The EDA Center | at the University of Minnesota  
Commentaries on Greater Minnesota

Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.

 

Commentaries
The Dynamics of a Regional Center
August 2012
Jack M. Geller, Ph.D.
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In late 2008 the status became official: that the Mankato-North Mankato region was changed by the federal Office of Management and Budget from a Micropolitan Area to become Minnesota's newest Metropolitan Statistical Area. Of course, most local officials knew this change of status was coming as all of the population estimates since the 2000 Census suggested that the 50,000 threshold was near and most expected that this would be confirmed as soon as the 2010 Census was completed. But getting the official status declared in late 2008 was to some an early Christmas present. It opened the door for new levels and categories of federal funding and more importantly, it put south central Minnesota on the screen of many corporations and their site-selection firms seeking to expand to new, emerging and dynamic metropolitan areas.

But is the population size of the region the only factor that makes a region dynamic? What about MSAs like Detroit and Cleveland whose size far surpasses south central Minnesota's, but whose economy has stalled and population decreasing? No, the true measure of a dynamic region is its ability to both serve as a hub and magnet for new job creation and sales; as well as its capacity to reciprocate growth in its smaller outlying region.

So it was with great interest that I read a recent report focusing on the "Trade Center Hierarchy in Greater Minnesota" by U of M researchers William Craig and Bruce Schwartau
(http://www.cura.umn.edu/sites/cura.advantagelabs.com/files/publications/Reporter-41-3&4-Craig-rev2.pdf). Like many demographic and economic researchers before them, Craig and Schwartau rank greater Minnesota communities by their 2009 taxable retail and service sales. But in addition to this simple ranking of sales, they also examine changes in the population size, retail sales, and sales per capita. For you see, it is in these statistics that one can get sense of how dynamic the economy of a trade center really is; i.e. is the community truly serving a broader region, or is it primarily serving its own population?

A simple example of this is to look at the communities of Willmar and Alexandria. Willmar is by far the larger of the two communities with a 2010 population of 19,610; while Alexandria's population is significantly smaller at 11,070. Yet the smaller Alexandria had retail and service sales in 2009 totaling $287 million, while the much larger Willmar's sales were only at $282 million. In fact retail and service sales grew in Alexandria (1990-2009) at a rate of 68 percent, while sales growth in Willmar was less than half at 31 percent. Translated into sales per capita, the smaller Alexandria reported sales of $25,958 per person in 2009, while the larger Willmar reported similar sales of $14,382 per person. Clearly it suggests that Alexandria is serving as a trade center that is drawing upon a much larger area and possibly a more affluent population than Willmar. And as one who visits both of these communities on a periodic basis, I can attest to the significant growth in retail shops, strip malls and hotels in Alexandria over the past decade, while such growth was not as apparent in Willmar.

So how did the Mankato-North Mankato MSA fair in these rankings? Well the short answer is extremely well. Of all greater Minnesota Cities it is clear that Mankato deserves its spot at number 4 in the rankings, behind Rochester, Duluth and St. Cloud. While Mankato's 2009 sales were just shy of $1 billion ($904 million to be exact), the remaining three all surpassed the billion dollar mark with Rochester leading the pack and nearly $1.2 billion. However, what really secured Mankato's ranking at number 4 was the sales figure for number 5 Brainerd, MN, whose sales were $421 million -- less than half of Mankato's. Clearly, the Mankato-North Mankato MSA deserves its place and status with greater Minnesota's other metro areas.

But what was truly most impressive was the sales growth of the Mankato-North Mankato region. While sales from 1990-2009 grew at a rate of 39 percent in Rochester; 27 percent in Duluth; and 42 percent in St. Cloud; sales grew in Mankato over the same time period at a rate of 123 percent (from $406 million in 1990 to $904 million in 2009)! Translated into sales per capita, the Mankato area actually generated $17,153 in retail and service sales per resident, while the similar number are $10,976, $10,986 and 10,041 for Rochester, Duluth and St. Cloud respectively.

As I noted earlier, having a large enough population to create a critical mass is certainly an important factor in creating a dynamic regional center, but population alone is not enough. Rather the ability of a community to evolve into a truly dynamic regional center for sales, service, health care, education, the arts and entertainment is the true test. And based upon this analysis, it certainly seems like the Mankato-North Mankato MSA is passing this test quite successfully. With a 2010 population of 52,703, the Mankato-North Mankato MSA is half the size of the St. Cloud MSA at 101,206. Yet in 2009 it reported 89 percent of the retail and service sales of the St. Cloud MSA. If this trajectory continues will Mankato jump to the number 2 spot by 2020?

Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at gelle045@umn.edu

This document was prepared by the University of Minnesota, Crookston under award number 06-66-05709 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

The University of Minnesota is an equal opportunity educator and employer.

 
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