The New Rural North Dakota

1
The New Rural North Dakota

• Winter Farm Bureau Meeting
• 1 February 2003
• Dr. Roderic Hewlett, Dean Minot State
  University College of Business and Graduate School

2
The Context

• Federal and state governments are not the
  catalysts for our growth.
• Government can help through crafted business
  and farmer friendly policies.
• Engaged and aware citizens will set the course
  for development as they have for over 200 years
  in America.
• More commodity production lower prices!! Law
  of supply and demand.

3
Precursors for Growth

• Certified greenfield sites conforming to
  industry standards including rail (economic
  container), road, and air transport.
• Available workforce.
• Favorable business environment and
  productivity/cost conditions.
• Factor or market proximity.
• Supporting industrial infrastructure.
• Schools (K-12, vocational, and higher education)
  that support QOL, retention/recruitment efforts,
  and IRD support.
• Housing and/or land availability.
• QOL issues (safety, cultural, generational).
• Affordable and available utilities.

4
What We Should Do (Go Vertical)

• The United States is the largest consumer and
  producer of processed food products in the world.
  In 1997 total U.S. food shipments were valued
  at 481 billion out of a 9 trillion economy.
• According to the US Department of Commerce, the
  processed food and beverage industry accounts for
  greater than 1/6th (gt 17) of the countrys
  industrial output, making the processed food and
  beverage industry sector the nations largest
  manufacturing sector.
• Other states and localities are providing
  incentives, actively recruiting food and beverage
  processors, and establishing business climates
  supportive to this huge industrial sector.
  Heres a brief look at what other
  states/localities are doing

5
Industrial Selection Criteria

• With all of the costs and liabilities involved in
  food processing, site selectors put communities
  in consideration for recommendation under the
  microscope when it comes to evaluating sites for
  expansion or relocation.
• They look for communities that are specifically
  targeting food processors since they are often
  willing to work harder to meet corporate needs.
• They screen for workforce availability and
  training levels to verify adequacy.
• Selectors put priority on considering education
  and vocational training opportunities available
  to support their corporate human capital
  development needs.
• Other highly important selection factors include
• Energy costs.
• Environmental regulations.
• Quality of the transportation and distribution
  network available.

6
What Is Iowa Doing?

• Cut in personal income tax and elimination of the
  property tax on machinery and equipment (ME).
• Enterprise zones that make new business
  investment more profitable.
• State Regulatory Assistance Program that helps
  businesses expedites permitting with Iowas
  regulatory agencies.
• Iowa offers employment screening, assessment, and
  testing services to help companies select job
  applicants. Additionally, Iowa provides special
  training reimbursements for initial hires.
• Iowa offers employment screening, assessment, and
  testing services to help companies select job
  applicants. Additionally, Iowa provides special
  training reimbursements for initial hires.
• North Dakota has similar programs

7
Other Iowa Advantages

• Iowa is in the heart of an eight-state market of
  nearly 912,000 businesses and 35.3 million people
  with a total of 902 billion in personal income.
  Interstate 35 and 80 intersect in the center of
  the state Interstate 380 links Iowa City, Cedar
  Rapids and Waterloo and Interstate 29 serves as
  a direct route to Kansas City and the Dakotas.
• Iowa has excellent rail and air connections to
  all major markets and is bordered on the east and
  west by the Mississippi and Missouri Rivers,
  navigable to the Gulf of Mexico.
• Iowas cost of doing business is ranked as fifth
  lowest in the U.S. in the Relative Cost of Doing
  Business Index put out by Regional Financial
  Associates.
• Iowa is ranked among the top five states in the
  nation in education and according to the Survey
  of Manufacturers, Iowa workers provide 5.72 in
  value-added labor per dollar of wages, compared
  to a nation-wide average of 5.39.
• The first two items above are natural advantages
  on North Dakota

8
Storm Lake, Iowa

• Storm Lake, Iowa has taken advantage of the state
  advantages and leveraged them to create a
  prospering local food and animal processing
  industry. The city of 10,000 is home to two
  major food processing plants
• IBP, a subsidiary of Tyson, processes over 10,000
  hogs daily.
• Bil-Mar, a subsidiary of Sara Lee, processes over
  20,000 turkeys daily.
• A state-of-the-art egg processing plant
  approximately 15 miles to the north of Storm Lake
  is under construction, and will house
  approximately four million hens upon completion.
  
• Other manufacturing concerns in the area are
  involved in grain bin manufacturing, pump
  manufacturing, feed supplement processing, and
  specialized metal fabrication
• Storm Lake has excellent recreational
  opportunities, quality education system, and
  proximity to Des Moines for the arts and
  entertainment.
• The largest wind farm is located in part of Buena
  Vista County (Storm Lakes county) consisting of
  259 wind turbines generating enough power to
  serve 71,000 average Midwestern households.
• The city is also home to Buena Vista University.

