 1200 Fund, employs more than 800 people. Through the 1200 Fund, the city has become an equity partner in Cirrus, though the fund does not always look for an equity stake in companies.
Focus on jobs
Private organizations are also active in recruiting and providing incentives to companies that will create jobs.
“Our focus is on economic development and job creation and job retention and to try to benefit, to the extent we can, low and moderate income people,” says John Elden, loan program manager with the Duluth-based Northland Foundation.
The Northland Foundation was created in 1988 by the Minneapolis-based McKnight Foundation. Along with its business loan program, the Northland Foundation also has a grant program for nonprofit organizations and a program focused on helping children in the community.
“As a development lender we’re very focused on trying to stimulate businesses to develop something that they may not have been otherwise able to do without our help,” says Elden.
For some businesses, assistance from the Northland Foundation means simply being able to stay afloat in difficult times.
“In the last couple of years we’ve seen more requests for businesses that are experiencing some temporary difficulties that just need some time and help to make it through,” says Elden. “Lately we’ve seen more business retention projects and fewer expansions because I think a lot of companies are waiting for the economic tide to turn a little bit.”
The area also has a very active chamber of commerce, as evidenced by its recent membership drive.
“We are one of the few growing chambers in the state,” says Tess Dandrea, director of business retention and resources for the chamber. “Many are downsizing. We had our last membership drive in May and brought in 103 new members. We were pleasantly surprised by that. Our goal was 70.”
The chamber also works to make sure its members are aware of public policy initiatives that may affect them, and has worked to bridge the gap between businesses and trade unions in the area.
In November 2001 Duluth mayor Gary Doty called an economic summit for the city. The city will periodically call such meetings of public and private entities, says Cotruvo, simply to take a step back and look at the area’s economic situation. Talking to business leaders in the area, many ideas were born from that summit, including the Area Partnership for Economic Expansion (APEX).
Although still in the fund-raising stage, the organization’s mission is to assist in business growth and recruiting to the area, says Jim McGinnis. McGinnis is president and CEO of Duluth-based Murphy McGinnis Media and one of the founders of APEX. The organization hopes to have a staff in place by the end of 2003.
APEX will replace Team Duluth, which brought public and private interests together to grow the business community, although the effort was led by the city as opposed to private business. That’s a key distinction for McGinnis.
"It really reconfigures the structure of the organization in such a way that it’s primarily led and primarily funded by business leaders working in consort with government," says McGinnis.
McGinnis is quick to point out that he is not the only member of the business community working to put APEX together.
"I’m simply a citizen volunteer. One of many who is working to try to bring the private sector to the forefront,” he says.
APEX is not, he says, about providing venture capital, but rather assisting business growth and recruiting businesses to the area.
“The whole region really is looking to Duluth to see what it does and APEX is an initiative that is still in its formative stages,” says McGinnis.
Given the area’s history of high unemployment, many organizations focus as much on job creation and retention as they do on business growth.
While they’re waiting for the tide to turn, however, companies are organizing. Industry-oriented organizations are popping up everywhere, says McGinnis. He sees the level of business activity in the Duluth area as an attempt to “connect the dots, so that all of us are working collectively not only for our individual interests. We recognize that working for the growth of the community at large is really what it’s all about.
“There are so many people who are working so hard to help our region grow and there is a spirit of optimism here,” says McGinnis. “In my eight years of living in the community I certainly haven’t seen it at this level. I think it’s healthy."
Cannabis-based products have been increasingly available in Minnesota over the last six years. The opportunities in that space became even more prominent last year when the state legislature voted to become the 23rd state to legalize adult recreational use of marijuana for Minnesotans over 21.
When Super Bowl LII was played at U.S. Bank Stadium in February 2018, Alex Tittle didn’t play a down on the field, but he had more than three-years of impact on the experience.
Unemployment in Minnesota sits below 3 percent. Labor market participation is high. Airport traffic counts across the country are approaching and even surpassing pre-pandemic levels, so consumers are still spending money. Consumer confidence, reportedly spurred by the strong labor market, also seems at least cautiously on the rise.
