Fighting for Our Place in a Global Economy

Liz Fedor is a former Minnesota journalist and current foundation staff member who has written extensively about manufacturing, housing, agriculture, and other key rural issues.

IDEA Competition
Northwest Minnesota Foundation

IDEA Competition

Regional Partnership Program

Successful businesses start with hard work, the right connections, and a flash of inspiration. The purpose of northwest Minnesota’s IDEA Competition is to grow the region’s economy by outfitting the next generation of homegrown innovators for success in a global marketplace. IDEA (an acronym for Ingenuity Drives Entrepreneur Acceleration) provides an annual opportunity for competition among entrepreneurs, in search of the most promising breakthrough ideas. After winners are selected, the program supports them with assistance to reach product commercialization.

A network of service providers coordinates technical assistance that includes business training, individual counseling, market feasibility research, business plan development, and intellectual property information. The intensive specialized technical assistance helps accelerate their growth while providing capital and opportunities for them to succeed. Promising innovators are also celebrated for their accomplishments at a public event. In its first three years, the IDEA Competition has attracted well over $1 million in program support from project partners and other funders, including Northwest Minnesota Foundation.

photographer | Joe Rossi

Job security can feel like a pipe dream in a changing economy.

The Great Recession has acted as a “Great Equalizer” — triggering huge job cuts among white collar and blue collar workers alike. While the pain of these job cuts is palpable, the people of Minnesota are not victims. They will fight to build good companies that can employ them and thrive in a global economy. In this, the Minnesota Initiative Foundations will be called upon once again to serve as incubators for job growth. It will be analogous to the way they assumed leadership in the mid-1980s when fear, anger, and uncertainty swept across Minnesota’s countryside. Debt-laden farmers were losing the land that had been cherished in their families for generations. At the same time, pink slips were being handed to veteran workers toiling in Minnesota’s mines and forests.

While some farmers were swarming the Minnesota State Capitol and pressing for a moratorium on farm foreclosures, others were looking at the harsh financial realities and packing up their families. They were hoping for a brighter future in bigger cities. Mining families also were feeling forced to leave their beloved Iron Range towns behind. The exodus from rural Minnesota alarmed the leaders of The McKnight Foundation in the Twin Cities. They were worried about Minnesota splitting into a two-tier economy. Minnesota, a state in which residents pride themselves on their egalitarian values, suddenly held the potential to disintegrate into geographic pockets of wealth and poverty.

McKnight responded to the crisis in Minnesota’s natural resources economy by creating six regional Minnesota Initiative Foundations, and it gave local leaders the power to decide how to spend McKnight’s money to alleviate human suffering and build a more sound economy.

A job is the best anti-poverty weapon, so the nascent regional foundations decided to play a direct role in job creation. They formed partnerships with local bankers, entrepreneurs, and company leaders. The six regional foundations provide gap financing, which over time has yielded thousands of jobs across the state.

It was unorthodox for philanthropic organizations to jump into the loan business in a major fashion with for-profit partners. But it was critically important to diversify the economic base of Minnesota’s rural regions. In their drive to develop a rural economy that could support future generations, the Minnesota Initiative Foundations’ leaders epitomized what the late John W. Gardner called “tough-minded optimism.” In his book On Leadership, the nationally regarded educator and foundation president wrote, “Leaders must instill in their people a hard-bitten morale that mixes our natural American optimism with a measure of realism. To sustain hope one need not blind oneself to reality.”

When the Minnesota Initiative Foundations were conceived in 1986, the state’s agriculture and mining sectors were badly battered. But a quick and massive shift to manufacturing and service sector jobs would be problematic because those rural regions would be far from consumer markets. Leaders of each of the Minnesota Initiative Foundations talked to their peers in the business community and public and nonprofit sectors to carve out development strategies that made sense for their unique regions. Over the years, the Minnesota Initiative Foundations built their financial capital and partnerships with others who wanted to strengthen the regional economies.Twenty-five years later, the fruits of those actions are visible across Minnesota’s distinct regions.

Gemini Custom Apparel in Grand Rapids is selling products in markets as diverse as Brazil and the Czech Republic with the help of a working capital loan from the Northland Foundation. As credit markets dried up in recent years, the Duluth-based foundation provided financing so Gemini could maximize its opportunities to make clothes for people who fish, race cars, and take part in other sports. The neighboring Northwest Minnesota Foundation, headquartered in Bemidji, gave an operating loan to LaValley Industries. LaValley makes products for the oil and gas pipeline industry that reduce people’s contact with the hazards of pipe handling. The company provides local jobs and buys goods from area vendors — and is seeking space to expand. While the Minnesota Initiative Foundations have spurred job creation through business loans, they have also invested in workforce training and development. The Initiative Foundation in Little Falls supports efforts to help people obtain National Career Readiness Certification that will enhance their ability to land jobs.

