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.

Maxine Herr for the Tribune - West Fargo became North Dakota's fifth largest city when the once "bedroom community" jumped 73 percent in its population over the past decade.

By MAXINE HERR
For the Tribune

West Fargo grabs the distinction of being the state’s fifth largest city after the 2010 census counted 25,830 residents in the booming town. It’s a huge leap from just under 15,000 residents a decade ago.

“The numbers are staggering as you look at them, but we’ve worked hard as a city commission,” West Fargo Mayor Rich Mattern said. “When you have that kind of growth you know it’s because we’re meeting the infrastructure needs that prop up with that growth.”

Mattern said the census numbers will now make the city eligible for more community development block grants, a big boost toward meeting future demands. For a city once content to rest in Fargo’s shadow, West Fargo is working diligently to avoid common growing pains.

“We were so used to putting in water lift stations for every 20 to 30 houses. Now we’ve learned a lesson to do it section by section with one large lift station,” Mattern said. “There are less of them and it’s more cost effective to do that.”

The raging Red River is behind much of West Fargo’s growth. With the major flooding scare in 1997, Mattern said the city’s population began to explode. For years, West Fargo has been perceived as a bedroom community to Fargo, but that belief is nearly gone.

“I think we had that attitude for too many years,” Mattern said. “But we became not only a good place to live, but a good place to do business, and so we’re seeing that attitude change now.”

Local businesses certainly prove that sentiment. Caterpillar began a $50 million expansion to its remanufacturing facility in West Fargo to help meet the growing demand in its equipment operations. With construction already underway, completion is expected in June 2012. This expansion will add 250 employees in high-tech and manufacturing jobs.

Continued business interest brought trailer manufacturer Trail King Industries to town in the past decade. Trail King’s vice president of operations Perry Lubbers said his company was attracted to West Fargo because of incentive programs offered by the city, but they also saw space to grow. Now, it appears West Fargo’s rise in population hasn’t been enough to keep pace with Trail King.

“For us, West Fargo is not growing fast enough. We’re having a difficult time finding the skilled labor that we need to continue to support our growth,” Lubbers said.

He said Trail King requires a unique skill set from its employees.

“It’s not even the same type of people working at Case or Bobcat,” Lubbers said. “We need people that are true craftsman that can build from the ground up. We have to go across the country to find the people we need to continue to support our growth.”

Trail King is doing what it can to create a workforce closer to home. They are working with North Dakota State College of Science and technical schools in the area to ensure they are teaching curriculum relative to their needs, and representatives visit with students about what the company has to offer.

Trail King prefers to recruit locally because of the work ethic it finds here.

“It’s the attitude and mentality of the people,” Lubbers said. “They want to succeed.”

As the young adult population continues to swell, city officials are trying to stay on pace. Mattern said one focus is to develop bike paths, parks and keep plenty of day care available.

Cass and Clay County YMCA President Paul Finstad said the YMCA opened a childcare site in West Fargo two years ago because the community was underserved. It didn’t take long to fill every opening. The center cares for over 100 children and has a waiting list.

Finstad said the YMCA offers childcare at its two main facilities in the area, and it has supplemented those by leasing three more sites that provide full childcare. It moved the central Fargo YMCA to a location in southwest Fargo in the past year. It currently has 30 to 40 childcare openings.

“I think we’ve tried to spread ourselves out a bit with childcare. By closing a center in the middle of the city that was getting a little tired and old and moving it down there, we were able to take more kids in,” Finstad said.

For now, the YMCA is not looking to expand into additional sites.

“With childcare, there’s a real delicate balance between making it and not making it,” he said. “We’re careful to not take on more than we can handle in one given time.”

Meanwhile, Mattern believes West Fargo is ready to handle whatever the future sends its way.

“There are a lot of lessons we’ve learned through the years because of our growth,” Mattern said. “I see plenty of room for more development.”

If Business Watch is new to you in the Bismarck Tribune, allow me to introduce the publication.

Business Watch has been in circulation more than eight years. It began as a subscription-based publication. Earlier this year, we decided to redesign Business Watch and bring it to a wider audience through the Bismarck Tribune. For six months, Business Watch incubated while we prepared to re-launch the bi-monthly feature with the October/November 2011 issue. Rather than be a channel for breaking business news, Business Watch is an opportunity to take a broader view of the business climate in North Dakota. By examining trends and long-term growth, Business Watch looks toward the future of business in North Dakota.

Each issue of Business Watch will have four areas of focus: N.D. Business, N.D. Industry & Innovation, N.D. Retail and N.D. Energy.

In this issue, we take an in-depth analysis of what the 2012 census says about North Dakota. With the influx of out-of-state workers to the oil patch, one might have expected higher numbers in the census. Instead, various storylines emerge about North Dakota’s growth: urban vs. rural, east vs. west, young adults and young children. In the town profile, a regular feature from the original publication, writer Maxine Herr looks at West Fargo with its astounding 73 percent growth reported in the 2010 census.

N.D. Industry & Innovation addresses not only the latest innovators in business, but also the industry for which North Dakota is traditionally known: agriculture. The feature industry article examines the success of Project Safe Send, which has been working for 20 years to dispose of contaminants found in old barns, sheds and kitchen pantries. The innovation feature highlights a forward-looking series of conferences: the North Dakota 2.0 initiative.

In N.D. Retail, writer Tina Ding spotlights the northward expansion of Bismarck. Where traffic lights on State Street used to terminate at Century Avenue, commercial and residential areas have expanded three miles to the north — to 71st Avenue and beyond.

