Saturday, April 30, 2005

Victory Tour Across the USA—On a Mower?

Visiting entrepreneurial, locally owned manufacturing operations is one of my favorites when I’m touring small towns as part of my speaking tours. This week I visited one such firm, Excel Industries, in Hesston, KS. The company started 45 years ago to build tractor and combine cabs, a rarity at the time. They built those cabs for companies like John Deere until 2 years ago. John Deere accounted for 2/3 of their business, so losing that business to Deere’s in-house plants was a shock and required a major shift for the business.

Bob & Paul Mullet, majority owners of Excel, fortunately had another product that accounted for the other 1/3 of their business, zero turn mowers. They’ve expanded that business and grown it to replace what they lost to Deere. Refocusing from only commercial into residential and expanding the dealer base has allowed them to refocus the business, making it better. Bob Mullet told me, “One of our challenges is handling all of the growth. We’ve been up 40% per year for the last 3 years running.”

The zero turn mower was invented in 1963 in Hesston by John Regier who wasn’t an engineer but a “putterer” or mechanical genius who loved to work on equipment. Taking a design from Lyle Yost’s Hesston Manufacturing swather (that cluster thing again!), he adapted it to mowing his lawn. Excel named the new machine the “Hustler” after the Air Force’s workhorse B-58 Hustler fighter-bombers.

Excel developed the Hustler for commercial use only, selling the machine thru 80 dealers scattered around the country. When they lost the Deere cab business, they refocused the company solely onto the turf business, expanding into machines for the homeowner. From that base of only 80 dealers they’ve expanded to over 900 and gone into overseas markets. Only 5% of their sales are overseas today, but they expect it to grow to 25% within 5 years. It’s another example of American ingenuity developing markets around the world.

Their major residential mowing promotion this year is built around famous NASCAR racer Richard Petty and a fundraiser for Victory Junction Gang Camp, a children’s camp that he sponsors in North Carolina. Called the Mow for Victory Tour (, Josh Schmidt, 19 year old son of Excel’s sales manager, is driving a Super Z Hustler painted to look like Petty’s racecar from CA to NC. He left CA on February 26, is in western AL right now and should get to the camp on May 28th. They hope to raise $250,000 for the camp with this promotion.

When I asked Paul Mullet what the Mow For Victory Tour was costing the company he told me, “I don’t want to know what it is costing us. I just know that our marketing budget is way over budget.” I loved his follow on comment, “Next time we’re going to see how fast we can drive one of our Hustlers across the country.”

Tomorrow’s blog is on the challenges that US manufacturers like the Mullets face.

Friday, April 29, 2005

Can Even an A+ City Build a Mountain?

The stats looked great! High school grads 12% above national average, bachelor’s degrees 30% higher and families below poverty 1/3 of national average were all not bad for a town of 3,509. But what took my breath away were the amenities that don’t show up in statistics.

Hesston, KS is a relatively young town, incorporated in 1921 with 500 people and had only grown to about 600 by 1960. But, Lyle Yost’s starting of Hesston Manufacturing in 1956 catapulted the small town forward. Yost invented the swather and the Hesston swathers and balers became world famous. He sold the company in 1980 and after passing thru several owners is today owned by AGCO, which has consolidated plants in MO, OH and TX into Hesston. The High School mascot is a Swather, probably the only one in the country.

AGCO and other manufacturers in the town give the community a strong industrial base with over 1500 jobs. But, what really struck me were the amenities that the community has added over the years, especially for a town this size. I’ve been in a lot of towns in the past year and this one gets an A+.

They’ve got 5 new subdivisions opening up as there is a shortage of housing. 83% of the manufacturing workforce is from out of town. One area of town is filled with new retirement and senior housing. The Hesston Wellness Center, which includes an indoor pool, would be the envy of cities of 20,000. Ditto to the Dyck Arboretum! They also developed their own 2 year college which offers aviation, nursing and other 2 year courses.

In the mid 70s Hesston looked at either building a lake or a municipal golf course. They got some help from the federal government and built a beautiful 18 hole course that Golf Digest in 2004 ranked as one of the top 200 in the USA for value. It has been self sustaining for the town since it was built.

They are doing a 1.7 mile hiking trail (cost $750,000) that will link the new housing areas with the schools and other areas of town.

One of the most innovative new projects I saw was an intergenerational child care center that is being built adjacent to the Schowalter Senior Living Center. This non-profit Mennonite Foundation hopes to have the elderly read to the children and have other interactions that are beneficial for both. Neat idea!

And, it is a neat, tidy town. Shana Smith, head of the Chamber and John Carder, City Administrator, gave me a tour. Carder, who has been an administrator in other towns, told me, “Last year we had to only send out one weed notice for someone to mow their lawn compared to about 150 that I used to send out in a similarly sized town that I was at before.” Smith and her husband moved back here from Denver when their oldest daughter was ready to start school, because of the wonderful quality of life in Hesston.

And the mountain? Actually, it’s not exactly a mountain. This is Kansas after all! When the only sledding hill that the kids could find to ride down was at the interstate, the people of Hesston built their own hill. And, it’s a big hill! Right in the middle of one of their many parks. They call it Mount Hesston!

Thursday, April 28, 2005

Notes From Race City USA

Mooresville, NC is one of my favorite agurbs®. It was a one horse town with 5,600 jobs in the textile mill industry in the early 1980s, way too many for a town of only 10,000. Residents decided that even though textiles were doing well at the time, they needed to diversify their job base. They started a new 250 acre industrial park on the outskirts of town and brought in a stable of new companies.

One of the early companies that located in Mooresville was NGK Ceramics USA, a Japanese manufacturer of catalytic converters. This month they completed a major expansion with a new 100-yard-long kiln that will increase production from the current 50,000 catalytic converters they produce per day for virtually every auto producer. The $60 million investment solidifies the 500 high paying manufacturing jobs at this plant, according to Melanie O’Connell Underwood, economic developer for the community.

