Relocation, Relocation, Relocation
Although Minnesota-based companies recruit by using positive attributes of the state—from its high ranking on several “livability” scales to its good marks in general health—that doesn’t mean it’s an easy place to start or run a business. In fact, to use Midwestern parlance, it could sure be doing a whole heckavalot better, believes Dana Olson, CEO and founder of Ecodev, a firm that provides companies with advice on where to expand or relocate.
Based in Bloomington, Ecodev matches companies with financial grants and incentives available nationwide. The firm examines several factors in making a determination, including labor needs, proximity to vendors and clients, tax situations, property requirements and quality of life. So how does Minnesota stack up in the race to get more enterprises here? Olson has some opinions:
Q: When compared to other states, do you feel Minnesota is competitive in attracting companies to relocate here?
» Not as much as it could be. There are a few reasons, but mainly the tax structure here is just not that great. When we’re doing a model of where a company can put its headquarters or manufacturing, Minnesota doesn’t do well when put against other states. Not just in taxes, but also in property costs, for example. The cost of doing business here is just very high.
Q: Is there a state that Minnesota might be able to follow?
» The closest state to what we should be emulating is Nebraska. And that’s because, regardless of who’s in the administration or the condition of the economy, they still have a pro-business attitude. We don’t really have that. You hear a lot about the Dakotas in terms of tax structure, but states like that fluctuate based on who’s in charge. Nebraska stays consistent, they have a good model for supporting businesses, and even though it’s not the most competitive state, it’s a good example of what can be done in the Midwest.
Q: What’s the most attractive state outside the Midwest?
» Texas. About half of all new private sector jobs created in our country in the last three years are in that state. It’s not a coincidence; Texas is very focused on being pro-business, and they allow their individual communities to raise money to use for economic development. They also added a local sales tax. So now all these communities have the funds to attract businesses, build an infrastructure and really get business booming.
Q: Why do you think the state isn’t as strong as others like Nebraska and Texas?
» There’s a philosophical difference. In Minnesota, we just don’t have the mentality of investing in business, we think money should go to other programs. I’ve been in business here for nearly 30 years, and it’s always been that way. What we need to do is lower taxes across the board—business taxes are crippling here—and invest in businesses. Some people feel like it’s not right to put money into so-called “rich” companies, but the fact is that the state receives the money back, through payroll taxes, property tax, income tax. In most cases, the money is back within a five-year period. That’s the basic model that’s proven itself over and over—if you put a dollar in a community, that dollar rolls over ten times in that community. So it’s easy to see a return on investment. Plus, you’ve created jobs, so it becomes a twofold effect when you invest.
Q: If you find the state inhospitable to business, why is Ecodev located here?
» The honest answer is that I’m a Minnesotan, and my wife won’t let me move [laughs]. My wife and I both grew up here, our children are growing up here and we just love the state. That’s what makes it so frustrating to evaluate Minnesota against other states and have it come up short. I’d love for Minnesota to change and invest more for business, I would welcome that. There are many business owners who feel like that, who have an emotional attachment to Minnesota—look at Polaris. They tried so hard to expand here, and got to the point where they couldn’t anymore. We deal with Minnesota companies all the time that want to stay here, and it’s just very challenging to do so. Granted, we have budget issues here, but other states do, too, and they’re not hurting as much as we are. It’s all a philosophical difference, and I think we have to ask: Do we want to be a pro-business state or not?