Economic Development

Apogee to Invest $30M in MN or GA Plant

The company is comparing the cost and benefits of each location and pursuing state and local support for both locations.

Bloomington-based Apogee Enterprises, Inc., the parent company of glass manufacturer Viracon, announced Tuesday that it plans to invest $30 million in one of two Viracon plants—and its Owatonna plant is in the running.

The company is also considering Viracon’s plant in Statesboro, Georgia. The two plants are Viracon’s largest, Apogee said.

“Apogee is pursuing state and local support for both locations,” and is comparing the cost and benefits of each location, the company said.

The investment will result in an 18-month project that will “improve efficiencies and allow Viracon to offer the new products required to strengthen its competitive position,” Apogee said.

Apogee did not say when it will make a decision or whether the investment will create new jobs; calls to the company were not immediately returned.

Viracon employs about 2,000 people in the United States, and more than 1,000 work at the plant in Owatonna.

Viracon’s glass has been used in such buildings as the recently-rebuilt World Trade Center and the Petronas Towers in Kuala Lumpur, Malaysia, which is among the tallest buildings in the world. Local structures adorning Viracon-made glass include the Xcel Energy Center in St. Paul and the University of Minnesota’s TCF Bank Stadium in Minneapolis.

Apogee is among Minnesota’s 40-largest companies based on revenue. The company’s stock price more than doubled between November 2011 and November 2012, thanks to a steady increase in revenue, which totaled $662.5 million for the fiscal year that ended in March—up about 13 percent from $582.8 million during the previous year.

—Nataleeya Boss
(nboss@tcbmag.com)

Monticello Manufacturer Plans Plant Expansion, Hiring

WSI Industries said that its 47,000-square-foot expansion will accommodate new machinery and new employees.

WSI-HQ-RFW
     WSI's Monticello manufacturing facility

WSI Industries, Inc., said Wednesday that it intends to break ground this month on a major expansion that will double the manufacturing space at its Monticello facility.

The company said that it expects the 47,000-square-foot expansion to be complete in early 2013. It didn’t disclose the cost of the expansion.

WSI is a contract manufacturer of precision parts for a wide range of industries, including aerospace, energy, marine, defense, recreational vehicle, and bioscience. The expansion comes on the heels of positive third-quarter sales that totaled $9.5 million, up 45 percent from the same period a year ago. Earnings for the quarter totaled $598,000, or 21 cents per share, representing a 51 percent jump from the prior year.

The company has also seen consistent annual growth, with revenue totaling $18.8 million in its 2010 fiscal year and $25 million in 2011. It expects to exceed $31 million in sales for the fiscal year that ends August 26.

WSI’s financial strength has led to a steady growth of its work force—and the company foresees additional hiring on the horizon.

President and CEO Benjamin Rashleger told Twin Cities Business on Thursday that the company has steadily added employees over the past several years, growing from 59 employees in 2009 to 91 today.

Rashleger said that, like many other manufacturers, WSI is having a difficult time finding qualified employees, but the company is interested in adding several new workers to meet its current needs.

“I’d hire five to 10 [qualified workers] right now if they walked through the door today,” he said.

As WSI expands its Monticello plant, which is the company’s sole facility, it plans to add new machinery to meet the needs of a growing and diverse client base.

“If we continue the same success in growing our business, we will add new machines, and we will need new people to run them,” Rashleger said.

The expanded facility could accommodate up to roughly 160 employees—meaning that if the company continues its pace of growth, it could eventually boost its headcount by about 70 workers, Rashleger said.

WSI said that it expects the construction of its expanded facility will have a “minimal impact” on its current manufacturing processes.

“This expansion illustrates the confidence we have in our current customers and their future success, as well as our ability to continue to attract and obtain new business in the contract manufacturing market,” Rashleger said in a statement. “We believe the additional space provided by the expansion will provide us the opportunity to also expand the capabilities and services we can offer to our customers, in addition to the added capacity, which will also help to drive the expansion of the business by attracting new customers and programs.”

WSI is among Minnesota’s 100 largest public companies based on its revenue. Shares of the company’s stock were trading up about 3 percent at $6.30 during Thursday morning trading.

—Jake Anderson
(janderson@tcbmag.com)

Federal Export Agency Opens Minneapolis Office

The new office, which aims to stimulate exports, will assist businesses in learning about opportunities abroad, among other functions.

