Oh For the New VLJs!

I was very frustrated earlier this week. I had a very bad experience flying thru DFW Airport on my trip to Wilburton, OK. I left home at 1 pm to drive to the St. Louis airport, flew thru the hub in Dallas, connecting thru to Ft. Smith, AR, where I picked up a car to drive onto my final destination. It took me 9+ hours to fly/drive there, almost exactly the same time that it would have taken me to drive the 590 miles. I averaged 65 mph flying/driving, actually better than the 57 mph that NASA showed on average for distances of less than 500 miles.

By point-to-point air service the distance is cut to 490 miles. If one of the new air taxi companies that I continue to research and write about had been operational I could have made the trip in less than 2 hours. Oh, for those new Very Light Jets (VLJs). They can’t come soon enough.

Following is an email that I wrote in frustration to my travel coordinator at Agracel. I reported on the events that occurred on that trip but perhaps exaggerated a bit on some of the people that I ran into along the way. I actually barely did make my flight. Here is my email:

It is always such a pleasant experience to get to fly thru DFW. My flight was on time (that is a first!) but we got to the gate and had to wait about 10 minutes so that they could get the gate ready for us. We arrived at the gate, got out of seats and were ready to get off of the plane when the air hostess announced over the intercom, “There is someone at the gangway, but she doesn’t seem to know how to operate it. However, we can see that she is on the phone and we hope that she is getting directions on how to get it to move toward the plane.”

Thank goodness she is not a pilot!

After patiently waiting for another 5 to 10 minutes, she figured it out and we deplaned. Hardly anyone noticed that there was about a twelve inch drop from the plane to the gangway. How far do you think you can drop a roller board without damaging a wheel?

“Could you tell me what gate the flight to Ft. Smith is leaving from?” I asked as I got to the arrival gate at C 28.

“Why yes hun (Yep, this is Texas!), you have to go to gate A-2-D”

Huh!!! A-2-D? Wasn’t that a robot in a Star Wars Movie, or something? Who has ever heard of gate A-2-D?

I didn’t lose my cool yet, “How do I get to A-2-D?”

“Why you just walk down to C-2 and get on the train and ride it two stops. You’re almost there then.” Famous last words.

Did I tell you that I only had 42 minutes from the time the plane landed until my flight left for Fr. Smith? And guess how many flights/day they have to Ft. Smith?

So I walk all the way from C 28 to C 2, which is twice as long as it takes in a “normal” airport. That is because DFW’s terminals are laid out in semi-circles. They were designed prior to security concerns, built so that you could drive right up to the gate and park right in front of your gate. The effect is that you have ½ of the normal gates in a mile and it seemed like a mile as I walked to C 2.

And, then I waited for the train. They have this message board above the train entrance that says, “Train arrives every 2 minutes.” Evidently, just like everything else in Texas their minutes are a big bigger than back home. I wish I had timed it, cause it seemed more like 10.

By the time that the train pulls up, there is a pretty big crowd waiting to get on the train. The first 3 get on the train and this voice comes blaring out of the loudspeaker, “The doors are closing. Please stand out of the way.”

Evidently, they had to make up for the lost time of not getting there within the two minutes that they advertise.

I sure hope that little old lady that I bumped as I lunged for the door didn’t break anything and was able to recuperate by the time the next train came in the advertised two minutes.

About 5 or 6 minutes later we arrive at the second stop. Are you keeping track of the time? Fortunately, I am the first one off of the train. There is some accounting principle involved: LIFO, Last in First out.

The train arrives at gate A 12. No sweat! I’ve still got about 12 minutes to get to A-2-D

Oh oh! You have to go DOWN an escalator to get to gate A-2. Surely D is around here someplace!

“Let me see your boarding pass!” She’s definitely not from Texas. Looks like a misplaced New Yorker.

“Get on the bus.”

BUS? BUS? I thought I was flying?

Bubba Billy Joe, the bus driver told us that he had a full tank of gas. I think that he was trying to make a joke.

It wasn’t. Not only was Bubba a frustrated NASCAR driver but I thought that he was going to drive us to Ft. Smith. I know that Texas is big, but I didn’t know that DFW was that big! We saw parts of the airport that I’m sure people in Dallas didn’t know existed.

We finally got to another building that had gates A-2 (A thru F). It is now 5 minutes past when my plane was supposed to leave for Ft. Smith, but the speaking gods were looking down on me and my plane was 20 minutes late leaving.

Please try not to book me thru Dallas in the future.

