By KAREL SOVAK

For the Tribune

When you think of a family-owned business, you may think of small mom and pop operations.

The dissolution of many family-owned businesses, as they progress to the second, third and even fourth generations, is substantial. According to statistics, about 30 percent of family-owned businesses pass on to the second generation, and only 12 percent make it to the third generation. Most alarming, only 3 percent survive to the fourth generation. Considering that about 90 percent of Midwest businesses are family-owned, the Prairie Family Business Association (PFBA) is looking to bring family-owned businesses to a new light and assist in the succession planning by starting the Affinity Peer Group, or APG.

The APG is intended to bring ‘peers’ together to assist in the growth and development of the member businesses attending the sessions. The APG is relatively new to North Dakota, but not to many family-owned businesses in the region. The APG places generational owners together to share success stories, challenges, trends and even personal development of the members. In this way, first generation owners can share with other first generation owners, while the second, third and even fourth generation owners have their own forum.

PFBA began in South Dakota in 1993 with a mission “To build relationships and offer quality educational programs that promote successful businesses and healthy families!” They moved into North Dakota a few years ago, and have been building momentum ever since. The APG is just one more resource family-owned businesses can use to develop more professionally and consistently, into those next generation owners.

PFBA director Beth Adamson stated the APG consists of confidential groups of 6-10 family business members, in similar corporate roles, meeting monthly to discuss matters of business, family and personal interest.

“Affinity groups are peer groups that meet regularly, allowing members to share experiences and learn from each other in confidential setting and seek advice and help with issues they are facing,” Adamson said. “This current group is preparing to assume leadership roles in their family businesses. They are committed to preparing themselves to take over from the senior generation. The affinity group is a ‘safe’ place where members can benefit from the collective knowledge and experience of their peers. Sharing and learning become the hallmarks of these groups and lessons learned can then be taken to the work place or the family to assist in perpetuating the family business.”

Adamson continued that participants face obstacles such as gaining the respect of company employees loyal to the senior generation, negotiating with siblings or cousins on ownership issues, and preparing themselves to be competent leaders. In addition, many are struggling with convincing the senior generation that they are capable of leading. Members of the initial group are Ryan Barth, Jordan Pope, Jon Simmers and Jill Duemeland. All are in similar positions within their respective companies with regard to assuming leadership roles.

Jill Duemeland, president and CEO of Duemeland Commercial Real Estate is a fourth generation partner in a company that was started back in 1905. Duemeland likes the resources PFBA has provided for her family business.

“Since we have joined, we have created a Family Business Office Policy and have worked with consultants on succession and life planning,” Duemeland said. “By focusing on the family dynamics in addition to the business, this has been instrumental in the growth and success of our company. APG is great because it allows you to connect with individuals who can relate to the joys and challenges of working in a family business.

Jon Simmers, CEO of Bismarck Aero Center is a second generation partner in a business his father founded in 1990 and is an active member in the APG. Simmers said the APG is not only an important opportunity for him personally, but for their entire organization. “The APG group will continue to shape me and allow our organization to plan into the future,” Simmers said. “What is so unique about this group is that we are all in similar states in our business with respect to operating a family business. We all have unique, yet similar experiences that can become complex with family dynamics. We can all learn a lot from each other by sharing best practices and avoiding the mistakes that have been made by other family organizations.”

Simmers indicated that the program is designed to go beyond just him and his organization as well.

“I joined the APG to dedicate time to helping other family businesses succeed”, Simmers said. “In return, I expect the same dedication from the other members of the group.”

Karel Sovak is an assistant professor in the Gary Tharaldson School of Business at the University of Mary. He also facilitates the juniors and seniors in the Emerging Leaders Academy.

WILL KINCAID/Tribune - Workers put the finishing touches on a new 3 story apartment building on 19th St. in Bismarck in this August 2011 file photo.

With about a one percent rental vacancy rate in Bismarck, many in the rental housing market are confident about the future.

Eric Brenden of Northwest Contracting said his company is building another 42 unit building for the Belcastle Apartments complex at Capitol and 19th Street. They’re also working on the footings for a 140 unit building on Cook Drive near Pebble View Golf Course and are waiting on permits to build an apartment complex in Lincoln.

“There’s quite a demand right now,” Brenden said. “Apartments and hotels are being rented out before they’re even complete. We can’t build them fast enough.”

Schan Altringer, property supervisor for Investors Marketing Management, said they have no vacancies right now but they’re building a 128-unit complex in northeast Bismarck.

“We’ve already started pushing dirt around and will be building up as fast as we can,” he said. “We have people calling us everyday for apartments.”

Carol Fandrich of Belcastle Management, who manages Belcastle, Boulder and Capitol Apartments, said the increased demand has sped up turn around on existing properties too. She said she had a notice from people planning to move out in June and the apartment is already rented for after they leave. She had another family give her 60 days notice but had them leave earlier because someone else wanted to move in right away.

Rocky Gordon of the tight market is nothing new. It was very low to begin with. Over the last couple years the vacancy rate has been 2 1/2 percent. Now it’s down to one percent or less.

Gordon said the cause for the tight market is growth in Bismarck’s population coupled with not very many apartments being developed in previous years. Now development is starting to catch up.

“How much is the market going to grow? That’s a question I don’t have good answer to,” Gordon said.

Bismarck Director of Community Development Carl Hokenstad said 2012 is shaping up to be another record year for residential building permits and the majority are being built in the north part of Bismarck.

Most in the rental housing industry said the oil industry is a major driver of increased demand. Fandrich said many of her tenants are moving in from Williston because they can’t afford $2,000 a month for rent. Some who work in the oil field can’t find housing in places like Williston or Dickinson, so they are living in Bismarck and driving out for work.

While oil is part of what’s causing demand, those in the industry say it’s not the only reason.