The Export-Import Bank of the United States said Tuesday that it has opened a new regional export finance center in Minneapolis.

The bank is an independent federal agency that aims to help create and maintain U.S. jobs by filling gaps in private export financing without burdening American taxpayers. It provides a variety of funding mechanisms, including working capital guarantees, export-credit insurance, and financing to help foreign buyers purchase U.S. goods and services.

The new center is the first of four that the Export-Import Bank is opening this year in an effort to stimulate the nation’s exports. According to the bank’s news release, the new office will assist local businesses in learning about opportunities abroad and help them to access the bank’s products and services.

The bank will open other, similar regional centers in Atlanta and Seattle later this month and in Detroit, Michigan, in the late fall.

“Our mission at Ex-Im Bank is to support American jobs by financing American exports,” Wanda Felton, the bank’s first vice president and vice chair, said in a prepared statement. “The opening of our new export center in Minneapolis is good news for regional exporters as we seek to boost exports and job growth.”

Over the past five years, the Export-Import Bank has authorized approximately $710 million to Minnesota businesses to support $1.4 billion in export sales. Among the 138 exporters who received financing from the bank during this period, 88 were small businesses.

—Christa Meland
(cmeland@tcbmag.com)

Coborn’s to Open 5 New Grocery Stores in N. Dakota

The new stores will be built in an area of western North Dakota where population growth is occurring thanks to booming oil production.

St. Cloud-based grocery retailer Coborn’s, Inc., recently announced plans to build five new stores in the oil-producing region of western North Dakota.

The new stores, which will be built between now and 2014, will significantly boost the company’s presence in North Dakota. It currently operates six grocery stores within the state, including three in the oil-rich area surrounding the Bakken rock formation, where oil production rates have soared in recent years.

The new stores will be in that same area surrounding the Bakken formation. Coborn’s namesake stores will replace the company’s Food Pride stores in Stanley and Tioga, and another Coborn’s will spring up in Watford City. Meanwhile, Cash Wise stores will be built in Dickinson and Minot.

Coborn’s has owned and operated Cash Wise stores in the Fargo/Moorhead area and in Bismarck, North Dakota, since 1988.

Coborn’s first entered the Bakken area earlier this year: In April, it partnered with Williston, North Dakota-based grocer JK Foods to co-own an Economart in Williston and Food Pride stores in both Stanley and Tioga, whose populations are rapidly growing thanks to the oil boom.

In May, the company also expanded its presence in western North Dakota by opening a Coborn’s store in the small city of Jamestown, which is situated between Bismarck and Fargo.

In a prepared statement, Coborn’s President and CEO Chris Coborn called North Dakota “a prime market for Coborn’s to expand.”

He added: “Building five new stores in the Bakken will strengthen our brand across North Dakota and will bring new fresh food options to these rapidly growing communities.”

Coborn’s is an employee-owned company that currently operates 45 grocery stores in Minnesota, the Dakotas, Iowa, Illinois, and Wisconsin. In addition to those grocery stores, which operate under a handful of banners, it owns CobornsDelivers, an online grocery ordering and home-delivery service, and stand-alone convenience, liquor, video, and pharmacy stores. To support its retail locations, Coborn’s operates its own central bakery, dry cleaning facility, and grocery distribution center.

The company’s annual revenue exceeds $1 billion, and it employs roughly 6,700. It is among Minnesota’s 25 largest employers based on workers within the state, of whom there are more than 6,000.

—Christa Meland
(cmeland@tcbmag.com)

City Seeks Developers for 100 "Green" Homes in N. Mpls.

Minneapolis is now accepting proposals from developers to build 100 “green” homes in North Minneapolis over the next five years using $3 million in grants and loans.

The City of Minneapolis announced this week that it and two partners will provide up to $3 million in construction loans and grants for the building of 100 “green” homes in North Minneapolis over the next five years—and it is now accepting proposals from developers.

The funding is being provided as part of a new “Green Homes North” housing program.

The money—$1 million in grants and as much as $2 million in loans—will come from the city, the Minnesota Housing Finance Agency, and the Family Housing Fund. According to the city, the grant money will help developers cover the difference between the homes’ fair market value sales price and the overall development cost. Developers selected for the project will also receive interim construction financing in the form of loans.