Another initiative of Mooresville in the 1980s was branding their town as “Race City USA”, hoping to encourage race teams to locate in this high quality of life community. From only one team in 1989, 48 more teams have moved their headquarters, plus another 150 entrepreneurial racing suppliers to Mooresville. Mooresville is the epicenter of racing in NC, an industry that provides 24,000 jobs in the state and generates over $5 billion in economic impact to the state. The state is looking at building a new testing and research center in the state and I’m guessing that Mooresville will be on the top of the list of where that facility should be located. It’s another example of the impact of clustering on a community and region.

Wednesday, April 27, 2005

Cessna Test Flies Their New VLJ Also

I’m out in KS and OK this week, but spending most of my time driving and touring not writing. Today I drove 400 miles starting in Hesston, KS; and visited Sedan, KS; Bartlesville, OK; Perry, OK; and ending in Chickasha, OK. I’ll have several blogs on several of these great towns in the next week. I’m doing two talks tomorrow at the Rural Economic Development Summit in Chickasha, including my new “Hometown Entrepreneurs: Your New Paradigm Shift in Economic Development.”

I flew into Wichita on Tuesday where Cessna test flew their new entry-level business jet, the Citation Mustang, this week for the first time. Eclipse and Adams are both testing similar Very Light Jets (VLJ), but at much lower price levels than Cessna. Cessna plans to deliver the new Mustang in 2006.

DayJet intends to fly the Eclipse, test flown in 2004, and made in Albuquerque.

New On-Demand Airline

What if you could marry high speed computers, sophisticated databases and the new Very Light Jet (VLJ) aircraft? I wrote about the future impact of just this on where we live in my book and saw its possibilities when I visited Eclipse Aviation’s Albuquerque headquarters last year. This week another player entered the field, DayJet of Delray Beach, FL. This follows Pogo, another start-up being launched by former AA CEO Robert Crandall and People Express founder Donald Burr.

DayJet CEO Ed Iacobucci, founder of the software company Citrix Systems, calls his new service a combination of a private jet charter and an airline. Customers would log onto the company’s website, entering the cities that they want to fly between. They would enter the dates that they want to fly and parameters like, “arrive there no later than _____ time; depart by __________ time; etc.”

DayJet would confirm your flight, matching it up with others going in similar directions and time of day. There will be business people on tight schedules and grandparents that are more flexible. All would fly and fly at a price that is only slightly more than full fair coach tickets today.

It will revolutionize how we travel by air, opening up the 10,000 airports in this country to more travel, even as the 150 that currently handle 98% of our air travel diminish in importance. No longer will busy travelers have to live near O’Hare, DFW or Newark. Think of how this will change where people will live?

Tuesday, April 26, 2005

A Shooting Star Fades Away

Sparta, IL and my hometown, Effingham, have both been way stations for a corporate star that faded way too quickly. I reminisced with several people when I was in Sparta last Thursday giving my Boomtown talk. While it was a great run while it lasted and left many long term benefits for both communities, it was a painful loss for both towns.

World Color Press (WCP) printed comic books for decades in Sparta. When the company expanded into magazine printing in the 1960s they built their second plant in Effingham in 1969. At the time it was the largest printing room in the world. Magazine printing became their main focus and they moved their corporate headquarters here, but continued to print comic books in Sparta.

During the 70s and 80s they grew into other southern Illinois towns like Salem, Mt. Vernon, Flora and Altamont. They also added plants in TN, CA & OK. Times were good! Perhaps too good. Rather than risk a strike WCP generously acquiesced to union demands.

Times change but change is often difficult for many. Magazine printing got more competitive, companies consolidated, and suddenly WCP was a small part of a larger company. And the new company demanded efficiency and an adequate return on investment, something that huge, highly structured plants often have difficulty adapting to. In the end the new company closed all of the plants in IL, while the more flexible plants in the other states have remained operational.

Yes, several offshoots of WCP are still around and operating (that cluster thing again!). And, Sparta, Effingham and the other towns will pick up the pieces. It was great while it lasted, but painful when the company left town.

The moral: Ever town must be prepared for change. It will happen, you just don’t know when. You’ve got to continually be innovating as a community and constantly looking to how you can improve and innovate.

Monday, April 25, 2005

Tumbleweed, Oil and a Question?

I sometimes pinch myself to make sure that I’m not dreaming. Who would believe that people would pay me to travel around the country, touring wonderful communities, meeting dynamic town leaders and getting to share my passion for the agurbs®?

It was a beautiful spring day for the 2 hour drive from Lubbock, TX to Lovington, NM late last week. The roads were fine and fast (no speeding tickets!); farmers were in the fields; and country music was flowing from the radio. I even saw some tumbleweed! Oil rigs were pumping away and new wells were going in right and left. I saw 10 oil rigs drilling in a 10 mile stretch in TX and 6 in one small spot in NM. The oil boom is beneficial for many, especially the many towns that are at its epicenter.

One such town that looked like it could use some help was Brownfield, TX (population 9,500). Brownfield’s downtown had more vacancies than occupancies and almost looked like a ghost town. It’s sad, terribly sad to see a town of that size in such bad shape. As I sped out of town I wondered why it looked like it was dying when across the border Lovington had so much more vibrancy.

“Why do some towns boom, even as others die?” continues to drive me on my quest across the country.

Sunday, April 24, 2005

We Want Back Our Hospital!

Their hospital closed in the late 60s and in most towns it would have stayed closed. People would have moved on, chalking it up to a typical occurrence in rural towns. In my travels I’ve yet to see where someone has reopened something as complex as a hospital. That was, until last week.

Lovington and nearby Tatum resolved to reopen their hospital, creating a new hospital district. Today the Nor-Lea General Hospital is a thriving entity in Lovington, NM, employing 180. It recently completed a $7 million expansion, draws patients from a 90 mile radius and does 95% of its revenue as an outpatient facility.

Its CEO, David Shaw, who moved to Lovington 5 years ago, was selected as Lovington’s Citizen of the Year at the event I spoke at. He is dynamically expanding the vision of the hospital and also of the community.