“I think it’s directly related to oil activity going on,” Investors Real Estate Trust Property Manager Mike Gregory said. “Irrespective of that I think Bismarck has been growing.”

“We look at Bismarck as a sustainable market,” Jon Miskavice of MNU Construction said. “It’s not overbuilt, not under built. It’s just a really steady market. There wouldn’t be any major affect if oil goes away … Minot is explosive. You don’t see that here in Bismarck.”

Many in the industry are optimistic that demand will support more development for years to come.

“Everybody is full,” Fandrich said. “I don’t see it letting up in the near future.”

Hokenstad said historically rental property vacancy rates are cyclical. Some years demand is up and there’s a lot of construction. If units start to become vacant, the construction slows down.

“We’re in a high growth period right now, Hokenstad said. “From what we hear will last for some time

Kurt Bollman, executive vice president of Goldmark Property Management, said the demand in Bismarck has caused and will continue to cause investors from outside area to look at the town with more interest. He said Goldmarck Development has built a few new properties over the last three to four years and they have stayed filled. He said the company continues to look for expansion opportunities in the area.

“Goldmark’s philosophy has been to grow in a conservative fashion but we do see Bismarck as solid market for years to come.”

“I personally believe it’s going to be more of a long term thing,” Altringer said. “That’s why people are developing more apartments right now. There are more people moving into the Bismarck area … I don’t think Bismarck will ever really have a problem with people up and leaving.”

Bollman said what could cause problems for the rental market industry in Bismarck would be over building or of multi family housing or a downturn in the region’s economy.

“I’m just thinking that unless a bunch of apartments are built in the next year there’s still going to be a demand,” Fandrich said.

Many people view the U.S.- China bilateral relationship as the most important bilateral relationship in today’s world.

With 1.3 billion people and an emerging consumer class, the opportunities that exist for North Dakota companies in China are phenomenal. As the Chinese population grows at an alarming rate, the country is becoming increasingly worried about food safety and security. Furthermore, as the middle class grows, consumer tastes are becoming more sophisticated. The market is craving high quality consumer goods and foods, and North Dakota produces some of the finest food products in the world.

A delegation of North Dakota business leaders and officials got a first-hand look at these opportunities during a recent trade mission to China, led by Lt. Gov. Drew Wrigley, North Dakota Agriculture Commissioner Doug Goehring, and the North Dakota Trade Office.

“The North Dakota delegation had significant success in China and there are already contracts in the works for a number of companies,” North Dakota Trade Office Executive Director Dean Gorder said. “The Chinese market isn’t a simple one. It requires dedication to make sales, and the relationships with Chinese buyers are of the utmost importance. But, once you form a relationship, it’s one that often lasts a lifetime.”

Trade relations between the U.S. and China are just a piece of a larger relational puzzle. Our nations’ ties are dynamic and — as the two most powerful countries in the world — they require careful attention. Admiral Bill Owens, a Bismarck native, retired admiral from the U.S. Navy and former Vice Chairman of the Joint Chiefs of Staffs who now spends about 25 percent of his year living in China, saw the importance of nurturing this sensitive relationship and created a program called The Sanya Initiative.

The Sanya Initiative is a US-China, military-to-military exchange between retired Generals and Admirals. The goal is to foster discussion on many sensitive subjects between our countries, to create dialogue, understanding and friendship and to build more trust between our governments and countries.

“I started Sanya six years ago with the belief that the Chinese-U.S. relationship was the most important in the world and that if we learned anything from the Cold War it was that we needed to foster the very best Military to Military Relationships — something we didn’t do in the Cold War,” Admiral Owens said. “I thought that if we got the most senior retired officers together we could foster a warm, open, trusting relationship which might be of great value to the overall relationship in the future. I believe that it has turned out to be true, but we need much more engagement between our militaries and we need trust between them. I am totally committed to helping to make that happen.”

Launched in 2008, the program is an annual event that typically consists of two days of high-level official meetings followed by two days of official visits in the nation’s capitols.

The U.S. Generals and Admirals that participate are mostly retired Chairman and Vice-Chairman of the Joint Chiefs of Staff — the highest ranking military positions in the U.S. The Chinese military sends the counterparts to these positions.

The discussions are substantive on a range of complicated issues. Topics have included sensitive matters such as security in the South China Sea, stability on the Korean Peninsula, partnering to stabilize Afghanistan and Pakistan, and partnering to support non-proliferation of nuclear weapons in Iran and North Korea.

The Sanya Initiative is considered ‘unofficial dialogue’ yet has strong support from both governments. The program provides a more candid, personal, and less -political platform on which to discuss key issues between the two countries. The program allows dialogue between individuals who care deeply about their countries and believe that a sustained, reliable long-term military-to-military relationship supports their respective country’s well-being, prosperity, and growth.

Participants have strong feelings on the subject matter and points-of-view often differ, but both sides agree there have been misperceptions between the two countries and that both governments should take concrete actions to eliminate misunderstanding through confidence-building measures and open communication.

All discussion points from The Sanya Initiative are taken back to the governments through political attaches who attend meetings. A smaller scale follow-up meeting of the Sanya Initiative is usually scheduled a few months later, and communications are continued throughout the year.

With the success of programs such as The Sanya Initiative, the relationship between the U.S. and China can remain open, despite political tensions. From North Dakota’s perspective, this could mean improved trade opportunities.

Former Ambassador and Congressman Mark Green recently visited North Dakota for the Global Business Connections international business conference and shared his views on the Sanya Initiative. He stressed the importance of information sharing between countries for economic growth and applauded North Dakota’s efforts in the international arena.

“Information sharing and engagement in the world goes a long way towards promoting better understanding and preventing unnecessary conflict. The same is true in the economic arena, and to get our economy moving again, we must be active participants in the global marketplace,” Congressman Green said. “North Dakota is way ahead of the curve and knows this well, as exports increased by more than 33 percent last year from the state and over 300 percent in the last decade.”

