Streamlined Success

St. Cloud uses focus and expansive coalition building to bring manufacturing jobs to the region

From the February 2015 issue.

St. Cloud Mayor Dave Kleis and Cathy Mehelich, the city's director of Economic Development
(St. Cloud’s Mayor Dave Kleis and Cathy Mehelich, the city’s director of economic development)

When German-based manufacturer Geringhoff opened the doors of its first U.S. facility last year, it illustrated the transformation of St. Cloud into one of Minnesota’s premier settings for manufacturers.
 
Geringhoff is a 130-year-old, family-owned maker of farm equipment, primarily corn harvesters. In an effort to extend its presence in the U.S. market, the company tested 27 different locations before settling on St. Cloud. 

St. Cloud had a lot to offer. 

There was the available building. In the fall of 2011, just as Geringhoff made its first inquiries to St. Cloud, an 80-year-old mill-working business shuttered its operation, unable to withstand the economic downturn in housing. The business was forced to abandon its nearly new, 100-thousand-square-foot, state-of-the-art facility.  

There was the supplier network. St. Cloud authorities identified 65 relevant regional suppliers, located as far north as Detroit Lakes and south into the Twin Cities, far more than any competing location.  

There was the workforce. The combination of St. Cloud State University and five regional technical training institutions provided a potential workforce of more than 30,000 local workers.

And, not to be underestimated, there was St. Cloud’s German heritage. Mayor Dave Kleis, the public face of St. Cloud’s efforts, emphasized the area’s German heritage, even conversing in German with Geringhoff executives.

It all mattered, but mainly in the way Kleis’ St. Cloud contingent deployed a seamless coalition of local economic players to press its narrative. It included representatives from the city’s new economic development office, the privately funded Greater St. Cloud Development Corporation, St. Cloud State University, St. Cloud Technical and Community College, the workforce center, the small business development center, a locally based representative from the Minnesota Trade Office, and St. Cloud’s highly regarded chamber of commerce.

An internal Geringhoff publication probably best summarized its decision to choose St. Cloud. “They [Geringhoff] wanted a place where they could find hard-working, honest employees and a great community that would support this growing business,” it said. “They found all these qualities in St. Cloud, Minnesota.”

Park Industries COO Joan Schatz, St. Cloud, Minnesota
(Joan Schatz, COO, Park Industries)

Nuturing its Manufacturing Base
St. Cloud helps longtime resident Park Industries expand and Create more jobs

Park Industries, based in St. Cloud since 1953, reached out to the city and economic development partners to aid in an $11 million expansion. The nation’s largest producer of stone-processing equipment, the company employs 225 people. Its expansion included the construction of a 33,760-square-foot addition to the manufacturing facility and additional machinery and equipment. To assist the expansion, the Minnesota Department of Employment & Economic Development provided funding through the Minnesota Job Creation Fund, and the city of St. Cloud provided tax increment financing. 

Joan Schatz, COO at Park Industries, says that among the strengths of St.Cloud is its region-wide sense of mission.

“They understand our needs and what our challenges are as we grow and address our various markets,” she said. “Our situation is particularly dynamic in the way that community business leaders step up and partner with city and state officials as well as educational institutions.”

Mayor Kleis is largely credited with setting a more business-sensitive tone in his city’s attitude toward, and success with, job creators and economic development.

He used his first State of the City address some 10 years ago to suggest that St. Cloud better prioritize its links to current and prospective job creators and streamline the process through which businesses deal with the city. His vision ultimately evolved into the creation of the city’s first stand-alone Economic Development Authority (EDA), an entity that focuses exclusively on addressing business needs in the community.
 
Previously, economic development had been primarily administered through the city’s Housing and Redevelopment Authority (HRA), as well as a public/private organization called the St. Cloud Area Economic Development Partnership. Kleis immediately perceived that economic development activities would get lost among the HRA’s more pressing responsibilities to housing, neighborhood development and revitalization.

It was also not lost on him that the HRA’s priorities might change with the shifting concerns of its rotating and independent board of directors.
 
“It never had a clear focus on jobs,” Kleis says, adding that the HRA also lacked a “true connection” to the city.
 
Kleis’ new economic development commission was run by an appointed board and a staff that was housed within the city’s Department of Community Development.  