The people of Lovington and Tatum showed a real “Can Do” spirit in not giving up on their closed hospital. It is often the real key to success of successful towns compared to others.

Friday, April 22, 2005

Brian Urlacher’s Hometown

Lovington, NM (population 9471) is a county seat town in a county that is approximately 40 miles wide by 110 miles long (4393 sq. mi.), four times bigger than Rhode Island. It is a BIG county. It started as a ranching town, boomed when oil was found in the 20s, but is always going thru the busts that inevitably occur in the oil patch. It’s starting to boom again. Retail sales are up over 40% from two years ago.

In the past several years dairies have become an emerging cluster for the region. Goff Dairy, a locally owned family operation has been milking for over 40 years. Its success has encouraged other dairies from ND, NE, CA and even overseas to move here. Dairy farms are much larger here than found in WI, which I wrote about March 30th, ranging from 400 to 4500 cows (Goff Dairy).

These new dairies have resulted in resurgence in agricultural production, with farmers raising feed for the cows. A cheddar cheese plant was moved here from the Dakotas in the 90s. Several other service businesses have sprung up due to all of the cows and diaries. It is a classic case of how a cluster can impact an area.

Brian Urlacher, the Chicago Bear All-Pro Linebacker, is from Lovington and gives back in excess of $100,000/year to the local school system. It’s nice to see that he hasn’t forgotten his roots.

If you’re in Lovington on the 4th of July be sure to attend their “World’s Greatest Lizard Race.” They race ‘em all, small geckos to giant iguanas. It’d be a hoot to see.

Thursday, April 21, 2005

Big City Blues

In the past month both Chicago and New York Magazines have featured articles about the higher level of stress in large cities and bigger states. New York’s title was “You’ll never have stress in this town again: 91 ways to kick the tension habit.” Both cities seem very preoccupied with too much stress in their metros.

The fact that there is more stress in large cities didn’t surprise me at all. In fact I think that part of the success of my book Boomtown USA, is that so many people are looking at getting out of the rat race of large cities to more tranquil places like my agurbs®.

The average number of psychologists per 100,000 residents in the USA is 31. The top 10 states with from 42 to 161 per 100,000 are DC, VT, MN, MA, NY, CO, IL, RI, NH, and PA. The lowest 10 states with from 11 to 18 per 100,000 are: LO, MS, SC, NV, AL, AR, OK, TX, KY and IN.

What was particularly interesting to me was that the top 10 states with most psychologists have 57 agurbs® compared to 84 agurbs® in the lowest. Also of interest is that, with the exception of CO, the highest ratio of psychologists to residents all voted for Kerry in the past presidential election. The lowest ratio states…all voted for Bush.

Wednesday, April 20, 2005

From Moo to You!

There is an old joke in agriculture, “How do you make a million dollars in agriculture?” “You start with $5 million!” George Shetler was like a lot of small farmers. He was going broke slowly, painfully slowly. In the 20 year period from 1974 to 1994 almost 400 farms/week went bankrupt. And Shetler would have probably gone down that path if he hadn’t made a shift from commodity production to niche marketing.

Shetler was a dairy farmer, 25 miles from Traverse City, MI, who milked 40 cows. He was a small fry in an industry that was dominated by giants. To survive he had to do something radically different.

In 1995 he surveyed local food retailers to see if there was a market for his grass fed milk. He wrote out a one page business plan which included one infamous line: “Pray!!” He built a micro creamery out of used equipment and started delivering his own milk.

Today he has 38 cows and sells 1,300 gallons of milk and dairy products twice a week to 50 stores in the region. His delivery truck has a set of Texas longhorns bolted to the roof of the cab, which is painted as you would expect in a black-and-white Holstein pattern. The slogan on the side of the truck is “From Moo to You.”

Today he has seven employees and has grown revenues by over four times. Two of his oldest sons have moved back to the farm. Instead of throwing in the towel George Shetler goal now is, “to have something here for the grandkids.”

Shetler is a great example of the path that more farmers should be going down. Unless you can constantly be a low cost producer of commodity products, in the long term commodity production is extremely difficult. By developing niches like Shetler, a farmer can differentiate their product and develop a brandable product that commands higher prices and better margins.

Tuesday, April 19, 2005

Dallas Smart Money was Wrong

I’m sitting at the DFW Airport this morning waiting on a plane to Lubbock. It is absolutely the worst hub airport as I always seem to have to get onto the tram that links the various terminals as opposed to being able to quickly walk to connecting gates at other airports. Today I had to go from C21 to B9, another 15 minute tram ride. I was at school in Dallas when DFW was being built, remembering the excitement of its completion.

At the time the smart money thought that DFW was the 8th wonder of the world. At the same time they also thought that Southwest Airlines didn’t stand a chance against mighty Braniff. They were wrong on both counts.

DFW was built in the pre-security world. The terminals were designed in giant circles so that passengers could drive right up to their gate, park their car and get onto their plane. It was a great system…for about 5 years. But in today’s world, it is a mess.

Those same experts didn’t understand how a pipsqueak airline like Southwest, with only 3 planes, could possibly compete against mighty Braniff Airlines with its hundreds, if not thousands of planes. When Southwest had to shrink to only 2 planes because of Braniff’s competition, it only reinforced their expert opinion. Again they were wrong.

Competitive environments change. What looks like a sure thing, often isn’t. The experts were wrong. Towns need to take the same approach. Often the sure thing, isn’t. And the LT company that is going to be in your town forever, isn’t. Times change and so must communities.

Traverse City—A Golden Eagle

It’s always a thrill for me to get a chance to tour one of the top 100 (Golden Eagle) agurbs® that our research identified as outstanding communities. I always go with a bit of trepidation, not wanting to find that our Golden Eagle might be a Mole instead. Traverse City, MI didn’t let me down.

I could tell that it was a special kind of town when I walked into the airport. I have seen a lot of airports in the past year and theirs is one of the coolest I have seen for a town of 14,532. It utilizes the local stone as an accent to the northern lodge look for the airport. It is definitely not a sterile, typical airport.

