North Dakota needs to think small (firms), then big (exports)

Opinion-Letter to the Editor

Matthew Mohr

Published November 1, 2003  | November 2003 issue

Few people would argue against enhancing the economic growth prospects of North Dakota. As a sparsely populated state with a long-lived dependence on agriculture, the state needs to address alternatives to farming for its economic future.

Some economic development proponents are hoping for growth through a "big bang." These people believe that attracting one or more multihundred employee businesses will position North Dakota for a bright future. What these big bang proponents fail to address is the fact North Dakota doesn't have the population base to fill the job needs of such large businesses, and only a few cities in North Dakota have the infrastructure to handle a large employer.

The real answer to long-term economic prosperity for North Dakota is to create an environment to attract many hundreds of smaller export-based businesses. In classic economic terms, this would be defined as the return to a cottage industry-based economy.

According to data from the Minneapolis Federal Reserve Bank (see May 2003 fedgazette), North Dakota had $644 million of manufactured exports in the year 2002 and $1,203 million of agricultural exports in the year 2002. Minnesota, during the same time, had $9,517 million of manufactured exports with $2,299 million of agricultural exports. Given these statistics, it is reasonable to conclude North Dakota would experience enhanced economic growth from an increase in nonagriculture-based, export-oriented businesses.

Attracting a number of small export businesses sounds easy, but it would take effort and a change in attitude toward business development. North Dakota economic development offices need to focus their efforts on venture capital forums, advertising to small business owners nationwide and create some statistics-based literature highlighting the benefits of doing business in (from) North Dakota, such as the highly educated workforce, low workers' compensation rates, low health insurance costs and high employee retention rates.

Each town looking for businesses should create a piece of literature showing the business buildings, homes available and the selling prices, proximity to health care, education available for children, recreational opportunities and the related costs of living in that community (utilities, food, taxes, etc.).

Smart business owners looking to relocate or expand into a new area will view North Dakota statistics as strong indicators of a favorable business climate to explore.

Statistics will not eliminate all the negative attitudes about the weather in North Dakota and North Dakota's "buffalo commons" reputation or dispel the great brain-drain myth. Strong, honest advertising with testimonials from successful enterprises will go a long way toward reversing the poor reputation built around North Dakota. The region does have a lot to offer businesses and their employees.
North Dakota has some of the most beautiful natural land in North America. With today's technology, small-town living has more to offer than ever before in history.

A prime example of how small North Dakota businesses can thrive is Direct Response Technologies Inc. located in Beulah. According to Michael Marcil, president and CEO of Dakota Venture Partners, Direct Response Technologies Inc. now has 10 employees living in Beulah and loving it. During a recent discussion, Marcil boasted of receiving 300 applications for five job openings at Direct Response Technologies Inc. in Beulah. All five openings were filled with people who had a North Dakota heritage and wanted to return to or stay in the state.

Direct Response Technologies Inc. offered good wages, benefits and a great way of life.

North Dakota has a lot to offer employers and their employees. Almost every town could add one or two small businesses without causing any disruption to the town's infrastructure.

The answer for the state is courting many, many small businesses that sell products and import profits, resulting in the creation of jobs and economic growth in the state.

Send your comments to letters@mpls.frb.org.