South Dakota work ethic attractive to businesses

Not long ago, Bob Bergstrom called a meeting of EthosPartners employees in Mitchell.

Not only did employees from the business’ Plankinton office show up in inclement weather, they came armed with sleeping bags and toothbrushes, just in case they weren’t able to make it home that night.

“I had a brand new sales director in town from Charlotte, N.C.,” said Bergstrom, revenue enhancement unit division leader. “He was amazed at that.”

Bergstrom cites the dedication and loyalty of South Dakotans as one of the primary reasons the business has done so well since the first office was opened six years ago, growing from five employees in a small Plankinton office to 87 employees in Plankinton and Mitchell.

During his annual State of the State address last month, Gov. Mike Rounds lauded South Dakota’s energetic approach to work, as well as the state’s business-friendly climate.

“South Dakotans have a fantastic work ethic,” the governor said. “Our fellow citizens want to work. We see value and dignity in every kind of work.”

Both Bergstrom and Julie Boisen, vice president of business development for the company and a Minnesota native, say the work ethic found in South Dakota was only one of the reasons the business calls the area home.

“Everything from the cost of real estate to the cost and quality of employees … has been pretty outstanding,” Boisen said. “There’s a loyalty that exists that we don’t always experience in some of our other larger markets.”

RULES OF ATTRACTION

As the executive director of the Mitchell Area Development Corporation, Bryan Hisel is always ready to bring more businesses to Mitchell.

Doing so is no easy feat.

“There are 18,000 nonprofit development companies that work for communities in America,” Hisel said. “How do you separate yourself out?”

EthosPartners — which does back-office work for the medical industry — is one of at least 29 businesses that the MADC has help set up offices in Mitchell in the past 25 years.

Having an interstate running through Mitchell is definitely an asset, Hisel said, but it takes more than pavement to attract business to the area. South Dakota’s business climate is the key, he said.

Hisel said the state’s low cost of business and easy access to potential employees are both selling points for the area. Numbers from the office indicate that Mitchell is holding its own in a country still grasping to escape a recession.

Between 2006 and 2009, 233 jobs were created in the Mitchell area. The biggest portion of that number comes from Performance Pet Products, a company that relocated to Mitchell in 2006 and expanded to include a second shift last year.

The company has created 80 jobs in Mitchell since 2006. Other recent contributions to the city’s employment include EthosPartners with 45, Enertech with 56, Vantage Point Solutions with 41, Quality Wood Products with eight and Dakota Labs with three.

Hisel said the MADC has given various forms of help to numerous businesses that have started from scratch or opened offices in the Mitchell area. Aid has ranged from zoning assistance to expansion loans and training funds. In some cases, like the opening of Cabela’s in 1999, the city assisted with site development.

Although the amount was higher than usually paid, the work to get Cabela’s in town opened the door for expansion on the south side of Interstate 90.

“We had to put in over $3.5 million worth of infrastructure, roads and street,” Hisel said. “Cabela’s was an attraction, but the infrastructure made all the difference in the world.”

The Mitchell Area Development Corporation owns more than 200 acres of available land in the Mitchell city limits, Hisel said. In a perfect world, the development corporation would be able to create streets and water and sewer hookups on the entire portion, which would make it easier for businesses to more efficiently start up or relocate to the area.

The problem, as it almost always is when it comes to business, is money.

Hisel estimates it would take approximately $1.5 million to extend streets and water and sewer hookups to 30 acres of MADC-owned land.

“We’ve never had a fully-developed industrial park that was ready for anyone to build on,” Hisel said. “The only reason we’re in the land business is we have to have something for them.”

WELCOMING BUSINESS

Hisel said the main companies being targeted by the MADC include firearms, biomedical and office industries.

Those are almost exactly in line with the industries being sought by the state of South Dakota itself.

Richard Benda, cabinet secretary for the South Dakota Department of Tourism and State Development, said the industries are ideal for South Dakota. Firearms restrictions are substantially more lax than in other states and both the biomedical and “back office” industries are growing.

Benda said the state is also actively recruiting those involved with information technology, value-added agriculture and renewable energy.

A number of incentives are available in the state, including training assistance, loans and other financial options, Benda said. He’s also quick to point out one of Gov. Mike Rounds’ favorite points: South Dakota has no state income tax.

“The unfortunate thing is that some of the other states have figured out a way to tax them,” Benda said. “These states have figured out how to pick the pocket of corporate America.”

The governor, in his speech to the Legislature last month in Pierre, noted that South Dakota has “a great business climate.”

He said the Department of Tourism and State Development has been working hard to attract businesses, as well as help businesses stay afloat and grow new jobs. Aiding that effort, he said, has been use of REDI and APEX loans.

REDI — or Revolving Economic Development and Initiative — funds are designed to promote job growth in the state. The low-interest loans are available to start-up firms, businesses that are expanding or relocating and local economic corporations.

The APEX — or agricultural processing and export — loan program is designed to assist companies in communities with populations of 25,000 or fewer that add value to raw agriculture products through processing, or export a minimum of 75 percent of its product to entities outside the state

Rounds said that during 2009, for instance, eight REDI loans and two APEX loans were extended. Also, 57 companies committed to expanding in or relocating to South Dakota.

The governor also said that the state is actively pursuing prospective businesses — more than 380, he said — to further develop economic growth within the state’s borders.

He said “South Dakota still has the lowest state tax burden per person of any state in the entire country” and also boasted about the state’s standing in a recent business report.

“The most recent Business Facilities Ranking Report measures 20 factors of quality of life, including low crime rates, material well-being, job security, availability of recreation, health care, education and cost of living,” Rounds said. “They rate South Dakota number one in quality of life.”

But Benda said that beyond all of the financial and regulatory incentives and reasons, businesses want to come to South Dakota for one key reason: the people.

“In all honesty, we do what everybody else in South Dakota does: we work harder than everybody else and we do it with less,” Benda said.

PARTNERS IN PROGRESS

When the decision was made to expand EthosPartners facility, time was of the essence.

In Boisen’s mind, the city of Mitchell’s assistance was second to none.

“We didn’t have time to build. We needed a solution that we could basically staff and get into in four to six weeks,” Boisen said. “They couldn’t really have done much more.”

The company signed a $50,000 note for the furniture, fixtures and equipment purchased from Vantage Point Solutions upon its move to a new building.

The amount will be forgiven if EthosPartners maintains at least 35 full-time positions at the location each year during a five-year period.

If Boisen’s predictions for the future prove correct, both EthosPartners and the city of Mitchell could reap the rewards of success.

“The company is on track for another 30 to 50 percent growth in 2010 and we’re expecting some of that growth to come in that Mitchell office,” Boisen said. “They did an amazing job.”

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