Finally, in N.D. Energy, reporter Hanna Bush checks in with the Mandan refinery expansion, looking at what hurdles have been passed and what hurdles lie ahead.

Cathryn Sprynczynatyk is editor of Business Watch.

Submitted photo In this summer 2010 photo, workers for Project Safe Send process old contaminents for safe disposal.

By DEBORA DRAGSETH
For the Tribune

Take a look under your sink, storage shed or in the back corner of your garage. Any old rat poison or a rusty can of roach spray? A weed killer you vaguely remember buying sometime in the 1980s? Instead of wreaking havoc on the environment by pouring a dangerous contaminant down the drain, flushing it down the toilet, burning it, burying it or dumping it, consider an alternative method of disposal that is safe, convenient, legal, free and environmentally sound.

Jessica Johnson, Environmental Scientist at the North Dakota Department of Agriculture, would like to make you aware of Project Safe Send. Project Safe Send is a program administered by the North Dakota Department of Agriculture that helps people get rid of unusable pesticides and empty containers free of charge.

This spring will mark the 20th anniversary of the popular state-wide program. Since 1992, thousands of ranchers, pesticide dealers and applicators, government agencies and homeowners have brought 2.7 million pounds of old, unusable or banned pesticides, including herbicides, insecticides, rodenticides and fungicides to Project Safe Send’s collection sites.

Johnson urges people to check their storage areas, barns and other outbuildings for any unusable pesticides and set them aside for Project Safe Send. “The program is free, non-regulatory and at the collection site, there are no questions asked,” Johnson said. “Our motto is ‘Safe, Simple, Free.’ We are very proud that North Dakota’s program is considered to be one of the most extensive in the nation.”

Although the biggest volume of collections comes from farmers, Project Safe Send also sees many business owners as well as home garden and lawn people come to its collection sites. According to Johnson, people often forget that they have pesticides until they come across them while organizing their kitchen, bathroom, garage or shed. Furthermore, it is not uncommon for a family member to be cleaning out a deceased relative’s home and find something like a decades-old can of DDT — a commonly used pesticide product until it was banned in the United States in 1972.

Collection day

On collection day, crews are on hand at a pre-scheduled location site. Participants are asked to complete a voluntary survey and inventory form. A contractor unloads the waste and collects any paperwork. The entire process takes only a few minutes. The contractor then properly packs the waste pesticides and prepares the necessary shipping manifests for transportation to out-of-state disposal incinerators.

Ken Astrup, general manager of Dakota Plains Cooperative, has been on the Project Safe Send board of directors since its inception. He said, “It’s a fantastic program focused on getting unusable pesticides off the farm and removed from the environment. The best thing about the program is that it allows people who may not have knowledge about how to handle these chemicals to do the right thing.”

Astrup added, “Often, people acquire or inherit older buildings and that’s how they come into possession of these pesticides. When my father-in-law died we found a Schwan’s ice cream bucket with DDT in it. We hear stories like that every year.”

Project Safe Send’s operating budget for the 2011-2013 biennium is $525,922. The program is funded by chemical suppliers who are assessed a fee for all the products that they register in the state. These fees are channeled through the Environmental and Rangeland Protection (EARP) Fund to Project Safe Send. Project Safe Send has also received funding from the Environmental Protection Agency as a result of North Dakota’s flooding concerns. It was then able to use those funds to set up extra collection sites in flood affected areas.

“As a board,” said Astrup, “each year we meet to determine the collection sites. We move the sites around so that once every three years a site is within easy driving distance of everyone in the state.”

Education makes a difference

Environmental Scientist, Jessica Johnson, recommends that people minimize waste by buying only the pesticides they need to carry them through the season; if there is any left over, she stresses that proper storage instructions need to be followed. “We see people bring in pesticides in fancy glass jars from the 1920s or 1930s. I’ve seen yellow pesticides in Cheez Wiz containers,” she said. “Never transfer pesticides to containers that children or others can mistake for something to eat or drink. Always store pesticides in their original containers as the label contains important information, including directions, ingredients and emergency information in case of accidental poisoning.”

“I like to think that we make a difference in helping educate North Dakotans about the environment,” Johnson said. Recently, at one of the collection sites, the staff asked an older gentleman what prompted him to come to a Project Safe Send disposal site. His answer: Because of his age, he wanted to be sure the pesticides were properly taken care of before he passed away. That may sound grim, but one can appreciate this North Dakota farmer’s concern for protecting and conserving the environment.

Getting the word out

Project Safe Send works with radio stations and newspapers to inform the general public about the collection sites and dates. Brochures and posters are sent to certified chemical applicators, agricultural dealers and elevators throughout the state. Last year, over 16 thousand brochures were distributed.

Collection dates and locations around the state will be announced in the spring of 2012. People are asked to pre-register if they intend to bring 1,000 or more pounds of pesticides to the site. If the containers are deteriorating or leaking, pack them in larger containers with absorbent materials. Free heavy-duty plastic bags are available from the North Dakota Department of Agriculture. For a list of accepted items, for 2012 sites and dates, to obtain plastic bags or to get more information, go online to www.nd.gov/ndda/program/project-safe-send or contact Jessica Johnson, Environmental Scientist, at the North Dakota Department of Agriculture: 701-328-2980 or 800-242-7535 or email at jnjohnson@nd.gov.

Submitted photo Jasper Schnieder, North Dakota's state director for USDA Rural Development, speaks at the ND 2.0 conference in October.