Your faithful traveler,
Jack

From SF to IN—Able to Retire 10 Years Early

“That price of $1 per square foot was the price that it sold for, not the rental rate!” Elizabeth McNeece told me as we drove by a good looking, solid 3 story building on a corner street on the main street in the downtown of Vincennes, IN. “And the roof is in very good shape.” McNeece owns a coffee shop (with a wi-fi hot spot) only a block away and is president of the downtown association. She and her husband Marc, who is president of the local chamber, were giving me a tour of the town prior to my talk at their annual chamber dinner.

“This is the Pantheon Theater which seated over 1,000 people. It could probably be bought for around $35,000 or $40,000. Red Skelton used to perform here.” He was born and raised here and is definitely a favorite son. Vincennes University is building a new $15 million Red Skelton Performing Arts Theater.

They showed me other incredible bargains in their historic downtown. Vincennes, built on the banks of the Wabash River, was the first capital of the Indiana territory and was the western front in the Revolutionary War, allowing the USA to become a much larger country than the original 13 colonies. They’ve got buildings that date to the 1730s. “We’ve got the largest historical district in the state with over 1200 homes in it,” Marc told me, “We had one couple from San Francisco who saw one of our old homes for sale on the internet for $90,000. They bought it, put another $90,000 into fixing it up, sold their home in California and moved here. They said that the savings allowed them to retire 10 years earlier than they thought they would be able to.” They are developing a mile and a half river walk that will connect the University to past the downtown area.

Vincennes is developing a plan to utilize their unique downtown and historical area, modeled after Paducah, KY another old river town. Paducah advertised their historical area to artists nationally, offering to loan them the funds to come in to fix up old buildings into studios and lofts. Within a couple of years they recruited in 44 new artists who invested over $11 million into the downtown area. Their tourism sales are up by $4 million. Makes sense! I don’t know why more towns like Paducah and Vincennes do something similar.

Vincennes is a sleeper. If my business was redoing old buildings, instead of industrial development, I’d be down there today buying buildings.

Importance of Newspaper’s Approach

“We decided we were going to move somewhere in Washington and so we got several daily newspapers for six months before we made the final decision,” was how Kathy McGee explained to me how they decided to move to Ferndale, WA (population 9,300) from Kansas City. She was a secretary and her husband was a utility company manager. She had recovered from a cancer scare and they decided to make a new start in a new area. They had visited WA on their honeymoon, liked the state and decided early on to move there.

“It was a leap of faith to make that move, but we’ve not had any regrets,” she told me as we flew from St. Louis to Dallas. “We lived in suburbia in a big 4 bedroom house. We sold it, held an auction and made the move. We found a bigger house on five acres out in the country.”

“The first night was kind of scary as we just couldn’t get used to the coyotes howling in the night.”

She does wood carvings, which she showed me on the plane ride. Each one takes about a week to do and has its own story. You will be able to see them on her new website, which is under construction (www.impressionsbykat.com). It was a nice, chance encounter on a usually boring plane ride.

Her story impressed upon me the importance of the local newspaper in helping people and companies in deciding if they will move there. I’ve seen a strong correlation with a newspaper that is constantly negative, focusing upon all the bad things happening in a town and low or negative growth for the community. Compare that to one that, while reporting on everything, seems to find good things happening in the community. That town seems to have a different approach and better growth prospects. Which one would you prefer to live in?

Most Millionaires/Capita to Down & Out—Can They Come Back?

“During the 1920s and 1930s we had more millionaires/capita than any other place in the entire country,” Dale Young II, Executive Director of the Okmulgee, OK Chamber of Commerce told me on my tour of the community. You could tell that something special happened here at one time when I drove thru the downtown. But other than a 1921 Vaudeville theatre restored into a movie theater, the Creek Council House Museum and a few other retrofitted buildings the downtown needs lots of help. It has lots of potential, probably more than I’ve seen, but it will require a great deal of effort.

Okmulgee boomed when oil was first discovered near there. Frank Phillips who founded Phillips Petroleum had his start there but moved to Bartlesville. Waite Phillips, brother of Frank, stayed in Okmulgee, made a fortune in oil and diversified into ranching, real estate and banking. He was one of many millionaires who made their homes in Okmulgee. However, he and the other millionaires’ children often moved off to greener pastures.

The town has a beautiful new $2 million swimming pool and a wonderful YMCA. The funds were raised locally and from some of the foundations of those original millionaires’ heirs who now live in other areas. It is great that they continue to give back to the town of their source of wealth.