“We have built green homes with our partners in North Minneapolis, and they’ve been a huge success, so now we’re taking that experiment to scale,” Mayor R.T. Rybak said in a prepared statement. “Green Homes North will provide another boost of confidence for the housing market, the building trades, and the neighborhood.”

The project specifically targets development on blocks with several vacant lots and areas that were hit hard by foreclosures.

“Green Homes North is the next step in the city’s aggressive ongoing efforts to rebuild neighborhoods impacted by foreclosures,” Tom Streitz, Minneapolis’ director of housing policy and development, said in a prepared statement. “We are seeing great progress in restoring our housing market in the City of Minneapolis, as evidenced by the recent increases in home sale prices in the city, and this will help build on that trend.”

Development proposals, which are due August 15, will be reviewed by a design committee and the neighborhood where the property is located. Priority will be given to proposals that “minimize the use of the subsidy and provide the highest standards of quality design, energy efficiency, and overall sustainability,” according to the city.

The city wants locally sourced green products to be used in the project and said that it would like to see local, women, and minority contractors and businesses involved. It will provide free training and job placement services through a city program that focuses on green construction skills.

—Dominic Zahner
(dzahner@tcbmag.com)

Christopher & Banks Says Turnaround Plan Is Working

The retailer released preliminary second-quarter financial results showing year-over-year improvement, a move that’s presumably in response to recent criticism from an investor and would-be buyer.

Less than two weeks after being blasted by a minority investor and would-be buyer, Christopher & Banks Corporation released preliminary second-quarter financial results in an attempt to demonstrate that its turnaround strategy is working.

The Plymouth-based women’s clothing retailer said late Wednesday that same-store sales—sales at stores open for at least 13 months and a key measure of a retailer’s health—will increase between 5 percent and 5.5 percent for the three-month period that ends Saturday. Sales for the quarter, meanwhile, are expected to total between $102 million and $103 million, down slightly from $105.6 million for the second quarter of last year.

The company also said that it expects cash and cash equivalents to be in the range of $39 million to $40 million at the end of the second quarter—up from $33.7 million at the end of the first quarter.

Full financial results will be released August 29.

“While we remain in the early stages of our turnaround plan, our initiatives are gaining traction,” President and CEO Joel Waller said in a prepared statement. “Our new merchandising and marketing strategies are beginning to show progress. Meanwhile, strategic initiatives underway to reinvigorate sales through in-store merchandise presentation and optimization of our selling staff are also yielding improved performance.”

Christopher & Banks has closed at least 100 stores within the past year and cut hundreds of jobs. Its Wednesday announcement appears to be in response to criticism it has received from Boston-based investment management firm Aria Partners, which owns a 4 percent stake in the company.

On July 3, Aria extended an unsolicited, $64 million buyout offer, offering to pay $1.75 per share—which represented a 51 percent premium over the previous day’s closing price.

But six days later, Christopher & Banks’ board rejected the offer, saying that it wasn’t in the best interest of stockholders and that the best course of action was to stick with the company’s own turnaround strategy. The company also adopted a shareholder rights plan, better known as a “poison pill”—a measure that corporations take to discourage hostile takeovers. The plan will essentially dilute the stock of an investor that acquires 15 percent or more of the company’s shares.

Aria Partner Edward Latessa then sent a sharply worded letter of ridicule to Christopher & Banks’ non-executive Chairman Paul Snyder. In it, he said the board’s credibility in terms of turning the company around was “worthless based on its record thus far” and questioned the compensation of Snyder and another board member.

Christopher & Banks’ new strategy involves reducing the number of styles offered this fall and “rebalancing” its assortment; lowering prices and reducing the variety of prices; improving inventory flow by reducing the number of major floor sets by half; and developing a promotional strategy that features more targeted, unique promotions and fewer storewide events.

The company operates 658 stores in 44 states. For the fiscal year that ended January 28, it reported a net loss of $71.8 million, which included $9.8 million in charges related to restructuring efforts.

For the first quarter that ended April 28, Christopher & Banks reported a net loss of $13.4 million. Same-store sales fell 15 percent during the period.

—Christa Meland
(cmeland@tcbmag.com)

All $12M in 2012 Angel Tax Credits Is Allocated

The Minnesota Department of Employment and Economic Development will begin accepting applications in November for the $12 million in credits that’s available next year.