By DEBORA DRAGSETH
For the Tribune

In case you haven’t noticed — this is not your grandfather’s North Dakota. It seems as if the land of grass and sky has been transformed overnight and its residents have been forced to come face-to-face with inevitable and enormous change. We find ourselves asking “Where is the state heading?” “Where do we want it to go?” And an even more impenetrable question, “Who is driving?” To use 21st century terminology: perhaps our internal GPS system needs to recalculate the route.

North Dakota 2.0 is an initiative spearheaded by Jasper Schneider, North Dakota’s State Director for USDA Rural Development. Organizers have planned a series of conferences with the goal of bringing North Dakotans together to network, learn about potential opportunities and contribute to the continued success of the state. The first conference was held in Bismarck in October. “North Dakota 2.0 is the beginning of an era; it is about persevering and empowering motivated individuals to capitalize on our state’s abundance of opportunities to ensure that North Dakota’s better days are still ahead,” said Schneider.

The conference offered nationally recognized speakers included Rich Karlgaard, publisher of Forbes Magazine, and Diane Smith, author of “The New Rural.” Six statewide leaders from an array of organizations helped facilitate the day’s events by leading conversations on six topics: community development, civic involvement, infrastructure, business leadership, health and wellness and future challenges.

North Dakota: The future is already here

The entire country is talking about jobs and the fragile national economy. The nation’s unemployment rate has been hovering at nearly 9 percent since 2009. However, not every state is suffering an economic crisis. North Dakota has a billion dollar budget surplus, a booming oil industry and a job base that has grown 5 percent in the past two years. Since July 2008, North Dakota has either tied for or had the lowest unemployment in the country.

North Dakota ended the decade with a total of 430,000 workers, up more than 61,000 since 2000. To put that into perspective, the ten-year change constitutes an increase equal to the population of Bismarck, the state’s second largest city. Currently there are over 16,000 unfilled jobs and projections indicate that 45,000 more workers will be needed in the next two years and of those jobs, one out of three will be in oil and gas.

Development of the massive Bakken oil field in the western part of the state demands workers, although officials are quick to point out that the state’s larger cities such as Bismarck and Fargo to the east of the Bakken are also thriving. In Governor Jack Dalrymple’s most recent State of the State address, he posited his explanation of the North Dakota miracle: “It is about an educated workforce, low taxation, a friendly regulatory climate.”

The new North Dakota

Things have changed a lot here since 1981 when Joel Garreau wrote about the Dakotas in his seminal book, “The Nine Nations of North America”: “If you like roller coaster rides, don’t come to the Plains. Stability here is a virtue.” We are living in one of the most interesting moments in North Dakota history. Our state is a place of deep opportunity not unlike the opportunity given to the settlers who came to the Dakotas to take advantage of the Homestead Act of 1862.

Jasper Schneider noted during the conference, “It is common for North Dakotans to band together to solve our common problems.” Schneider offered examples of pioneering infrastructure developments from the mid-19th century such as the Rural Electrification Administration, the Bank of North Dakota and the North Dakota Mill. He said, “Today, the deployment of high speed broadband Internet is a 21st century infrastructure challenge that we can work together to make happen. Speed matters and we need to be able to access transmission speed that is comparable to that of urban areas.”

Rich Karlgaard, entrepreneur-turned-publisher, offered insights to the participants of ND2.0. Originally from Bismarck, Karlgaard currently lives in California where the unemployment rate is 12 percent. The Forbes Magazine publisher said, “In North Dakota we tend to look at things from the inside out — sometimes we should look at the economy from the outside in. Beneath all the headlines is the profound restructuring happening right now in the world economy, the United States economy, and even the North Dakota economy. The economy of North Dakota is being changed by horizontal drilling.”

Karlgaard gave the following advice, “You cannot overinvest in education, especially math, science, engineering, business, accounting and entrepreneurship. Take what you are doing now and double and triple down. Don’t benchmark education against other states; benchmark your K-12 education against the world and get aggressive about that.” In regard to entrepreneurship, Karlgaard emphasized, “Make sure the homegrown entrepreneur feels that he or she can pull it off—the opportunity in North Dakota is to broaden its economy beyond oil extraction. North Dakota has other riches to build on: cheap land, a stable workforce and broadband Internet. The world is changing faster than you think.”

Scenario building in the face of ‘Black Swan’ events

Future scenarios need to take account of technical solutions, social structure, economics and, of course, the massive forces of demographics as “new North Dakotans” pour into our state. In his book, “The Black Swan: The impact of the Highly Improbable,” author Nassim Nicholic Taleb’s emphasizes that the events that drive history are outliers or what economists refer to as “Black Swans.” Whether positive or negative, these events cause massive consequences and do not follow predictable rules. “Our ability to predict large-scale deviations that change history has been close to zero,” he notes. We make the mistake of guiding our future from our experience of the past — which is actually, according to Taleb, irrelevant. He likens it to a driver who looks only in the rearview mirror, inevitably running into walls.

None of us is prescient. We may not know our future, but we do know what everyone else in the world is just beginning to discover — North Dakota is no longer in the middle of nowhere, the future is now and here and it is ours to shape. Taking charge of our own destiny — that is the vision of ND2.0.

ND2.0: The process

When asked why the USDA Rural Development was interested in spearheading this type of conversation, Schneider noted that their mission is a commitment to rural communities. “In North Dakota, every county is a rural county — even Bismarck and Fargo. Drive just a mile out of town, and you are in the heart of agriculture.”

