Editor’s Note: In light of President Obama’s recent action on immigration, we are featuring our partner Twin Cities Business’ article about the economic impact of immigration in Minnesota.
When bipartisan federal legislation to overhaul the nation’s immigration system failed in 2007, Bob Fitch decided he’d seen enough. The solution, he believed, was to unite trade associations and provide cover for individual business owners who supported such legislation but hesitated to speak out for it.
Then the executive director of the Minnesota Landscape & Nursery Association, he joined forces with his counterpart at the Minnesota Agri-Growth Council, Daryn McBeth, to launch a coalition to campaign for an overhaul. Soon, the Minnesota Milk Producers Association climbed aboard. Then the state’s largest business association, the Minnesota Chamber of Commerce, signed on. “That really was a huge turning point,” says Fitch.
Today, Fitch’s idea has become the Minnesota Business Immigration Coalition, which has broad buy-in and advocates for smart immigration growth in Minnesota. And because of its efforts, hundreds of Minnesota businesses now back the push to modernize federal immigration laws. Their message: Without more immigrants, Minnesota’s labor force will fall short of the workers it will need, at both the higher and lower ends of the skills spectrum, as baby boomers retire.
The coalition and the Immigrant Law Center of Minnesota are working with unions, immigration attorneys, religious leaders and social service organizations to persuade Congress to revamp the country’s outmoded visa system—which is really the most pressing problem when it comes to changing policies that affect immigration in Minnesota. The coalition has a litany of complaints about it (see “The Problem with Visas,” page 29).
The coalition’s work on immigration reform obviously began well before President Obama’s re-election, which gave the issue new momentum because his coalition included many Latino voters. And its mission centers on a fairly direct statement: “The immigration system is broken.”
Backers of the alliance agree with a recent Chicago Council on Global Affairs report, which says that the U.S. visa system, which governs the entry of most new arrivals into the country, hampers U.S. employers by preventing them from hiring the foreign-born workers they need to be competitive. The report calls on Congress to establish a “pathway to citizenship” for the more than 10 million foreign-born individuals living in the United States without authorization (roughly 60,000 in Minnesota, according to the state demographer’s office) and to provide more visas for high-skilled workers. Several Minnesotans, including Minneapolis Foundation President and CEO Sandy Vargas, and Cargill Vice President Mike Fernandez, were among the members of a 12-state Midwest task force convened to produce the report.
Demographics dictate destiny
In Minnesota, as State Economist Tom Stinson and recently retired State Demographer Tom Gillaspy have often noted, economic growth springs from two sources: greater productivity of existing workers, and/or more workers. Demographic projections show that the state’s labor force, which surged 27 percent from 1990 to 2010, will grow less than 6 percent from 2010 to 2030. Restrictive immigration policies would throw sand into the gears of one of the only two routes to economic growth.
Stinson, Gillaspy and Bill Blazar, who leads the immigration coalition for the state chamber of commerce, often cite the projections as a powerful sign that demographics is destiny: Worker shortages are virtually certain to arrive soon—though with the high unemployment rates of recent years, such warnings aren’t being heeded. And according to the Minnesota Department of Employment and Economic Development, the shortages are creeping ever-closer in critical fields soon to be riddled with retirements, most notably in management, office and administrative work, sales, production, and education.
“Four or five years ago, people thought Tom and I were basically lunatics,” Gillaspy says. “Some people still do.”
But there’s nothing crazy about their concern or about the growing importance to Minnesota’s economy of immigrants who, as a group, are younger than the rest of the state’s labor force. According to data from Gillaspy’s successor, Susan Brower, the state’s labor force grew by 617,000 from 1990 to 2010. Immigrants accounted for three of every 10 of these new workers.
Back to the future
A century ago, Minnesota was an immigrant state. In 1896, voters received instructions in nine languages. Four years later, Minnesota ranked seventh highest among all states for foreign-born residents as a share of total population. But immigration slowed to a trickle during the half-century that ended in the 1970s. Foreign-born residents relative to the overall population fell to one of the lowest shares for any state.