Brandon Branch, a local restaurant owner told me, “We have typical small town problems but our main problem is that we are too close to Tulsa. People tend to go there to buy their big items, even cars. Over 40% of our workers go to Tulsa for work. The wages are better there but it costs over $3000/year for them to commute there.” Tulsa is only 40 miles away on a four lane highway. It is real tough to only be a bedroom community, especially when much of your retail dollars also end up in the “job magnet” town.

An old Phillips refinery, closed in the early 1980s, is being redeveloped into a first class industrial park at great cost by the Okmulgee Area Development Corporation with help from ConocoPhillips and the OK Department of Environmental Quality. I hope that they can use this new park to catapult Okmulgee back into a more prosperous future. With 24.1% of their population living below the poverty level, they need to get it going soon.

Manufacturing Clusters in OK

“From a job’s standpoint, manufacturing is the second most important sector in total number of jobs, and also has the highest average wage,” said Kathleen Miller, head of research for the Oklahoma Department of Commerce. She was talking about NE Oklahoma at the Rural Economic Summit that I talked at last week in Okmulgee, OK.

With 64,105 jobs at an average wage of $39,602 and over 60 firms that have more than 200 employees, the manufacturing sector is a key reason why NE Oklahoma is such a vibrant region. Recent passing of a Right To Work (RTW) Law, improving worker’s compensation legislation and increased emphasis in economic development all are poising Oklahoma and in particular NE Oklahoma for an increase in manufacturing in the state.

Oklahoma has identified and qualified a number of sites for mega projects, like auto assembly plants. I told the audience that while I didn’t really care for a mega project in a small town because they suddenly became the “800 pound gorilla” that can be wonderful when times are good, but create havoc when times turned bad. However, if Oklahoma could recruit a big project like an auto plant to Tulsa or Oklahoma City the spin-offs for the smaller towns could be tremendous. I cited the example of Mississippi which recruited in a Nissan plant that has resulted in over 20 smaller parts manufacturers locating in small towns all over the state.

Miller pointed out a number of manufacturing sub-clusters in the region including: Valve & Hose Fitting; Oil Field Equipment; Sporting Goods; Plastic Pipe; Plastic Film; Pumping Equipment; and Power Boiler. Keep your eye on NE OK.

From Old Industrial Plants to Multi Million Dollar Housing

Many people might look at a place like Bergen County and think that this is a place that has few worries. Here are some stats for the county compared to the national average: % with High School diploma 86.6% (80.4% in USA); Bachelor degree or greater 38.2% (24.4%); Per capita income $52,867 ($21,587); and Families below poverty level 5.7% (9.2%). But just like the poorest, most remote county in the USA, Bergen County has issues that keep people awake at night.

After my talk Kevin O’Connor, chair of the planning commission for Edgewater, NJ (one of the 70 towns in Bergen County), showed me around his community and talked about how Edgewater has transformed itself. As you could imagine from its name, Edgewater sits on a major waterway, the Hudson River. You can look across the river and see the Empire State Building. The town stretches for about 3 miles along the Hudson, but is only 2 to 3 blocks wide.

Historically Edgewater was a major industrial town with companies like Alcoa, Ford, Celetex and others having major manufacturing plants in the community. Their plants were built along the river affording them an easy and cheap shipping mode. The German, Irish and Polish immigrant workers lived near the plants, walking to work. All of that changed in the 1960s and 1970s when the manufacturers shut down their plants one after another. Edgewater was hit with a body blow and was on the ropes. Its population dwindled to around 3,000 people.

Fortunately, Edgewater’s location near Manhattan has allowed the town to reposition itself from an industrial town into a residential and retailing one. Many communities aren’t so fortunate. But having a view of a river like the Hudson and the skyline of Manhattan are wonderful vistas that command tremendous premiums in the residential marketplace. Multi-million dollar homes, condos and townhouses are situated on virtually all of the old industrial land in the town. Traffic issues today are one of the major concerns as the population has soared to over 8,000, but it has been a nice rebound for an old industrial town.

“Toto: This isn’t Kansas!”

“What can the most populous county in NJ have in common with the many, much smaller counties that I constantly visit,” I thought as I rode in the cab from the Newark airport to Tenafly, NJ. And even though it is called the Garden State, I didn’t see any farm fields in my hour ride. I’m sure that I passed thru at least a dozen towns or more on the ride, but there was no discernable difference from community to community as we sped by the towns.

