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A Conversation With. Mark Lofthus, Director of Business Development, Minnesota Dept. of Trade & Economic Development

"While Southwest Minnesota focuses on renewable energy with wind turbine development, rural Minnesota is also very involved in the ethanol industry. As of February 2007, we had 16 ethanol plants, with five more under construction. By 2008, our ethanol production is expected to reach 1 billion gallons, consuming approximately one-fourth of the state's corn crop."

Jun/Jul 07
Q. How did Minnesota fare last year in business development?
A.
Our economy was noteworthy for several reasons. When Minnesota tracked business expansions with at least 20,000 square feet, $1 million in investment, or 50 new jobs in 2006, we found 166 projects, 5,315 new jobs, 6,360,820 square feet, and $2.19 billion in investment. We were able to clinch the relocation of the headquarters of medical device company Coloplast to Minneapolis from Marietta, Georgia. The Danish company was in the process of purchasing Mentor Urology and decided to relocate their headquarters here also. That was a landmark decision, adding 300 quality jobs to the local economy.

Q. How is the state responding to the national focus on renewable energy?
A.
In February 2007, Governor Tim Pawlenty signed bipartisan legislation that requires energy companies to provide 25 percent of power from renewable sources by 2025, encouraging the use of wind turbines, biomass, hydrogen, and solar power. These industries are poised for the developments of the new economy. While Southwest Minnesota focuses on renewable energy with wind turbine development, rural Minnesota is also very involved in the ethanol industry. As of February 2007, we had 16 ethanol plants, with five more under construction. By 2008, our ethanol production is expected to reach 1 billion gallons, consuming approximately one-fourth of the state's corn crop.

Q. What are some other industry focuses?
A.
We have continued development in the biosciences. We have a host of medical products companies such as Medtronic, St. Jude Medical in St. Paul and Boston Scientific, which just bought the Guidant facility in the Twin Cities suburb of Arden Hills. The expertise and business opportunities from those existing companies hopefully will lead to more bioscience activity.

Food processing is another niche for us. We have Cargill in Minneapolis, the second-largest privately held corporation in the United States. They produce new products and technology using agricultural fibers, cellulose, and corn starch and use them in innovative ways.

Q. What new incentives does the state offer for businesses?
A.
Our biggest incentive program, JOBZ, has been involved in 300 projects since it started in 2004. Now, the governor is requesting that the JOBZ benefits be made available for 10 full years to any qualifying business that signs on for the incentives anytime prior to the program's sunset. Another proposal will enable corporations to change the corporate income tax apportionment formula to base it entirely on where the sales the sales originate, rather than on a share of the payroll, sales and property. If it passes, if the company has greater sales outside of Minnesota, their income tax will be proportionately less.

Q. What is the news on exports and foreign investment?
A.
Exports from manufacturing industries rose to $3.8 billion in 2006's fourth quarter. Exports to Canada grew the most. Others showing increases were Israel, the United Arab Emirates, Brazil, Columbia, and Venezuela. Transportation equipment is the primary export of growth, with leading markets in Canada, Germany, the United Kingdom, and Israel. Other increases have been seen in electrical equipment, food products and chemicals. Many sales are derived from medical-related products.

In foreign investment, a U.K.-based company, Essar Global Limited, announced its agreement to acquire Minnesota Steel LLC and build an integrated steel plant in phases with expected completion in 2009. This could make our state one of the lowest-cost producers of steel in the world. This is expected to generate about 700 full-timejobs, and 2,100 spinoff jobs in support businesses.

Q. How have fluctuations in the business world affected economic development?
A.
We are looking at the closing of the Ford plant in St. Paul, where Ford Ranger trucks are produced. Although no one wants to see a large property like this close, it now represents both a challenge and an opportunity for us. We have a 2.1 million-square-foot building in a neighborhood of St. Paul, a beautiful training facility, and 1,500 already trained employees. Either another manufacturer will realize its worth.

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