What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

Minnesota exports to Africa rose 29 percent in 2013

Posted by: Adam Belz under Business trends, Economics Updated: September 23, 2014 - 2:05 PM

I'm working on a story about Minnesota companies exporting to Africa, and figured out that the state's exports of goods to African countries grew 29 percent in 2013, to $244.6 million.

That’s still a small number overall (2013 exports to Canada were $5.8 billion), but the growth prospects in nations like Kenya, Nigeria, Uganda, Ghana and Morocco are drawing more attention from western companies, including firms in Minnesota.

The rise of the textile industry in North Africa has been a boon to a company in Duluth, and a higher education boom has been a big opportunity for an architecture firm with an office in downtown Minneapolis.

South Africa is by far the largest market for Minnesota products, accounting for $82 million in goods in 2013, but Egypt, Nigeria, Ghana and Lybia have grown a lot in the past five years.

Most projections are for those numbers to continue to grow, thanks to a rising middle class in some of those nations. Here's a snapshot from the Ernst & Young attractiveness survey, which is a good read on the opportunities for foreign investment in Africa:

Printing plant closure costs St. Cloud 475 total jobs, $72.7mn in sales

Posted by: Adam Belz under Business trends, Economics Updated: September 23, 2014 - 10:42 AM

Quad/Graphics, a firm that employed 280 people in St. Cloud, acquired another firm called Brown Printing Company in May, and then announced three weeks later that it would close its printing plant in St. Cloud by the end of August.

That date has come and gone. To get a sense of the economic impact, analysts at the University of Minnesota put together estimates of the job and sales impact of the closure. According to those estimates, which came to my attention via one of the authors, Brigid Tuck, the loss of jobs will be much greater than 280:

When 280 employees are laid off, an additional estimated 195 jobs in industries that serve the printing plant and its employees will be lost. In total, 475 jobs in the two counties will be affected by this action.  The manufacturing company itself will produce an estimated $48.5 million less in output because it is closed, which will contribute to a total loss of an estimated $72.7 million in output (sales) in the two counties.  Labor income will also drop.  Lost jobs at the plant will directly cause a decrease in labor income of $16.8 million for employees at the facility. The lost spending of these wages and other purchases by the plant will decrease total labor income in the two counties (Stearns and Benton) by an additional $7.8 million. Thus, the total loss of labor income will be an estimated $24.6 million.

There's also some interesting stuff in the report about the history of printing in St. Cloud and the role of manufacturing in the local economy. Quad/Graphics has been around since 1938 and printed the St. Cloud News. Manufacturing, which includes printing, employs a "much larger share" of workers in St. Cloud than elsewhere in the state.

It was another hit for the St. Cloud area, which also lost the Verso paper mill in Sartell in 2012.

But St. Cloud, overall, is doing pretty well. Of the five metro areas in the state of Minnesota, it is adding jobs the fastest. Over the past 12 months, St. Cloud has added more than 3,000 jobs, which amounts to 2.9 percent growth.

That compares with 2.3 percent growth in the Twin Cities and 0.7 percent growth in Duluth.

Opening Belz, Sept. 23

Posted by: Adam Belz under Business trends, Economics Updated: September 23, 2014 - 10:13 AM

Amazon to collect Minnesota sales tax starting Oct. 1 – StarTribune
BNSF official: Keystone pipeline won’t stop oil by rail boom – McClatchy
Are the Federal Reserve’s naysayers on the wrong side of history? – Washington Post
Natural gas alone isn’t magic weapon against climate change – Seattle Times
Forget the masked men in the east, Ukraine’s economy is imploding – Sober Look
Apartments, apartments, apartments in downtown Minneapolis – StarTribune
City panel endorses 100-acre solar farm just outside Sioux Falls – Argus Leader
Fresh graves point to undercount of Ebola toll – NY Times
Rural Iowa is graying, shrinking (part 2 of 5) – Des Moines Register
White supremacists gone in Leith, town can’t rest easy – Bismarck Tribune
Big Pharma: Germany’s Merck to buy St. Louis-based Sigma-Aldrich – Bloomberg
Humanity’s most famous mixtape is now 11 billion miles away – Atlantic

Guest Post: Twin Cities economy growing in spite of geographic disadvantages

Posted by: Adam Belz under Business trends, Economics Updated: September 22, 2014 - 2:39 PM

I got this interesting email in response to a turn-of-the-screw story on the Twin Cities passing Detroit in annual GDP:

I read your article in yesterday's Strib, and I think that something that needs to be added is that Twin Cities metro economic growth must be placed in the context of geography and climate. Half the world's population lives within 100 miles of a coastline, and the U.S. is no exception to that pattern. Economic growth tends to concentrate there, where there has been a ready access to trade made possible by inexpensive transportation. Even during the days of Imperial Rome it cost as much to ship a unit of grain 50 miles by oxcart as to ship it by boat from Alexandria to Ostia, Rome's port.

Minnesota is in the cold center of a massive continent, far from the oceans. What is in the center of continents? Places like Mongolia, Chad, Bolivia. These are not economic hot spots. That Minnesota does so well is in spite of its location, not because of it. Running an economy from Portland or Seattle is like beginning the game on second base. Even Chicago and Detroit have ocean access through the Great Lakes. Minnesota's Duluth is at the far end of the chain. Denver is different. It is also in the center of a continent, but with a much milder climate than the Twin Cities. Denver is a transportation hub, the source of its growth; however, Colorado, unlike Minnesota, is a transport receiver more than a transport shipper. My wife's cousin was a trucking broker, and he has told me that there is trucker resistance to taking a load to Colorado because too frequently one has to dead-head back.

Geography and climate. They're master status factors.

Fred Schumacher
Gheen, MN 

Sorry, North Dakotans, your constitution won't allow you to get oil royalty checks

Posted by: Adam Belz under Business trends, Economics Updated: September 23, 2014 - 10:44 AM

Year-round residents of Alaska will each get a $1,884 royalty check this year from a state oil wealth trust fund, but residents of North Dakota aren't so lucky.

The Bismarck Tribune reports

In North Dakota, it would be unconstitutional, said John Walstad, legal division director for the state’s Legislative Council.

“We get that question from time to time: ‘How come I don’t get a check?’” Walstad said. “Well, because our constitution says ‘no’ at this point. It could be changed, but right now it says ‘no.’”

Reporter Erik Burgess explains the part of the state constitution that prohibits such royalty payments, and shows that it's not exactly a well-thought-out thing:

The constitutional language in North Dakota that prohibits a direct payment to residents is found in Article X, Section 18, in which it states that the state cannot “loan or give its credit or make donations to or in aid of any individual, association or corporation except for reasonable support of the poor.”

That language was put into the constitution “ages and ages” ago, Walstad said, and it’s an attempt to prevent the state from investing state money into private enterprises.

Changing the rules would require a constitutional amendment. Meanwhile, daily oil production in North Dakota is now comfortably above 1 million barrels a day, and natural gas production in July was at 1.3 billion cubic feet per day, an all-time high.


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