Saturday, August 25, 2012

Business Climate: Minnesota vs North Dakota -- Again

Don sent me a great link, one I would have missed. Nothing to do with oil. It has to do with expansion of the manufacturing base in North Dakota.

One might want to see my original post regarding reasons why companies are expanding in North Dakota vs Minnesota. The original post was written a long time ago, but there have been many updates. If you go to that link first, skip all the updates, and scroll down to the original post. This was the nut of that post:
President Obama might want to talk to Senator Al Franken (D) from Minnesota to find out what's happening out in the trenches.

For one thing, a very well-respected company and, should we say, an icon of Minnesota has recently expanded, building three new plants on the North Dakota side of the border.
Warroad-based Marvin Windows and Doors has opened North Dakota plants in Fargo, West Fargo and Grafton.
Marvin’s John Kirchner explained why the firm expanded to North Dakota in the last several years: “The regulatory and tax climate in North Dakota ... tend to be more friendly toward the business."
Also, Kirchner said, it takes too long to get state permits, delaying expansion plans.
While pledging that “we are not going to walk away from Minnesota” and saying Warroad will remain Marvin’s home and biggest factory, North Dakota is a good location for company manufacturing plants, he said.
Now, back to today's story.

The above digression will help put this new story into perspective.
Officials in Mapleton, a few miles west of Fargo on Interstate 84, say a pair of building projects involving a new manufacturing plant and an expanding business should attract new residents.

Groundbreaking was held Saturday for the 10,000-square-foot Horsch Anderson LLC manufacturing plant. The plant, which will make agricultural equipment, is the collaboration of Aberdeen, S.D.-based Anderson Industries and two other companies.

Mapleton Mayor Eric Hillman told the Forum newspaper  the city is spending about $3.2 million for a new industrial plant to accommodate the $6.5 million plant. It will be covered by special assessments.
The Horsch Anderson plant, which is scheduled to be completed early next year, will serve as the North American headquarters for the triumvirate of Anderson Industries; Horsch Maschinen, of Schwandorf, Germany; and Harper Industries, of Harper, Kan.

The other project involves Great Plains Transport, which has been leasing space in Mapleton and plans a new 25,000-square-foot headquarters to open in 2013. The company, which employs about 80 people, plans to add about 50 new jobs, said Bob Holland, Great Plains Transport president.
From a geographical perspective, it probably would have been just as easy to open on the east side of Fargo, in Minnesota. 


  1. If you want to objectively compare the business climates of the states, I recommend the multitude of data released each year by the nonpartisan Tax Foundation. Specifically, the "Location Matters" analysis. is the website to visit in order to read the most recent study.

    You might be surprised to discover (I was) that for 2012, the Tax Foundation ranked Minnesota higher than North Dakota in terms of each state's friendliness to manufacturing operations. Although Minnesota has a high corporate income tax rate, the state gets rewarded in the rankings for having low property tax rates as well as property tax abatement, which both help lower a company's total tax burden. On the other hand, in spite of a lower corporate income tax, two factors work against North Dakota in determining the rankings. One is the state's "three-factor apportionment formula," which uses property, payroll, and sales of a company to determine the amount of tax payable. In addition, North Dakota has a "throwback rule," whereby the sales a company makes in other states are taxed in North Dakota as long as the company does not have nexus (a physical presence) in those other states.

    I suspect the regulatory climate is where North Dakota wins with regard to the manufacturing sector. However, during this year's legislative session, Minnesota's Republican-controlled legislature did identify many regulatory burdens that could be eased and was able to get Democratic Governor Mark Dayton to make the requested changes (one of the few things the governor and legislature agreed on this year). So I guess we'll have to wait and see what becomes of the regulatory environment in Minnesota within the next few years.