Bob Gluszewski, Area Manager for Consumers Energy gave me a whirlwind tour on our way to the Rural Partners of Michigan Conference on small towns and rural development. Traverse City is a regional draw with lots of big boxes, but what I really loved was their vibrant downtown area. I didn’t see any vacancies and noticed a number of dwelling units both in upstairs apartments and nearby condos that are helping to create a very unique “sense of place.” They are redoing their old opera house into a community center. They do a summer music festival in the downtown area that is nationally known. I rated it as the second best downtown I’ve seen of this size, second only to Oxford, MS.

They’ve developed as regional retailing, ag, golf and medical center. Their many area lakes make them a great tourism destination. They’ve leveraged their status as the Cherry Capital of the World (70% of the cooking cherries and 50% of the sweet cherries are grown within a 50 mile radius) to develop the Cherry Festival, which is held for one week around July 4th to bring in over 130,000 visitors each year. The area has recently also become a winery cluster with 14 already operating, including one owned by Madonna’s dad.

A local family is building a new baseball stadium to host the Beach Bums, a new class A team. Great Wolf Lodge has a huge waterpark and there are plans for another 2 more in town. Do I sense another cluster starting?

It was quite impressive for an agurb® of less than 15,000 population.

Monday, April 18, 2005

ND Final Thoughts—Renewal thru Angels

When Scott Molander, Mike Fladeland, Deb Dragseth and others were touring me thru western ND and eastern MT, I marveled at the natural beauty of the region. I was most impressed with the people that I met, especially their attitude toward trying to do things for the betterment of their communities and region.

One thing though that really bothered me from that week was a bumper sticker that several people told me about. It obviously made an impression upon many people because of the number of times I heard about it and the fact that the bumper sticker was probably last seen in 1985, over 20 years ago.

So what could make this kind of impression? And what can we do about it today?

The bumper sticker was fairly straightforward. It said, “Lord, Give Us One More Oil Boom. We Promise Not to Blow it This Time!”

Today the Williston Basin in western ND and eastern MT is going thru another oil boom, their third in 50 years. And just like the first two, this one is going to end in a bust at some point in time, although no one can tell you when that bust will occur. But, it will be ugly, just like the first two. And, it’s not a question of IF, but WHEN!

My question is: Will there be any lasting benefits from this current boom of $50+ oil?

Scott and I spent a lot of time talking about this subject in our 700 miles together in the car driving from town to town, giving talks and touring communities. He has been involved in an angel investor network in Indiana and I think that such a network could work in the region that we visited. It would take coordination, determination and salesmanship, but I think that it could be something that could act as a catalyst to help foster more entrepreneurial activity.

And I can’t believe that it wouldn’t be an attractive investment for some of the many people who are going to be making “windfall profits” in the coming years with this current oil boom. People who love their towns and region, understand that they’ve got to continue to progress or they run the risk of their towns continuing to “age in place.”

If Scott or someone else decides to put something together, I’d like to invest. That’s how sure I am of the merit and chance of success that it has from what I saw on my trip.

Sunday, April 17, 2005

Mushroom Season

Well it's that time of year again. Mushroom season!

It is one of my favorites. It is a wonderful time to be out in the woods with the birds chirping and the buds starting to pop. It is a time of renewal and newness.

My only disappointment is that once again, for probably the 20th straight year, my wife found the first mushroom. She also found the most. Even though I found only a few of the 20 or so that we found, I don't mind eating 1/2 of them.

Well, there's always next year. Maybe I'll find that first one.

Selling 15 Million/Year that You Can Get for Free!

He got the nickname, “The Badger”, because he was always battling guys bigger than him in his days playing basketball in North Dakota. And Scott Molander never lost that competitive spirit, even as he has moved onto great success in the business world.

He graduated from DSU in 1988 and “wanted to get out and see the world”, taking a job with Footlocker. His first job with the company was in Chicago. He freaked out when he got to his first toll booth outside of Chicago calling home to ask what you did at them. At his first day at an inner city store, when a customer asked him, “Is it ok if I take these shoes and come back to pay you later?” he didn’t think anything about it. His boss quickly set him straight that he wasn’t working in Crosby, ND anymore.

He quickly became retail savvy, moving onto running a store. He traded hats with other stores in the country, quickly taking his store from #1800 in hat wear to #63. But he got fed up with the politics of the big company, yearning to do something on his own.

He and another Footlocker employee, Glen Campbell also from a small town near Cape Girardeau, MO, decided that they should do something together. Glen was a great salesman and Scott was the finance and accounting part of the equation. They looked at buying a sports store franchise but finally Scott asked, “Glen what if we only did hats?” They developed a business plan, spent over a year shopping it to investors and finally got one of Scott’s former business professors from ND to assist them, raising $110,000 to start their first store on November 3, 1995 in Lafayette, IN. They did $110,000 in sales during that first Christmas season, often sleeping in the back of the store to save on the cost of a hotel. Someone with that type of dedication and willingness to sacrifice is a big step ahead of most.

Scott told some interesting stories of his start-up to the students at the DSU Entrepreneurship Conference. When he was thinking of quitting his job at Footlocker to start Hat World he went home to tell his parents. His dad’s reaction was, “You are going to quit your job and do WHAT? I can go down to the feed store and get a new hat every week, if I wanted one.” His future wife’s reaction when she met him two months after starting that first store, “If I were you, I’d keep my day job.” His mom’s reaction? She didn’t say a thing. She just wrote out a check so that she could be his first investor. Don’t you love moms?

His mom and those first investors didn’t do too badly either. A $2,000 investment became $80,000 when he and Glen sold the company last year for $177 million after it had grown to 500+ stores, doing $300 million in sales. At $20 per hat that is 15 million hats sold!

I traveled with Scott all over western ND for four days and here are some of my favorite quotes from him, “Our goal was to build a great company that was fun to work at. We weren’t focused on the money at all.” He still gets choked up talking about the “kids who joined him at Hat World. Now they have grey hair just like me.”

