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Local Focus: Rochester

For a wide variety of companies and industries, the city of Rochester and its surrounds offer much more than just a world-famous health clinic

Just in case those in charge of marketing the Rochester area should find themselves in need of a new tagline, here's one suggestion: "Rochester: great health care and so much more."

While still known worldwide as the home of the Mayo Clinic, the Rochester area has been actively building a broad-based, technology-driven economy for the 21st century and beyond.

Rochester has long been one of the technology centers of the Midwest. IBM Rochester, though it's announced plans to move some production work to Mexico and New York, has been the area's second-largest employer and is the state's largest information technology employer. Its 3.6-million-square-foot manufacturing, engineering, and educational complex in Rochester is the largest IBM facility under one contiguous roof.

Rochester is also home to Benchmark Electronics, an electronics manufacturing services provider; Kardia Health Systems, a medical IT firm; and Metafile Information System, which develops management software applications.

Agribusiness is another important economic sector in the area, which has some of the world's richest farmland. A number of major food processing companies are based here.

Another boost to the area's workforce are the 45 or so two- and four-year post-secondary educational institutions within a 90-mile radius.

Meanwhile, the Mayo Clinic recently announced Destination Medical Center, a $5 billion economic development initiative to ensure the area secures its status as a leading international medical destination center. Under the plan, Mayo has pledged to spend $3.5 billion over the next 20 years to expand its Rochester campus. It will also leverage another $2 billion in private investments on stores, hotels, cultural and sports facilities, and other amenities.

In addition, Mayo and Rochester area business development officials recently announced the opening of the new Mayo Clinic Business Accelerator at the Minnesota BioBusiness Center.

Another major initiative for the community is Workforce 2020, the mission of which is to promote the incorporation of pioneering new ideas for education and workforce development. It's led by a coalition comprising the Rochester Area Chamber of Commerce, Rochester Area Foundation, Rochester Area Economic Development, the Department of Employment and Economic Development, and other community partners.

Business leaders have often commented that they find Rochester a good place to recruit and retain talented employees, based on the city's many lifestyle amenities and attractions. The state's third-largest city, it has perennially ranked high in Money magazine's "best places to live" list, and in a wide variety of other such lists.

The company sampler that follows is indicative of Rochester's diverse, forward-focused business community.

cubeThe Cube

When you put talented people together in the same space, good things happen — even if it's a tiny space. That's the rationale for The Cube, Rochester's first co-working space to bring together local, creative entrepreneurs for synergistic bonding. Rochester native David Hewitt's zeal for "ground up" economic development led him to establish a cooperative, providing a 600-square-foot office space where the owners of small, creative businesses can work next to like-minded entrepreneurs.

Hewitt's co-founder is Erik Giberti, the owner of a small application-design firm who had wanted to bring co-working to Rochester for several years before meeting Hewitt.

The downtown space provides a business broadband network, wireless printing with scanner and copier, a white-board wall, member-only events, coffee, and Mama Meg's ice cream sandwiches (one of Hewitt's other business ventures). Hewitt expects to have 25 to 30 members by year's end and expand into the other half of the 1,200-foot space, which he has an option to lease. Looking ahead, "Our success won't be measured on ‘scaling up' — we won't open Cubes in other cities," Hewitt says. "Our focus is on seeing entrepreneurs that work here expand to the point where they will have to get their own offices and hire employees."

Domaille Engineering

The growth of Domaille Engineering has paralleled the expansion of the fiber-optic industry. Founded in 1990 by Nancy and Mike Domaille, the company developed a niche in ultra-precision machining and metrology (the science of measurement), which eventually led to the design and development of high-precision, optical fiber polishing equipment.

The company originally developed its technology in the late 1990s at the request of Corning, the largest manufacturer of fiber optic cable, according to company president Jim Frazer.

Domaille serves customers in a number of industries, including defense, aerospace, telecommunications, and medical and fluid technology. Its client list includes 10 Fortune 500 firms.

After the telecom industry "crash" of 2001, Frazer and other members of the company's new management team diversified into other industries, designing and manufacturing polishing equipment. Those strategic moves doubled the company's annual revenue, from $6 million to about $13 million. In late 2011, Domaille was acquired by private equity group St. Louis­–based Capital for Business.

The company is a three-time winner of the prestigious Deloitte & Touche's Fast 50 award, given annually to the top 50 fastest-growing technology companies in Minnesota.

Vice president Don Hickerson says one of the keys to the company's growth has been "an abundance of highly skilled, local companies that have helped out Domaille. We recently worked on a manufacturing solution for a major East Coast company where we were able to draw on engineering resources from 3M and Mayo."

mill creekMill Creek Life Sciences

Using technology licensed from Mayo, Mill Creek makes cell culture supplements used in growing stem cell and primary cells for clinical and research markets. The company, founded by former Mayo DNA researcher Judy Lundy and entrepreneur Steven Dietz, serves researchers who treat patients using stem cells derived from patients' own bone marrow or adipose tissue.

The company is halfway to its goal to raise $3 million in financing from angel investors — an effort that began in the fall of 2011, Lundy says. "We'd like to have it wrapped up by the middle of the year, depending on how long the [state-funded] angel tax-credit money lasts."

The company began production late last year and has shipped its cell products to about 15 customers in a half-dozen foreign countries, supplying a number of Phase 3 clinical trials, according to Lundy.

Mill Creek is the equivalent of "a tool and die maker for the regenerative medicine market," Lundy says. The industry is in its very early stages, "but when it takes off, we'll be in a good position."

Regarding competition, Lundy says Mill Creek has only one known competitor: Zen Bio. So far, however, Mill Creek is the only provider of clinical grade stem cells, she says.

