Winter 2012 Feature Article
Exportrepreneurs
At the complex vault of international trade, a clever few are picking the lock.
By Martha Coventry
Photography by John Linn
Great ships loaded with grain and iron ore leaving the Duluth harbor bound for ports around the world. For generations of Minnesotans, that was the image of our state’s international trade.
Today, that romantic vision needs to make room for a broader view of Minnesota exporting. Businesses in towns across Minnesota led the state to a record-breaking $5.3 billion worth of products sold internationally last year. When you consider that the National Association of Manufacturers reports that every $1 in manufacturing product infuses an additional $1.37 into other sectors of a local economy, it’s clear that exporting abroad supports people at home.
“There is no doubt that international success requires a business going ‘all-in’ and taking some calculated risks,” said Kathy Gaalswyk, Initiative Foundation president, “but the good news is that they don’t have to do it alone. In Minnesota, we have a wealth of resources and expertise to draw upon.”
Over 100 companies in central Minnesota are playing an increasing role in the state’s exporting success. Some fought hard to keep their heads above water during the recent recession. All see international markets as the way to expand their business base and weather the storms of economic uncertainty.
Even as they grow, these companies have stayed where they were founded, keeping the money they earn in their communities, contributing taxes, paying utilities and raising their employees’ standard of living. And they have no intention of moving from the towns they call home. Here are four central Minnesota businesses that are exporting success.
global fanfare
Schaefer Ventilation Equipment, Sauk Rapids
 |
STEADIER DEMAND: The recession proved to Schaefer Ventilation Equipment CEO Neil Crocker that the company needed to develop a more sustainable overseas market. |
Schaefer Ventilation Equipment sells big air-moving systems and radiant heat products that it makes in Sauk Rapids. These systems heat, but mostly cool, animals, plants and people. Giant fans push breezes through movie sets and focused heaters warm chilly hotel entrances. Pilgrims entering Mecca, in Saudia Arabia, pass under Schaefer fans blowing a cooling mist.
The company’s income grew by 50 percent in 2011, but sales were shaky only a few years earlier when the recession hit manufacturers hard. To stay profitable, Crocker kept the company focused on essentials, but he wisely continued to fund a series of growth initiatives. One was an exploration of international business opportunities. “Lots of international companies come to the U.S. to attend annual trade shows,” said Crocker. “We’ve always made connections and sales from these events.”
The recession proved to Crocker that the company needed to develop a more sustainable overseas market. By geographically diversifying sales, Schaefer’s products could become less season-dependent and the company could build a steadier demand.
In 2010, Crocker and his team participated in a U.S. Commercial Service/Minnesota Trade Office program called ExporTech designed to help companies become successful exporters. Schaefer also used the U.S. Commercial Service to find dealers and distributors and received coaching on international marketing strategies from the Minnesota District Export Council.
Aided by Schaefer’ s 60-year history and a stellar reputation for quality, this tactical exporting effort is paying off. In 2011, Schaefer Ventilation sold $1 million worth of products to Egypt, Pakistan, Mexico, United Arab Emirates, Russia and Venezuela, among other countries. It is also putting significant effort into growing its Middle East business to include Saudi Arabia and Kuwait. Next year, Crocker hopes to increase its international sales to $2 million.
smoother sailing
Larson Boats, Little Falls
 |
EASTBOUND: Larson Boats CEO Al Kuebelbeck is turning the Little Falls-based company’s attention to China. |
Larson Boats has ridden many financial waves since Paul Larson began building cedar-plank watercraft in 1913. Buyouts and bankruptcies, depressions and recessions have buffeted the company over the years, but it has held on because of its near iconic status among boaters and an impeccable reputation for quality.
Even so, 2007 was a difficult year. Along with the downturn in domestic sales, international sales crashed in the global recession. It was also the year the company declared bankruptcy.
Despite the grim boat-buying picture, Larson had several strengths in its favor—a solid history of excellence; highly skilled, loyal employees; in-house manufacturing that saves inventory and freight costs; and tremendous support from the Little Falls community. With financial support from the Initiative Foundation and other partners, the company quickly began to build back its business, especially in the world market.
“To truly be able to grow a boat company, you have to have a vision for international sales,” says Nino Dreger, head of international marketing. “If we establish the company well in every single market worldwide, we can take advantage of positive economic developments in one market if another falters.”
