MADE IN MN 2008

BOOSTING MINNESOTA’S ECONOMY

IN TOUGH ECONOMIC TIMES
Lee Egerstrom
Minnesota 2020 Fellow
November 2008
Acknowledgements _________________
Thanks to MN2020 Graduate Research Fellow Laura Haubrich & Undergraduate Research Fellow Julia Quanrud
for contributing statistics for this report and compiling new items for this year’s Made in Minnesota Gift Guide.
New Minnesota-made gift ideas are available at www.mn2020.org/giftguide.

Thanks to Minneapolis Ceramic Artist Emily Dyer for the cover image. Her work is available at
www.emilydyer.com and can she can be reached at 612-598-2248.

Thanks to all the Minnesota artistisans and small-business owners who helped with this year’s report and
contributed new items to the gift guide.

1 Made in MN 2008
Table of Contents___
Introduction & Key Findings 3

Rippling and Rattling Through the Economy 4

Impact of Shopping Close to Home 6

Fresher and Tasty 8

Putting Your Money to Work 11

Made in MN 2008 2
Introduction & Key Findings___________
Minnesota is in a recession. It always makes economic sense to support our local manufacturers and retailers
when possible. It makes even more sense now. The need to stimulate the local economy has become more
urgent than it was a year ago when Minnesota 2020 issued its first Made in Minnesota report and put its
Minnesota Gift Guide on line with hundreds of local products and businesses. Here is what has changed this
holiday season.

Buying Minnesota Made Products Benefits the State Economy

• According to the Mid-America Business Conditions report by Creighton University, new product orders
in Minnesota and the surrounding states dropped 14 percent in October, and production at plants
dropped nearly 13 percent, indicating a downturn for state retailers.

• The National Retail Federation predicted a 4 percent increase in November-December stores sales
last year, with Minnesota’s share factored at $9.49 billion. Actual sales, however, fell short. Now, initial
forecasts from NRF envision November-December sales growth of only 2.2 percent. Retail industry
analysts have forecast even weaker sales growth ranging from 1.3 to 1.7 percent for this season. That
would fall short of stimulating an economic recovery.

• According to the Minnesota Finance Department, there were 20,600 retail establishments operating in
the state during 2007. These stores employed 301,700 people last year.

• The Department of Finance also predicts Minnesota’s economy will continue to weaken through the
spring of 2009.

• Overcoming weak sales, however, is the added benefit of buying local. Each $1 spent with a local,
independent business keeps 68 cents at home and circulating in the Minnesota economy. About 43
cents of the $1 spent at national chains that do not have headquarters in the state stays behind to boost
the local economy.

• Findings from last year’s report found that if Minnesotans spent 25 percent of their holiday shopping
budget on Minnesota made products, the impact would ripple through the economy like a tidal wave
and have small and local business people hiring more employees. That would make more than a $2
billion infusion into the state economy. Even a 10 percent increase in purchases of local products would
stimulate employment and increase entrepreneurs’ purchases from local suppliers.

Buying Minnesota Made Products Saves Money and Energy

• Given the enormity of Minnesota’s turkey, pork and dairy industries and other food sectors, we
probably do eat more local products than most Americans. But still, the typical holiday meal travels 1,200
miles from farm to feast table during the holidays. Holiday gift items often travel that far and farther.

• For many households, gifts this year will include upgraded television sets in preparation to February’s
switch to digital broadcasts. Those purchases will necessarily come from elsewhere –almost all from
abroad. Only a conscientious effort to buy Minnesota made gift items can cut back on packaging and
transportation costs, and keep retail profits working at home.

3 Made in MN 2008
Rippling and Rattling Through the Economy___
Minnesota 2020 and entrepreneurial partners in promoting local gift purchases have set a modest target of
keeping 10 percent of holiday gift buying local. Studies from across the nation point out the economic benefits
of targeting such purchases. Consider these findings:

“Local businesses spend 53 percent of their revenues within the local and state economies, while so-called ‘big
box’ superstores spend only 14 percent within the local economy.”
-Duncan Clark and Richie Unterberger
The Rough Guide to Shopping with a Conscience
New York and London: Rough Guides Ltd., January 2007

“Replacing $753.6 million of imports (6 percent of total) with instate production would result in almost $1.4
billion in new output, $343 million in new earnings, and (more than) 15,000 jobs. To accomplish this would
require an increase in instate production of 8.3 percent. Other benefits include increased state income tax
revenue from the new earnings ($5 million annually), and increased corporate and property tax revenue.”
-Peace and Justice Center
“The Leaky Bucket: An Analysis of Vermont’s Dependence on Imports.”
The Vermont Job Gap Study. Phase 6: July 2000