I’m always a bit apprehensive when I go to larger, more metropolitan areas like this, wondering if my message will resonate. What I’ve always found and found out again this week in Bergen County, is that while the towns might be bigger and closer together the dreams, concerns and problems are much the same all over this great country of ours.

First though let me tell you about Bergen County. This northern most NJ County is right across the Hudson River from Manhattan. The 2003 census showed a population of 884,118, but the county’s rapid growth is quickly pushing it close to 1 million. Put another way, if Bergen County were a state, it would have a population greater than six states (DE, SD, ND, AL, VT and WY). Most surprising to me was that there are 70 municipalities in the 239 square miles of the county. Some are less than 1 square mile in size.

Most of the towns in Bergen County are in the 10,000 to 20,000 population range, not unlike a lot of towns that I visit. In talking with the mayors, council members, planners, chamber execs and others at my talk I found that they have many of the same questions that similarly sized towns have all over the county. Issues that they raised were: traffic concerns, brain drain, housing costs, taxes, schools, etc. If I’d closed my eyes and just listened to the questions I could have been in Kansas.

Revolutionary Jet Service

“It will revolutionize how we travel in this country,” is how Don Burr characterized his new start-up company, Pogo (www.flypogo.com), on a TV show I watched this morning. He was talking about the new company that he and Robert Crandall, former CEO of American Airlines, are starting with 150 Very Light Jets (VLJs). I wrote about the concept in BoomtownUSA, calling it one of the new technologies that would accelerate the move to the agurbs®.

Their planes will carry four passengers along with the two pilots, flying at around 400 mph. Burr expects to price the service at $6/mile for peak times and ½ of that amount for off-peak. Their ideal client will be flying around 400 to 500 miles. Their scheduling will be done in real-time via the internet, scheduling flights all over the country.

As an example of the advantages of their service, if I was traveling to Bentonville, AR, the distance driving is 435 miles or about 7 hours drive time from my home in Effingham, IL. If I was going to fly commercially it would take about 4 hours from the time I left home. With Pogo, the distance is 350 miles (you fly directly there), taking about 1 hour and costing about $500/person. Granted, the cost is a bit more than the alternatives, but what is your time worth? At around $50/hour, Pogo becomes a very viable alternative way to travel.

Sculpture Park Draw

This incredible sculpture park appeared in front of me as I was driving on one of the many back roads that I try to take as I am traveling around the country. I love to explore, finding out-of-the-way spots. The diversity and uniqueness of our country is incredible.

I had to stop, even though I was tight on time, and am glad that I did. I found the Franconia Sculpture Park (www.franconia.org) in Shafer, MN to have a wide variety of sculptures from various artists. The Park was founded in 1996 as a place where artists can exhibit their work, work on developing new pieces and meet other artists. There are over 75 sculptures on display on a rotating basis from local, national and international artists. They also host up to 25 visiting artists and provide internships for up to 15 new artists. Several symposiums, workshops and art festivals are held during the summer.

Why don’t other communities try to do something similar? Wouldn’t this be a great tourist draw to add to your arsenal?

Banding Together for Success

When the census shows the biggest town in a region is less than 6,000 economic development can sometimes be daunting, especially in the face of all of the much bigger organizations in the arena. And that is why it is always encouraging to see rural communities banding together, realizing that what is good for one town is good for the others in the long run.

I was at the Northern Technology Initiative’s Annual Meeting, a six county area to the north of the Twin Cities in MN. It is a group that brings together the local EDs, with the educators, area foundations, utility company EDs, and local Mille Lacs Band of Ojibwe’s efforts to reach out in the ED area.

One of the more interesting presentations at the conference was an effort to determine local content of area companies with the purpose of increasing local share and determining commonalities of content that could encourage new business development. It is a process that can only be done on a regional basis. If successfully implemented, it has tremendous potential for enterprise and job creation.

After the conference I toured several cities, including Cambridge, Pine City (one of my agurbs®), Mora and Hinckley. Cambridge is developing new industrial parks. Pine City, which sits on the picturesque Cross Lake and Snake River, has a wonderful downtown park and has innovatively converted an old coke factory, creamery and car dealership into condos and town homes on the banks of the river. Mora, a sister city of Mora, Sweden, holds the annual Vasaloppet Cross Country Ski Race (2nd largest in the USA) every year. A local in Hinckley is building the town a paved airport! It was a great tour! I hope to be back soon.

