Wednesday greetings to ‘CCO Radio listeners. It’s mid-July, Major League Baseball’s All-Star Week is upon us, the Minneapolis Aquatennial is later this month, and towns across Minnesota are prepping for their own summertime festivals. Here’s one to watch for: Walker, Minnesota’s Moondance Jam on July 20-21. Here’s where you can learn about it: http://www.moondancejam.com/.
With local summer heat, there are also local summer business issues to vet. And some national and international ones, too. Here are a few:
Here’s a current business issue with local, national, and international dimensions: steel tariffs and trade. Donald Trump gained critical support from voters in Pennsylvania and Ohio by promising to protect their steelworkers and foundries from “cheap” steel importers located in China, Brazil, and elsewhere. Now, President Trump is close to deciding whether and how to make good on that promise. And that decision matters for Minnesota business. Here’s where you can learn more about that decision and its business implications: https://www.bloomberg.com/news/articles/2017-07-11/where-trump-s-war-on-foreign-steel-might-lead-quicktake-q-a. A ton of hot-rolled steel in the US runs about $650 out of the mill. The same ton is about $550 if it is coming out of European mill, and about $450 if out of a Chinese mill. Trump wants to slap a 20% tariff –that’s an import tax– on foreign steel so that US steel is not so much more expensive (but still more expensive). The US President has the authority to slap on these tariffs under a Cold War law if those steel imports threaten national security. That basis may be shaky, but assume Trump uses it to slap on the tariffs this month. At the margin, steel tariffs might help Iron Range Minnesota where taconite producers might see more demand. Might. Here are the losers in Minnesota: 1) automotive producers (like Toro) since 50-60% of the weight of an auto is steel; 2) construction firms (like M.A. Mortenson) since about 16% of the cost of a large commercial building is steel; 3) dairy grain exporters (like Land O’Lakes and Cargill) since the European Union has promised to retaliate by slapping tariffs on US agricultural exports to Europe; and 4) the US (like you and me) because the tariffs would apply to Canadian steel, violating NAFTA rules and imposing fines on the US. This proposal doesn’t make a lot of business sense to most Minnesotans. Then again, I am pretty sure that Trump isn’t considering the proposal to court Minnesota votes.
Here’s another local story with national and international implications. This week, Bloomington-based Holiday Stationstores agreed to be acquired by Canada-based Alimentation Couche-Tard Inc for an undisclosed sum. (Alimentation Couche-Tard in French roughly means Night Owl Necessities (Grocery) in English). Here is where you can learn more about the pending acquisition: https://www.bizjournals.com/twincities/news/2017/07/11/circle-k-parent-buys-holiday-stationstores-one-of.html. Holiday is privately owned by the Erickson family with a 90-year history of operation in Minnesota and the region. Forbes magazine estimates Holiday’s annual revenues at $3.2 billion. The acquisition price is likely multiples of that annual revenue estimate. Two questions loom with the acquisition: Why sell out now? What does it mean for thousands of Holiday employees at Holiday stations and at the Bloomington HQ. It’s hard to tell why the Ericksons chose to sell out now. Family businesses depend on sons and daughters from the next generation to take over ownership and management from the current generation –think, for example, of the three generations of Carlsons who have successively (and successfully) led Carlson Companies from the 1940s to the present day. Perhaps the next generation of the Erickson family wasn’t keen to step into leadership for 80 year old Ronald Erickson, the current chairman and CEO. In the near term, there are likely to be no changes in daily operations at Holiday stations and HQ. Alimentation has a lot to learn about the Holiday after closing, and the Eriickson family will be vital to that learning. Still, this sale is important for the state. Holiday is one of the many great private companies based in Minnesota and contributing so much to the state’s business climate and quality of life.
Last week, we discussed a recent USA Today ranking that put Minnesota third out of 50 states for the best state economy and quality of life issues. This week, CNBC ranking of state business climate puts Minnesota at…#3…again! Here is where you can learn more about the CNBC ranking: http://www.cnbc.com/2017/07/11/georgia-snags-americas-no-2-spot-for-business.html. What did CNBC point to for the attractiveness of the North Star state’s business climate. Nope, our top personal income tax rate of 9.8%, third highest in the country. CNBC attributes our high ranking to two factors: education; and quality of life dimensions related to healthcare, transportation, and cultural infrastructure. It’s pretty easy to see how those factors can attract, nurture, and retain business HQs…like Holiday Stationstores. And that attracts growth, employment, tax revenues, and all sorts of public and private infrastructure investments related to education and quality of life. The virtuous circle at work in Minnesota. Here is a state with a contrasting business climate: Illinois. Here’s where you can learn more about business travails in the Land of Lincoln: http://www.news-gazette.com/opinion/editorials/2017-07-11/illinois-economy-still-faltering.html. Faltering economic growth, job growth, but increased personal income and corporate income taxes to cover state a multi-billion dollar state budget deficit and a multi-hundreds of billion dollar state pension fund gap. Where’s the hope for Illinois business? I think the answer is in its incredible universities and their awesome capacity for training and discovery to re-charge local businesses: University of Chicago, Northwestern University, and especially the University of Illinois. U of I is a research powerhouse that rivals our U of M. Let’s hope that Springfield, Illinois will find a way to support that powerhouse and re-power a faltering state.
We have been talking about increasing competition between “bricks and mortar” chain stores and “clicks and mortar” online businesses that need only distribution centers. But there’s another way to do business that doesn’t include mortar: mobile business. Business in a trailer or truck going to customers via the road or rail is a fast-growing small business segment. And it’s not just food trucks. Learn more about different mobile business trends here: https://www.entrepreneur.com/slideshow/226734. Here’s an example. Stylist Sarah Ellison Lewis of Austin, Texas, founded her shoe store in a trailer in 2011. Her shop, called Bootleg Airstream, offers an eclectic footwear collection that has included vintage Chanel pumps and new, gilded oxfords from Jill Sander. Lewis sells these and more from her artful black and white striped trailer every sunny weekend on Austin’s South Congress Shopping district. There’s a new mobile business just waiting for you if you’ll only do a little re-hab to the camper sitting in your driveway!
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