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.
Tech firms rise in area first known as Granite Country
by Matt Krumrie OVER THE YEARS the St. Cloud area was known for being a leader in the granite, printing and agriculture industries.
It was the No. 2 producer of granite in the world, which in turn gave the city and region—located just over an hour northwest of the Twin Cities in Stearns County—the nickname Granite Country.
While the past has shaped the region’s history and economic vitality, the future of the community appears to be based around the development and success of the technology, biosciences and manufacturing industries.
The region is home to 17 different industrial parks and business centers, seven colleges and universities, and features a workforce of about 90,000 who make an average of $13.94 per hour (compared to $17.60 in the Twin Cities, $16.24 throughout Minnesota, and $14.56 nationwide).
While the St. Cloud Hospital, the state of Minnesota and St. Cloud Public School District No. 742 are the largest employers in the region, it’s the many small businesses expanding or moving into the community that are driving change.
Tom Grones, CEO of Geo-Comm Inc., owns a business on the growth and expansion side of things. Geo-Comm provides high-tech public safety systems and consulting services throughout the United States.
Grones says a variety of factors keep and attract business owners in the region. Among them, he says, are low crime rates, lower housing costs (the average median home price in 2005 was about $93,000) and little traffic congestion.
He adds: proximity to the Twin Cities (St. Cloud is right off of I-94, and Hwy. 10, state highways 15 and 23 also go into the city), a business-friendly climate, accessible government officials and numerous leisure opportunities.
Grones has watched his business grow from seven employees when it opened in 1995 to 91 in 2006. Revenue was $6.4 million in 2005 and projected to reach $8.5 million in 2006.
In mid-August Grones said the company had a 12 percent increase in its work force in the last 60 days, and he anticipates a 10 percent increase in 2007.
GeoComm is actively involved in 130 projects in 29 states, and while they are first and foremost a company that provides communications tools to the public safety industry, they have seen tremendous growth in the communications consulting sector since the September 11 attacks.
As the federal government continues to provide enhanced funding to local government for developing two-way radio systems that are designed to provide seamless communications between all branches of the public safety community, business should continue to grow, says Grones.
“The key successes have resulted in large part by identifying, training and retaining a quality workforce here at the company,” says Grones. “In addition we have had a great deal of success via our expanded direct sales force and a steady increase on indirect sales via partners and resellers.”
Latest moves
Those not familiar with the pulse of the St. Cloud business community might be surprised at what’s going on in this central Minnesota region. Here is a look at some recent developments:
• The Donlin Co., a custom millwork distributor, recently moved from St. Cloud’s East Side to the new St. Cloud Airport Business Park where they constructed a 104,000-square-foot corporate office, manufacturing and distribution center.
• A new 56,000-square-foot manufacturing plant is being built by Thief River Falls-based Arctic Cat Inc. The plant will employ about 150 workers when completed.
• CompuCredit, a direct marketer of branded credit cards and related fee-based products and services, recently acquired some of the former Fingerhut business. Encore capital group is also growing. It’s a collections agency that purchased much of Fingerhut’s debt.
• St. Cloud is also home to MicroBioLogics Inc., a cutting edge bioscience company that does business worldwide.
• Marco, a St. Cloud company that provides integrated systems for voice, data, video and print, recently hired 24 people. The Minnesota Chapter of the ESOP (Employee Stock Ownership Plan) Association named Marco the 2006 Minnesota ESOP Company of the Year. The award is given to a company committed to employee ownership.
• ING direct, the financial services company that has offices in downtown St. Cloud, is going to add 400 more people to expand its workforce in St. Cloud to about 800 workers.
• Freeze.com, an Internet media company that grew out of a rented dorm room at St. Cloud State University, now has more than 80 million registered users. In 2006 Freeze.com received the Ernst & Young entrepreneur of the year award in the e-business category.
Goldleaf Plastics Inc. recently moved from the nearby town of Waite Park (population of about 6,600) into an 80,000-square-foot building at St. Cloud's I-94 Business Park. The move brought the company of 61 employees about 15 minutes closer to the Twin Cities, which can be even more attractive to potential employees or vendors, says CEO Sandy Berling, and President Dan Berling, who is Sandy’s husband.
The company fabricates and distributes plastics and supports other companies by cutting wood and other materials on its CNC routers. Founded in 1983, the company had revenue just under $10.3 million in 2005, and expects revenue just over $11.8 million in 2006.
Dan Berling says Goldleaf, which expects to double in annual revenue over the next five years, chose to move for a number of reasons, including:
The new 80,000-square-foot facility allows for a clean process flow through its production and office areas. This further supports its ISO 9001:2000 practices.
New capabilities such as vacuum forming, screen printing (formerly outsourced), and additional production capacity through more routers and ovens are easily placed in the new facility.
