Ready to relocate: South Dakota experiences surge of interest from businesses

June 29, 2020

With his Minnesota-based business of more than 30 years destroyed by rioters, Kris Wyrobek declared he would rebuild his manufacturing company.

But not in Minneapolis.

7-Sigma, a manufacturer of industrial products such as rollers for printing presses and mannequins for medical training, would be taking its 50 jobs elsewhere, Wyrobek told the Minneapolis Star Tribune in a story published June 9.

“They don’t care about my business,” he said, criticizing the city’s emergency response as his facility was heavily damaged by fire.

“They didn’t protect our people. We were all on our own.”

Wyrobek’s public pronouncement of his move reflects a growing number of private conversations, those in area economic development say.

The pandemic, subsequent shutdowns and civil unrest have combined to create a high level of interest from businesses in potentially relocating – and South Dakota appears to be sitting at the center of many of those conversations.

“It’s been extremely busy,” said Steve Westra, commissioner of the Governor’s Office of Economic Development.

“Our business development team is really on overload almost because we have too many leads to be following up on. It’s great.”

The interest began appearing during a time when most of the country was under stay-at-home orders and many businesses were forced to stop operating, he said.

The state received significant national press for not issuing a blanket order.

“We have people calling us thanking us for the way our governor has handled this and how they wish their governors were doing the same thing so they could at least be keeping their businesses open and provide jobs and benefits and opportunities for their employees,” Westra said.

“They ask about that continually. We get those phone calls, which then allows us to go into highlighting South Dakota and talking about what a business-friendly tax climate we are. We have a fully funded pension. We have a great and willing and able workforce, and that’s extremely appealing to a lot of these businesses.”

Many also expect their taxes ultimately will increase in their home states to cover shortfalls related to the pandemic, he added.

“A lot of these states are essentially broke, and these employers know the only way the states will be able to weather this is through an incredible increase in taxes, and in South Dakota we’re not going to see that,” Westra said.

While the spike in interest hasn’t trickled down as far as the Sioux Falls Development Foundation yet, “I like our activity pipeline,” said Dean Dziedzic, vice president of economic development.

“It’s manufacturing, we’re getting some interest on the food processing side again, distribution, warehousing is in the mix. We have had some clients visit the community, but I would say that was very specific for things we’ve been working on for some time. For the most part, business travel is still pretty locked down. We haven’t seen any uptick in it yet.”

Minnesota messaging

Economic developers both in Sioux Falls and at the state level are hearing strongly from Minnesota companies, they said.

“There are some Minnesota companies that have expressed they want to leave Minnesota, and obviously we’re reaching out to them,” Dziedzic said.

In the state’s office, Westra estimates 20 percent of out-of-state interest is coming from Minnesota. The office also is being contacted by individuals from South Dakota interested in returning.

“With what’s going on culturally taking place, I think it allows more people – especially former South Dakotans – to look back and say, ‘I left the state, I want to see my kids grow up in the state I remember and how safe I felt and what a great state it was in general.’ And they’re reaching back out to want to hear about jobs and opportunities of coming back to South Dakota.”

Both organizations plan marketing campaigns in Minnesota that will start soon.

The Development Foundation is returning to its decades-long strategy of airing radio ads in the market starting July 6.

“We’re going to be hitting it pretty hard for the next three months through some specific, targeted radio ads that explain the benefits of South Dakota – low-cost, pro-business climate, taking advantage of some of the praises the governor received for the approach to the coronavirus,” Dziedzic said.

The state plans a comprehensive marketing push also beginning in early July, “essentially letting them know we’re open for business, and in South Dakota we mean business,” Westra said. “We’ll be going full steam ahead knowing we’re getting a lot of out-of-state leads from them.”

But much of the state’s marketing has come for free in recent months, he added. For instance, the website 24/7 Wall Street created an index of states most likely to be crippled by COVID, and South Dakota ranked last.

“South Dakota’s economy is less exposed than the economies of other states to the effects of the pandemic and resulting economic fallout largely because of its employment composition,” the website said. “Only 14.5 percent of workers in South Dakota are employed in industries that are at high risk of slowdown due to efforts to contain the virus.”

The interest from businesses is broad and reflects a variety of industries, including interest in both the eastern and western sides of the state and communities of all sizes, Westra said.

“What’s really nice is we have more than enough leads coming to us. I can really say I don’t think we’ve ever had that before,” he said.

“Businesses love stability. That’s what South Dakota offers every single one of them.”

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Ready to relocate: South Dakota experiences surge of interest from businesses

“They don’t care about my business.” Words like that are flowing into South Dakota, as businesses are showing big interest in potentially relocating.

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