Wake-up call

Mosaic’s departure should send a message about Minnesota’s business climate.

I am a 40-year veteran of Cargill, Inc. and the founding CEO of the Mosaic Co. I brought Mosaic to Minnesota, creating 150 high-paying headquarters jobs here. We could have decided to locate our HQ in Chicago, where we already had a large office, but instead we closed it and moved to Minneapolis. We also considered locating in Tampa, Fla. We knew then that Tampa would be less costly to Mosaic and to its HQ employees but chose Plymouth to be close to our largest shareholder at the time, Cargill.

I am sure that having been born in Minnesota and having spent much of my life here working for a terrific company, I had a bias in that decision. That bias was enhanced when then-Gov. Tim Pawlenty called me personally to encourage us to locate in Minnesota. He couldn’t and didn’t offer any state-funded inducements, but just hoped we would make the right decision for the state.

Now Mosaic has decided to leave Minnesota and some of the coverage in the Star Tribune rationalizes it as no big deal (columns by Lee Schafer—“Loss of any corporate HQ is disappointing, but let’s put it in context,” May 16—and Neal St. Anthony, May 20). It is a big deal—a wake-up call for Minnesota, and here’s why:

1. Unlike UnitedHealth Group (referenced in Schafer’s column about context), Mosaic receives no support, direct or indirect, from government.

2. Unlike UnitedHealth, Mosaic competes in a global marketplace with companies owned and subsidized or tariff-protected by their governments. China and Morocco are a couple of big examples.

3. Unlike UnitedHealth, Mosaic has to be the low-cost producer to survive. Unlike UnitedHealth, Mosaic has to watch every nickel to survive. The main May 16 news article about the move called the company “nicely profitable in the first quarter at nearly $2 billion in sales.” It wasn’t nicely profitable; it earned $42 million in the first quarter of 2018 on $1.9 billion in sales. That’s a 2.2 percent profit margin. Few businesses survive and thrive on 2 percent margins. In the first quarter of 2017, Mosaic lost money.

4. Minnesota’s high state and local taxes, now not deductible on federal tax returns, make it more difficult to hire and retain top-quality executives to manage Mosaic. By comparison, Florida has no state income tax.

5. Minnesota’s vaunted quality of life isn’t that great, particularly in the winter. Don’t forget that most days of the year, Florida has friendlier weather. That is a factor in many snowbirds’ decision to head south. Don’t delude yourselves. I know from experience. I am a snowbird, living in Arizona for most of the winter.

6. Minnesota is losing 150 well-paid executives. If the average salary of Mosaic’s headquarters office is $175,000 and state income taxes are 9.85 percent, that is $2.6 million. Property taxes these people pay probably average $20,000 per person. That is another $3 million lost until 150 other well-paid executives move to Minnesota. And these people spend more money than most others in Minnesota. And they are very generous people who give back to the community in many ways. Now Minnesota has to replace them—and the $5 million to $10 million they contribute to state government and communities every year. With high taxes and a forbidding climate, who is going to move to Minnesota when they have better choices in other states?

7. Maybe UnitedHealth and others may choose to grow elsewhere—in locations that are more welcoming in every way. Surely Amazon didn’t give Minnesota a second look. Not even a follow-up phone call. And nobody at the Star Tribune and in government seemed to care. How many jobs has Minnesota failed to attract and because of its smugness doesn’t even know or care?

Wake up, Star Tribune and Minnesota. Something is happening here! Consider this a sign of things to come, unless things change. Now, and dramatically. Get competitive or expect more Mosaics and snowbirds to leave.

I wish Mosaic would stay in Minnesota, but the company is making the right choice. To be competitive in a very competitive global industry, it can’t afford this wintry place when it can choose a lower-tax, warmer climate.

This article originally appeared in the Star Tribune.