All $12 million in angel tax credits made available by the state this year has already been allocated, the Minnesota Department of Employment and Economic Development (DEED) said Thursday.

DEED said the credits “ran out earlier than expected because of the strong response to the program . . .”

Two-and-a-half weeks ago, $3.3 million in credits remained—and DEED predicted at the time that the money would be gone by summer’s end.

The Angel Tax Credit Program gives a 25 percent tax break to individuals and investment funds that provide between $10,000 and $4 million in seed money to businesses focused on high technology or new proprietary technology.

The Minnesota Angel Network, a BioBusiness Alliance of Minnesota-led initiative that aims to connect angel investors and entrepreneurs in the state, sent an e-mail to various stakeholders on Thursday, alerting them about the tax credits having run out.

In the letter, written by Executive Director Todd Leonard, the organization said that timing is critical for start-up technology companies seeking funding, and “we encourage new and seasoned investors to continue to look at deals and make investments in companies with high-growth potential throughout the remainder of 2012.”

The letter also said: “If you are disappointed that there are not more funds available to spur investment in our high-tech start-up economy, we encourage you to contact your state legislator and voice your concern.”

Since the Angel Tax Credit Program was launched in July 2010, it has attracted more than $140 million in private investments for small and emerging companies in the state, according to DEED. This year alone, 100-plus businesses have received funding from more than 300 investors and 15 angel funds.

The state will fund $12 million in angel tax credits annually through 2014, and credits cannot exceed $125,000 per person per year. In November, DEED will begin accepting applications for the $12 million in credits that will be available next year.

The angel tax credit is available to investors and investment funds that funnel money into start-ups that are less than 10 years old, have fewer than 25 employees, and have less than $4 million in previous equity investments. The businesses also must be headquartered in Minnesota and have at least 51 percent of their workers and their full payroll based within the state.

—Christa Meland
(cmeland@tcbmag.com)

Big Snack Co. Moves to Downtown St. Paul; Hiring Underway

The company, Flagstone Foods, is hiring for more than 30 positions at its new headquarters building.

Flagstone Foods—one of the nation’s largest suppliers of trail mixes, dried fruit, and other snack mixes—has relocated its corporate headquarters to downtown St. Paul.

The company announced Monday that it moved into the Lawson Commons building, located on St. Peter Street between Fifth Street and Sixth Street. It claims to be the first food company to locate its corporate offices in the heart of St. Paul.

Flagstone recently changed its name from Snacks Holding Corporation. It was formed in November 2010 when San Francisco-based private equity firm Gryphon Investors bought two independent companies—Ann’s House of Nuts, a major manufacturer and marketer of dried nuts, and Minneapolis-based American Importing Company (best known as Amport Foods), a major manufacturer and marketer of dried fruits.

Flagstone CEO Paul Lapadat told Twin Cities Business on Tuesday that the snack company moved its headquarters to St. Paul from Richfield, and the Ann’s House of Nuts corporate headquarters is in the process of relocating from Columbia, Maryland, to the new St. Paul facility. (Several functional support employees at Amport moved to St. Paul as well.)

Flagstone is in the process of hiring for more than 30 jobs at its new headquarters building, some of which moved from Maryland. A number of positions are still posted on the company’s website—and they span a wide range of functions, including marketing, customer service, human resources, materials planning, packaging purchasing, food science, and financial analysis.

Lapadat said that the St. Paul headquarters will house roughly 45 workers after the hiring has been completed, which he expects to occur within the next 45 days. At that time, Flagstone will employ about 450 in the Twin Cities area (including approximately 400 at Amport's manufacturing facility in Minneapolis) and 1,100 total. In addition to its local operations, Flagstone operates several manufacturing and warehouse locations in Robersonville, North Carolina.

Because Flagstone is a private company, it doesn’t disclose annual revenue, but Lapadat said that it works with “all of the major retailers” and aims to become “a $1 billion healthful snacking company.”

Flagstone said that it aims to grow organically but is also looking for acquisition opportunities. Its management team is comprised of executives who have worked at food giants ConAgra, General Mills, Kraft Foods, Pillsbury, Michael Foods, and Ralcorp, as well as Procter & Gamble.