The new facility was designed utilizing lean manufacturing principles and has room for additional growth.
The new location is just off of I-94, which provides easy access for employees, shipping and deliveries.
The available pool of potential employees is large and readily accessible.
“The work ethic of central Minnesota people is outstanding,” says Berling. “But in order to grow, we needed to add talent, capabilities and capacity.”
Parks a coup
The creation and continued development of the many industrial and business parks has been a major coup for the regional economy. St. Cloud acts as the center of activity and attracts workers from nearby communities such as Sauk Rapids, Sartell, Waite Park and St. Joseph.
Also, because of urban sprawl and transportation improvements, it attracts workers from the northern Twin Cities. That could continue as well. When the Northstar Commuter Rail is complete in 2009, over 5,600 riders are expected to make the 40-mile trip from Big Lake to Minneapolis and back.
Big Lake is midway between Minneapolis and St. Cloud, at the intersection of U.S. highway 10 and MN 25. In July the St. Cloud City Council approved plans to add more than 1,300 acres to the St. Cloud Regional Airport, which local leaders hope will help expand the services and destinations the airport can reach.
While city officials are moving forward with developing many new projects and initiatives, it’s the redevelopment of the old that has people in St. Cloud talking. That is focused around the restoration and remodeling of many long-time businesses in the old downtown area of St. Cloud.
Through a combination of private and public investments, the downtown revitalization continues to move forward, says Pegg Gustafson, executive director of the St. Cloud Downtown Council (DTC), a not-for-profit organization that promotes economic and aesthetic vitality downtown.
The city has invested in a new regional library, a new parking ramp and a new law enforcement center. This has been a relief for an area that is still stinging from the closing of a Herberger’s department store, taking 200 jobs with it.
“The property owners have made huge investments to restore their buildings,” says Gustafson. “Several properties have changed hands in the past two years, and the new owners have embraced historic preservation with over 17 restoration projects completed.”
Gustafson says high-tech companies have found downtown to be a perfect location because the infrastructure (T1, T3 and wireless) is in place.
A four-story redevelopment project was announced in July when the commitment was received by ING Direct to add 400 or more employees (to their current count of 380). XTech LLC purchased a large existing property. Netgain Technology purchased the historic Federal Building.
Other high-tech companies located in downtown St. Cloud include Lexis Nexis, Freeze.com, Cloudnet, CitEscape, and GeoComm, among others.
Tony Goddard is director of St. Cloud Opportunities, a non-profit economic development group that has played key roles in the development of four industrial parks in the St. Cloud area. But once you talk about the downtown revitalization, that’s when you get Goddard excited.
Goddard’s full-time job is as director of downtown’s historic Paramount Theatre and Visual Arts Center. During the 2005-06 season, about 60,000 people come to the theater and center, Goddard says. Goddard, who leads a staff of five full-timers and about 25 part-timers, sees the pride in community leaders and business owners in downtown.
“There is a lot of activity, and a lot of good things happening,” says Goddard. “While the arts may not be an influencing factor on the businesses of St. Cloud, local businesses have an influence on our ability to attract people. People are starting to see it and you can tell when they come here.”
This has helped with another trend that is popping up across the country: a growing interest in urban living in loft-style apartments or condominiums. Gustafson says there is tremendous demand for downtown housing, which reflects a societal change, particularly from the Generation X crowd.
“People are opting for the city living to be closer to main employment centers, entertainment and cultural attractions,” says Gustafson, who added that the Downtown Council will promote the use of vacant office buildings and warehouses to give them a second chance at life as new housing stock.
“One of the things we look forward to is the market becoming deeper as new companies expand or move into downtown,” says Gustafson.
Teresa Bohnen, president of the St. Cloud Area Chamber of Commerce, says one key factor benefiting the St. Cloud region is the diversity in the type of businesses there.
Whereas Rochester was heavily based on the Mayo Clinic or IBM, she points out, St. Cloud has a little bit of everything. That includes the traditional industries like granite, printing and agriculture, and the new emerging businesses such as the many listed above.
“I think our strength is in our diversity, and I think those outside the greater St. Cloud area are starting to realize that,” says Bohnen.
[contact] Dan Berling, Goldleaf Plastics: 1.800.526.8810, da*@**************cs.com. Teresa Bohnen, St. Cloud Area Chamber of Commerce: 320.656.3804, tb*****@****************er.com. Tom Grones, GeoComm, Inc: 1.888.436.2666; tg*****@******mm.com. Pegg Gustafson, St. Cloud Downtown Council: 320.257.8600, pe**@*************wn.com. Tony Goddard, Paramount Theatre and Visual Arts Center: 320-257-3106, tg******@***********ts.org
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