Brittany Posey is the Membership Coordinator at the North Dakota Trade Office. She also serves as part of the NDTO Communications Team.

AMY TABORSKY/Tribune file photo - A wind farm near Wilton, N.D.

Is the answer really blowing in the wind? Quite possibly, if the question is about North Dakota’s capacity to create renewable energy.

According to the American Wind Energy Association, North Dakota is, in fact, the windiest state and ranks No. 3 in the percentage of electricity that is wind-generated, at 14.7 percent.

Wind energy seems tailor-made for the state: It requires dependable wind and open spaces, two things North Dakota has in abundance. It’s environmentally friendly, with zero carbon emissions and no water usage. It’s compatible with farm and ranch usage.

According to Skystream, a manufacturer of wind turbines, the state has the capacity to generate 500 percent of the entire country’s electricity needs.

Windmills have had a long history in North Dakota.

In the early 1900s, ranchers built water-pumping windmills to provide water for their livestock, and some are still in use.

Before the Rural Electrification Act of 1935, some isolated North Dakotans put in rudimentary wind generators to power their lights and small devices with direct current. However, their small batteries limited the use of windmills.

Fast-forward a hundred years, and wind farms have become a boon to the state, generating millions of dollars in land lease and property tax payments, and creating thousands of jobs. In addition to small shops, two large manufacturers have opened shop in North Dakota in the last decade, the AWEA reports; LM Glasfiber, in Grand Forks, produces fiberglass blades for the turbines, and DMI Industries, in West Fargo, produces the towers.

More than 40 wind projects currently exist in the state, and more are being discussed. As recently as March, the Morton County Planning and Zoning Commission gave a collective nod to a proposal to put 51 wind turbines in Morton and Mercer counties.

But there’s a hitch. In March, a bill to extend the federal Wind Production Tax Credit died in the U.S. Senate, sparking dire predictions for the future of wind energy throughout the country. The tax credit is set to expire at the end of the year, and the industry is hoping for a reprieve.

Paul Govig, director of the Division of Community Services, agrees that the tax credit is key.

“We’ve had significant growth in wind power over the last few years,” he said. “It has somewhat stalled because of the production credit in Washington. It really depends on when that money is freed up in Washington, when they agree that they’ll subsidize the industry. If they’re willing to do that, developers will jump in. President Obama — the Democratic Party — is generally more favorable to green power. There are some cases where they want the government to get involved with it.”

Even without the federal tax credit, however, incentives are available to encourage businesses, manufacturers and even families to invest in wind energy. The state offers several options for different types of customers to buy into wind, from tax credits to sales tax exemptions.

In addition, the state Department of Commerce offers financing options.

“The North Dakota Development Fund has millions of dollars available to primary-sector businesses – primarily manufacturing and processing,” Govig said. “Possibly these kinds of businesses could access funds from that, in the form of low-interest or equity financing.”

Unfortunately, the DOC incentives aren’t extended to private customers.

“There isn’t a specific initiative for that,” Govig said. “There are tax incentives, but, without some type of subsidy, it’s very difficult for the customer to justify that expense against the return.”

But Govig said the cost isn’t the biggest sticking point with investing in a turbine.

“The biggest issue is that wind isn’t a dependable resource, even in North Dakota,” he said. “It’s not 24/7, like coal.”

There are other drawbacks, as well, to the turbines.

Some people consider the windmills as unsightly as, oh, an oil derrick on the landscape. To them, the exchange of aesthetics for cheap, clean energy just isn’t worth it.

Although advances in technology have made the turbines almost silent, the cumulative noise of a few dozen of them has some seeing red.

There are also highly debated concerns about health risks — to humans as well as bats and birds. Some fear that living near a large group of turbines is causing health problems, a mix of mental and physical symptoms called wind turbine syndrome. Windmill neighbors have claimed issues with anxiety, sleeplessness, palpitations, headaches, dizziness and ringing in the ears.

Proponents of wind energy claim that the production of fossil fuels offers more, and more tangible, health risks.

Spearheaded by Californians concerned about raptors, some groups have called the turbines “bird-o-matics,” claiming that an unacceptable number of flying creatures are killed by flying into the blades of the turbines.

Proponents of the turbines, while calling the deaths regrettable, say that the number of birds killed by turbines represents about 1 percent of bird deaths each year. They blame hundreds of millions of the deaths on cats, collision with power lines and windows, pesticides, cars and communications towers, while attributing only 10,000 to 40,000 deaths on windmills.

So, as with most harbingers of change in North Dakota, wind turbines are generating controversy along with electricity. But the state’s propensity to harvest natural resources virtually assures that the wind, too, will be put to use.

BRIAN GEHRING/Tribune Farmers north of New Salem were in the fields in this August 2010 file photo with the small grain harvest getting under way. Agriculture remains North Dakota’s top industry.

By DERRI SCARLETT
For the Tribune

Oil. Oil, oil, oil. News of North Dakota’s fledgling big-ticket industry threatens to drown out everything else. But there are still a lot of other things going on in the state. And oil isn’t even the biggest.

 Agriculture is king

Agriculture is still king in our state, and manufacturing, other resource mining, technology, tourism and services fill out the state’s thriving economy.

Al Anderson, the state Department of Commerce commissioner, agrees.

“North Dakota has one of the strongest economies in the nation and, while oil plays a role, it is only one piece of the puzzle, making up just 25 percent of our state revenue collections,” Anderson said. “Oil is just one piece of our economic success and our economy is much bigger and more diverse than ever before.”

While agriculture is — by its nature — not a huge job supplier, it’s still the No. 1 piece of North Dakota’s economic puzzle. The state grows more durum wheat than any other, and, for all wheat production, it’s second only to Kansas.