Geotek

As public utilities across the U.S. and around the world replace aging infrastructure and invest in new power-transmission lines, Geotek has set itself up as a key vendor. It began as a manufacturer of fencing and landscape products made of high-tech composites, but the demand for its cross-arm products used on utility poles has grown to about 85 percent of the company's revenue, according to CEO Dale Nordquist.

Geotek, which was founded in 1991 by Conrad F. Fingerson and Amy L. Donahoe in Rushford, uses a proprietary process to make fiberglass cross-arms and poles for electric distribution installations, as well as posts for electric fences on farms.

In 1996 Fingerson and Donahoe moved the company to Stewartville (just south of Rochester and part of its metro area). In 2009, Geotek was acquired by St. Cloud–based Granite Equity Partners. The company has been growing at about 20 percent annually for the past four years, a pace Nordquist expects to continue, since the market penetration of composite cross-arms is less than 10 percent.

As a business leader, Nordquist says he appreciates Rochester's growing professional workforce, along with the cultural, social, and racial diversity that "has made it much easier to recruit the engineering talent we need from other parts of the country."

LiquidcoolLiquidCool Solutions

The company originally known as Hardcore Computer has rebranded itself as LiquidCool Solutions to focus on licensing its liquid cooling technologies for servers and high-performance computing. Originally a manufacturer of PCs, workstations, and servers, LiquidCool has developed a lucrative niche in the data center sector, based on its patented Liquid Blade immersion cooling system.

The company plans to license its technology and intellectual property to server makers, and eventually branch out into other markets, according to CEO Herb Zein, who is part of a Milwaukee-based angel investor group that made a major investment in Hardcore.

Zein was formerly founder/operator of Thermal Source, which became the largest owner-operator of district energy systems in the U.S.; he sold the firm several years ago. He expects a bright future for LiquidCool, built on proprietary technology the company says can save data center operators up to 40 percent in energy costs compared to air-cooling methods.

Xylo Technologies

Even during the depths of the recent recession, Xylo Technology found a growing market for its menu of services, which include IT staff augmentation, application software and systems development, and interoperability expertise (connecting and integrating legacy, disparate, and unrelated systems). According to president Dharani Ramamoorthy, who founded Xylo in 2000, the firm doubled its revenue annually between 2006 and 2009.

A native of India, Ramamoorthy says the company's success has been based on a simple but important principle: "knowing our clients' needs very well. So many players in this [staff augmentation] market do everything — IT, accounting, human resources ... but our focus is on IT services. Because of my background in the industry, I can know clearly what challenges clients are facing. And all of our recruitment team are IT professionals who spend a lot of time interviewing each candidate to find the right fit for each assignment."

When recruiting IT talent, Ramamoorthy says he appreciates the fact that Rochester is often ranked near the top in "best places to live in the U.S." surveys.

Stanley Jones & Associates

No matter how technologically sophisticated health care may become, technology will never supplant the human touch in healing and helping patients live better lives. Case in point: the outpatient therapy services provided to patients of all ages by Stanley Jones & Associates (SJA). "This is not a technical job," says Jan Jones, a therapist who co-founded the company in 1984, with then-business partner Michelle Stanley. "It requires someone who has a heart for their patient."

Today, SJA, a Medicare-certified home health care agency, serves as the Mayo Clinic system's primary provider of physical therapy, occupational therapy, and speech therapy services provided in the home, in schools, or outpatient clinic settings.

In the agency's outpatient clinic, SJA therapists with specialized expertise treat children with challenges such as autism spectrum disorder, fine and gross motor delays, speech language delays, and physical disabilities. Adults with speech and language disorders are also treated at SJA's clinic.

SJA has won a number of regional and national awards. Most recently, it was named one of 100 Blue Ribbon Small Business Award 2013 winners by the U.S. Chamber of Commerce, "recognized for its dedication to the principles of free enterprise and its contributions to restoring jobs and prosperity." In 2012 the organization named it one of 25 national "Free Enterprise Honorees."

buttonsAffordable Buttons

Entrepreneur Linda Christopherson has followed an improbable but inspiring path to business success. A 1994 home-schooling project Christopherson started with her three children has grown into Affordable Buttons, one of the nation's largest button manufacturers, with more than 50,000 clients and $3 million in annual revenue. The operation was recently recognized by Inc. magazine as one of the fastest-growing companies in the country. One of the catalysts for the company's early success was Christopherson's relatively early adoption of the Internet to reach customers directly. "We were the first button company to have a website," she notes with some pride.

Today, Affordable Buttons turns out 40,000 to 50,000 buttons per day in its 6,800-square-foot manufacturing facility. In 2011, Christopherson diversified, launching Image Splash, a provider of promotional print products. Looking back, she also credits the support of "our local chamber of commerce in helping businesses grow. They provide so many networking opportunities that it doesn't take long to feel part of the community when you move your business here, which is what I did 10 years ago."

Envirolastech

Startup Envirolastech has made news by using recycled materials to develop the first plastic lumber product capable of replacing traditional, structural wood lumber. Envirolastech's technology, verified by the American Society for Testing and Materials, enabled the firm to win the Clean Tech Renewable Energy Division competition in the 2012 Minnesota Cup, an entrepreneurial competition focusing on new, innovative businesses. The company now produces about 30 different products using its proprietary composites made from recycled plastic and incinerator ash.

Envirolastech founder Paul Schmitt has even bigger plans. He's submitted a proposal to city and county officials to build a sorting and production facility next to Rochester's waste-to-energy incinerator. The plant would produce electricity and steam and use recycled plastics and incinerator ash to produce marketable building materials, such as siding. Schmitt envisions a "closed-loop recycling system" that could make Rochester the nation's first zero-waste city.

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