“Wal-Mart and others tried to go after us. They would come into our store, buy a hat and then blow up a photo of the receipt to show that they were selling their hats for $10 per hat less. We beat them on service, selection and training. Besides, who is going to go into a Wal-Mart to buy a hat? It is an impulse item.”

Today Scott is giving back to his hometown of Crosby, ND and to his alma mater Dickinson State University. My guess is that he will start another runaway success like Hat World in the near future.

Saturday, April 16, 2005

Leveraging Coal Resources to Their Fullest

Beulah, ND has the highest per capita income in the state. Lignite coal lies close to the surface of the surrounding rolling hills. The town has several electric generation plants and one of only two coal gasification plants in the world. The other is in South Africa. Jobs are plentiful and pay well.

Many communities would just sit back and “let the good times roll.” But a community that is the hometown of Jerome Strom, who I blogged about yesterday, isn’t the type of town to just sit back and let things happen on their own.

Beulah has contracted with Dr. Marian Chertow of the Yale University Center for Industrial Ecology to develop a plan for all of the by-products that could be harvested. Some are obvious such as anhydrous ammonia and ammonia sulfate. But her study, which is to be presented on May 1st will hopefully offer other ideas for Beulah and the surrounding area.

Duke Rosendahl, head of economic development for neighboring Hazen emailed me after my talk of why a community can NEVER stop doing economic development, “The work is NEVER done... there's no slack time .. take it (the job of growing) seriously because.. most others won't ..It only takes a few to make things happen.... but those few are rare and precious and have the "can do" spirit that makes a community a winner.”

I saw that type of spirit in Beulah.

Friday, April 15, 2005

Giving Back to the Roots of Their Success

“What we did in our business was because of the deep inbreeding of principles that we got from growing up in small towns in North Dakota and from our education at Dickinson State University,” is how Jerome Strom relayed the success of he and his late wife Rosie Ann in building Yale Investment Company. “Don’t promise what you can’t deliver.”

He and his wife met at DSU, at the time a small teacher’s college where 85% of graduates ended up teaching. The Stroms also followed this tradition, teaching in Oregon and then in California. They started a restaurant, Jerry’s Burgers, which they ran for 10 years. In 1974 they saw a need for supplemental retirement income, starting Yale Investments. Their specialty was income producing property, primarily apartments.

Even though the Stroms were making their living in Palo Alto, they never forgot their roots. They have given back, providing the largest scholarship fund at DSU, sponsoring the entrepreneurial conference and providing funding for other projects. This giving back is something I find often with small town individuals. They never seem to forget where they came from and are very generous in giving back.

Mr. Strom’s philosophy in business was particularly inspiring to me, “Find a need within your own community. Find a way to be of service to people who live there. Meet their needs and you will find the rewards are more than you can imagine.”

Thursday, April 14, 2005

We’ll do it Ourselves Town

I wish that there were more towns with a “Get out of the way, cause we are going to do this ourselves,” when they face obstacles in their way. One such town is Watford City, ND (population 1,435). A small town like this has to utilize ALL of their resources, including state and federal funding, to be able to accomplish projects that are important for the community. But too often when those funding sources fail to produce, many towns give up. Not Watford City!

I was amazed at what can be accomplished with this type of approach. Watford City has built a new aquatic park for $1.5 million; a 30,000 sf multi-purpose building for ice skating, soccer and other indoor events (cost $1.0 million); a tourist visitors center ($1.0 million); and new country club house. And all in the past five years! They also have a wonderful library, wellness center and 22,500 sf meeting area that includes a 10,000 sf auditorium and racquetball courts.

The story of how they did the tourism welcome center was particularly interesting. The town wanted to tap into the tourists that were headed to the Theodore Roosevelt National Park and Lake Sakakawea. They wanted to build a nice welcome center but didn’t have the funds to do so. They finally put together a deal with the municipally owned liquor store and local museum to build it. It is the only combination of such that I have seen, but it works. And works very well!

Hopefully more towns will follow Watford City’s approach of “If we can’t find help, we will just do it ourselves.”

Wednesday, April 13, 2005

The Cure for Higher Prices is Higher Prices

Sidney, MT is going thru a new oil boom. The city has a vitality and newness about it. It is amazing what $55/barrel oil can do.

In the early 1980s, at the peak of the last boom, “Seven rigs/day was considered a lot,” according to Leslie Messer of the county economic development agency. “Today we’ve got 19 rigs going. We’ve got one company that has 400 well staked out in the county, ready to drill.”

These new drilling rigs are drilling down 9,000 to 10,000 feet and then drilling out horizontally in four directions up to 2 1/2 miles away. Taxable sales in North Dakota’s oil extraction sector were up 252% in 2004 compared to 2003. Amazing technology and high oil prices will result in more oil production and ultimately lower prices.

Tuesday, April 12, 2005

From Bust to Boom

Oil was first discovered in the Williston Basin in 1951 and Williston, ND has been thru two booms and busts since then, in the 50s and 70s. At the end of the last bust in the early 1980s the city was left with a $27 million bad debt for special assessment districts that were used for infrastructure. The population fell from 17,000 to 12,500. In 1990 the city started a 1% special sales tax, 75% of which was used to retire this bad debt and 25% for economic development in the region. The debt was paid off and today the $1.3 million annual tax is being used for the betterment of the community and the region.

Ward Koeser, who has been mayor for 11 years remembers the oil boom crash vividly, “My wireless communication business did 95% of its business with oil field companies. We saw an 80% drop in our business. It was painful but we’ve rebuilt it. Today only 15% of our business is in the oil patch.”

Williston is going thru another oil boom due to $55/barrel oil, but it is less of a one industry town. For example, Holland America is moving their travel agent sales and reservation center from high priced Seattle to Williston. The population has rebounded to 14,000 and appears much better prepared for this third oil boom.

