Building for a Boom

ARSHALL - Rich Karlgaard isn't worried about the economic future of southwest Minnesota. Quite the opposite, Karlgaard told an audience of area business leaders, saying that America's heartland is headed for a "sustainable boom" in the next 30 years. After looking at recent economic trends, Karlgaard said, "I don't want to be in coastal, urban areas" to start a business. Karlgaard is the publisher of Forbes magazine and an author and columnist. He was speaking at the Premier Leadership Event at Southwest Minnesota State University on Monday. The leadership conference was sponsored by the Southwest Initiative Foundation. It's less expensive to live in regions like southwest Minnesota, and companies can afford to expand or start in rural areas, Karlgaard said. That's provided regions are willing to promote entrepreneurship to create jobs that make people want to stay and return to the rural areas, Karlgaard said. "In Silicon Valley where I live, the two big companies are Intel and Cisco, he said . "But they can't add a single job to the area, because of the cost of living," he said. So, when companies are looking for alternative sites, or entrepreneurs look for a place to start their business, they can look at rural areas, he said. Improvements in Internet and wireless communication technology mean cities in the heartland aren't isolated. "There is no information gap anymore. Everyone has broadband," Karlgaard said. The Midwest also offers strong educational systems, low crime rates and other things that are attractive to potential employees. Karlgaard said southwest Minnesota has several factors in its favor, like a strong educational system, the region's closeness to Interstate 90, and the efforts of groups like SWIF to encourage entrepreneurship. Rural areas can provide two key capital needs to business and industry. One is the capital of people and the other is capital as in real money, Karlgaard said. Communities shouldn't focus solely on trying to attract industry or commercial employers, he said. "Bring in a big company or a big box store, and the jobs are there," Karlgaard said, but they don't create a loyalty to the community. In contrast, entrepreneurship can foster community growth and identity. "People think, 'This is our intellectual property,'" he said. "Time and time again we see this, where an entrepreneur gives confidence to an entire town." Banks and other traditional funding sources need to be willing to financially back entrepreneurs, he said. "People here are conservative. They don't like to throw money around. It's a good thing, largely," Karlgaard said. But being too conservative can sometimes cause a community to lose out. For example, he said, the founders of aviation company Cirrus Design chose to locate their business in Duluth after being denied loans in Wisconsin and North Dakota. Expanding and creating more regional partnerships could also work in southwest Minnesota's favor. "I think you've got a great regional concept now," Karlgaard said, but it could be expanded. South Dakota communities like Sioux Falls and Brookings could be viewed as regional assets instead of business competitors. "Coming into Sioux Falls and driving here today, I couldn't tell the difference between South Dakota and Minnesota," he said. "The sky doesn't change color at the border." Although recently the possibility of a recession has received a lot of publicity, Karlgaard said the reality is more positive. Some parts of the U.S. are hurting, he said, but nationally, the economy hasn't shown negative growth.