North Dakota is the No. 1 producer of barley and sunflower seeds and near the top of the list for flaxseed, canola seed, oats, rye, sugar beets, honey, navy beans, pinto beans and soybeans. North Dakota, being naturally self-sufficient, also produces a lot of the hay and corn needed to feed its livestock sector. Cattle, calves and hogs are its main output, plus milk and the many products made from it.

Investment into the state doesn’t hurt, either, according to Anderson.

“Cargill recently started a $50 million expansion project, and Monsanto has completed a $17.5 million expansion that has created 20 new jobs in the Fargo area,” Anderson said.

Agriculture begets manufacturing

Manufacturing is also important to North Dakota’s economy and, because of its agricultural base, a lot of that is food processing — adding value before the resources are shipped and sold.

In addition to milk products, like cheddar cheese, major food products include bread and pasta, frozen potato products and seed oils (flaxseed, sunflower seed), according to the Department of Commerce website. Livestock are turned into steaks and sausages, and sugar refineries process North Dakota’s sugar beet crop.

The state also manufactures construction and farm machinery, aircraft and motor vehicle parts, and computer, electronic, metal and petroleum products.

And investment continues in that sector, as well, according to Anderson.

“Manufacturing continues to grow in North Dakota, where most of the country has reported severe declines,” Anderson said. “One example is the recent expansion announcement by Caterpillar in West Fargo. Construction has started on a $50 million project that will create about 250 new jobs during the next three years, nearly doubling the plant’s current workforce. Caterpillar officials told us that North Dakota’s pro-business climate was a major factor in their decision to expand in West Fargo. Phoenix International, a company that manufactures electronics for John Deere, recently broke ground on a $22 million expansion project that will include 90,000 additional square feet in Fargo for an expanded work force. The state’s business growth also includes expansions at WCCO Belting in Wahpeton and Harris Manufacturing in Oakes.”

Legendary growth

The tourism industry continues its legendary growth, coming in at No. 3 in the state. Despite its lack of major attractions, North Dakota’s cities and towns welcome visitors at an impressive rate.

“Tourism continues to drive North Dakota’s economy as the third largest contributor to gross state product,” Anderson said. “The tourism industry growth is visible by looking at the number of new hotels constructed across the state. In the past two years, 21 new hotels have opened, adding 1,474 sleeping rooms in 11 communities. Another 24 hotels are under development and are expected to add another 1,800 rooms by (later this year).”

Technology and aviation are becoming more important to the state’s economy, as well, and are major job-producers.

“Our technology sector has gained national recognition and our information technology subsector job growth has been triple that of the nation,” Anderson said. “Microsoft and Amazon have both recently expanded. Amazon added a 30,000-square-foot facility that will expand their customer service operations in Grand Forks. The expansion is expected to create 200 full-time jobs, plus additional seasonal jobs. Microsoft’s Fargo campus is one of the larger Microsoft locations worldwide, and their three buildings house over 1,500 employees, vendors and contingent staff.”

Noting aviation growth, Anderson said, “Fargo-based Spectrum Aeromed is one of the fastest growing private companies in the nation according to Inc. Magazine. Over three years, the aviation company has a grown its revenue by nearly 800 percent.”

Employment up

Services round out the state’s economic picture, including community, business and personal services; wholesale and retail; and finance, insurance and real estate.

Health care includes the many large medical centers found in North Dakota’s, as well as smaller satellites and private nursing and home health care. Others in this category include law firms (the state hosts operations centers for several major corporations), motels and repair shops, according to the Department of Commerce website.

Food products, mined products and motor vehicles dominate the state’s wholesale sales, and retailing is strongest in grocery and hardware stores, restaurants, service stations and telemarketing operations.

Ranking third are services in the finance, insurance and real estate group. North Dakota’s banking and insurance industries are centered in Fargo.

Finance and insurance play a surprisingly large role in the state. According to the U.S. Census Bureau, North Dakota has more than 1,000 finance and insurance enterprises, with 42 firms having 2,500 employees or more. These businesses include credit intermediation, securities, insurance carriers, financial vehicles and related activities.

Of course, service is a serious job-building sector, and employment is an area where the state really shines.

“We have the lowest unemployment rate in the nation; we have 20,000 plus jobs openings, with two thirds of those outside of oil-producing counties,” said Anderson. “In fact, the counties with the greatest number of job openings right now are Cass with 6,365 and Burleigh with 2,797. North Dakota has added nearly 50,000 new jobs in the last decade, while the nation has lost jobs. The American economy grew at a pace of 2.9 percent last year, while North Dakota’s economy increased by 7.1 percent last year, the strongest growth in the nation.”

And no changes are predicted in that picture for the foreseeable future.

The key to North Dakota’s strong economy, then, is much more than a large patch of oil under some rocks.

“The fact is, steady growth in North Dakota’s targeted industries is key to our state’s strong economy,” Anderson said.

And, while slow and steady doesn’t always win the race, it at least keeps North Dakota in the running.

LAUREN DONOVAN/Tribune Two bulldozers and nine scrapers were assembled during the reconstruction of Highway 22 landslide in this file photo from Nov. 11, 2011. On the best days, equipment removed 580 loads of dirt to make a new cut for the road. The road re-opened on Nov. 9, 2011 after being closed because of landslides since late May 2011.

By DERRI SCARLETT
For the Tribune

A booming economy, water and oil combined last year to create a perfect storm on North Dakota’s roads, and “construction season” promises to be long, long, long throughout the state.

According to Russ Hanson, executive vice president of Associated General Contractors, “The Williston area is very visible with its needs and the wear and tear on the roads out there, and that need is real. There’s a lot of notoriety and press, and rightly so. But there’s also a lot of work throughout state. It will be a very big year for construction in North Dakota.”

