Minnesota job creation: Where it comes from, how it happens

Shutdown announcement
Gov. Mark Dayton kicks off what he's calling his "statewide jobs tour" on Wednesday, Aug. 24, 2011, with a visit to Fergus Falls.
MPR Photo/Jeffrey Thompson

Gov. Mark Dayton kicks off what he's calling his "statewide jobs tour" today with a visit to Fergus Falls.

Polls show voters place jobs and the economy at the top of their list of concerns. That may be one reason why even as agency budgets were being cut throughout state government, this year's state budget nearly doubled the size of a relatively small and little-known program called the Minnesota Investment Fund.

The fund got an extra $3 million to give out in low-interest loans to businesses that want to expand in or relocate to Minnesota.

Mark Lofthus, who directs the Minnesota Investment Fund and other job creation programs at the state Department of Employment and Economic Development, spoke with MPR's Morning Edition about the fund.

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Phil Picardi: How many jobs do you think you'll be able to lure to Minnesota with that $3 million?

Mark Lofthus: It's an important tool for us to work with specific companies. It's hard to say exactly how many jobs would be created with those $3 million, but on average we assist companies to the tune of about $5,000 to $10,000 a job. It's low-interest loans, it's funding that leverages private investment that helps them buy equipment typically, or construct a building or conducts a physical expansion in the state.

Picardi: So if you do the math, how many jobs is that? Like 300-600?

Lofthus: With that math, yes. That's about right. I'd say 400-500 jobs would be what we'd expect with that.

Picardi: Earlier this month, the Minnesota Investment Fund and the city of Sauk Rapids made $500,000 loan to the sporting goods manufacturer Coleman. Let's use that as a case study. How will that deal work?

Lofthus: It's a very good example of how the Minnesota Investment Fund will help with job creation, because this is a company that is putting back into place manufacturing of life preserver jackets in Sauk Rapids in the St. Cloud area. About three years ago, that company had downsized the operation and sent those jobs to China in order to save costs, and over the years they've realized that they can do that more effectively, productively and competitively by being in Minnesota. So it's home-shoring. We used to hear a lot about off-shoring, now we're hearing more about home-shoring — bringing jobs back into the United States for a lot of reasons: productivity, access to markets, shipping costs, the value of the dollar. ... So our funding will assist, along with the city of Sauk Rapids, so that Coleman can purchase about $1.1 million of equipment for manufacturing to reconstitute the operation there in Sauk Rapids. They have committed to create at least 100 jobs in the next two years, and it's structured as a forgivable loan. So if at the end of that two year period, if they don't create the jobs the loan would not be forgiven.

Picardi: What about the argument that these types of government-subsidized business loans just rob Peter to pay Paul? Couldn't you argue we're just collecting taxes from the profitable businesses in the state so we can give money to one of the less successful ones?

Lofthus: Every state, every government jurisdiction is working on economic development. Our mission is to try to attract jobs, to keep jobs here, to grow jobs in the state, and we are competing in an international market for that. This is a global marketplace as we all know, and Minnesota has to find ways to make investments in job creation here. At the end of the day, when those 100 jobs are created in Sauk Rapids, we'll stand tall and be proud of the fact that they were created there, not somewhere else in the United States, not somewhere else in the world or staying in China, but here. We are very proud of that and will continue to use that money for that purpose.

Picardi: I guess $3 million is a lot for you or me, but if you compare that to the overall state budget, it seems like a drop in the bucket. Do we need to be doing more?

Lofthus: We probably do need more resources. For a long time the Minnesota Investment Fund has been starved for new money. The $3 million we got last session is the first new allocation we've gotten in at least eight years. $3 million is not very much compared to what other states offer. There are many states that have economic development funds that are dedicated to that purpose in the tune of $250 or $100 million. So it's a small amount of money for Minnesota. We've never been a large player in the economic development incentives, but with a significant commitment to that, we can find projects like Coleman.

(Interview transcribed by MPR reporter Elizabeth Dunbar.)