Then church congregations and resettlement agencies, backed by foundations, stepped up to accept refugees from war-torn Southeast Asia. Refugees from Somalia, the USSR and its constituent countries after its collapse, Ethiopia, Burma, Liberia, Bosnia, and other troubled nations followed. This influx has given Minnesota’s foreign-born population a different look—more from Asia and Africa, fewer from Hispanic countries—than the nation’s. What’s more, the scale of Minnesota’s effort to roll out the welcome mat has been remarkable. In 2004–06, the state resettled more than 18,000 refugees, according to the Minnesota Department of Health, second only to California; that’s one of every nine refugees the entire country took in. Plenty of newcomers from Latin America have come to Minnesota as well, attracted by job opportunities.
Yet the process has not always gone smoothly in Minnesota. Late in 2005, a unit of the Minnesota Department of Administration estimated the annual cost to the state and local governments for illegal immigration at up to $188 million annually for education, public assistance, and incarceration. The report criticized Minnesota legislators for failing to address this concern while legislators in other states passed 47 laws earlier that year dealing with immigration and refugee issues. Gillaspy, who worked for the Department of Administration, was aghast at what he viewed as the report’s restrictive tilt. “When I found out about it, I went ballistic,” he says.
Immigrants do tend to increase the near-term tax burden, but immigration advocates insisted that the report ignored many economic benefits of new arrivals. They argued that Republican Gov. Tim Pawlenty was using the report to stoke opposition to immigration to benefit his party. Pawlenty followed up with a series of proposals designed to crack down on immigration abuses. Later, a study by the Office of the Minnesota Legislative Auditor and a report for the Minnesota chamber by University of Minnesota professor and immigration specialist Katherine Fennelly challenged aspects of the Pawlenty administration report.
Over the years, many economists, analysts, and commentators have studied the economic impact of immigration. One of the most recent commentaries comes from economist Douglas Holtz-Eakin, an adviser to Republican politicians and the head of the conservative American Action Forum. Holtz-Eakin says a serious modernization of U.S. immigration policies would generate significant economic growth. Conversely, he warns that a lack of immigration would lead to contraction of both the U.S. population and its economy due to low birth rates among U.S.-born women.
Studies by Raymond Robertson, a Macalester College economist, have found that immigrant workers coming to the United States from Mexico illegally have had no significant impact on the wages of U.S. workers. Robertson says that’s because these workers take jobs U.S. workers don’t want.
For now, the nature of the refugee flow has changed. In 2008, the State Department shut down its Family Reunification Program. The move, precipitated by concerns about fraud, sharply reduced the flow of refugees into Minnesota from Somalia—so much so that the state fell from the ranks of the 10 states accepting the most refugees that year. Minnesota has been out of the top 10 ever since. Kim Dettmer, who leads the state refugee resettlement effort at Lutheran Social Service of Minnesota, says the decision disrupted plans for many refugee family members still abroad to join relatives resettled in Minnesota. “It was heartbreaking,” she says. But by another measure of refugee inflow, net inflow of “secondary migration”—refugees moving from one state to another—Minnesota’s 1,832 arrivals in 2011 easily topped all other states.
Alliance likely to endure
As the refugee situation was shifting, the business immigration coalition kept growing. The state restaurant and lodging associations came in as partners. Blazar and John Keller, who heads the Immigrant Law Center, hit the road, crisscrossing the state twice to brief businesses on the alliance’s work. Among the co-sponsors of these forums were the Service Employees International Union (SEIU) and several other unions, Jewish Community Action, the Minnesota Council of Churches, the Minnesota/Dakotas Chapter of the American Immigration Lawyers Association, the Islamic Center of Minnesota, and the League of Women Voters.
It’s an enduring alliance of strange bedfellows. Javier Morillo, the articulate and assertive president of the SEIU’s Minneapolis-based Local 26, has attended several coalition meetings at the state chamber’s office in downtown St. Paul. As Morillo notes, “It’s definitely an odd thing for the SEIU and the chamber to even be together in the same room.”
Congress continued to consider immigration legislation as this article went to press, with the House considering the Senate’s comprehensive overhaul of existing law. Whatever these politicians do in the weeks ahead, much of the current system will remain, as will the judicial precedents, rules, and social tensions that now prevail. And if Congress does nothing, the Minnesota Business Immigration Coalition will still be pressing its case.