AGC is the trade association for commercial contractors in the state.

“Last year, the state spent $590 million, and that was by far a record,” Hanson said. “We expect this year to be another big year, very close to last year.”

Peggy Anderson, spokeswoman for the state Department of Transportation, agrees.

“The estimated 2012 construction program is approximately $520 million on projects throughout North Dakota,” she said. “The governor and Legislature passed a comprehensive transportation package of $1.67 billion for the 2011-2013 biennium, which includes maintenance and enhancement of state, county, city and township roadways. That includes an unprecedented sum in non-matching State General Fund dollars and is the largest two-year budget for road construction and transportation services in NDDOT history.”

That figure includes $600 million for the regular federal aid statewide construction program, $228.6 million for the Extraordinary State Highway Maintenance program and $147 million for the county and township road reconstruction program.

The funding comes from several different sources, including the federal highway administration, state highway tax distribution fund, and state general fund, Anderson said.

“A lot of temporary repairs had to be done last year because of flooding,” she said. “Those are called emergency relief projects. We plan to complete permanent repairs in those areas this year.”

Part of the problem is a numbers game, thanks to a thriving state economy.

“The number of trucks on the road today throughout state has increased,” Hanson said. “It’s most visible out west, but it’s true everywhere. And they’re heavier than they were a generation ago.

There are almost double the number of trucks there were 30 years ago, and those trucks are 30 percent heavier. You take those numbers into the equation, and there’s a vast need for infrastructure.”

Drought-prone North Dakota had the opposite problem last year, Hanson said.

“Water is one of the most powerful natural things there is,” he said. “You’ve got Devils Lake — the lake that won’t stop rising — and that’s creating problems. The flooding around the state caused a lot of erosion. There are damaged bridges to be repaired, downed trees to deal with, dykes to be removed.”

The DOT’s Anderson said, “Record flooding across North Dakota caused extensive damage to state, county and urban roadways covering 41 counties and three cities. Some areas of the state are still assessing damage to their infrastructure. The Department is working on a large number of emergency relief projects.”

Areas affected by flooding, in addition to Devils Lake, include the Red River area, Minot, Bismarck and the Prairie Pothole Region, which covers the eastern half of the state.

“Another challenge due to weather-related conditions includes landslides on highways in western North Dakota,” Anderson said.

While oil has been a boon to the state economically, it has been a bane to roads, especially in the northwest.

The DOT has accelerated projects in western North Dakota and increased dollars spent for repair work, construction and signage in oil impact areas, Anderson said.

Major projects worked on in 2011 include the following:

• Completed first Super 2 highway construction in North Dakota on U.S. Highway 85 between Watford City and Williston, providing additional passing and turning lanes
• Major construction and widening projects on state Highway 8, state Highway 22 and state Highway 23
• Expedited repairs on damaged pavement of several state highways in Williston and Watford City areas
• Installation of traffic signal systems at highway intersections near Tioga, Williston, Watford City and Stanley
• Added centerline and edge-line rumble stripes on two-lane highways

Western North Dakota projects scheduled for completion this year include the following:

Interstate 94

• Westbound reconstruction from east Dickinson interchange to west of Taylor

State Highway 8

• Widening and regrading near Bowbells from junction of U.S. Highway 52 to junction of state Highway 50

State Highway 23

• Improvements include widening roadway and adding passing and turning lanes east of New Town to state Highway 37

State Highway 22

• Expanding to five lanes in north Dickinson to Dunn County line
• Widening and adding/turning lanes 12 miles north of Killdeer to Lost Bridge.
• Widening and adding passing/turning lanes from state Highway 73 to state Highway 23

Williston truck route

• Developing a truck-reliever route for the city of Williston

Additional truck reliever routes are under consideration for Dickinson, Alexander, New Town and Watford City, Anderson said.

The housing crunch in that area has compounded problems, said the AGC’s Hanson.

“The housing issue is a huge challenge, and there’s just no getting around that,” he said. “Those needs are there for those mobile crews. Every contractor handles it differently, but it affects our industry as much as anyone. When some subcontractors put in a bid for work, they’ll include in the bid that the main contractor will have to find housing for the workers.”

But there is some good news, he said.

“While Mother Nature was very harsh last year, she was generous this year. Crews were able to work almost through the end of year. That allowed a lot of catch-up work to be done. It made up for time lost during flooding last year.”

Planned projects for eastern and central North Dakota include the following:

Bismarck District

• I-94 east of Bismarck exit 161
• I-94 exit 157 Bismarck
• U.S. Highway 83 project in north Bismarck
• State Highway 36 west of Tuttle
• State Highway 24 near Fort Yates, adding turn lanes and lighting

Valley City District

• I-94 from westbound from Dawson to Crystal Springs
• Reconstruction of Ninth Avenue in Valley City from Main to 12th Street

Fargo District

• West Fargo — Main Avenue (Fifth Street East to 45th Street)
• Fargo — Seventh Avenue and Interstate 29 overpass
• Fargo — U.S. Highway 81 (12th Avenue to 17th Avenue North)
• State Highway 200 in a section of Mayville — Pavement, bikeway, lighting

Grand Forks District

• State Highway 15 from the junction of state Highway 32 east to one mile west of Northwood
• State Highway 1, Lawton north to Nekoma
• Grand Forks — Columbia Road (Eighth Avenue to U.S. Highway 2)

Devils Lake District

• U.S. Highway 52 from south of Carrington to south of Melville
• State Highway 57 — East of Ft. Totten to one mile west of the junction of state Highway 20
• State Highway 20 — South of the junction of state Highway 57 north to the city of Devils Lake Levee

For a complete list of projects, go to the North Dakota Department of Transportation website at www.dot.nd.gov.