“USDA Rural Development was proud to be the lead sponsor, but we weren’t the only sponsor, Schneider continued. “We tapped into something that people wanted and desired. From the positive responses of our sponsors, we realized right away that people are hungry for this type of conversation.”

Jessica Haak, North Dakota Farmers Union membership development coordinator and conference attendee, agreed. “The North Dakota Farmers Union was excited about being involved as sponsors of ND2.0. We work with farmers and ranchers every day and we want to be a part of the discussion about the future of North Dakota.” Like most of the participants, Haak appreciated the discussion and ideas that the conference brought forth, particularly the interactive portions that gave everyone a chance to participate. “Participants walked away with lots of ideas and hope for the future. People want to be involved in creating and shaping their environment. Unfortunately, a lot of times we just talk about the challenges and who should have to deal with the problems. Instead, we left with a sense of empowerment, ownership and a voice. Yes, there are difficult challenges, but there is much to be hopeful for regarding the future of our great state.”

Creative, collaborative and non-confrontational

One of the tools used at the ND2.0 conference was e-voting, the process of instant polling or audience response, making it possible to get immediate and accurate feedback on people’s opinions. ND2.0 participants were asked to answer questions by pushing a number on a small, handheld device. Questions such as “What is the greatest infrastructure demand in the state?” and “What is the biggest threat to our quality of life in North Dakota?” were posed to the participants. The results were used as the basis for discussion throughout the conference and can be viewed at www.nd20.com.

ND2.0: The future

Another 2.0 conference will be scheduled in the spring in Fargo. Schneider feels that it is important to get a good cross-section of people. “We now have raw data that will be helpful. We will meld that data with feedback from the Fargo area as well. Over the winter, we intend to go to the people — we will hold town hall meetings across the state inviting participants to give us their feedback. We will be continuing the conversation and working up to the Fargo event.

Schneider is hoping the culmination of these collective thoughts will be a data set and a white paper that can be used as a guide for the state. He encourages all North Dakotans to watch for the next ND2.0 event and sign up as participating in this important movement will help to steer our state into the future. For more information, go to www.nd20.com.

Editor’s note: Debora Dragseth was a facilitator at the first ND2.0 conference in October 2011. Debora Dragseth, Ph.D. is a professor of business at Dickinson State University in Dickinson, North Dakota.

Start-up companies tend to focus more on the product or service they are creating over the design and culture of their organization. Bad mistake.

While there is no proper percentage of the time and energy to be expended on various components of a company, entrepreneurs are wise to dedicate some of their efforts into the design of their organization. Once the legal structure is determined (i.e., limited liability partnership, or S-corp) entrepreneurs need to decide how the culture they are creating will be wrapped into a quality organizational design.

McKinsey and Company share a model that provides some solid foundations for a majority of organizations. The 7s model was created to allow entrepreneurs a chance to fashion a “shared values” culture around all of the necessary pieces for a quality organizational design. Branching off the shared values center are strategy, structure and systems, along with staff, skills and style. These seven “S’s” have been deemed interdependent, yet due to their integrative nature within an organization, dependent on each other for organizational success.

Strategy deals with the mission, vision and values of the company. The structure of the 7s matrix consists of reporting processes, such as lines of authority. The systems are the daily operational parts of how the organization runs. Staffing contains the type of talent the organization seeks to obtain and retain, along with the skills necessary for competence to shine through. The final s –style, is all about the leadership methods running the company.

Of course, there are myriad theories on organizational design, and with each organizational design comes the process of asking the proper questions around the culture the entrepreneur has created. Some of those questions are the following: Why do we exist? How many departments do we wish to have in our organization? How will we communicate to our internal and external stakeholders?

One important question the entrepreneur has to ask is “How much will I be able to actually lead in my own organization?” After all, entrepreneurs want to do what they do best, and that is to create. A quality organizational design can help the entrepreneur find their leadership style while building and growing the company.

If the business plan helps to identify the financial needs, then organizational design assists with the operational issues and can also help entrepreneurs answer the many questions that come with most startups. Howard Schultz, CEO of Starbucks penned the book “Onward: How Starbucks Fought for its Life Without Losing its Soul” and describes the ordeal that plagued Starbucks — losing sight of its core values.

A mantra that Schultz uses to express the return to the values that made Starbucks an iconic business model since the mid-1980s details the importance of a proper organizational design. “Starbucks is not a coffee company that serves people; it is a people company that serves coffee”.

As you can see, it is the people that make the company. Such is the lesson many entrepreneurs can learn from a well-seasoned veteran in the business world. Entrepreneurs who take the human element out of the equation of their developing business will tend to make the road even more difficult for organizational success. Organizational design starts with the people who buy into the culture of the business being created. Entrepreneurs need to start with that in mind.

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

MIKE McCLEARY/Tribune An aerial view of Pinehurst Shopping Center and surrounding businesses located in northwest Bismarck.

By TINA DING
For the Tribune

Steady growth and development along major transportation routes happens, in part, due to accessibility advantages. As a result, developers and real estate investors often acquire land along key roadways while paying close attention to areas where sites will likely be demanded in the future, whether as commercial, residential or industrial.

Prior to the construction of Garrison Dam, Bismarck developed around a central downtown district, growing small commercial business and stretching to the east for industrial spaces. Once the dam began holding massive waters back, prime lands opened up in areas formerly unattainable due to regular flooding.