Monday, April 11, 2005

18 Docs in a Town of 1,300?

Dr. Gerry Sailer is retired now but the legacy he has created in out-of-the-way Hettinger, ND is one of legends. Most towns of 1,300 are lucky to have one doctor or possibly two, but Dr. Sailer had a vision of his adopted town reaching out to neighboring towns and ranches. He recruited in recent medical school grads, many from other small towns in the state, with a message of, “rural areas like this are where you can make a difference, not necessarily make the most money.” All of the 18 physicians work in the same group. All of them travel to their satellite offices. They work as a team, helping each other.

The locally owned, not-for-profit hospital, West River Health Services is a critical access hospital with 25 beds. It owns eight outlying sites and services four others. There are only 20,000 people living in its 20,000 square mile coverage area, which is larger than the state of Rhode Island.

Jim Long, CEO of West River, understands that places like Hettinger face some critical issues due to past out migrations and the rapid aging of its population. With a medium age of over 50 years compared to a national average of 35 years he told me, “We have 15 years to change these trends or we will slide downhill over a quick period of time.”

Places like Hettinger still have that chance, but they’ve got to create more jobs and opportunities if they are going to survive. It’s people like Bob Kudrna, Dr. Laura Walker, Wes Cvach, Dr. Gerry Sailer and Jim Long that make such a difference in places like Hettinger.

Sunday, April 10, 2005

Dakota Cabin Quilts to the World

Despite the fact that I never could pronounce the town name to the locals’ satisfaction I found Hettinger, ND (population 1,300) an incredibly progressive regional community. Bob Kudrna, the county’s dynamic economic development head showed us around. We saw a new manufacturing plant that has 40 new employees in a new building in the downtown, a $170,000 conversion of the old J. C. Penney store into a 145 seat theater and several interesting locally owned retail stores.

The most compelling stop was when we pulled up in front of Dakota Cabin Quilts ( on Main Street. The company is owned and run by Laura Walker and her husband Wes Cvach. She is a local physician. He is a rancher.

Laura was a quilter who couldn’t always get exactly the right fabric for her hobby. She also wanted to buy in bigger quantities for better pricing. She and her husband started Dakota Cabin in their home. Ten months ago they set up shop in a building that Hettinger had fixed up in anticipation that someone just like them would occupy it. They are now in the 2400 sf completely remodeled shop with over $100,000 of inventory, which would be way too much inventory for most towns of this size. But they do ¼ of their business over the internet all over the world, ¼ at trade shows and only ½ out of the store. Bus tours have started stopping at their store and Glassworks, a stained glass artisan’s gallery just down the street, because of their uniqueness.

If you go to Hettinger remember to pronounce the GER, like in Ti-GER. I’m practicing the pronunciation because I hope to go back.

Saturday, April 09, 2005

Fantastic Trip thru Western North Dakota

Yesterday I boarded a plane in Bismarck, ND having spent all week in the western part of the state giving talks twice a day in seven towns. Mike Fladeland of Montana-Dakota Utilities, which sponsored my trip, Scott Molander, one of my favorite entrepreneurs, along with Deb Dragseth and Scott Hanson of Dickinson State University accompanied me on this 800 mile journey. We were on the road from 7 in the morning until 10 or 11 at night every day, touring communities, meeting entrepreneurs and hopefully inspiring a person or two of what they can do for their community at each of my 7 talks. And, I had a great time!

The scenery was breathtaking (especially the Badlands), the wildlife abundant (we must have seen a hundred pheasants from Dickinson to Hettinger), the conversation stimulating (Scott and I came up with a great idea to capture permanent benefits from the current oil boom—more on that in a blog next week), but the highlight was meeting so many local residents who were working to better their small towns. They were genuinely looking for ways to create more opportunities so that their kids and grandkids would have the type of opportunities that they enjoyed. I’m going to be writing about some of them over the next week, including this weekend just because I’ve got so much great material.

Dickinson State is taking a very proactive approach to developing the skills of entrepreneurs in North Dakota. They were hosting their fifth annual Entrepreneuring in North Dakota Conference, which had over 400 attendees. It is underwritten by a couple who graduated from DSU, taught school, ran a restaurant and then made it big in Silicon Valley real estate. I’ll have more on their story in a future blog.

The people were very friendly. I hope to get back very soon.

Friday, April 08, 2005

Get Over It!

In the late 90s a group of farmers in Divide County, ND decided to build their own pasta plant. They were tired of only getting $2.50/bushel for their durum wheat which is used to make pasta. Over 80% of the durum wheat raised in the USA is produced within 150 miles of Crosby, the county seat for Divide County.

The $10 million project was financed with $3 million in equity from 283 area farmers and local citizens; $1 million in a grant from the USDA; $3 million in loans and a $3 million building that was leased. The company opened its doors in 2001 with 75 employees, a huge economic boost for the 1,000 population town. However, the plant only operated for 18 months, quickly closing its doors.

Les Knudson was chairman of the board of the plant and showed me around the modern facility. He explained to me what went wrong, “From a macro standpoint the Atkins diet was hitting its peak and the co-packing business that we were counting on never materialized. From a micro view we never learned how to make good pasta. We had 2 experienced managers but we just couldn’t make a consistent product. It killed us.”
Les Knudson has already picked himself up and is rapidly developing his own company, Superior Grains. However, other people in the town can’t forget the closing and still bemoan ever trying a project like it.

One of my main concerns for towns like Crosby is that they don’t put projects like the pasta plant behind them. They rehash failures like this over and over at the local coffee shop and are afraid to do other projects like it because of this misstep. That is a BIG mistake. Crosby needs to learn from what went wrong but in a positive sense in continuing to forge ahead. Crosby natives like Les Knudson and Scott Molander understand that. I wish that others in the community would too.

Thursday, April 07, 2005

Consummate Entrepreneur

I knew he was a consummate entrepreneur when I walked into his office and his friend Scott Molander pointed out that the vending machines we were looking at were owned by his three sons, aged 7, 10 and 14. Les Knudson explained to me, “The boys borrowed $2000 to buy the machines and have to keep them filled up. My son Noah, who was six at the time, was the youngest person to ever borrow money at that bank. He signed N-O-A-H in big block letters on the loan documents.”

