Moving Minnesota forward: Improving transportation, rethinking taxes and attracting top-notch talent

January 30, 2017

Moving Minnesota forward: Improving transportation, rethinking taxes and attracting top-notch talent

Minnesota Senate Committee on Jobs and Economic Growth Finance
and Policy
Finance

January 30, 2017

Introduction

Chairman Miller, distinguished members of the committee, thank you for the opportunity to testify today.

My name is Dave MacLennan and I am the chairman and CEO of Cargill. We are a global company proudly headquartered in Minnetonka, Minnesota, with operations around the world. Our purpose is to nourish the world in a safe, responsible and sustainable way.

Our company is a great American success story. It was started in 1865 by William W. Cargill, with just one small grain warehouse in Conover, Iowa. By 1879, he had established operations in Albert Lea, Minnesota. Today, Cargill has 150,000 employees in 70 countries. 

I also serve as the chair of the Minnesota Business Partnership. Since 1977, the partnership has been focused on demonstrating that the quality of life for all Minnesotans is directly linked to our state’s economic health. More than 120 CEOs and senior executives from Minnesota’s largest companies that represent the Partnership, understand that we have a responsibility to protect and improve Minnesota’s economy and quality of life.

So, today I’d like to talk to you about Cargill and our commitment to Minnesota. I will also talk about some of the challenges and the opportunities we have to ensure our state remains competitive.

Minnesota footprint

Cargill is a global company and an American company, but first and foremost, we are a Minnesota company.

Let me give you a quick overview of our footprint across the state:

  • Our world headquarters is in Minnetonka, with a second location in Hopkins.
  • We have a cooked meats plant in Albert Lea,
  • An egg processing plant in Monticello,
  • Three R&D centers in Plymouth and one in Elk River,
  • Many grain elevators in the southern half of Minnesota,
  • And our barge terminal in Savage, which is known as Port Cargill. This facility is celebrating its 75th anniversary this year. During World War II, Cargill built 18 tankers for the U.S. Navy in Savage, and after the war, we converted the location to a major river terminal for agricultural goods.

Economic impact

Cargill has always been part of the fabric of rural Minnesota, and our economic impact is significant. On average, we buy nearly $400 million worth of corn and soybeans annually from Minnesota farmers, which equates to 75 million bushels of corn and 11 million bushels of soybeans.

Last year, Cargill paid more than $850 million in wages to our nearly 4,800 Minnesota employees.

We also count hundreds of large and small Minnesota businesses among our partners and suppliers. This past year, we paid more than $200 million to Minnesota companies for things like maintenance, equipment, construction and raw materials for our plants.

Recently, we invested $35 million in our Plymouth R&D centers. This reflects Cargill’s commitment to creating new approaches to respond to our customers’ needs. With this investment, we can help invent the future of food right here in Minnesota.

We also invested $60 million in the renovation of our headquarters in Minnetonka, which we fully modernized and made more energy-efficient. This work is being done by Minnesota companies and creating Minnesota jobs.

People

But don’t let these numbers obscure the other side of the story, which is about people and the communities where we live and work. As a company, we know that our people are our greatest asset. That is true around the world, and it is true right here in Minnesota.

One of Cargill’s guiding principles is “we treat people with dignity and respect.” That is why we strive to be an inclusive workplace.

For 13 years straight, we have received a 100 percent rating from the Human Rights Campaign for our commitment to equality and inclusion for LGBT employees. We are one of only a few companies to achieve this distinction.

In January, we joined Paradigm for Parity, a group of companies that has pledged to achieve gender parity across all levels of corporate leadership by 2030.

And at the beginning of the year, we also banned the use of mobile phones for work purposes in cars to highlight the dangers of distracted driving and help ensure that our colleagues get home safely to their families every night.

Corporate responsibility

To us, employment is more than just a transactional relationship, and Minnesota is more than just an operating location. We strive to enrich our communities. That is especially true right here in our home state.

Last year, the Cargill Foundation invested more than $7 million in partners located in the Twin Cities area. Through our partnerships, we focus primarily on improving nutrition and education. In 2016, we reached more than 300,000 Twin Cities children.