The move “changed the philosophy,” he says, adding, “I wanted to put it there so there was an entrepreneurial aspect to it.”


Hermann Braun, Director of Manufacturing, Geringhoff, St. Cloud
(Hermann Braun, Director of Manufacturing at Geringhoff)

He then hired a seasoned veteran to be the city’s economic development director. Cathy Mehelich, a graduate of St. Cloud State University’s local and urban affairs program, is a 20-year veteran of helping local communities relate to their job creators. After a first job in Olivia, she spent 11 years at Elk River and moved to St. Cloud four years ago.
 
This new entity and new separation of powers put a strong emphasis on business development that quickly became clear in the community.
 
“[Kleis] saw the opportunity for the city to do a better job in responding to business development needs and led an effort to do that better,” Mehelich says.
 
“One of the mayor’s goals was to serve as a first stop for businesses that are interested in coming to the city,” she says, “whether for startups, expansion opportunities, technical and financing resources or new development opportunities.”

Kleis also withdrew from the regional economic development partnership that was composed primarily of elected officials. “Way too heavy on the government, too little on the business piece,” he remembers. He appointed a task force to find a better solution, which led to the creation of the Greater St. Cloud Development Corporation (GSDC), a private collaboration of approximately 100 regional business and community leaders within Benton, Sherburne and Stearns counties in central Minnesota. GSDC describes itself as spearheading the economic development efforts of the greater St. Cloud region by identifying and unifying opportunities to engage community leaders, foster business growth, expand and nurture the area’s talent base, and support the communities that make up the greater St. Cloud region.
 
“We found a lot more business buy-in and support,” Kleis says, adding that GSDC is made up almost entirely of business investors and is financed almost entirely by the business community.
 
As a result, St. Cloud has experienced an enormous amount of positive change, according to Mehelich. “It really helped streamline our responsiveness to the business community,” she says. “Being a regional hub, there are a variety of business development resources, both public and private.”

Kleis’ economic development team scored another victory two years ago when mass transit bus manufacturer New Flyer decided to produce a new bus at its St. Cloud plant. 

The Winnipeg-based company already employed more than 600 people who produce heavy-duty city transit buses for large metropolitan areas across the county, including New York City, Los Angeles and Miami. 

Three years ago, the company entered into a joint venture with Scotland-based Alexander Dennis Ltd. to produce an intermediate-size bus—the MiDi—to serve smaller municipalities. Alexander Dennis would create the designs and New Flyer would provide the manufacturing, including the sourcing of components.

New Flyer's MiDi, made in St. Cloud, Minnesota

New Flyer needed to decide which of its three U.S. plants—St. Cloud; Aniston, Ala.; or Elkhart, Ind.—it would use to build the MiDi.

The St. Cloud team helped broker a public-financing package that included interest-free loans of $100,000 from St. Cloud, $250,000 from Stearns County, and a $1 million forgivable loan from Minnesota’s Department of Employment and Economic Development.
 
Kleis’ EDA office coordinated the approval process with all three entities in order to streamline communication and scheduling for the company.  In addition, Mehelich coordinated a small private reception for Winnipeg-based company executives one year before the expansion project in order to highlight new local initiatives and acquaint company officials with community leaders.

New Flyer chose St. Cloud for the $5 million expansion that includes six new bays to its 350,000-square-foot facility, and machinery and equipment to retool existing production lines.

“This is a central location for us, for our management,” says Wayne Joseph, New Flyer’s St. Cloud-based executive vice president of operations. “We would have closer and better oversight. We did get some financial incentives from St. Cloud, although we certainly could have gotten as much or more from the other locations. 

“I think it was our commitment to St. Cloud and the St. Cloud area. The mayor had a lot to do with it. Our relationship with the community made us want to invest in this area.
 
“Mayor Kleis is extremely pro-business, extremely pro-manufacturing. Between the mayor and Cathy, we could not have a better relationship and partnership with the local community.”

Meaningful Results
Since Mayor Dave Kleis created a stand-alone economic development department in his city hall offices, St. Cloud has experienced: 

• 300,000 square feet of new construction projects
• $15.4 million market value
• 335 new jobs, 
• 1,081 retained jobs, and 
• $54 million private investment at a 10-to-1 ratio of private/public dollars.