“Proportionally, local merchants tend to employ local labor and buy more local goods than national
competitors, which operate from remote headquarters. Local business owners keep their profits in state, and
contribute more to local and state takes. Local businesses are also more likely to promote local artists.”
-Evan Rytlewski
“The Importance of Buying Local.”
Express Milwaukee. Nov. 28, 2007

“A 2003 case study of Midcoast Maine covering several lines of goods and services validated these findings. …
The survey found that the businesses spent 44.6 percent of their revenue within the surrounding two counties.
Another 8.7 percent was spent elsewhere in the state of Maine. The four largest components of this local
spending were: wages and benefits paid to local employees; goods and services purchased from other local
businesses; profits that accrued to local owners and taxes paid to local and state government.”
-Michelle and Derek Long
“The Importance of a BUY LOCAL FIRST!
Campaign”Boulder Going Local Inc. 2007

and …

“Packaging products, raw materials from our wood suppliers, it would have a ripple effect up and down the
line.”
-James Seeley Kreisman, owner
Beka Wood Products, St. Paul
Minnesota 2020. Made in Minnesota, Nov. 20, 2007

Made in MN 2008 4
Why this is Important

The Minnesota economy is growing weaker and shows no signs of a rebound until well into next year. This
became clear when the Minnesota Department of Finance issued its October 2008 Economic Update. The
report deduced:
“October’s baseline forecast from Global Insight Inc. (GII), Minnesota’s national economic
consultant, shows real (Gross Domestic Product) declining through early next spring. GII now
expects real GDP to grow at a 1.5 percent annual rate in 2008 but at only a 0.2 percent rate in
2009. (Its) February baseline forecast called for real growth rates of 1.4 percent and 2.2 percent.
While the economy was stronger than projected during the first half of 2008, a much weaker
economy is expected for the remainder of 2008 and all of 2009. Global Insight also notes, ‘Since
our (October) forecast was concluded conditions in the financial markets have worsened even
more dramatically.’”
October 2008 Economic Update
Minnesota Department of Finance
Real GDP Expected to Fall Well Below Baseline The same report noted that
Minnesota sales tax revenue
shrank by 2 percent, or nearly
$7.8 million, in the July through
September period that makes the
first quarter of the state’s 2009
fiscal year. While basic food and
clothing items are exempt from
sales taxes in Minnesota, the
revenue decline clearly shows
that Minnesotans are retrenching
in their purchases – both from
necessity and from caution.

That is bad news for jobs. Buzz

Anderson, president of the
Minnesota Retailers Association
trade group, said restoring
Minnesotans’ purchasing power
MN Dept of Finance
and strengthening its retail-lead

economy are two sides of the same coin. In Minnesota, he said, the role of retail is comparable to national
statistics. (“What to Expect from Holiday Shoppers,” Nov. 5, 2008. National Retail Federation.) That means
about one in every five Minnesota jobs is tied to retailing in some capacity. That also links retail revenue and
jobs directly with growth or declines in state GDP.

All this means that Minnesotans with the economic capacity to be selective should be looking for the obvious
when shopping this year. That is: How might we get better bang for the buck?

5 Made in MN 2008
Impact of Shopping Close to Home___________
The whole world learned this past campaign season that Minnesota is a great place to go shopping. For that,
Minnesotans should be thankful and contemplate inviting the Republican and Democratic parties to hold
future national conventions in Minnesota - convenient to so many unique and classy clothiers and purveyors of
fine gift items.

A few things to remember: First, anything bought in Minnesota stimulates the state’s retail industry and helps
secure employment at establishments that provide about
20 percent of all jobs. Second, purchases of items made in
the state and sold by locally owned entrepreneurs greatly
enhance the economic benefits of the transaction. And
third, buying locally made gift items, such as apparel,
unique foods or art objects, is a reliable way of insuring
quality.

To prove the point, Minnesota 2020 is today updating its

online Made in Minnesota directory with more than 100
new items to help shoppers find ideal products made
by Minnesota entrepreneurs. The directory will remain
online to help shoppers target their purchases for the
greatest Minnesota good all year around. But for now,
the expanded and updated directory is intended to help
shoppers find Minnesota products that will serve as
stocking stuffers and as gift reminders for far-flung friends
and relatives that nothing beats the taste and touch of
Minnesota this holiday season. Visit it at www.mn2020.
org/giftguide

“Hot Kotchur” for Western Governors and

Minnesota Shoppers

Minnesota cousins back in Sweden have the saying,

“There is no bad weather, just bad clothes” (www.
thelocal.se). That comment brings perspective to

Minnesota clothes and climate as well, and we have the manufacturers and retailers to fit your seasonal needs.