By KAREL SOVAK

Social entrepreneurship has picked up steam over the past few years based on the number of conferences, workshops and the rise of L3Cs, or low profit limited liability corporations.

Social entrepreneurship finds its place in our capitalistic society at a crucial time. With the advent of the corporate financial collapse, demonstrations like Occupy Wall Street and even the issues overseas with the European Union, there may never be a better time for entrepreneurs to focus on solving some social issues. Social entrepreneur looking to impact the triple bottom line focus on three things — people, planet and profit.

Since the L3C concept is new to the scene, many state legislatures have looked into their organizational structure as a viable business model to assist the social entrepreneur. Currently, eight states have approved the L3C as a legal business structure. Ten more states are looking to introduce the legislation in 2012. The legislation requires an amendment to the general limited liability act. This opens the door for those entrepreneurs who wish to solve the issues of poverty, hunger, homelessness or literacy (and the list goes on) to create a business model that acts like both a non-profit and for-profit. In fact, some social entrepreneurs have chosen to help in the sustainability of non-profits or the social responsibility of for profits.

In addition to the government side of business, the number of post-secondary institutions offering courses in social entrepreneurship has risen more than 400 percent in the last decade. The Opus College of Business at the University of St. Thomas, St. Paul, Minn., is included on that list of schools looking to encourage social entrepreneurs in their MBA program of study. Additionally, many community economic development organizations are promoting and offering incentives to those choosing the L3C path, especially in youth initiatives.

There are many routes the social entrepreneur can take. Combating obesity, finding alternative energy sources, even taking on floral shops are current businesses finding success in the United States. Absent legislation from the state of North Dakota to create the L3C model, there are still many reasons for social entrepreneurs to look within our borders to hone their skills in a social manner.

Due to the oil activity in the western part of the state, North Dakota is trending to be on the verge of many organizations to fulfill the myriad social needs in many communities. While some of the for profit companies are doing a satisfactory job providing for housing and other infrastructural needs, social services needs will continue to be on the rise. Currently, one of the areas of greatest needs is the emergency medical services. This industry has seen a large attrition of vital talent taking new positions in the oil industry at much higher wages. Many volunteers are also scarce, which calls for a demand to find more innovative solutions to meet the many needs. Perhaps North Dakota legislators can see their way to consider adopting the L3C as a solution?

Return on investment (ROI) now has a new player in the market. For non-profits, the ROI has always been based on the number of recipients served, or the attempted fulfillment of their mission. The for-profit corporations’ ROI is a performance metric used to measure the gain of an investment based on the cost of the investment. For the L3C, the ROI seeks to blend the risk and return of any profits to promote the benefits of social goals.

While L3Cs may not be the pot of gold at the end of the rainbow, they could provide a much needed relief with the many storm clouds brewing over so many societal issues.

Karel Sovak is a professor in the Gary Tharaldson School of Business at the University of Mary. He is also the facilitator for the juniors and seniors in their Emerging Leaders Academy. He can be reached at 701-355-8042, or ksovak(at)umary.edu.

Relentless traffic, staggering lines at restaurants and folks living in campers throughout western North Dakota help to demonstrate reasons for increased retail spending. Housing shortages encourage construction of new homes. And new homes mean retail purchases.

“Much of this is related to the oil boom in the Williston area,” Tax Commissioner Cory Fong said. “You only need to listen to the news to see what’s going on with bumper to bumper traffic driving in and out of there and hearing about both shopping and construction: hotels and housing. Williston is off the charts in infrastructure and lifestyle changes, contributing to our state’s taxable sales and purchases for the third quarter.”

Williston sees benefits from overall growth in spending. “The irony is that we’ve surpassed Fargo in retail sales,” Williston Economic Development executive director Tom Rolfstad said. “However, we recognize the demand for goods and services driven by oil related needs extends past Williston.”

Rolfstad said oil and gas impacts are staggering at Williston. Over two thousand housing units are anticipated; 691 hotel units are under construction; they currently hold the highest average annual salary in North Dakota.

“Retail spending for western North Dakota reflects great growth and economic benefits for Williston and other cities in and around the oil patch; however, numbers across the state are up,” said Fong. “Of fifty reported communities, only five were down according to third quarter taxable sales and purchases.

Third quarter experienced a 147 percent increase in construction alone. Additionally, mining and oil extraction were reported with a gain of 98.5 percent (the largest dollar increase of $545 million) with financial, insurance, real estate, rental and leasing up 67.2 percent. “We’re seeing much of the activity due to oil. Yet it’s more than retail, mining and oil extraction,” Fong said. “We’re seeing activity spawning in other sectors and other cities (Watford City, Stanley, Tioga). Most sectors reported strong growth. Manufacturing in the business climate is up 45 percent with wholesale trade up 43 percent.”

People are spending money. And that appears true across the state. In addition to the growth in the Williston area, eastern communities are experiencing significant growth as well. Both retail as a driving force in Fargo and unique small town purchases help contribute to the spike in quarter three.

“As we see western North Dakota booming, we’ll see effects across the entire state,” North Dakota Retail Association president Mike Rud said. “One piece we’ll need to factor in is how to maintain a labor force within the communities experiencing significant growth. With adequate labor in our retail and service industry, we’ll grow our customer service to where we expect North Dakota to be; in that way, we can help to encourage long-term investments in infrastructure — in individuals and families interested in living here to do just that; sustain and keep the growth in North Dakota.”

Rud said that getting roofs up within those communities lacking housing will help to encourage individuals to establish roots and stay for the long haul, even returning as college graduates or staying after high school graduation. “We need labor in so many applications,” Rud said. “Across the retail and service industries, we are lacking in help. We’ve all heard about retail pallets being dropped on floors with no manpower to restock shelves. It’s a matter of building up the infrastructure to bring added grocery stores, big box stores — whatever it takes to balance out as far east as Bismarck and beyond.”