In Owatonna, the Southern Minnesota Initiative Foundation leverages its resources to produce economic vitality through bio-business initiatives. This strategy capitalizes on the region’s strengths in the agricultural, medical, and renewable energy fields. For example, Bio-Plastic Solutions in Blooming Prairie is doing nationally prominent work by using renewable polymers to manufacture plastic products that support a healthier indoor environment. While many business loans from the Minnesota Initiative Foundations have helped develop new enterprises, the foundations have not turned their backs on long-standing businesses. In the northwest, St. Hilaire Seed Company secured a loan to expand and now supplies edible pinto beans to a worldwide market. In the northeast, Northstar Aerospace was approved for a loan to help it diversify its product lines after a major customer scaled back its business.

In the center of the state, the boat manufacturing industry in Little Falls was severely hit by the economic slowdown as many consumers slashed their spending on leisure goods. The Initiative Foundation demonstrated leadership in assembling a financing package to help a boat manufacturer weather the storm, save jobs, and adjust to a slowly recovering economy. In Fergus Falls, West Central Initiative has provided about 850 business loans, which have been used to create or retain over 6,000 jobs. West Central Initiative also filled a leadership void by preparing an ambitious plan that allowed it to reestablish a development district under the federal Economic Development Administration. The West Central Initiative operates a revolving loan fund and has taken other steps to bring outside resources to its nine-county region.

In their efforts to stimulate job creation, the Minnesota Initiative Foundations’ staff members cannot be accused of holing up in their offices and waiting for people with good ideas to come to them. The Southwest Initiative Foundation, based in Hutchinson, exemplifies this through its Entrepreneurship Initiative, providing education, youth entrepreneurship programs, and financing across the 18 counties it serves. Its one-on-one business consultations and classes are offered at the grassroots level, and are available in cities such as Luverne, Ortonville, Slayton, Benson, and Marshall. The problem-solving skills that are often needed on the farm or in small towns foster an entrepreneurial mindset. The snowmobile industry and giant 3M Co. both have their roots in northern Minnesota. The Minnesota Initiative Foundations have stepped forward to serve as partners for today’s entrepreneurs.

As they’ve grown in resources and sophistication over the past 25 years, the Minnesota Initiative Foundations have evolved into significant players that complement the work of the private and public sectors. Collectively, they have made more than 3,500 business loans, which saved or created nearly 40,000 jobs. As the United States climbs out of a brutal recession, the Minnesota Initiative Foundations are not standing idly by. Rather, they are deploying their financial resources and social capital to ensure that rural Minnesota has a place at the table in the 21st century economy.

Dynamic Structural Steel
Northland Foundation

Dynamic Structural Steel

Gap Financing Recipient

The main street through Proctor — population near 2,800 — boasts a pizzeria, a few gas stations, a nine-hole golf course, and just two stoplights. Visitors might not guess that just south of one of those stoplights, housed within the hulk of the former DM&IR Railway repair shop, is a young company that is dynamic in every sense of the word. A steady stream of semis come and go from Dynamic Structural Steel as multiple shifts clock in and out. Mammoth steel beams traverse a cavernous work bay. And Jason Erickson, its 30-something president, teleconferences with customers throughout the U.S.

The innovative use of technology has enabled this northeast Minnesota upstart to compete nationally. Design computers are networked with monitors on the plant floor, so everyone from engineers to welders works from the same set of specifications. Each piece of steel is given its own barcode, allowing project managers to track progress instantaneously. Highly sophisticated software and manufacturing systems and equipment are matched with a skilled labor team that embodies Minnesota’s work ethic. This winning combination has elevated average output to 50 tons of finished product per day. With gap financing from Northland and others, Dynamic has purchased a third punching and thermal cutting machine to help keep pace with the increasing demand.

photographer | Joe Rossi

Lind-Rite Precision, Inc.
West Central Initiative

Lind-Rite Precision, Inc.

Workforce 2020 Program Participant

At Lind-Rite Precision, Inc., in Osakis, employees gather at a whiteboard every morning to go over the statistics. In minute detail,
workers see the number of projects on back order, projects completed, the number of items produced each day, labor costs per item,
and daily and monthly profits. A few months earlier, this degree of transparency didn’t exist at the machine shop; now, it’s one of the tools Lind-Rite staff have learned to use through West Central Initiative’s Workforce 2020 training program. The program has helped the manufacturer decrease back orders, increase productivity, and ultimately, profitability. Lind-Rite works with WCI partner Enterprise Minnesota, a nonprofit business consulting program, to learn how to streamline processes and encourage personal accountability.  After just a few short months, the progress has been clear — and everyone in the company can see that progress on the whiteboard.

Since 1992, West Central Initiative has supported the retraining of the manufacturing workforce in west central Minnesota through Workforce 2020. The goal of the program is better wages for a skilled workforce, and in the end, better job security as manufacturers become increasingly more profitable. West Central Initiative partners with Enterprise Minnesota to provide training on innovative, cutting-edge technologies not currently available in the region, so workers can increase their skills while manufacturers learn leaner, more efficient methods of production.

photographer | Gregory Harp