Growth spurts to both the north and south as well as in proximity to the Kirkwood Mall happened while residential and commercial developments played off one another; neighborhoods and small commercial business filled in along key roadways, such as along Washington Street, Main Street and both Interstate 94 and N.D. Highway 83 north as well as later along Bismarck Expressway. Affordable living, moderate income and prosperous neighborhoods took root at varying areas while developers held onto prime properties along arteries, awaiting a commercial growth opportunity.

“Growth in north Bismarck happened once affluent neighborhoods became established; it was soon afterward that a recognized need for commercial growth and retail development existed,” Duemelands Commercial CEO and president Jill Duemeland said. “Ideally, retailers like to stand on their rooftops to see their customers. Residential growth and commercial real estate availability along major arteries encouraged them to do just that.”

Pinehurst Square developed after the surrounding neighborhoods encircled the commercially zoned property. For years, the land remained untamed and unruly, yet the landowner hung on. Today, the mall blends with the surrounding residential homes and thrives upon close proximity to I-94 and both Tyler Parkway and Century Avenue, home to Lowe’s, Kohl’s, TJ Maxx, Best Buy, Old Navy, Dress Barn and more.

“Not only did the area develop adequately around the property,” Duemeland said, “key developers were waiting for taxable sales to establish. Once the sales were met, there were multiple interests in the property, resulting in Pinehurst.”

Further, she said there are currently three key sectors for incoming commercial developers to consider: areas on key arteries on the north side — along the northwest corridor along Tyler Parkway, Century Avenue and Highway 83; areas to the east along both Centennial Avenue and Century Avenue; and on the south side near the mall. Each of the areas attracts differing retailers due to their own demographic expectations, traffic counts and tendencies.

“As a city, we have a combination of pre-planning and a sense of growing our city logically,” City of Bismarck director of community development Carl Hokenstad said. “Our hope is that as we approve planning, it makes sense. Our biggest challenge fell during 2005, as big box stores, such as Home Depot and Lowe’s came all at once. Additionally, Dan’s Supermarket and Menard’s relocated north, with their existing buildings filling with either medical or Hobby Lobby.”

Hokenstad said the city of Bismarck considers all land use plans, road master plans as well as sewer and water infrastructure plans prior to developers stepping in, although at times, they come to the city before it’s been thoroughly considered. Although, he said the city tries to be accommodating to the plans of the developer and the development as well.

While residential areas march up Highway 83, both large and small commercial developments begin servicing neighborhoods, such as Prairie Rose Dentistry adding a north location or churches holding multiple campuses. Existing businesses position themselves for future growth, such as churches with larger parcels of land for expansion and hotels planning for construction and renovation. Evangel Assembly of God Church anticipates breaking ground on new construction to facilitate their children’s ministry and recent renovation to Charity Lutheran Church and Century Baptist along north Washington demonstrate the growth to the north.

Currently, there are multiple hotel properties under construction, including the recent completion of the LaQuinta Hotel at the interchange of I-94 and Highway 83. Duemeland speculated that one possible driver for hotel growth might be the oil traffic to North Dakota. Additionally, the city sees a low vacancy rate for apartments, so she feels basic economics will eventually drive our local market to grow to balance affordable housing and help to stabilize the rates for rents.

Senior living communities such as St. Gabriel’s and Good Samaritan are new to Bismarck; city bussing for public schools and Capital Area Transit provide a network of fixed bus routes in town.

Both personal and business banking has never been more convenient, with multiple new banks including: Starion Financial, Security First Bank, Gate City Bank, Northland Financial, Blackridge Bank and more as well as satellite banks in grocery stores and credit unions. New day spas, gyms and hair salons mix between other small commercial businesses.

Infrastructural growth included a new fire department near Highway 83 and 43rd Avenue North while schools burst at the seams. As a response to neighborhood growth, the school district may have no choice other than securing land for future growth before prices soar and become unaffordable. Despite the recent addition of Sunrise Elementary, north side schools such as Centennial, Robert Miller and Northridge hold full classrooms.

Restaurants continue filling gaps across the board, including a wide variety of cultural eateries. Kobe’s Japanese Steakhouse and Sushi Bar, Ruby Tuesday, Hooters and Olive Garden pack full houses and fast eats such as Five Guys Burgers and Fries and two new Sonnets sandwich shop locations serve up quick burgers or sandwiches.

Residential developer and contractor Jack Knutson focuses his construction efforts to north Bismarck as well. Once south Bismarck ran out of developable, affordable land, he moved his operations north. Despite difficult terrain, there are more options and locations to select from on the north side, since the south side of Bismarck runs into the curve of the Missouri River.

“From our mayor to city commissioners and city planning, we’ve done a great job of planning accordingly,” Duemeland said. “As we continue to plan for our future, we need to ensure our city and county officials work together as they make and develop key decisions on one side or another — working together as we move forward. As we do so, we need to ensure we continue to manage those buffer spaces between residential and industrial spaces.”

What is the State of North Dakota’s role in the global economy?

North Dakota today is an inverse image of the U.S. economy at large. With a population slightly more than 672,500, our tiny state touts an envious unemployment rate of 3.8 percent, and according to a recent Gallup survey, North Dakota has the best job market in the country. Our economy “sticks out like a diamond in a bowl of cherry pits,” as Ron Writz, editor of the Minneapolis Federal Reserve’s newspaper, “fedgazette,” accurately described.

The success of North Dakotans is due, in part, to a diverse economy, including a vibrant agricultural sector and the many expanding industries surrounding energy development. Whether it’s oil, coal, grains, soybeans or specialty crops, a growing world economy is driving higher prices and demand for North Dakota’s goods.