“What does this mean for North Dakota? We’ve been experiencing a steady growth pattern for some time,” Fong said. “The impact of sales across our entire state indicates a very diverse, robust economy across all sectors. While we do benefit from energy, agriculture and agricultural commodity, processing, manufacturing and tourism, we are also seeing increases in those areas reflective of those traveling: accommodations and food services. We see consumer confidence up as a result.”

Fong said he anticipates taxable sales and purchases to level off, however. “We cannot sustain this level of growth over growth,” he said. “This will mean a slowdown in taxable sales, bringing us to a new normal; ultimately this leveling off will be a healthy thing for North Dakota.”

Only two sectors reported downturns: educational, health care and social services dropped 18.5 percent and a 16 percent decrease in utilities. Virtually unchanged, professional, scientific, technical and management services declined only 0.2 percent.

MIKE McCLEARY/Tribune In this October 2011 file photo, about 220 high school students from central and western North Dakota traveled to the Bismarck State College campus to participate in the annual Explore BSC Day. The National Energy Center of Excellence building was busy with future college students.

By TINA DING
For the Tribune

As the economy improves, aging North Dakotans feel confident in making decisions to retire. And a retiring workforce needs a strong generation of workers to fill their shoes. Students seeking opportunities to work in the energy industry, either as high school graduates or those seeking career changes, find new program choices at both the University of North Dakota and Bismarck State College.

Recent changes at both schools allow energy students to either attend coursework as a traditional student on campus or online — or a combination of both.

Since 1970, BSC has been supporting the energy industry in North Dakota by training generations of graduates in a full gamut of programming. From line workers to power plant operators and welders, graduating students have long worked to become highly specialized while supporting the energy industry.

With ramped up Bakken oil activity, students seek options to obtain programming that directly supports the industry, such as process plant technology, mechanical maintenance and instrumentation and control technology. And when a retiring workforce demands replacement workers, the industry will need to hire qualified graduates of these programs.

“Additional workforce needs in the oil and gas industry drove the addition of our new ‘Petroleum Production Technology program’”, BSC National Energy Center of Excellence vice-president Kari Knudson said. “This program will prepare students to work as an operator in the field or work for a service company that provides support to oil and gas operations.”

Students now have opportunities to work in the oil industry, in their backyards. Western North Dakota holds the potential for many careers in long term positions.

Knudson said January 2012 marks the addition of the Petroleum Engineering Technology program. Students will be prepared to work in technical jobs that support petroleum engineers, geologists and geophysicists working in the petroleum industry.

“At UND, we have several initiatives going on in energy education,” UND Institute for Energy Studies director Steven Benson, Ph.D. said. “In respect to educating the next generation of energy experts, we make sure that students recognize four primary pillars in getting energy out there: A. first, the science and engineering technology needs to work; B. the energy technology should make financial and economic sense; C. the importance of policies and regulatory issues on new technologies work; and D. the social issues associated with energy development.”

Further, Benson said UND has opportunities for student education in coal utilization, petroleum, crop oil (derived from plants), renewables, fossil and wind energy. The university recognized a need to develop a specific program for bachelors of science degree in petroleum engineering in August 2010. “Our program developed and is now a full-fledged department of petroleum engineering — providing training and background for not only working in the Bakken play, but to prepare to work both nationally and internationally. Our program currently holds 33 students in the program and we look forward to as many as 50 next fall — growing the program to the level of 100 students,” he said.

He described petroleum engineers as those who search for reservoirs containing oil and gas. Additionally, they work with geologists to understand the formation and characteristics of the rock containing the reservoir. It becomes their job to determine the best drilling methods before fracturing and drilling, then following through the production and processing and more.

“Politicians and decision makers have identified energy as a major challenge for our country, both now and in the future,” UND School of Engineering and Mines dean Hesham El-Rewini said. “Today, we are in a position to surpass California and Alaska, and have the potential to be second to Texas as the state producing the most oil. As a result, we wanted to cover the entire energy spectrum of challenges and solutions here at UND, from fossil-based (oil and gas) to renewable energy.”

El-Rewini said two parallel programs gained official approval, including petroleum engineering as well as the research and outreach program for all energy challenges and solutions. Today, petroleum energy has been approved as a department.

“We observed that we are the only state in the top 10 oil producing states without a petroleum engineering program. We’ve also held many conversations with prospective students and alums who’ve worked in oil and gas,” El-Rewini said. “It was they who felt we needed to step up to the fact that we are an oil producing state needing to produce the next generation of petroleum experts. Additionally, we reviewed the curriculum to determine the skills needed to give our graduates the best opportunity for a successful career.”

Since baby boomers are retiring, he realizes the potential gap between the retirees and the preparedness of those entering the profession. “We needed to develop the skills needed in business as well as those needed for leadership and management. And more so, we wanted to ensure we are exposing students to multi-cultural experiences,” he said. “There is an absolute need for an international presence in the oil industry.”

True, oil experts need to be prepared not only to work in the North Dakota Bakken play, but to be transferred overseas as well. Many enter North Dakota with international experience — fully understanding how to drill, work efficiently and understand business plans, economics and leadership in multiple settings, cultures and backgrounds. Both UND and BSC find they are ready to embrace the expectations of the industry by offering petroleum programs at their schools.

“There are so many opportunities in the industry,” Knudson said. “Women as well as men are seeking energy degrees, often entering the field after having experienced a parent, a relative or friend who’s worked in the energy industry. They see the potential for a great long-term career.”

At first glance, North Dakota appears to be gaining in population. The United States census shows the state boasting a 4.7 percent increase from 2000 to 2010 bringing the residents tally to 672, 591 — just short of the state’s peak population in 1930 of nearly 680,000. But dive into those numbers and you’ll find that 42 of the state’s 53 counties lost population.