Les was born and raised on a farm that is within sight of the Canadian border. He went away to college to become an engineer and worked in the aerospace and cabinet industries. His wife was a manager of a clothing store. But they wanted to get out of the big city. As Les told me, “We wanted a life style change so we moved back here in 1994 to farm.”

Les’s dad, Jerome, was an entrepreneur in his own right. Besides farming he invented a hillside tractor that used a mercury filled tube and hydraulics to keep his big 300+ hp tractors level. He only made 26 of his Knudson Tractors, so it wasn’t a big success, but some of the lessons that Les learned from seeing his dad struggle are serving him well today. “Dad tried to do everything himself. He didn’t delegate well. I’m trying to develop a team that can allow us to grow.”

Les started Superior Grains, Inc. in 1998, shipping his first carload of product in March, 1999. He ships specialty crops such as lentils, peas, chickpeas and organics all over the country and world. He employs 40 people, will do $20 million in business this year and has already outgrown the operation that he started on the family farm. I visited his new modern, state of the art processing plant in Williston that will start up production next week. This plant, built right on the main line of the BN from Chicago to Seattle, will allow him to ship 2000 railcars/year compared to the 400/year from his first plant. The original family farm plant will be converted into even more specialized products that Les is dreaming of producing.

Visiting Les Knudson’s dream on the Canadian border reminded me of why I love traveling around the country giving talks on my book and research. I get to meet so many people like him that are making a difference in their small towns.

Wednesday, April 06, 2005

Voters say "NO" to supercenters

Last Friday (April 1) I wrote about a pending referendum in Monroe, WI regarding the approval of big-box retailers in the city, specifically Wal-Mart. This morning the Green County News reports that the referendum was overwhelmingly beaten. The advisory vote in Monroe received nearly 69% no votes and 31% yes votes, asking if the city should approve construction of large super center retail stores. The vote was prompted by Wal-Mart's proposal of building a new super outlet north of Highway 11 and east of Monroe Truck Equipment. The Town of Monroe also had an advisory vote on the same question with the “no” votes totaling 70%. Apparently the people of Monroe don't want M&Ms.

To North Dakota from the SW

I’ll be in western ND and eastern MT all this week giving a series of talks in small and medium sized towns. Scott Molander, co-founder of the 500+ store Hat World chain and ND native, and Mike Fladeland, community coordinator for Montana-Dakota Utilities, both sponsored and are giving me a great tour of this beautiful state. The landscape reminds me of western Brazil, where I spent 7 great years when I was in my 20s, bringing back wonderful memories for me.

First stop on Monday was Crosby, ND (population 1089), Scott’s hometown, which is only 6 miles from the Canadian border. Scott has invested and given back greatly to the community. I talked at the High School to the junior and senior class in addition to a good representation of citizens from Crosby. Crosby went to state this year in basketball and has won the state Future Business Leaders of America (FBLA) competition for the past three years. And those young people knew their stuff…they had some wonderful questions for me after my talk. Great group of kids!

Crosby is pushing hard for people to move to the town, even offering free building lots. They’ve had a family move from CA who is developing a call center for a Silicon Valley company. Shawn and Esther Oehike moved their electro optics company, SEO Precision, to the community. Their story was very interesting.

The Oehikes lived in Albuquerque but were frustrated by the lack of support for non-Venture Capital backed companies. They found Crosby on the web (another example of why communities must have a good web site), visited the community, found them to very receptive and moved here 2 years ago. Esther is CEO and Shawn is the Chief Engineer. He was one of the designers of Ronald Reagan’s star wars programs, working on laser weaponry. His expertise was on the steering mirror, which Shawn explained to me, “is the enabling component that allows for the laser tracking. Without it, nothing would work.” He showed me how precise his laser is, able to bounce it beam off of a steering mirror that can hit a dime 20 miles away and keep it there. SEO is turning that star wars technology into consumer products.

I saw their prototype product which will allow a single light, enhanced with SEO’s patented spinning mirror, to light up 40,000 sf with a single bulb that only draws the power of a 50 watt bulb. Imagine the benefits to night farming and other activities that take place in out of the way places!

The Oehikes have adjusted well to small town living. Their 2 sons are both in High School, were members of the state winning FBLA team, are participating in local sports and have easily made friends. In the words of Esther, “It was a very good move for us and our boys have both got much more involved in things like sports than what they ever did in Albuquerque.

Crosby moved the Oehikes into a retrofitted J. C. Penney store that has offices on the first floor, apartments on the second and lab space in the basement. The city is developing a Tech Center for other small businesses in the building that it hopes to attract to the town. Crosby is a small town on the move with a great approach on how to continue to grow their community, creating opportunities for the young people that I talked to at the High School.

Tuesday, April 05, 2005

Sidney, NE—Once Down, Now Booming

One of the participants at the NMPP Annual Meeting last week was Gary Person, who has been with the city of Sidney, NE for 27 years as city manager and economic development director. This town of 6,800 people is a great example of how a community can transform themselves and why they were chosen as one of my agurbs® in BoomtownUSA.

Forty years ago virtually all of the jobs in this far western Nebraska town were controlled by the federal government or large companies. Major employers were an army ammunition depot, a minuteman missile base, oil and gas exploration, and the railroad. Big employers can be great, but when they close down it is devastating. Gary told me, “We have worked very, very hard for many years to build something special here after losing about 75% of our private sector jobs in the late 1960s and 1970s. Those jobs were controlled by outside forces.”

By depending upon local entrepreneurs rather than the big, outside employers Sidney has transformed themselves. Gary, “We have tripled our economy in the past 15 years.” The most famous local entrepreneurs are Dick and Jim Cabela who started the world famous Cabela’s retail chain after a Furniture Mart trip to Chicago. But, there are several other local entrepreneurs who have also had a huge impact upon the local work force. Gary calls it one of the entrepreneurial capitals of small town America.