Barrier to success: visas
At Bailey Nurseries this spring, the air was thick with urgency. The company’s 1,300 acres of growing fields in Minnesota were teeming with workers pulling orders, spacing plants, branding and packaging them, and loading trucks. April and May are the months that matter most at Newport-based Bailey, a rock-solid, 108-year-old enterprise that does 60 percent of its business in just 60 days. A cold, late spring had delayed the work, squeezing that precious window of time ever tighter.
This inescapable mandate, to get so much work done so quickly, forces the company to rely heavily on temporary employees. The jobs are tough, the hours long. American-born workers generally don’t take them, so Bailey brings in guest workers from Mexico for most of the work. But doing so has become more difficult because of visa rules that can delay or prohibit their involvement. This year the company was fortunate to find about 100 Burmese refugees in the Twin Cities looking for this type of work.
“As Grandma Bailey put it many times, we never would have made it without the men who came up from Mexico,” says Joe Bailey, human resources director for the company and a fourth-generation member of the founding family. But Grandma Bailey didn’t have to contend with today’s U.S. visa system.
Bailey has called the H2A temporary visa program “a Soviet-style bureaucratic nightmare.” He testified about the failings of the visa system in September 2011 before a subcommittee of the U.S. House Committee on Education and Work Force, chaired by Minnesota Rep. John Kline. Bailey was representing the American Nursery & Landscape Association. His comments for this story are from that testimony and a recent interview with Twin Cities Business.
Rival nurseries in Canada have a competitive edge over U.S. nurseries because they benefit by using a seasonal agricultural program, Bailey says. “The Canadian government facilitates use of the program and the success of its growers. This is a vastly different reality than that facing our company and our peers across the U.S., where government is a hostile impediment rather than a help.”
A maze-like system
That view exemplifies the dizzying complexity that has triggered a world of complaints about the U.S. visa system from businesses of all kinds. Lengthy legal seminars, like the one Bailey and a slew of other human resources executives attended in May at the Faegre Baker Daniels law firm in Minneapolis, have become embedded in the cost of doing business.
As the flow of immigrants has risen, the armada of attorneys representing employers and immigrants has mushroomed. Marc Prokosch, chair of the Minnesota/Dakotas Chapter of the American Immigration Lawyers Association, says the chapter, formed in 1991, has nearly doubled its membership over the last decade to 285. Prokosch points to a 1997 opinion by Judge Robert Sweet in the U.S. District Court for Southern New York that quoted earlier rulings calling the country’s Immigration and Nationality Act reminiscent of “King Minos’ labyrinth” and “second only to the Internal Revenue Code in complexity.” The American Action Forum, a conservative think tank, notes that seven different federal agencies are involved in immigration regulations and that they have generated 234 different government forms related to immigration. Half of the forms come from the Department of Homeland Security.
Bailey is one of the nation’s largest nursery wholesalers. Its growing fields and greenhouses sprawl across 15 sites a few miles southeast of downtown St. Paul, and it has additional operations in Oregon, Washington, and Illinois. Its products are distributed by more than 4,000 garden centers, landscapers, growers and re-wholesalers in the United States and Canada.
The company employs 500 year-round employees, plus 900 seasonal workers during its peak spring shipping and planting season. Its 500 seasonal workers in Minnesota directly support the permanent employees; Bailey says that without an adequate supply of seasonal workers, it would be forced to cut its year-round jobs—300 of them in Minnesota—and drastically downsize its business, hurting its customers and suppliers as well. “Many Americans could lose their jobs in production, sales and marketing, logistics and transportation, and management if we don’t have an adequate seasonal labor pool,” he says. “We bring the temporary workers in to protect American jobs.”
By law, the company picks up the tab for their transportation, both to and from Minnesota and between work and home every day, and for their housing, visa, legal fees, translation services and furnishings— “everything but food,” says Bailey. The company’s guest worker flow can swing wildly for various reasons—in Minnesota, it was roughly 600 in 2008, 500 or so this year. But in 2011, after regulatory issues forced the company out of the H2A program, Bailey says it encountered “tremendous difficulty” finding guest workers; only 350 came. Bailey says that level, well below what the company needed, cost more than $1 million in lost business.