Transforming Regular Dave into Famous Dave

"He was just Regular Dave until he came here" is how Martin Jennings, described Dave Anderson’s first endeavor at running a BBQ restaurant to me this week. Jennings is Director of Development of the Mille Lacs Band of Ojibwe Indians, which gave (now Famous) Dave a shot at their Grand Casino in Hinckley, MN. “He set up a circus tent and put picnic tables up and tested his idea for a BBQ place right here. It eventually led to Famous Dave’s BBQ Restaurants.” Today there are over 100 Dave’s Famous BBQs.

Dave is one of the 3,500 members of the Mille Lacs Band and I was intrigued with a new spirit of entrepreneurism that is bubbling up here. Jennings explained to me of how the Band’s Corporate Commission is reaching out to Band members, “We provide technical assistance; an equity like loan program; and micro, macro and expansion loans. We are reaching down to the high school and grade school level with entrepreneurial training. This summer we are setting up a business camp for the kids.”

He told me of other entrepreneurial successes from the Band. “Bob Dorr is doing government security work and has over 1000 employees. We’ve got 6 to 9 who are building contractors. There is a hair salon, a gallery, coffee shop, etc.”

I stopped by to talk with Carole Higgins who runs the hair salon. She told me, “In 1979 the tribe sent me thru beauty school and I started my business in my home. In the late 80s I moved to Las Vegas to work at Ballys and Circus-Circus, so that I could learn some things when the casino opened here. I’ve had my shop with several employees in the casino here since I opened in 1998.”

Entrepreneurism isn’t overwhelmingly common here yet. There aren’t any second or third generation entrepreneurs who can pass down successful hints on the subject. But with Jennings and the Band pushing and winning examples like Dave Anderson, Bob Dorr, Carole Higgins and others it is a movement that will grow. And, it will transform Hinckley and other communities.

Down & Out to be Featured in Southern Living

The roller coaster ride of some small towns makes some guys shy, while others like Elk City, OK pick up the pieces and find new ways to remake their communities. Elk City is a town that is located in western Oklahoma, right along I 40. Marilyn Williams, Head of City License and Permits for Elk City told me, “We are a small city that went from a small farm town, to a town busting at the seams when the oil boom of the late 1970’s hit, to a depressed economy when the boom went bust in the mid 80’s. It took several long years of hard focused work to get Elk City to where it is today. We have been fortunate to have city leaders that have always planned and set goals that focused on what would be best for Elk City."

The city has recently developed an industrial park with access to the interstate and railroad. With Oklahoma’s new Right to Work Law, I think that towns like Elk City are poised for excellent job creation possibilities.

One rather unique “quality of life” feature of Elk City is their preponderance of museums. They opened their first one in 1967 and have grown their museum complex into a tourist attraction right next to their major park. The town features an Old Town Museum; Old Town, Farm & Ranch Museum, National Route 66 Museum, and National Route 66 Transportation Museum. Southern Living Magazine featured the Route 66 Museum in their April, 2005 issue.

Oklahoma Dreaming

“OKLAHOMA DREAMING…may not be the actual name of the Beach Boys song but some younger Californians may be doing just that. The San Diego Transcript reported yesterday that most Californians make less than half of what they need to buy the average California home. The median home price of $488,600 requires an annual income of $113,920 to qualify for the standard mortgage, and the vast majority of Californians make well less than half that figure. So who is buying the costly homes? Repeat buyers using their new found equity to trade up. For young families seeking their first home, it can quickly become a broken dream and many such people are beginning to look elsewhere for affordable housing. For Oklahoma, which has long waited for its youth to return, this is called o-p-p-o-r-t-u-n-i-t-y.” Reprinted from the Ponca City Development Authority Weekly Update May 6, 2005.

I was at NAIOP’s semi-annual meeting last week where the urbanist Joel Kotkin talked about the cost of housing in San Francisco. The medium priced house there is $900,000 and only 10% of their workers can afford to buy a house. It is an unsustainable market condition.

An additional “quality of life” factor is drive times. In Los Angeles the average rush hour commute is at 35 mph and even in San Bernardino it is only 42 mph. Hours stuck in traffic average 58 hours/year in LA and 35 hours/year in San Bernardino.

If you have a list of former residents (high school and college alums), you should be marketing to them if they live in CA. Remind them of how much house they can buy in your community compared to what they could get in selling out in lofty CA.

Rural Tax Advantage

Rural areas have a big advantage when compared to urban areas from a property tax standpoint. The 50 State Property Tax Comparison Study from the Illinois Tax Foundation (January, 2005—Data for 2004) shows the difference.