Lapadat confirmed that Flagstone received $80,000 from the St. Paul Housing and Redevelopment Authority as an incentive to bring corporate jobs to the city. The money constitutes a forgivable loan that won’t have to be repaid if the company brings in 40 jobs—and Lapadat said that benchmark will be achieved.

—Christa Meland
(cmeland@tcbmag.com)

Business Optimism Dips in Minnesota

Reversing a trend seen in the past three quarters, business leaders from across Minnesota expressed a drop in overall optimism about business conditions in the state, according to Twin Cities Business’ quarterly economic indicator survey.

Fewer business leaders are optimistic about the economy today compared to three months ago, according to Twin Cities Business’ most recent quarterly economic indicator survey.

Of the 490 business leaders who participated in the June survey, 33 percent said that they believe business conditions in Minnesota will improve during the third quarter (July through September)—down from 50 percent of respondents who entered the second quarter anticipating better times ahead.

The change in outlook follows three consecutive quarters in which there was an increase in optimism, and the dip in confidence appears to be primarily due to factors beyond Minnesota, including the European debt crisis.

One respondent wrote: “We thought this would be a good year financially, but with the euro crisis, things are not looking that good.”

Only 25 percent of the respondents said that they believe the national and global economies will improve during the third quarter—a 50 percent drop compared to respondents who were optimistic as they entered the second quarter.

While confidence in the Minnesota economy is down compared with the last quarter, it is still stronger than one year ago: Only 25 percent had expressed optimism for last years third quarter, and the percentage of those who believe business conditions will worsen this summer (15 percent) is down from 32 percent who voiced such pessimism a year ago.

Meanwhile, a smaller percentage of Minnesota businesses plan to increase their spending compared to investments during the prior quarter: 32 percent of businesses plan to increase capital expenditures compared to 38 percent in the second quarter, and only 20 percent plan to spend more on research and development, compared to 28 percent last quarter. Fifty-seven percent of the respondents expect to maintain the same levels of capital expenditure as the second quarter, and 72 percent will spend the same on research and development as they did in the second quarter.

Finding qualified employees remains a concern, with 29 percent of respondents expecting it to become more difficult in the months ahead—the same percentage of leaders who reported this concern heading into the second quarter. Only 6 percent of respondents believe finding qualified talent will be easier during the third quarter.

Meanwhile, Twin Cities Business’ last four quarterly surveys found that an average of 35 percent of respondents plan to increase their work force in the months ahead, and an average of 60 percent forecast increased profitability.

Additional information from the survey—including charts detailing which Minnesota industries are expecting to most actively hire, increase revenues, and increase investments in infrastructure this quarter—can be found in the August issue of Twin Cities Business, available online here and in print at select newsstands.

Twin Cities Business conducts this survey quarterly to provide a look at business planning and sentiment among leaders across all industries in Minnesota. Of the respondents to the most recent survey, 87 percent represented privately held companies and 13 percent represented public companies.

Execs, Governors Converge in Mpls. for U.S.-Japan Event

The annual Midwest U.S.-Japan Association Conference will bring together business representatives from the Midwest and Japan, as well as government officials, to explore strategies for enhancing business relationships.

Hundreds of executives and government officials from Japan, Minnesota, and other Midwestern states will descend on the Minneapolis Hilton in September for the 44th annual Midwest U.S.-Japan Association Conference, the Minnesota Department of Employment and Economic Development (DEED) recently announced.

Top executives from Japanese companies—including Toyota, NEC Corporation, and All Nippon Airways Company—will join Minnesota business leaders from Medtronic, 3M, and Ecolab, among other companies.

Minnesota Governor Mark Dayton and five other U.S. governors are scheduled to speak at the event, which aims to strengthen trade and commerce ties between Japan and the Midwestern states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin.

“The Midwest U.S.-Japan Association encourages new business partnerships and deepens mutual understanding between business leaders and government officials in the two countries,” Dayton said in a statement. “The annual conference is an opportunity to bring together key business and government leaders to explore strategies for building on our relationship with Japan.”

The conference, which began in 1967, has not been held in Minneapolis for 27 years, according to DEED. It will take place from September 16 through 18.

Minnesota businesses that are interested in doing business in Japan or would like to build on existing partnerships are encouraged to register for the conference by September 7. Click here for registration details.

—Dominic Zahner
(dzahner@tcbmag.com)