Recruiting efforts fall short
“We spent more time and effort than we ever have on recruitment. We advertised our positions in the newspaper and on the radio, held job fairs, recruited from local unemployment offices, recruited other ethnic groups [Hmong, Burmese, and Vietnamese] through their social service networks, recruited at local businesses that were laying off staff, started a referral program and sent letters to previous employers asking them to return.
“We had hundreds of applicants, but many were not willing to do the work after hearing about it, did not show up to be hired after we made the job offer, preferred to stay on unemployment, only wanted summer work, lacked basic requirements, could not work the demanding schedule which can be six or seven days a week and nine-to 14-hour days during the spring rush, or did not pass E-Verify or the criminal background screening we run on all new hires,” he says.
E-Verify is the U.S. government system that immigration authorities use, in conjunction with the U.S. Labor Department’s I-9 audits, to ferret out foreign workers unauthorized to be in the country. Bailey uses it and State Department background checks as well. About 10 states have passed their own laws requiring private employers to use E-Verify; such legislation has been proposed in Minnesota, but never approved. Authorities have cut back on controversial raids designed to arrest and deport unauthorized workers, turning more frequently to larger fines and tougher I-9 audits that critics describe as “desktop raids.” Bailey says a better solution would be to establish a pathway to citizenship for unauthorized workers.
The U.S. Labor Department, target of much of the criticism from employers of temporary agricultural labor, has defended its performance in congressional testimony, saying it is simply doing its job. But for Bailey and other employers of temporary immigrant workers, dealing with all of the paperwork can cause delays getting laborers into the fields soon enough to meet deadlines for filling orders.
Immigration authorities require employers to jump through too many regulatory hoops, Bailey says. For example, authorities recently began requiring the company to list its experienced and inexperienced seasonal workers as separate classes, in a new report. “That’s a big deal,” he says.
All the more reason to replace the H2A program with one that works, from his perspective. Managers at many agribusiness companies agree. So does Jeff Lungren, a U.S. Chamber of Commerce executive who told the gathering at Faegre that the program is unworkable.
Says Bailey: ”If a company like ours, one of the largest and most sophisticated in our industry, cannot make H2A work, something is very wrong.”
Path To prosperity
Lake Region Medical was in a bind. Demand for its products in the mid-1980s was surging. The company needed plenty of new workers fast, but the labor market was tight. Where to turn? To immigrants, who a few years earlier had begun to stream into the Twin Cities, primarily from Southeast Asia.
But the newly resettled Minnesotans needed training. So managers at Chaska-based Lake Region taught them how to make the company’s precision guide wires, which Medtronic and other large manufacturers combine with other components to produce heart pacemakers and a variety of other sensitive medical devices.
The strategy has worked, both for Lake Region and its 1,600-plus employees, many of whom are immigrants (the company would not disclose the actual percentage). Some have been there for more than 20 years, and moved up from assembly jobs to supervisory posts, research and development work, or other higher-level jobs. The company has won widespread recognition for its success integrating immigrant workers into its workforce to create a diverse culture that has helped it to grow and prosper. In 1999, Gov. Jesse Ventura chose Lake Region’s headquarters/factory campus as the stage to announce the second phase of his “Big Plan,” which among other things, stressed the self-sufficiency that Lake Region’s new arrivals from abroad had achieved by working there. In 2002, the Minnesota Job Skills Partnership gave the company its first chairperson’s award for training foreign-born workers and moving people from welfare to work.
State grants help
The partnership, run by the Minnesota Department of Employment and Economic Development, provides grants to schools or consortiums with expertise in customized training. The businesses whose workers receive the training chip in at least a dollar-for-dollar match; often the company matches come in the form of in-kind contributions, such as wages paid to employees during the training. From 1992 to 2009, seven grants totaling $1.18 million went for training Lake Region’s employees, six of them to consortiums that also train other businesses’ employees. Over the years, the company has used this process to teach its workers everything from measurement to technical vocabulary to blueprint reading.
Hundreds of immigrants throughout Minnesota have benefited from partnership grants through the years. One of the most recent grants went for JBS, the Brazilian-based company that owns the hog-processing plant in Worthington, to train workers to maintain machines. Minnesota West Community & Technical College helped design the training. JBS employs 2,400 workers, largely Latino immigrants, in Worthington.
Family-owned Lake Region produces more than 2,000 models of guide wires. Some are precision-machined to diameters as small as one-hundredth of an inch, so teaching workers to make them reliably is a high-priority task. “The training really never ends,” says Brenda Lundquist, director of organizational development and training.