9
Creston, Iowa

• Creston, Iowa, Union County is developing land to
  suit a food processing facility. Within the park
  is a prime site of 18.7 acres located on a
  hard-surface concrete road, with readily
  accessible electrical and gas service, as well as
  water and sewer.
• A railroad spur comes within 150 feed of the
  property and can be extended.
• Site is conveniently located nearby Highway 34
  and is located within a business enterprise zone,
  meaning significant tax advantages on top of
  those available statewide.
• Creston is served by the main line of the
  Burlington Northern-Santa Fe Railroad as well as
  Amtrak. The rail center of southwest Iowa
  features a major switchyard and terminal.
  Improved hard surfaced highways (no. 25 and 34)
  intersect at Creston, and I-80 and 35 are within
  a 30 minute drive. Creston Municipal Airport has
  a general aviation class 1 rating and features a
  4,910-foot hard surfaced runway.
• Local incentives specific to this region of Iowa
  include Southwestern Community Colleges ability
  to provide tax-aided training opportunities to
  new or expanding industry. Considerable leeway
  exists for tailoring the colleges efforts to the
  needs of the employer.
• The Southern Iowa Council of Governments can
  provide low interest or forgivable loans for
  these and other activities (this is where our
  200 million bond issue will provide an
  opportunity for NW North Dakota Council to
  provide considerable assistance in business
  recruitment).
• Union County also has comprehensive tax abatement
  programs for commercial, industrial, and
  agricultural developments.

10
Centralia, Illinois

• Centralia, IL (60 miles east of St. Louis, MO).
• Gilster-Mary Lee Corporation (200,000 sq. ft.
  structure) produces Duncan-Hines cake mix and
  frosting.
• Monsanto-owned soybean-conditioning plant is also
  located in Centralia (140,000 sq. ft. plant
  relocated to Centralia).
• Another firm presently located in Centralia is
  Graphic Packaging Corporation. Although not
  directly engaged in the food processing business,
  this plant produces the packaging for several
  well-known food items. During the past year,
  Graphic Packaging bought new capital equipment
  and increased payroll by 20 workers.
• Centralia is located in a corn and soybean rich
  region of the lower Midwest with abundant
  supplies of water, energy, and labor.
• Centralia officials are presently engaged in
  confidential negotiations to finalize the
  relocation of another food processing and baking
  company to the area, creating over 200 jobs.
• Centralia is within 300 miles of seven major
  metropolitan markets. The Canadian National,
  Burlington Northern-Santa Fe, and
  Norfolk-Southern railroads serve the community.
  US Route 51 bisects the community, while I-57 and
  64 pass just to the east and south.
• The workforce in Centralia is drawn from a
  regional labor market with more than 64,000
  workers.

11
Other Rural Community Initiatives

• Many other communities in the farm-belt relate
  similar stories of growth and development. Here
  is a compendium of advantages from various
  communities that highlight why businesses are
  selecting their communities for NAICS 31 sector
  business investments.
• DeWitt and Coles Counties, IL Twelve
  universities and colleges lie within 50 miles.
  Improved industrial land prices average on
  10,000 per acre. Tax Increment Financing (TIF)
  for infrastructure improvements is available in
  the City of Clinton, IL and Farmer City, IL.
• Coles County established Enterprise Zones for
  food processors with a 20 year-life. The zones
  provides for an 85 property tax abatement. Also
  a 6.25 sales tax exemption is available on
  building materials purchased from a qualifying
  materials retailer/distributor within the
  Enterprise Zone.
• In the Coles Enterprise Zone a stated investment
  tax credit of 0.5 is offered to businesses in
  the zone that are making investments in qualified
  property, including machinery, equipment and
  buildings. This credit is in addition to the
  regular 0.5 investment tax credit available from
  the state of Illinois.
• In Coles, a business may receive a 500 tax
  credit for each job created within the zone for
  which a certified economically disadvantaged or
  dislocated worker (as defined by the Job Training
  Partnership Act) is hired.
• The Coles Enterprise Benefits include no taxation
  on the interest received on loans by financial
  institutions for development projects located
  within an enterprise zone, thereby indirectly
  assisting the developing business in its
  financing.
• For a business certified by the state of Illinois
  as making an investment within the enterprise
  zone of 5 million or more and creating a minimum
  of 200 full-time equivalent jobs (note
  part-timers are fractional portions of FTEs) or
  investing 40 million and retaining 2,000 or more
  full-time jobs, a 4 state sales tax exemption is
  available on all tangible personal property
  (e.g., selected machinery and equipment, raw
  materials, inventory, component parts, supplies,
  manufacturing fuels, etc.). The tangible
  property must be used or consumed within the
  enterprise zone in the process of manufacturing
  or assembling goods for wholesale or retail sale.
  The exemption rises to 5 when applied to the
  operation of pollution-control equipment.

12
What We Must Do

• Focus on state-wide enterprise zone that provides
  tax exemption for agricultural and rural
  development initiatives, including credits for
  banks, businesses, and individuals that support
  these initiatives.
• Property tax relief to cash-flow agriculture.
• A two-year tax holiday or credit for capital
  employed in ND from out of state.
• Raise our own money (200 - 300 million) through
  the capital markets and provide for our own
  development (home rule counties and cities). An
  urban-rural alliance.
• Forge a regional and state-wide strategic plan
  for development of our economy.
• Enlist the state and federal government for
  assistance in establishing a supportive
  environment, not control of programs.
• Take our destiny into our own hands as we have
  done in the past the tools and opportunities
  are there for our taking other communities are
  already growing and we can too.
• Tap the hidden currents such as tourism,
  development grants, and networking to border
  states for recruitment.
• Set loose the development power of in-migration
  (income tax credit of 1,000 for two-years) for
  all forms of human capital employment (new job
  creation and in-migration). Forget
  out-migration, focus on net-migration!