CEO Al Kuebelbeck believes Larson’s advantage comes from the company’s 225 employees who build every inch of Larson’ s boats, except for the instrumentation and windshields, in the Little Falls factory. “There isn’t a better workforce than we have here in central Minnesota,” he said. “The average length of service of the people here now is 18-plus years. If you have that kind of dedication and pride in your work, you can win.”
Today, Larson is actively selling boats in 23 countries, with Sweden, the Netherlands, Australia and Germany as the fastest-growing sectors. And it is turning its attention to China, a country Kuebelbeck calls “literally untouched” when it comes to boat sales. The company is just beginning to see the positive impact of international sales. Currently, they make up 18 percent of the company’s revenues and Kuebelbeck’s goal is to double that number. The impact on the local economy grows with each percentage point, adding that much more to a vendor’s bottom line and increasing the need to grow the Little Falls workforce.
growing a need
Microbiologics, St. Cloud
 |
MADE IN ST. CLOUD: Microbiologics CEO Brad Goskowicz says the company sells its products in 128 countries. |
Over time Microbiologics developed a freeze-drying process and began creating microorganism quality controls. Using innovative packaging and new formats, it specialized those controls to ensure quality and safety in fields such as cosmetics, food, pharmaceuticals, and clinical testing.
“If you’re a hospital, for example, testing for staph and your results keep coming back negative, how do you know your tests are working properly?” said CEO Brad Goskowicz. “You need a control. We have specific strains of Staphylococcus that you can use to monitor your testing equipment to make sure it’s recognizing the bug when it sees it.”
Today, Microbiologics is one of only three companies in the world that makes these specific testing products. “We’ve found our niche,” Goskowicz said. “We are very, very good partners with the people we serve and we make all our products here in St. Cloud.”
The U.S. demand for Microbiologics’ products has always been strong, but the company needed to look for revenue and growth possibilities in markets that were expanding faster than those in the United States. “We wanted to supplement our U.S. revenue and find ways to weather downturns and disruptions that might happen all around the world,” said Goskowicz.
With support from the Initiative Foundation, trade organizations, and the Minnesota Department of Employment and Economic Development, Microbiologics began understanding export regulations, finding distributors, and moving into overseas markets. Now 40 percent of its $15–25 million revenue comes from outside the United States. The company sells its products in 128 countries, with those in Asia increasing revenues by a steady 60–70 percent each year and Latin American countries showing a 30 percent growth rate. “As multinational food and cosmetic companies move into these markets, constant monitoring of their products is critical,” said Goskowicz.
the art of destruction
Rotochopper, Inc., St. Martin
 |
GROUND LEVEL: Rotochopper CEO John Babcock said that international revenues climbed to $6 million in 2010. |
The employee-owned company was an inventive business from the start. In 1990, Vince Hundt, who had been importing and selling forestry equipment from Finland, met Fred Peltz, a gifted machinery designer and owner of Peltz Manufacturing in St. Martin. With startup financing from the Initiative Foundation they built a prototype grinder, refined it and continued to adapt it for multiple uses.
The company has been so successful in the United States that it didn’t invest in the international market until a few years ago. “One key to being successful in the overseas market is to have a good international bank,” said CEO John Babcock. “It ensures that the customer’s bank is stable, and that there are no U.S. sanctions in place against the country.”
Along with the difficult and costly practice of conforming to differing international manufacturing standards, it’s been a challenge for Rotochopper to find quality local representatives in various countries. But the sales force in St. Martin has been doing a first-rate job, according to Hundt, the vice president of market development and the architect of the company’s international expansion.
In 2009, Rotochopper sold $4 million worth of products internationally, about 20 percent of total sales. In 2010, international revenues had climbed to $6 million with sales in Canada, Norway, Sweden, Finland, England, Australia, New Zealand, Russia, Ukraine and Japan.
Many of Rotochopper’s product components are supplied by local businesses. Many services are performed locally, too—for example, a local vendor does the metal machining. In addition to these direct economic impacts, customers come from all over the world to visit the factory. They use taxis and rent cars, shop, stay at hotels, and eat at local restaurants. Babcock calls all of this activity “new” money because it is coming from outside the region and infusing local St. Cloud area businesses.
Most of the 50 people who work at Rotochopper come from 10–15 miles away. “We’re committed to St. Martin,” said Babcock. “The people who work here share in the success of the company. We’re here to stay.” IQ
Initiative foundation | 405 First Street Southeast | Little Falls, MN 56345 | (320) 632-9255