From what he’s told me, I’d have to agree. I’m hoping to get there this fall to see for myself. I’m featuring Sidney in a new talk I’m developing entitled, “Hometown Entrepreneurs: Your New Paradigm Shift in Economic Development.”

Monday, April 04, 2005

Observations from Nebraska

I was in Hastings, NE on Thursday giving a talk to the Nebraska Municipal Power Pool’s (NMPP) Annual Meeting. This is an association of municipal power providers in NE, IA, SD, CO and WY. They had a great program with lots of take home ideas, especially for smaller towns.

As I drove from Hastings to Grand Island, one of my NE agurbs®, I saw hundreds of sandhill cranes along the Platte River bottoms. They are in their annual 14,000 mile migration from TX, NM and northern Mexico to their breeding grounds in Canada, Alaska and even Siberia. More that 500,000 gather for up to six weeks to rest and refuel before they head north. I had first seen these birds in south TX and was reminded that bird watching is one of the fastest growing spectator activities in the USA today.

Grand Island looked great, except for their downtown area! They had way too many vacant store fronts and need to work on developing a sense of place in their downtown.

I learned that Henry Fonda was born in Grand Island, another Nebraska native, who made it big in the entertainment business. Johnny Carson, from Norfolk, was another one. What is with the water here?

Sunday, April 03, 2005

Harley Passes GM—The Lessons for the Agurbs®

This past week Harley-Davidson passed General Motors in market value, $17.7 billion vs. $16.2 billion, despite the fact that GM sales of $193 billion are 38 times Harley’s. Both companies started within a year of each other (Harley in 1907 and GM in 1908), have been close to bankruptcy (Harley in 1985 and GM in 1992), and have faced stiff Japanese competition for many years.

However, Harley has built a marvelous brand since a management buy-out in 1981. It has leveraged its unique American heritage to create incredibly strong customer loyalty and passion for the product.

We just completed a new Harley dealership here in Effingham that is built like a barn, right along the interstate. Have you ever noticed how many of these unique Harley dealerships you see from the interstate? It isn’t an accident. It is part of their strategy of building the brand.

The lessons for agurbs®? It is important to build your brand and stay close to your customers. And, it isn’t always the big guy that wins.

Saturday, April 02, 2005

Mayor Daley’s Airport Closing

Two years ago Mayor Richard Daley closed Chicago’s downtown airport, Meigs Field. Crain’s Chicago Business editorial said it best, “The decision to close Meigs was a bad one. Though tiny, it played a vital role in the city’s commercial infrastructure, mainly serving as a close-in landing spot for business aircraft shuttling executives to and from Chicago’s central business district.”

Meigs handled 30,000 to 40,000 flights/year and its closing hasn’t been picked up in added flights to other Chicago airports. In other words, business has gone elsewhere because of the hassle of flying into Midway, O’Hare, etc.

I’ve written extensively about the new jets like the Eclipse that will revolutionize air travel in our country. Meigs was ideal for these new jets. Chicago will rue the day that they bulldozed this wonderful downtown asset.

Wal-Mart Dances around Store Size Limit

Yesterday I wrote about Monroe, Wisconsin’s upcoming vote on the expansion of the state’s first Wal-Mart in the town to a new location. I’ve seen other communities and states try to thwart innovative companies like Wal-Mart. In the end, they all end up losing and are much worse off for the battle. Rather than mounting emotionally and financially costly campaigns against companies like Wal-Mart, they should be spending their time and effort on more productive, positive things for their towns.

Trying to pass laws to prevent expansion by certain businesses is usually counter productive. Virtually every time laws like this have passed, I’ve seen the “Law of Unintended Consequences” kick in. In happened in Vermont where the state passed laws to essentially ban Big Boxes. Wal-Mart built on both sides of the state, just over the state line, driving retail dollars and sales tax out of the state. Vermont saw the economic impact and quickly revoked their new laws. Other cities have tried to pass laws to keep companies like Wal-Mart out and, if successful, usually see the company build in the next city. Again, retail and sales taxes are sucked out of the original town.

Here is the latest example. Last August Dunkirk, MD, an upscale but older demographic town (population 2,363) thirty miles outside of Washington DC, passed an ordinance limiting the size of commercial retail buildings to 75,000 sf. Wal-Mart normally builds from 100,000 to 200,000 sf. Wal-Mart is proceeding with plans to build a 74,998 sf store next to a 22,689 sf garden center, also owned by the company. Both stores would have their own entrances, utilities, bathrooms and cash registers.

Kenneth E. Stone, professor emeritus of economics at Iowa State University, who has studied Wal-Mart for the past 30 years, said of the move in Dunkirk, “It almost points out the futility of municipalities developing ordinances and laws that restrict the size of stores. There’s always a way around them and an outfit as big and smart as Wal-Mart will think of a way.”

Friday, April 01, 2005

A Wal-Mart Supercenter in Monroe, WI—YES or NO

Next week the citizens of Monroe, WI will vote in a non-binding referendum on the building of a supercenter in the SW Wisconsin town of 11,000. I’m not exactly sure why they are having the referendum, other than it is the “cause du jour”. Monroe is wonderfully quaint regional shopping center. Its downtown has some very unique architecture, unique stores, bars and restaurants.

After my talk there last week we went downtown to Baumgartner’s, a local landmark, where I sampled Limburger cheese. It is best to not smell it before eating it. Monroe is the only place in the USA that makes Limburger. Matt Urban, executive director of the Monroe Chamber, explained to me, “Limburger cheese is a niche market and it doesn’t take much cheese to fill up that niche.”

But, I digress. Back to Wal-Mart. Wal-Mart built their first Wisconsin store in Monroe. They’ve been a good corporate citizen. The store they are in is old and they want to expand. Will it impact the downtown area? The local Wal-Mart store manager probably said it best, “We sell M & M’s, and they sell truffles.” Monroe will be much worse off, with retail trade going to other locations if they vote NO to Wal-Mart. I’ll post the results next Wednesday.