Mark Fleischhacker, president and chief operating officer at Lake Region, notes that some of the specialized expertise and skill sets the company requires are not plentiful in Minnesota. The training, available to all of the company’s workers, has given Lake Region the capacity to develop a skilled workforce essential to the company’s success.
Rise of the refugees
Vannao Luangsingoth and her family came to Minneapolis as refugees from Laos in 1980. She joined the company as an entry-level assembly worker in 1983, six months after her father was hired (the company’s first employee from Laos). Two of her sisters work there. All told, she and five other family members have 90 years of combined experience at Lake Region. As she upgraded her skills, she became a technician in 1987, an assistant technical trainer working for Lundquist in 1996, and a manufacturing supervisor in 2000. Today she manages 33 employees. At one point, immigrants from 14 countries worked for her. While moving up the ranks at work, she and her husband raised two children, and her job and rising income helped cover college costs: One child earned an undergraduate degree from the Minnesota School of Business, the other a degree in auto mechanics from the Universal Technical Institute in Chicago.
Denise Edoh arrived as a refugee from Togo in 2003 to join her brother in Coon Rapids. A few months later, Lake Region hired her for an entry-level assembly line job. In 2010, she was promoted to a higher-level assembly post. Last year, she rose another notch to become a technician in the company’s R&D unit, and this year was promoted to production scheduler. She earned an undergraduate degree in 2012 and is now studying for a graduate degree in business.
Both women were buoyed by their successes at Lake Region, and are deeply committed to their careers there. Luangsingoth was a welfare beneficiary for a while after she resettled here. Once she turned 18 and graduated from high school, she took a job to support her family. She remembers the family being the target of taunts because they used food stamps at their neighborhood grocery. “Some people shouted at us and said, ‘Go back to your country. You are here, taking our food, taking our jobs,’ ” she recalls. “I said I will prove to them that I can do like other American people can do.
“I plan to be here [at Lake Region] for the rest of my working life. I feel so attached here because they treat me like family.”
Willmar and the world: uneasy mood, contrary views
In recent years, Willmar has become known as one of the Minnesota cities most receptive to immigration. But not unanimously.
In 2010, 63 percent of Willmar’s voters decided to end Les Heitke’s four-term, 16-year tenure as the city’s mayor. Heitke, a champion of diversity, says his pro-immigrant stance was “a large factor” in his defeat.
Dick Longworth, a former Chicago Tribune foreign correspondent who has written two books on the economic challenges facing Minnesota and other Midwestern states, follows immigrant flows in the region. He points to Heitke’s loss as evidence of a growing concern all over the globe: Fear of a new, complicated, and more interconnected world that “many people don’t understand and don’t much like.”
“There’s always been a backlash against immigrants,” Longworth wrote in a commentary in May on his Midwesterner blog. In 2013, he sees this feeling aggravated by widespread uneasiness about job security and globalization.
Longworth is now a senior fellow at the Chicago Council on Global Affairs. In his May post, he noted growing resistance to immigration on two recent trips, to southeastern Iowa and to London. “Immigrants bring in new languages, new food, new music, new religion,” he wrote, but in Iowa and in England, many long-time residents feel that such changes rob them of control over their lives. He says the same uneasiness is evident in Minnesota.
Speaking up for restrictionists
Virginia-based NumbersUSA, which advocates for sharply lower levels of immigration, gives voice to such concerns. Former journalist Roy Beck founded the organization in 1997, a year after his book The Case Against Immigration was published. In 2007, the group was credited with a major role in influencing the U.S. Senate to abandon its proposed overhaul of immigration policy. NumbersUSA has staunchly opposed the Senate’s bipartisan “Gang of Eight” legislation this year to renew that effort.
In an interview, Beck argued that U.S. population growth, driven largely by immigrants since 1990, has led to lower per capita income, greater poverty, overcrowding in urban areas, strains on public finances, and deteriorating infrastructure. He says his group’s near-term goal is to reduce annual U.S. immigration to 550,000 and eventually to below 300,000. (Since 1990, about 1 million immigrants have arrived annually. From 1776 to 1976, that number was roughly 250,000.)