For a $150,000 home the average tax is $2,130 in the urban setting compared to $1,954 in a rural one. In Oklahoma, where I’m spending a lot of time in May, the difference is even greater. In Oklahoma City the tax is $1,721 compared to only $1,080 in Hollis, OK.

For a commercial building ($1 million value with $200,000 of fixtures) the national average is $24,562 in the urban area compared to $19,722 in the rural area. Again Oklahoma is well below the national averages with that $1 million building paying $15,319 in Oklahoma City and only $9,373 in Hollis.

For an industrial building ($1 million building, $500k Machinery, $400k Inventories and $100k Fixtures) the average is $32,722 in the urban areas compared to $26,089 in the rural. Again in Oklahoma, their rates are below the national averages with Oklahoma City at $27,669 and Hollis at $15,469.

Giving Back Again and Again

One of the wonderful attributes of many small town people who I meet is that they don’t forget from where they came. And, they tend to be generous in giving back. I got the following email today from Deb Dragseth of Dickinson State in ND today about such an act.

“Jack,

Jerome Strom, our Alumnus from California who sponsors the Entrepreneurship Conference every year (this was the 5th year) was very, very impressed with "his" conference (he had never been able to come before). The speakers (you and Scott), the audience (a record-breaking 450), the Western Edge Tour, the Manufacturer's Roundtable. All of it.

Anyway, last night, he announced that he is giving $1 million to the U. to help us pursue the Entrepreneurship Initiative. He told Dr. Vickers that the thing that impressed him was the display of Entrepreneurial spirit here at DSU. Isn't that awesome?

Faith, luck, hope, vision? I don't know which . . . or maybe it was all four, but we are well on our way!

Thanks for all that you did. You were certainly a central part of the conference and the energy that was generated here that week.

-Debora”

It made my day!

A Long Drive or Driven to Help Their Small Town?

When a chain store’s bankruptcy causes your only general clothing store to close, what would you do? If you’re like most people, you just drive the 20, 30 or 50 miles to the nearest town to do your shopping. But the people of Powell, WY (population 5,500) aren’t “like most people.” They didn’t like having to drive the 25 miles to the Wal-Mart in Cody or the 94 miles to bigger department stores in Billings.

They decided to do something about the 2001 store closing. They sold 800 shares at $500 a share, low enough to build widespread community support, in the Mercantile which started in 7,500 sf but has grown to 10,000 sf since its August, 2002 opening. First year sales of $500,000 were well ahead of projections and have been growing ever since.

Other communities have taken a similar approach including Ely, NV; Malta, MT; Glendive, MT; and Worland, WY. It a great example of how local people, working together can turn a bad situation into new opportunities for their small town.

Denver Back Home to ND

The company name, GriZella (http://www.grizella.com), comes from an alien race once employed by Star Trek’s Captain Picard as a third party mediator. Its market is software for the trucking industry to help match up loads and trucks online.

The company started in Denver in 2001, but when co-founder Mark Draeb brought his partners to his small town of Hebron, ND (population 900) they loved the community and decided to move to the tiny town. All of the founders had been involved in previous high tech start-ups, but were looking for a place with a great quality of life. Draeb said, “I had a great childhood here. I think North Dakota is a great place to live.”

The company was the winner of the 2003 Governor’s Choice for Economic Development Award. They currently have six employees with plans to grow to 20.

It’s another great example of an entrepreneur moving back home and creating economic development in their hometown.

Land Rush Town

Perry, OK (population 5,400) is a “land rush” town, having been founded by history’s largest land rush on September 16, 1893. Wanting to escape the harsh winters of Maple Leaf, MN, Carl Frederick Malzahn soon moved to Perry and started the Malzahn Blacksmith and Machine Shop. His sons Gustave and Charles took over the business in 1913 when their father passed away.

Charles son, Ed Malzahn, invented the world famous Ditch Witch, the first compact trenching machine in 1949. Malzahn, now 83, still lives in Perry and has been making the machines there ever since. His granddaughter Tiffany Sewell-Howard, CEO of The Charles Machine Works, is the 5th generation of Malzahns to live and work in Perry.

Today the company employs 1,200 in the town, has helped other entrepreneurs to start related businesses (that cluster thing) and given back greatly to the community. I visited the Heritage Center, which includes a museum to the Ditch Witch and a community theater. Companies like Charles make such a big impact upon small towns like Perry.

Disneyworld on the Kansas Plains?

Nita Jones excitedly showed me around her hometown. She gushed about the people who had moved to the community and businesses they started. We ate breakfast at the Green Door Restaurant, a legendary main street diner and had lunch at the Rack Shack Barbeque, a brand new one just west of town.