So, let’s assume fashion conscious Western governors and other shoppers are passing through the Twin Cities
this holiday season and are looking for pragmatic clothes and gift items. Here’s an example how we might use
the Minnesota 2020 guide and help dress that visitor in ways that would help the Minnesota economy:

Warm feet. You’ve got choices. FootHuggers Comfort Socks at Minnetonka, for one. And Northern Woolens
Inc., at Nelson, for another. Their products will keep the toes warm in and out of boots.

Warm, dry feet. After the socks are on, try on a pair of mukluks from Steger Mukluks and Moccasins, of Ely, or
a hardy pair of footwear from Red Wing Comfortforce Shoes, at Red Wing.

Made in MN 2008 6
Warm hands. Many choices here. But consider woolen mittens from Custom Knit Goods of Stacy.

Warm head. Top it off with any number of Minnesota products. Polar Fleece hats from Marina Grabowski at
Brainerd will protect the ears and noggin.

Warm torso. Here’s an option to wear underneath in wintertime, and proudly display the casual look in
summer: Contempl8 T-shirts, Minneapolis.

Warm outerwear. Even more options. Try finding an appropriate anorak or other outdoor apparel from
Wintergreen Designs, of Ely; outdoor woolen clothing from Bemidji Woolen Mills, Bemidji; or some buckskin
clothing products from K.C. Miles Leatherworks, of Kimball.

Warm fashion statements. If it is important for you or your gift recipient to look smashing at all times, here’s
a couple of designer tips. Check out Harding Design Studio in
Stillwater. Designer Tim Harding makes high-fashion jackets
that are unique. Also, Caleigh Capes of Bemidji can cover
anyone for a fashionable wintertime dash to store or mailbox.
They made the uniform capes for the U.S. Women’s Olympic
Curling Team; a fashion statement that should be duplicated
by all U.S. teams in the next Olympic Games.

Hearth-warming accessories. Truly beautiful and unique

Minnesota made jewelry can be found at Swan Ltd. Jewelers,
Lake City. The Minnesota Department of Natural Resources
stopped commercial clamming on Lake Pepin about a decade
ago, said artist and proprietor Steve Swan. He, however,
purchased most of the remaining fresh water pearls from the last of the clambers and makes jewelry with river
pearl settings for customers.

For Swan, the uniqueness of his Minnesota made jewelry gifts reflects the dwindling supply of river pearls.
Most of his customers are from the Lake City – Lake Pepin region, he said. As time goes on, however, he will
need to secure pearls from other locations. But like the making of pearls, Lake City pearl jewelry has survived
the test of time. Swan has been making the jewelry for 20 years.

Kari Bentrup, at Northland Woolens Inc., said time is an element at the Nelson farm and woolen mill as well.
Angora blend socks, made from angora raised on the farm, are best sellers. Now, however, a separate “Twice
Baked” line of clothing is also proving popular, she said. That line includes gloves, scarves and hats all made
from recycled wool sweaters.

These are just a few of Minnesota’s unique entrepreneurs who are bringing a lot of class and style to
Minnesota made products. In doing so, they bring more than just retail sales to the state economy.

7 Made in MN 2008
Fresher and Tasty____________________________
Food. Drink. Snack and treats. There are many ways to remind friends, neighbors and away-from-home
relatives what a center Minnesota is for the gourmet and unusual food industries.

To jog the memory, Minnesota 2020

last year saluted the Minnesota
Grown Directory published annually
by the Minnesota Department of
Agriculture. It remains one of the
state’s best promotions. And it
helps natives and tourists easily find
nearly 700 local farmers and food
manufacturers who provide food
products that are rarely found by
shopping large, mass-market retail
companies.

The Minnesota Grown directory promoted food that is “1,500 miles fresher” in past years. More recent
studies, according to scholars at the Center for Small Towns at the University of Minnesota, Morris, actually

shows the route from farm to plate is more like 1,200

miles. That’s a lot of travel – and a lot of energy
expended – for food served in a state that is a literal
cornucopia.

While last year we focused attention on ways to treat

the sweet tooth through locally made chocolates,
let’s give “freshness” a value-added emphasis this
year – on the plates and in the glasses – regardless
where some of the raw materials are accessed.

Lutefisk and Herring

Few food items scream “Minnesota” as much as wild

rice or University of Minnesota-developed varieties
of apples, but ethnic delicacies such as lutefisk
and pickled herring come close. And you can’t talk
lutefisk without mentioning Minneapolis in the same
breath.

Chris Dorf, president of Olsen Fish Co., said the

grand old fish company has emerged as the largest
lutefisk maker in North America and likely is larger
than the largest maker in Norway. “We say, and are
pretty convinced, that we are now the largest lutefisk
company in the world,” he said.

