Austin business leads the pack: State officials highlight Austin economic growth, caution against a lack of innovation

Published 10:38 am Thursday, December 19, 2013

Business is growing a little better in Austin than in the rest of the state, but unless a few changes occur, the Minnesota Chamber of Commerce believes the economy could slow.

The importance of innovative change and the need to offer more services around the globe were part of a presentation on the state Chamber of Commerce’s GROW program.

“Change really drives our economy, whether we’re going to grow or decline,” said Bill Blazar, senior vice president of public affairs and business development with the state Chamber.

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Blazar said Chamber of Commerce data showed fewer businesses across the state offered new products in recent years, which is a worrying trend as companies could stagnate in terms of sales and profits. Blazar told a crowd of business people and city leaders that Minnesota businesses were already trying to increase sales while lowering profit margins.

Yet Minnesota, and southeast Minnesota in particular, grew at a better rate than much of the U.S. over the past five years, as the world recovered from the 2008 and 2009 recession.

Austin is leading the pack, as more Austin businesses have shown confidence in increased sales and profitability than in other areas of southern Minnesota. In addition, Austin businesses are expanding more in the community than elsewhere in the state, an encouraging sign according to Blazar.

“Austin pretty much leads the way in terms of sales and profitability,” Blazar said.

Yet many economists say the global economy will likely grow more than the U.S. over the next few years, which means more businesses need to adopt export strategies. Blazar highlighted Hormel Foods Corp.’s acquisition of Skippy peanut butter and subsequent plans for an international sales campaign as a good example of exporting goods from Minnesota businesses, but services like processing dental claims in European companies — something other Minnesota companies do — will likely be more in demand.

Blazar also highlighted benefits and drawbacks to doing business in Minnesota. While many businesses tout Minnesota’s education, electric reliability and workforce quality in southeast Minnesota, many businesses rate state taxes, health care costs, workers’ compensation rates, and insurance requirements as detriments to attracting workers.

It’s that struggle to find good workers that have businesses rethinking plans.

“Business is improving, business owners are more optimistic, profits are rising slowly, and people want to hire but they’re reluctant to hire, at least in a big way,” said Sandy Forstner, executive director of the Austin Area Chamber of Commerce.

Forstner said he agreed with much of Blazar’s presentation, but stressed his concern that businesses were looking to expand outside of Minnesota because of increased health insurance mandates and incoming business-to-business costs.

“Many of our larger companies, companies with the resources and business models that extend well beyond our borders, are looking to invest more elsewhere than here,” Forstner said. “That’s disturbing.”

Mayor Tom Stiehm said he was impressed with the presentation and sought to bring more economic issues to the Austin City Council.

“The No. 1 issue we have right now is to find good, decent-paying jobs,” he said.