We started at the St. Charles one room schoolhouse, which also serves as the Chamber’s office, visited Bill Kurtis’ Red Buffalo Ranch (if you go be sure to see Prairehenge) and ended with a walking tour of downtown Sedan.

I was amazed by the number of entrepreneurs who had developed businesses in the downtown area. They included Kurtis’ Red Buffalo Gift Shop and Art on the Prairie Gallery. But the shops included several antique stores, a quilt shop, a gift and floral shop, a hunting equipment store, a stained glass store, hardware store, hunting guide service and several others. Kurtis has plans for an Art’s College, hoping to turn Sedan into an artist colony.

One of my favorite stores was the Lost Sugar Mine Confectionary, where I stocked up for the rest of my 400 mile trip that day. In the back of Alyce Youngblood’s store is an animated sugar mine tour that puts Disney’s Small World ride to shame. Alyce is a retired college professor who moved to Sedan from Tyler, TX. She was one of many who I met who moved here from around the country and have started or bought businesses.

The community recently raised $1.3 million to redo the old Bradford Hotel, a 32 room three story hotel that has been closed for 40 years. Beginning in 2006, Sedan will now be able to accommodate overnight bus tours. The 82 buses that visited last year were all day trippers. They hope to expand their bus tours and other visitors with the refurbished Bradford. Nita walked me thru the numbers of each bus, calculating that each busload of visitors spends about $3000, but would triple that amount if they stayed overnight.

Sedan is on a path of greater things. Keep your eye on them.

Bill Kurtis Comes Back Home

Within 10 years of their mid 80s start down the tourism road; Sedan had built up a tourist trade of around 30,000 people/year with their Yellow Brick Road attraction and the Emmett Kelly Museum, located in the former 1885 Sedan Opera House. Kelly was born in Sedan in 1898. The efforts of a handful of local citizens were starting to pay small dividends for tiny Sedan.

Their big break came in 1996 when Bill Kurtis of television journalism fame bought a large ranch, renaming it the Red Buffalo Ranch, a mile from Sedan after visiting his parents in nearby Independence and driving through the Flint Hills near the town. Kurtis said that the scenery reminded him of the plains of Africa, one of his favorite places.

The efforts of the SOS group to increase tourism and jobs in Sedan impressed Kurtis who began buying older, run-down buildings in the downtown and working with the group to increase tourism not only in Sedan but on more of a regional basis. Kurtis’ vision was not to just bring tourists into one town for a couple of hours but to make the region a destination location by combining tourist attractions regionally. It’s a strategy that too many towns don’t step back and look at like Kurtis.

Today Kurtis has acquired over 10,000 acres of ranchland including land that his parents and grandparents owned at one time. One of his holdings is the 3,000 acre setting that inspired Laura Ingalls Wilder to write the book, later made into a popular TV series, Little House on the Prairie.

Kurtis has purchased 14 buildings in Sedan’s downtown, fixed them up and rented them out for $1 for the first year to allow new entrepreneurs a chance to get a start in this burgeoning tourist town. He’s doing the same thing in Coffeyville and Independence, KS and Bartlesville and Pawhuska, OK. He’s investing millions of dollars into the region, brought great publicity to the region and given back greatly to his hometown region.

And, it might never have happened if a dozen local citizens in Sedan hadn’t sent out an SOS (Save Our Sedan) in 1988. Tomorrow, what you’ll find in Sedan.

Yellow Brick Road to Success

I toured Sedan, KS with Jeannie Walker, the Tin Man and Nita Jones, Dorothy, both from the Wizard of Oz. They were part of a group that called itself SOS, which stood for Save Our Sedan. And they saved their hometown first on the back of the Yellow Brick Road and later on other attractions. Theirs is a great story.

Sedan, KS (population 1,386) is the county seat for Chautauqua County, which only has a population of 4270. The county is roughly 30 x 40 miles so there are less than 4 people/square mile. It is 40 miles to a town of even 10,000 people. Chautauqua is a very rural county!

Its economy was built upon ranching and later oil. In the mid 1980s both collapsed. The year 1988 was probably the low point, when the Sedan State Bank, a 75 year old institution in the region, collapsed and 13 businesses on the downtown block closed their doors. Numerous ranches were foreclosed upon. It was a bleak period for the tiny town.