North Dakota has increased its exports by a staggering 300 percent since 2005. It’s no doubt international exporting is a vital piece in the prosperity of the North Dakota economy — a piece that is not without controversy.

For North Dakota agribusiness professionals, one of the arguments relative to our place in the global market is the following:

“Is it in North Dakota’s best interest to not only export our products internationally but also the technology and know-how necessary to help these international buyers modernize their agriculture practices and become more sustainable?”

This is a highly-debated issue for agribusiness professionals throughout North Dakota, and there are valid points on each side of the argument.

The example

In recent years, many North Dakota exporters, specifically those in the agriculture fields, have taken an increased interest in the former Soviet Union countries including Kazakhstan, Russia and Ukraine. The geography and climate of these areas closely resembles that of North Dakota: large flat lands and rich soil are agricultural advantages while long, harsh winters create difficulties for farmers. It’s a catch-22 with which North Dakotans are all-too familiar.

Since the fall of the Soviet Union, these countries have had an increased interest in modernizing their farming operations to become more productive and help feed their respective populations. With North Dakota’s expertise and technology, our machinery producers have been able to provide large quantities of machinery to these countries. When we sell equipment to these countries, we are also sharing information on how to capitalize on the geography while working with a temperamental climate. In essence, we’re sharing the know-how to become successful farmers. But should we?

Point A:

Exporting know-how creates competition for North Dakota

On one side of the argument, many North Dakota food producers see sharing technologies and techniques with emerging international markets as handing over the keys to North Dakota’s share in the global food market.

While North America and the European Union markets account for the majority of U.S. agriculture machinery exports, most of these markets are fairly mature. For five years, until the financial crisis of 2008, dynamic market growth was most conspicuous in Russia, Ukraine and Kazakhstan — countries that were engaged in long-term modernization of their large and historically under-capitalized agricultural economies.

Some North Dakota machinery manufacturers have helped these countries do just that: modernize and become more successful farmers.

The North Dakota Trade Office led its first trade mission to Kazakhstan, Russia and Ukraine in 2006, with a goal to connect North Dakota machinery manufacturers with buyers in these growing markets. Since then, exports to the countries increased from $263 million in sales in 2006 to a projected $557 million in 2011. A few North Dakota manufacturers have even set up training programs in these countries to help educate farmers how to increase crop yields while using North Dakota-manufactured machinery.

Food producers might say that such programs have created direct competition for North Dakota growers. Take wheat, for example. Kazakhstan, Russia and Ukraine have become significant wheat exporters in recent years, together surpassing U.S. exports in 2008-2009. These countries were net importers as recently as 1995.

During the mid-to-late 1990s, these countries’ combined share of world exports was less than 5 percent, averaging less than 1 million metric tons. Their share of world exports had risen to more than 25 percent and for 2008 and 2009 exports averaged 36 million metric tons. Low production costs and new investment in their agricultural sectors have enabled their world market share to climb. For comparison, the U.S. share of world exports fluctuated up and down between 20 percent and 30 percent, according to the USDA Wheat Baseline projection for 2011-2020.

The increase in production happened in-line with North Dakota’s focus on increasing machinery exports to the region. According to the statistics, these former Soviet countries have quickly become what could be viewed as direct competition for North Dakota’s wheat producers. Did the export of agricultural technology from companies in North Dakota help fuel this increase in output? Quite likely. But, does that mean that these companies should forgo the opportunity? Is it, in fact, harming our state’s overall productivity?

Point B:

Emerging markets will modernize; North Dakota should participate and capitalize on the opportunity

On the other side of this argument are those who believe emerging markets such as Kazakhstan, Russia and Ukraine will modernize, with or without the help of the U.S. They say this is the opportunity for North Dakota to benefit from creating allies with emerging countries, instead of forgoing opportunity and handing over benefits and profits to another market.

The most explicit benefit seen from the export of machinery to former Soviet countries is in dollars coming into North Dakota. Since the first trade mission from North Dakota to Kazakhstan, Russia and Ukraine, the state has exported a total of $2.3 billion in agricultural machinery. That amount of money spurs job growth and helps stimulate the state’s economy significantly.

Another layer to the argument of why we should help regions modernize is the glaring fact that the world is in a food shortage and growing populations will only increase the demand for food, worldwide. For most of the past decade, the world has been consuming more food than it produced. After years of drawing down stockpiles, in 2007, the world saw global carryover stocks fall to 61 days of global consumption, the second lowest on record.

“Agricultural productivity growth is only one to two percent a year,” said Joachim von Braun, director of the International Food Policy Research Institute in Washington, D.C., at the height of the crisis. “This is too low to meet population growth and increase demand.”

According to an Oxfam report, food production would have to increase 70 percent by 2050 to feed the world’s population — an increase that will be nearly impossible. Demand for high-quality food products from North Dakota will only continue to increase.

Beyond the former Soviet Union, emerging markets such as the African countries of Ghana, Mozambique and Malawi, as well as India, are in desperate need of agricultural modernization. Many North Dakota agribusiness exporters believe this is the next frontier for their company’s products. Will helping these countries become sustainable harm North Dakota’s thriving economy?

“International exports are a vital aspect in the rapid expansion of North Dakota’s economy,” said Dean Gorder, executive director of the North Dakota Trade Office. “If we forgo the chance to modernize agriculture in emerging markets such as Africa and the former Soviet Union countries through the export of agribusiness technologies, you can bet that markets such as Canada and Germany will capitalize on our missed opportunity. That’s a chance North Dakota shouldn’t be willing to take.”