“We have an urban migration issue and rural communities have some work to do,” said Jasper Schneider, USDA Rural Development state director.

Schneider said even before the census numbers came in, his office has worked to reverse the declining trend.

“What we’re seeing in a lot of these areas are opportunities that haven’t traditionally been there,” he said. “Some of it is because of energy and the commodity process, because we’re constantly re-investing.”

Infrastructure and growth

Two years ago, USDA Rural Development invested $100 million to upgrade broadband internet in rural areas, and Schneider believes it has already made a huge impact.

“It increases the overall attractiveness of living anywhere in North Dakota because it gives you access and connection. It takes away the digital divide we’ve traditionally had in rural America,” Schneider said.

But with the new census statistics, Schneider and his office have to work a little harder to continue to fund essential programs. Since high income averages can take counties out of the running for federal aid, counties home to wealthy farmers and mineral rights owners struggle to qualify for programs.

“There’s only so much we can do without congressional approval, but what we’ve done is sought waivers — specifically for disaster and energy impact exemptions,” Schneider said. “Energy impacted areas aren’t traditionally sought after as far as infrastructure needs, but we have been successful in getting energy exemption for housing programs in Williams County, for example. We’ve been able to do more than we would have traditionally been able to do.”

Richard Rathge has been watching North Dakota’s demographics for over 30 years. As director of the North Dakota State Data Center at North Dakota State University in Fargo, he said this latest census hit him with some surprises. For instance, of the 15 communities in North Dakota considered “urban” (population of 2,500 or more), only eight grew. Places like Jamestown, Wahpeton, Valley City and Devils Lake continue to find themselves in the minus column.

“That was somewhat surprising to me. I’m not sure what’s behind those, but we will monitor those to better understand,” Rathge said.

Rathge said the biggest controversy with the census is what the numbers say and what people actually see as they look around their communities. In cities like Fargo and Bismarck, additional housing development doesn’t always equate to more people.

“We assume that as we see more building, our population must be really exploding — but not necessarily. It’s a function of the composition of the household, which is a big thing going on,” Rathge said.

Rathge explains that a new apartment building may not signal an influx of people coming to town, but rather more options for young people who simply want their own space.

“One of the most dominant households in North Dakota now is single. We’re not really growing in population; it’s simply a difference in composition,” Rathge said.

Growth among young adults

From the early 1980s to 2002, North Dakota lost young adults in rather sizable numbers every year. Because they carry with them the capacity to naturally grow the population, through child-bearing, North Dakota also experienced a continuous decline in birth rates.

“We were hollowing out our population. It was like someone squeezed the center of the population pyramid,” Rathge said. “I thought that would continue, but since 2002 our birth numbers have been going up, and I’m extremely surprised at the 2010 numbers. It was always the concern in our state because we desperately needed young adults. We got our wish.”

Breaking it down, ages 20-24 grew 17 percent, 25-29 grew 28 percent and 30-34 grew 7 percent.

“That’s phenomenal news for North Dakota. It creates a new vibrancy,” Rathge said. “The young adult population is the population that creates change, new attitudes, new ideas and also the potential for growth through children.”

They certainly held up their end of the bargain. North Dakota saw a 13 percent increase in the 0-4 age group. Rathge said the western half of the state is most substantially feeling the effects of those numbers. With only two exceptions, every county in the west half of North Dakota saw an increase in the 25-34 age population. Counties impacted by energy development, including Divide, Williams, Mountrail, and McKenzie, exceeded 43 percent in that same demographic. Correspondingly, the age 0-4 population in those counties also increased.

“As a demographer in the state for three decades, I’ve never seen this,” Rathge said.

But based on those increases, Rathge admits it’s easy to assume the overall population of western counties would have grown, but the census data suggests otherwise.

“This raises questions because of the contradiction,” Rathge said. “We get calls all the time from mayors and auditors saying the numbers are wrong. One has to remember there’s a difference between residential population and the population you see on the ground. The difference is the census asks, ‘Where do you reside?’ Many of those individuals in western North Dakota due to employment opportunities are fairly migratory. They come, and then go back to families. They don’t call North Dakota their residence.”

Expansion in the east and west

In contrast, West Fargo added nearly 73 percent to those who call that city home. They, too, saw a spike in young adult and preschool populations. Among the city’s nearly 26,000 residents, about 2,200 — or nearly 9 percent — were under 5 years old.

While Chuck E. Cheese may be dancing all the way to the bank, community leaders are trying to keep pace with the need for childcare since most of the young adult households are dual income.

“Daycares seem to come and go; we work hard to keep them in our city,” said West Fargo Mayor Rich Mattern. “The key is trying to keep them in order to attract young people so we can continue to grow.”

The knee-high residents won’t stay small for long, though, and Rathge said these numbers signal to those in education to prepare for an influx of students.

“In many areas of North Dakota, districts have declined and consolidated. Now they’re challenged with something very different,” Rathge said.

Jerry Coleman, School Finance Director for the Department of Public Instruction said statewide enrollment this year increased by 1,200 kids. While rural North Dakota is not losing students as quickly as in past years, Coleman said they are still declining. About half of the state’s schools saw a decline in enrollment. The other half is largely represented by school districts in oil country. Coleman said Alexander, a small community located between Williston and Watford City, gained about 30 students this fall taking their enrollment to 63.

“If you’ve got housing in your community, people will move into those towns, at least for the short term,” Coleman said.

The latest census brought plenty of surprise and controversy, but Rathge insists it is still a good litmus test of the health and growth of the state.

“It’s the perfect crystal ball because if you can understand historically the relationships that have changed us in population and in characteristics, you can fairly accurately determine what’s likely to happen in the future,” Rathge said.