In many towns going thru these type of problems, people would have thrown up their hands, expressed frustration and then sat back to slowly watch their town die a slow, painful death. I’ve seen too many in my travels that have taken that approach. But, Sedan wasn’t like other towns, or at least it wasn’t because of a dozen local people. Jeannie, Nita, the local doctor and nine other locals started SOS—Save Our Sedan. They didn’t know what they were going to do, but they just knew that they had to do something. Jeane McCann, one of the dozen, watched the Wizard of Oz with her grandchildren and west to the SOS meeting with an idea of doing a Yellow Brick Road. The dozen talked with the city council and other people. Most thought it was a bad idea. There were after all similar roads in Liberal, KS and in Judy Garland’s hometown in NJ. But the SOS group persisted and got the city council to agree to let them try it at their November, 1988 meeting. What did they have to lose?

The city council still wasn’t too sure about this idea of a Yellow Brick Road in Sedan, so they made the group start their road in the middle of the block, not on one of the 2 ends of Main Street. Jeannie told me, “We thought that if we sold 100 to 200 bricks, it would be fantastic. In the first week we sold 400 at $10/brick. Now we sell them for $25/brick.” And from that start, they’ve now “sold 11,148 bricks (to people from every state in the USA and 28 foreign countries), growing the yellow brick road to 8 blocks in length, the world’s longest,” said Nita as she took my $25 so that I could be number 11,149.

And, from that start Sedan has slowly rebuilt itself and its economy. More on that tomorrow.

Oklahoma’s Regional Focus

I was in Chickasha, OK last week for a SW OK Rural Economic Development Summit. I was able to give my BoomtownUSA talk and my new talk entitled: Hometown Entrepreneurs: Your New Paradigm Shift in Economic Development. Oklahoma is a hotbed of economic activity since passage of their hard fought Right to Work Law and was coming to grips with workmen’s comp costs in the legislature when I was there. Secretary of Commerce and Tourism Kathryn Taylor has been pushing economic development in the state strongly for the past 2 years when she was appointed Secretary, coming from the private sector, always a strong combination.

Oklahoma is pushing regional initiatives, even providing financial incentives to communities that band together into regional efforts. We talked at the conference about the common problem of trying to put communities together into regional groups primarily because “we play each other on Friday nights.” It is unfortunate that this “Friday night” attitude spills over into too many towns. If they would only realize that they have more in common with area towns and that by banding together they can accomplish much more for everyone.

Secretary Taylor is on the right track. She uses a great analogy of a pie, talking about how to grow the pie bigger rather than worrying about your own small slice of the pie.

World Class Manufacturer’s Challenges

This past week I toured Excel Industries, Inc., a world class manufacturer of turf equipment. This plant makes zero turn mowers that are shipped all over the world from Hesston, KS.

The first thing I saw as I entered the plant were state of the art laser fabricating machines, which take a sheet of heavy gauge steel and cuts it exactly into various sizes. The computer program that controls the operation minimizes the amount of scrap steel. Excel recently installed a new 10-stage powder coat paint system, which is also highly automated. Their bottleneck at the present time is in their welding department, where they hire 45 welders. They could use another 10, but can’t find them, despite the fact that welders make in excess of $30,000/year.

The Mullet brothers, majority owners of Excel, have been able to continually increase productivity in their plant thru innovations and new tooling. In the 1970s they produced $25,000 of sales for each employee. Today they are doing over $300,000/employee. They are doing 10 times more in sales volume with 100 fewer employees.

These productivity gains are why I continue to think that we as a country have a wonderful future in manufacturing. We continually are innovating and developing new ways of producing products. Because we can do it with fewer people (the productivity miracle), we are able to pay those producers more each year and it is why the manufacturing sector has some of the highest paying jobs in many communities.

The downside of being a USA manufacturer? It didn’t take long for me to guess what a major problem for them might be and the Mullets quickly expressed their frustration with our present legal system. Bob Mullet told me, “The contingency fee system raises legal costs for everyone. When we get a claim, we settle early if we can or we find that the meter runs up very high on these cases.”

One of their frustrations with these product liability claims is that while governmental sales account for only about 5% of their overall sales, it accounts for over 90% of their claims. Why would there be this discrepancy? The product is the same and you would have to assume that the skill set to mow a lawn is similar from the private to public sector. The only explanation I could come up with is that too many governmental employees are “gaming the system”, trying to qualify for workers compensation. It is a shame and raises costs for all of us in the USA.

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 (www.mowforvictorytour.com), 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.

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!

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.

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?

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.”

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.”

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.

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.

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.

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 (www.dakotacabinquilts.com) 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.

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.

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.

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.

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.

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.”

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?

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.

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.”

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.