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

Submitted photo The Tesoro Refinery in Mandan broke ground on a $35 million expansion in early No-vember. Work on the expansion, which will increase production by 10,000 barrels per day, is expected to be completed by June 2012.

By HANNA BUSH
Bismarck Tribune

Construction has started on the expansion of Tesoro Corp.’s crude oil refinery in Mandan, spurred by oil development in western North Dakota, a growing demand for diesel fuel and some timely help from the weather.

The company announced its plan to expand the plant in March. The goal is to increase production from 58,000 to 68,000 barrels per day. Tesoro is investing $35 million in the expansion, which will be geared toward maximizing diesel fuel production to meet the state’s rapidly rising demand.

Currently, the refinery processes 60,000 barrels of crude oil, which it refines into roughly 58,000 barrels of product, such as gasoline or diesel fuel, per day. The plant is able to refine nearly 95 percent of all the crude it processes, said John Berger, refinery vice president. “People are surprised that that number is so high,” Berger said. After the expansion is complete, the plant will be able to process 70,000 barrels per day.

The planned expansion will not require the construction of any new distillation units; instead, existing units will be upgraded and a new furnace will be built, in order to increase the heat supplied to the units. In order to refine crude oil into fossil fuels, the plant must use heat to distill the oil into fractions. With greater heat and increased temperature control, the refined products will be purer and the production will be faster.

According to Berger, there are four stages Tesoro moves through during any new project: appraise, select, define and execute. “We’re in execute stage now,” he said. “We have actually started construction.”

The company had to apply for modifications to its existing permits through the North Dakota Department of Health before moving into the final stage of the project. David Schollars, the refinery’s human resources manager, said they received their permits just two weeks ago.

“We’re on track for the project right now,” Berger said. Because the mild weather has allowed for concrete and foundation work well into November, the expansion is on track to be completed by June 2012.

“Several things have come together that have allowed our expansion project to happen,” Berger said. In addition to increased crude production from the Bakken shale and Three Forks formations in western North Dakota, the rapidly rising demand for diesel fuel in the state has created an opportunity for the plant to expand. Tesoro has invested “well in excess of $200 million” in the plant since acquiring it from BP in 2001, and each new project seems to fuel more opportunities, he said.

The refinery was built in 1954, just three years after crude oil was discovered in North Dakota. It processes primarily sweet (low sulfur) domestic crude oil, supplied by a 750-mile gathering and mainline pipeline system from the Williston Basin in Montana and western North Dakota. While the plant manufactures gasoline, diesel fuel, jet fuel, heavy fuel oils and liquefied petroleum gas, Berger said that gasoline comprises roughly 60 percent of the product they make, and diesel and jet fuel make up most of the remaining 40 percent. “Well over 50 percent of the diesel we produce stays in North Dakota and probably 30-40 percent of the gasoline we produce.”

According to the U.S. Energy Information Administration, there are currently 148 operable refineries in the U.S., 137 of which are producing refined fossil fuels. Mandan’s Tesoro plant is the only refinery in North Dakota. Due in large part to Bakken production gains, North Dakota is now the fourth-largest oil producing state in the nation. Crude and condensate production has increased by nearly 150 percent since 2005. Using horizontal drilling techniques, such as hydraulic fracturing (or fracking), operators have increased Bakken daily crude production from about 3,000 barrels to more than 225,000 barrels per day.

Currently, the Mandan refinery employs 240 people. The expansion stands to create up to 20 jobs to Mandan and Morton County, including maintenance workers, plant operators and construction personnel. Because of a wave of recent retirements, the refinery has hired about 36 new people in 2011, including seven new operators and several maintenance workers within the last two weeks.

“The refinery is one of the top-paying employers in the metro area, so it’s very encouraging to see that Tesoro, as a corporation, has made a decision to invest further in the Mandan area,” said Ellen Huber, the business development director for the city of Mandan. “We certainly appreciate their investment.”

The expansion stands to benefit the area in several ways. In addition to the influx of jobs, “construction activity provides additional market demand for long-stay hotels, restaurants and other businesses,” Huber said. The community at large will benefit, too, because the refinery has a long history of community involvement and volunteerism, she said.

“We do have an excellent working relationship with the city,” Berger said. “We will work hand in hand with them.” For instance, during this summer’s flood, several of the refinery’s engineers participated in a discussion about bank erosion concerns in Mandan, he said. The company also gave $100,000 to the United Way flood fund and $50,000 to Minot’s flood recovery effort.

Recently, the Mandan Chamber of Commerce awarded the refinery its Granite Award, recognizing its exemplary community relations role for the last 50 years, Schollars said. “We also try to encourage our people to go out and give time and money back to the community,” he said.

“We strive to earn our license to operate every day,” Berger said. “The refinery has a long history of obligation and commitment to be a good neighbor.”

At least once a year, the refinery holds a neighborhood meeting, at which people who live near the refinery are invited to discuss the plant’s production and plans, as well ask questions and voice concerns. “We had close to 200 people attend (this year),” Schollars said.

“The refinery has been a positive influence in the community for more than 50 years,” Huber said.

There are a few concerns about the expansion. Fractional distillation of hydrocarbons — the process by which crude oil is refined into more usable products, such as gasoline — results in the emission of air pollutants. Increased production at the Mandan refinery also will increase emissions. But while Berger couldn’t say exactly how much emissions might rise in line with the expansion, he was confident that the environmental impact would be small.