Made in MN 2008 8
This year, Dorf said, his company will make about 500,000 pounds of the reconstituted fish entry and about 2
million pounds of at least six different types of herring. In
terms of lutefisk, he said, “We are back to where we were
about 10 years ago” since lutefisk isn’t exactly a growth
market. Regained sales have come from consolidating
Minnesota manufacturers that keep lutefisk soaking and
processing centered in the state.

Olsen now makes and markets its legendary Olsen’s brand

as well as acquired Kemp’s (Duluth), Viking Brand (Golden
Valley) and Mike’s Lutefisk (Glenwood) branded products.
The gelatinous fish product starts out as “stockfish,” or
dried cod, harvested offshore and imported from Norway,
he said. The herring comes from North Atlantic waters off
the coast of Canada.

What makes lutefisk and herring “fresh” Minnesota products is the value-added work done at the recently
expanded Olsen Fish Co. plant in north Minneapolis. Olsen has 17 full-time employees year around. It adds
10 temporary employees in September and October each year for “the buildup” for the holiday season, and
an extra 10 employees are added from around the first of November until New Year’s each year for peak
production, Dorf said.

Meanwhile, pickled herring products do represent a growth market and are not dependent on Scandinavians
keeping family traditions alive, Dorf said. The herring products get a big boost from being a kosher food; that
makes them popular with upscale restaurants on both coasts, on cruise ships that cater to North Americans
and Northern Europeans out of Florida ports, and pockets of Scandinavian Americans stretching from Chicago
to Seattle.

So don’t thumb your nose at specialty fish products. Buying Minnesota made lutefisk and herring products
provides value-added benefits to the state economy that include jobs, revenue, taxes paid, profits retained,
and less easy to quantify quality of life
contributions.

Beverages

So what to serve with an appetizer

plate of herring in cream sauce or a full
plate of lutefisk with boiled Big Lake or
Red River Valley potatoes, locally grown
and frozen dill, and melted Minnesota
butter? Minnesota entrepreneurs offer
you several choices, and all add to the
Minnesota economy.

At last count, there are at least 13

9 Made in MN 2008
Minnesota wineries offering wine varieties in the Minnesota Grown Directory. Minnesota 2020 saluted several
of these wineries last year and will be adding more to the online directory for this season. These wines make
great gift items as well as compliment a feast meal at home.

Coincidentally, there are at least 13 breweries working in

Minnesota although a few farm out their production to other
plants. Local beers make wonderful gifts as well, and most are
available at liquor stores for slaking thirsts at the dinner table.

The largest and best known, of course, include the August

Schell Brewing Co. at New Ulm, the second oldest family run
brewery in America; the also historic Cold Spring Brewery and
its Glueck Brewing Co. at Cold Spring, and the newer but now
well established Summit Brewing Co. in St. Paul.

But Minnesotans and shoppers in specific markets can also

find superior beer products from Brau Brothers Brewing Co.,
Finnegans, Flat Earth Brewing Co., Lake Superior Brewing
Co., Lift Bridge Brewery, Mantorville Brewing Co., Pig’s Eye
Brewing Co., St. Croix Brewing Co., Surly Brewing Co., Vine
Park Brewing Co., and another dozen or so on-site brew pubs
scattered around the state.

Finally, promoters of buying local should raise a toast to the

farmers and local investors in west-central Minnesota. About
700 cooperative farmers and a couple hundred other local
investors own and operate the Chippewa Valley Ethanol Co.
at Benson. Alongside the ethanol plant, these entrepreneurs
make two premier vodkas for two rival companies.

The first made in Minnesota vodka was Shakers, distilled and

made in Minnesota for a California-owned company. More
recently, however, the venerable Phillips Distilling Co. of
Minneapolis has begun bottling and marketing Prairie Organic
Vodka made from grains raised in the Cottonwood and
Maynard farming areas.

Jobs. Taxes. Economic activity. And value-added manufacturing

raising the value of Minnesota small grains and corn. These
are gifts that keep on giving.

Made in MN 2008 10
Putting Your Money to Work__________________
There are two key points on any supply chain: the manufacturing stage where most value is usually added, and
at the point of purchase where a consumer determines that the product is indeed worth purchasing. Upstream
from the manufacturer are providers of raw materials and purveyors of business services. Downstream are
wholesalers and distributors, transporters and the people who stock shelves, serve food and ring up sales for
the retailers.

All phases of production and the supply chain create and support jobs. All add value or no transaction would
occur. But not all transactions and supply chain arrangements add equal value to the local and state econo-
mies.

The Made in Minnesota directory looks primarily at local manufacturers and the products they offer. But the
message behind the directory is a call on consumers to hold up their end of the bargain in these trying eco-
nomic times.

When possible, let’s all look to how we can get the most bang for the buck this holiday shopping season.

11 Made in MN 2008