Cargill is also a proud member of the Minnesota Keystone Program, which recognizes companies that donate at least two percent of their pre-tax earnings to the community.

We value the partnerships we have built here, and we see it as our responsibility to help our communities thrive.

Infrastructure

We are proud to be a Minnesota company and a good corporate citizen. But I have to be honest with you – doing business in Minnesota also presents its challenges. Among them are infrastructure, permitting, taxes and attracting and retaining talent.

For example, getting to and from our river barge facility in Savage is a challenge. Farmers delivering grain face heavy traffic along Minnesota State Highway 13. Among Cargill and the other businesses in the area, there are easily 1,000 trucks using the access road onto Highway 13 every day during harvest.

This situation is a growing impediment to business. Congestion and accessibility challenges deter farmers from delivering to the Savage facility – and fewer loads received and shipped means losses for our business.

A different transportation challenge exists on the Minnesota River, which runs right next to our facility in Savage and is the main waterway for its barges.

The U.S. Army Corps of Engineers maintains the navigation channel along the river from Savage to Saint Paul. However, we are responsible for maintenance dredging in and around the barge dock area. Over the last 15 years, the cost of dredging has more than doubled, due largely to the disposal of the dredged materials, which are expensive to transport and difficult to permit.

This brings me to my next point, which is permitting in general. Over the years, it has become way more difficult to get approval from the state and local municipalities for projects required to stay competitive.

All general permitting is getting more complex, more time-consuming and more expensive. The Minnesota Pollution Control Agency, the Minnesota Department of Natural Resources, the Army Corps of Engineers and watershed agencies all require permitting. And these requirements continue to get more elaborate and extensive. The contractors we hire to remove the dredged materials also have to get their own permits, and those costs are passed on to us and other businesses along the river.

We fully agree that we must do what’s necessary to protect our waterways and environment. At the same time, the state’s businesses and employers would be much better served if we could find a way to streamline these often onerous permitting processes.

Attracting and retaining talent

While Minnesota has much to offer current and future employees, there are also challenges when it comes to employee recruitment and retention.

It’s well known that the Twin Cites metro area has a lot of selling points. Our parks, trails, cultural institutions and schools provide families a high quality of life.

The Twin Cities area also offers a good talent pool. The higher concentration of population, schools and other companies makes it easier to recruit for Cargill jobs within the metro area.
However, we are often challenged to recruit from states where the wages are similar, but personal income taxes, property taxes and sales taxes are significantly lower, or even non-existent. This means that to attract talent, Minnesota companies must make higher offers to make up for an employee’s lower after-tax income.

According to a study just released by the Tax Foundation, not only is Minnesota’s top marginal individual income tax rate the third highest in the country, but the top rate of 9.85 percent kicks in at $155,000. This income level is lower than even California, where their top rate kicks in at around $260,000.

Cargill’s outstate locations face different challenges. For example, let’s look at Albert Lea, one of our earliest business locations and the site of our cooked meats plant.

While Albert Lea is not a large city, it has lots to offer the families who live and work there. But with a population of 18,000 people, and with Rochester just an hour away, it can be a challenge to compete for qualified workers.

And once you find talented people, it’s often hard to retain them. Right now, our Albert Lea plant is understaffed by 10 percent and several employers in the area compete for the same workers. If we want to realize our potential, we need to expand our workforce by improving training and education in our own state, especially in Greater Minnesota.

To be sure, we are seeing encouraging progress. Until last year, Minnesota was one of only five states that still taxed military pensions. This discouraged military retirees from living here after leaving the service. I would like to point out that Cargill saw positive results in military and veteran recruiting this past year, after the State of Minnesota exempted military pensions from personal income tax.

Closing

Mr. Chairman, members of the committee, we can improve our transportation network, rethink how government taxes and regulates, and do more to grow and attract top-notch talent. If we want to keep our state competitive, we must make forward-looking decisions and invest wisely. Many of these decisions and investments will be determined by those gathered here in this room.

I thank you for the opportunity to speak about Cargill. I hope to work with you productively in the future, and I hope I have highlighted some of the opportunities to improve Minnesota’s business climate. Please consider Cargill and me personally to be a resource as we work together to help ensure our great state is a place where businesses and communities can thrive.