“If we’re increasing crude rate by 15 percent, our emissions will increase significantly less than that,” Berger said. Because the newly constructed furnace will be run on natural gas, most of which is a byproduct of the refining process, it will be largely self-sufficient. Emissions from the largest part of the expansion will be reduced.

The plant takes its role in environmental safety very seriously, Berger said. One motto the refinery lives by is “industry in harmony with nature,” Berger said. “We make strides to be as good of environmental stewards as we can … we live and work and breathe in this community, too.”

In addition to the expansion of the plant, Tesoro is building an uploading facility at its refinery in Anacortes, Wash., to prepare for a new effort to rail crude oil from the western North Dakota to the coastal location. Some crude is railed to Anacortes by manifest cars now, Berger said, but the new facility will allow crude to be railed by a dedicated unit train from North Dakota to Anacortes in larger amounts and for better rail rates. Schollars and Berger are both confident about the plant’s future.

Berger, who has been with the refinery for 25 years, is especially excited about the expansion. “It’s always good to be growing,” he said. “And I think that the investments we’re making with the expansion are going to create even more opportunities for us.”

By Christopher Bjorke
Bismarck Tribune

Randy Hellman said he saw spending shift from “I want” to “I need” and back to “I want” again this spring and summer.

In May and June, people needed pumps, hoses, plastic sheeting and other items during their scramble to protect their property. They did not spend as much on things they might want but could purchase later, like the clothes at Hellman’s store.

“Obviously, the rest of us got left until later,” said Hellman, owner of Hellman Brothers Men’s Clothing in Bismarck. “May was down 40 percent. June was down 20 percent to 25 percent.”

The customers that did come in during that time were mostly people who needed a something like a suit for a special occasion.

“The need-based selling was there,” Hellman said. “We didn’t have those ‘I want’ sales.”

Though his sales have returned to normal, businesses like Hellman’s saw activity drop while the area was absorbed with waiting to find out what the flood would do. But since then, things have mostly returned to normal.

Over the months since the Missouri River rose and dropped again, spending in the area dipped somewhat in June, but rebounded to levels above what they were in 2010. Taxable sales and purchases in the metro area in the first quarter of 2011 were $344.6 million compared to $318 million for the same period last year, according to state tax commissioner’s office.

“It didn’t have that huge dip that we have to make up for now,” said Judy Sauter, research director with Bismarck-Mandan Development Association. “Looking back on it, I think we handled it quite well.”

If overall sales were not down, they were at least redirected from nonessential items, Sauter said.

“They may have bought different things, but spending remained the same,” she said.

The places where the money shifted were the businesses that could help people put up flood barriers or pump out their basements, especially in the days before the area’s level of protection became clear.

“For us, being the product that everyone needed in those trying times, things have been really busy,” said Bill Good, manager of the Mac’s hardware store in Bismarck. “We brought in a ton of products, pumps and hoses and all of the related products.”

Good said that the store hired some new staff and extended the hours of their other workers to keep up with the demand.

“We have 11 locations and it seems like every year someone goes through something,” said Randy Anderson, Mac’s corporate sales manager at its Moorhead, Minn., headquarters. “Obviously during a flood situation, everything else stops.”

Something that stopped in Bismarck-Mandan was activity on the river, as boating restrictions and flooded ramps cut off access.

Josh Vallely of Vallely Sport & Marine said boaters looked to other bodies of water and his business also concentrated on more customers from out of town.

“It wasn’t a banner year for us, but it wasn’t fall-on-the-floor for us either,” he said. “The lake (Sakakawea) was obviously full and had full boat access all summer.”

Vallely also sells motorcycles and all-terrain vehicles, so they could fall back on things other than watercraft.

“Our business just kind of shifted a little,” said Vallely, who saw boating activity come back strong after the river went down. “I think people will get back to that, because that’s what people in our community do.”

Most of the area’s businesses are far enough away from the river to not have been directly affected by high water. Roger Busch, a public information officer with the Small Business Administration, said that of the $31.4 million in disaster loans from the SBA to businesses in North Dakota this year, $30.9 million went to Ward County.

Larry Haisley, co-owner of Misty Waters Marina north of Bismarck, said that he was not interested in taking on SBA debt, even though his business lost a summer’s worth of revenue by being shut down during its prime season.

“It’ll probably take us two or three years to get over this,” he said. His marina has silted in and will need dredging before it can generate money from slip rental. His convenience store on the river was not flooded but it was cut off from the road by high water for most of the summer.

“Our business is way off because of the lack of use of the river,” Haisley said.

Nice weather and pent-up desire to use the river have made up for some of the lost revenue this autumn, and he said he has the only working boat ramp for now.

“The actual river itself is nicer than I’ve ever seen it,” he said. “Most people’s attitudes were that they were very, very happy to get back on the river.”

Stacy Keller, co-owner of the Broken Oar Bar, said that he has had good business since he opened his bar overlooking the river on the Mandan side. It is a far cry from June and July when the business was closed and he was “homeless, jobless and barless” and he was attending to the building’s pumps every day and displaced from his home in Bismarck’s Southport neighborhood.

“Every day I’d get five to 10 emails or text message saying ‘When is the bar going to open?’” Keller said.

The owner of “a seasonal bar,” Keller has lost the revenue of his two best months, but he expects his business and life on the river to get back to normal.

“I love the river,” he said. “Look at it this way, the river has made us a lot of money over the years.”

(Reach reporter Christopher Bjorke at 250-8261 or chris.bjorke@bismarcktribune.com.)