Beck disputes the positions of groups such as the Minnesota Business Immigration Coalition, which worry that baby boomer retirements will lead to widespread worker shortages. Businesses will find ways to adjust to market conditions, he contends: “Employers always want to have a labor surplus,” he says.
Immigration becomes a campaign issue
Willmar, 95 miles west of downtown Minneapolis, is home to two large Jennie-O turkey processing plants that employ many immigrants. Roughly a third of the city’s 20,000 residents are immigrants, a share that has risen substantially since the 1980s.
Latinos have been in Willmar since at least the 1920s, when they came seeking summer agricultural jobs. The city’s immigrant population grew substantially during Heitke’s tenure. About a decade ago, Somalis began coming. Now immigrants from many other countries have resettled in Willmar.
The waves of new immigrants have put Willmar in the national spotlight. In 2006, NBC sent a television news crew to the city to do a story hailing Willmar for its diversity. The network reported that the city is home to people of 37 different ethnic backgrounds.
Heitke would have become president of the National League of Cities. last year had he not lost the election in 2010. Immigration found its way into the city’s 2010 mayoral campaign, however, after the City Council started considering a partnership with the federal Immigration and Customs Enforcement agency. The pact would have authorized a trained local police investigator to look into the immigration status of suspects who had committed serious crimes. Immigrants protested, citing concern about racial profiling. The proposal drew sharply different responses from each mayoral candidate—Frank Yanish, the small business owner and political newcomer who defeated Heitke, backed the idea; Heitke opposed it. (Thus far, council members have not acted on the proposal.)
Willmar remains a showcase for immigration. A microloan program for Willmar’s immigrant entrepreneurs was featured in the Chicago Global Affairs Council’s report this year on immigration in the Midwest. The report noted that foreign-born residents now own 54 businesses in Willmar, with half of them by Latinos and 11 by Somalis.
But the city’s voters have apparently telegraphed a preference for a go-more-slowly approach. Perhaps that shouldn’t be surprising. Immigration, like capitalism, has often been a disruptive force in American life.
Mahendra Nath gave himself a crash course in risk-taking half a century ago, when he decided to leave his native land. India was an impoverished country. Opportunity beckoned in America. But the only way to come was as a student. So after the University of Minnesota offered him help, he hopped on a plane in 1964 and, with just $800 in his pocket, not knowing a single soul here, headed for the Twin Cities. His hosts, Bob and Patti Shoop, met him at the airport and took him into their home in St. Louis Park for a two-week stay. After that, he was on his own. Fees at the U quickly gobbled up $527 of his scant resources; “More than half of my net worth was gone in the first week,” he says. But his $237-a-month teaching assistant position and a scholarship helped cover most of his costs once college started.
The Twin Cities was home to just 102 Indian-born residents in 1964, and foreign-born entrepreneurs were almost as rare as good curry. Yet Nath went on to start a business, which by 2006 included restaurants, hotels, and real estate holdings, with annual sales of more than $180 million. Today, more than 32,000 immigrants from India live in Minnesota, and scores of them have launched their own enterprises, as have newcomers to Minnesota from all over the world. According to the Fiscal Policy Institute, a New York think tank, the Twin Cities area was home to 6,654 immigrant-owned businesses in 2010 versus 1,513 in 1990. Coastal gateways with much larger immigrant populations — New York, Los Angeles, Miami — have far more of these businesses, but the rate of growth in the Twin Cities, 340 percent for 1990 to 2010, ranked sixth-highest for the nation’s 25 largest metro markets. Many immigrant-owned businesses are marketing to growing clusters of buying power that represent a new source of strength for Minnesota’s economy.
In the Twin Cities, immigrant-owned businesses have been revitalizing an increasing number of once-declining neighborhoods. The change is obvious along Lake Street and Nicollet Avenue in Minneapolis, and University and Payne avenues in St. Paul. But the businesses are also packed into less visible shopping malls that dot inner-city areas. New immigrant businesses in Worthington, Willmar, and other outstate cities have helped these locales reverse economic declines.
Many immigrant startups in the Twin Cities have used entrepreneurial training programs developed by the St. Paul–based Neighborhood Development Center. The center has redeveloped half a dozen commercial properties in Minneapolis and St. Paul into small business incubators, now teeming with minority entrepreneurs. Since 1993, it has trained more than 4,250 would-be entrepreneurs, 36 percent of them immigrants, on running a business. It began teaching the course in Hmong in 1994, Somali in 1988, Spanish in 1999. This fall, it will offer this training in Karen, spoken by many immigrants in the state’s growing Burmese community.
Another Twin Cities nonprofit, MEDA, founded in 1971 to support minority entrepreneurs, has also ratcheted up programs for immigrant entrepreneurs. President and CEO Yvonne Cheung Ho says immigrant startups now account for about half of her organization’s client base.
Dot in a diaspora
Generally, the Indian-owned startups in the Twin Cities have differed from those launched here by entrepreneurs from other countries. They are not concentrated along commercial strips or in malls. Their customer bases are largely non-Indian, and often the reach of their markets extends beyond Minnesota. They range across many sectors.
And they are part of the Indian diaspora, a sprawling global network of labor and capital. In Minnesota, two corporate giants led by Indian executives—Essar Steel and Arcelor Mittal—have recently made huge investments in taconite production on the Iron Range.
“We’ve done better outside India than in,” says Dileep Rao, a Golden Valley consultant who knows many local Indian entrepreneurs. Rao came to Minnesota when he discovered that college would cost less at the University of Minnesota than at universities elsewhere in the United States. “All of us came here with almost nothing,” he says.
Many enterprising Indians left to escape corruption. Often, says Rao, they were professionals and tech workers who landed jobs with large U.S. corporations. When they concluded that discrimination or entrenched management limited their rise, many left to start their own businesses. Because India had been a British colony, many Indian professionals spoke English, so moving to English-speaking countries was a natural fit.
Thousands of Indian entrepreneurs across the world are linked by the Indus Entrepreneurs, an organization that describes itself as the world’s largest professional and networking organization for entrepreneurs, with 11,000 members in 57 chapters in 14 countries, 24 of them in the United States. Mahendra Nath co-founded the Twin Cities chapter, which has about 100 members.
In 1965, Nath earned an industrial engineering degree from the U with a 3.95 grade point average. “I was either sleeping, studying, or eating,” he says. Then he joined Sperry Univac, leaving after 18 years to pursue his own business full time, a longtime dream.
By 1990, Nath and his brother-in-law were buying Burger King restaurants. Eventually, Nath Companies owned 154 Burger Kings with 6,500 employees in half a dozen states, plus a dozen Denny’s restaurants, 900 apartment units, and the Radisson Hotel in Roseville. Nath has throttled back in recent years, but his businesses, with headquarters in Bloomington, still generate revenues of more than $40 million annually.
Chetan Patel, Kay Kuba, and Raghu Sharma joined Nath in the first wave of Indian immigrants to build significant businesses in the Twin Cities area. In 1988, Patel co-founded SMC, Ltd., a contract manufacturer of plastic parts for the med-tech industry, in western Wisconsin. Today it employs 1,500 nationwide. Kuba founded GCI Systems, a Shoreview computer systems integrator, in 1988. The company was sold to Indian-based GSS Infotech in 2011. Sharma launched Multi-Tech Systems in 1970. Mounds View–based Multi-Tech, which makes modems and other data-sharing devices, has 380 employees and annual sales of $128 million. Sharma died in 2007; his widow, Patricia Sharma, is president and CEO.
Mandeep Sodhi came to the United States in 1980, working at various major corporations before launching Select Source International in 2002. His company, based in St. Louis Park, provides software consulting and email services. Sodhi expects revenue of $15 million this year. Basant Kharbanda, the former Foshay Tower owner, owns properties including a telecommunications nerve center near the Metrodome.
Some wonder whether Minnesota’s newer generation of Indians can keep up the pace. Rajiv Tandon came to Minnesota in 1969 from India, founded the Adayana technology consulting firm and has close ties with the Indian business network in Minnesota. Tandon worries that the sons and daughters of foreign-born entrepreneurs may not be as motivated as their parents to start enterprises. “Immigrants are willing to work like dogs, but their kids grow up in a different atmosphere,” he says.
Dave Beal is a frequent contributor to Twin Cities Business. He is the retired business editor of the St. Paul Pioneer Press.
This article is reprinted in partnership with Twin Cities Business.