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Eagle Creek Expands to Vermillion, Promises 1,000 Jobs; Madison Chopped Liver?

Eagle Creek Software Services must be getting tired of working so hard trying to convince prospective employees to move their families out to Pierre. Company president Ken Behrendt says he'll bring 200 jobs to a new center in Vermillion and maybe—maybe, a word left out of the headlines—1,000 jobs around the state in the next five years.

Past performance does not guarantee future results, but when Eagle Creek opened its Pierre office a few years ago, it said it would create 200 new jobs. Eagle Creek currently has 100 employees in Pierre (that 100th hiring happened last August).

As in Pierre, Eagle Creek will save money in Vermillion by moving into a building the city will build for it for $4 million. The University of South Dakota will share the cost of training workers. In further corporate welfare, USD will also create a master's degree program to feed Eagle Creek's labor pipeline...

...a program that attentive observers may find looks a lot like programs already active at Dakota State University. Did no one think of Madison, with its already significant state investment in IT training, as a logical location for Eagle Creek's next expansion?

Daugaard noted that Vermillion came to mind shortly after state economic officials began formal discussions with Behrendt.

“When you are in the business of attracting industry to your state, you find out what they want and try to fill those needs,” the governor said.

Daugaard noted that after he and other state officials had initial conversations with Behrendt about his desire to expand Eagle Creek in South Dakota, it became apparent that Vermillion could fill the company’s needs.

“Vermillion has lots of high-caliber students at the University of South Dakota ... and if there is opportunity for them right here in Vermillion, how much better will it be for many of those students who can seize that opportunity? This is going to be something quite unique,” he said [David Lias, "Vermillion Ready for Onshore Opportunity," Yankton Press & Dakotan, 2013.03.14].

You think site for IT jobs, and you think Vermillion first? Or Pierre? How does Madison not come to mind?

Four years ago I asked Madison City Commission candidates how, with Dakota State University's programs and skilled IT students, Madison could have lost to Pierre in recruiting Eagle Creek. This year, Madison's mayoral candidates must face the same question.


  1. Michael Black 2013.03.14

    Why are you trying to blame our local leaders because Vermillion was lucky enough to attract another employer and Madison was not?

  2. Steve Sibson 2013.03.14

    So crony capitalism is OK if it happens in Madison, but not Pierre or Vermillion?

  3. Mark 2013.03.14

    I'm guessing Madison did come to mind, but Vermillion and the U put forth a more competitive package, i.e., subsidy.
    Let's hope those 1,000 jobs materialize as 1,000 and not as 500 - for the same of employees and taxpayers. Four million bucks for a building, ginning up a new grad program, and,(who knows?) property tax abatements, all make for a sweet deal for Eagle Creek.

  4. JoeBoo 2013.03.14

    I'm not against these type of jobs, however I wish it was noted what a city has to give away to get these jobs. And then how fast they come in. Seems that the media loves to put the big headline about the jobs, but then never fallows up on what it cost per job and how many of those jobs actually occur.

  5. owen reitzel 2013.03.14

    I don't think Madison could compete with Vermillion on this. I'm not saying Vermillion is better then Madison (being a Madison native) it looks like they had more to offer and maybe gave this company incentives that Madison couldn't match.
    But Vermillion better be careful. The company I used to work came to Mitchell and I think Aberdeen as well with much fanfare. Verifications was given incentatives from the state and a leased a building from the city of Mitchell. Governor Rounds came for a ribbon-cutting ceremony.
    seven years later Verifications closed their offices in Mitchell and Aberdeen and moved the jobs to India and in the process layed off 140 people.

  6. caheidelberger Post author | 2013.03.14

    Take a look at what Owen and Mark say, Michael. I'm not necessarily blaming Madison's leaders. But it wasn't luck. Eagle Creek didn't throw a dart at the map. It made a rational business decision. Anyone who wants to be mayor of Madison should be able to put together a reasonable hypothesis as to why Madison, with a school dedicated to Eagle Creek's core functions, lost out to Vermillion, with its more generalist liberal arts university and greater driving distance from all three of Eagle Creek's other offices, and lost out a few years ago to Pierre, which is, good grief, Pierre!, with no built-in IT workforce.

    Anyone who wants to be mayor of Madison should also be able to put together at least a bullet list of proposals that would help Madison not lose the next round of expansion by Eagle Creek or a similar company. That's the kind of problem mayors have to think through. (And as a nod to Sibby, Eagle Creek offers an excellent chance for a follow-up conversation with candidates about their view of corporate welfare.)

    Eagle Creek has passed over us twice. It's enough to make one think that Madison isn't trying very hard to catch Eagle Creek's eye, when their skilled job opportunities and purportedly high wages ought to make Madison drool. Doesn't Madison want highly paid workers with lots of cash to spend around town?

  7. caheidelberger Post author | 2013.03.14

    Owen, it is interesting to note that Eagle Creek touts its "Dakota Model" as an "onshoring" response to the offshoring that cost you and your neighbors your jobs. Eagle Creek and Verifications appear to be swimming in opposite directions. Why is that?

  8. owen reitzel 2013.03.14

    wish I knew Cory. No matter where its located I hope they stay a long time.
    Why do Wall-Mart and Costco seem to be so different? Wall Mart employees are on the government dole while Costco's employees are union and make living wages. And Costco makes huge profits

  9. Jana 2013.03.14

    $4,000,000 is a lot of public money to give to a private company.

    Anyone know who is on the hook for that building and the $4,000,000?

    Is the State fronting any of that money to the city?

    Is that a record for a community gift to a company of that size?

    Does anyone know the accounting they are using to calculate a payback?

    Does anyone know what the difference is between the Eagle employee pay for the same positions between SD and MN.

    Don't get me wrong, I think it's great that there are good jobs headed to Vermillion...just let's make sure all of the facts are on the table for the people paying the bill.

    Is there a good accounting of who is actually paying for it and how it will be funded?

    Taking the announcement on its face, we should be and I am happy for the kids that get good jobs and for Vermillion if the investment is a good one.

    Does anyone else think of the old saying that "if it sounds too good to be true" applies here?

    Does anyone else think that the Gov's office has lost trust with people in the state? Do you think he wishes his staff wouldn't have said voters were stupid and lazy?

  10. caheidelberger Post author | 2013.03.14

    $4M, 200 jobs... $20K per job. Plus the cost of the new master's program.

    I wonder what would happen if we offered a $20K homesteader bonus to every person who moved to South Dakota. ROI?

  11. Jana 2013.03.14

    As usual, our host brings up another good point.

    What is the cost of the new master's program? Guess I missed that in the media coverage.

    In all fairness to the Governor's office, nice work bringing in a new business and a new employer.

    But think through these things the same way that you explain a substantial investment to your spouse.

    After the initial excitement is over, you had better be able to lay out the details.

    So Cory, why didn't the media ask what the new degrees would cost the tax payers?

    Why didn't they come prepared with past promises broken to better report new promises made? i.e. the 200 jobs promised in Pierre that have yet to be met?

    If Eagle would have said that they are still looking at getting the number of jobs up to what they promised in Pierre...I would have been OK with that...provided they gave a good reason.

    If USD would have said 'this is what our new "Eagle" degree will cost taxpayers and this is our return on investment,' I might have been OK with that, if I knew what their other choices were that they rejected.

    The initial goal is set at hiring 200 employees. Same as when they launched with fanfare in Pierre...which is still at 100 employees. Why is this project different?

    Speaking of Pierre, what were the promises made by both Eagle, the State and the city of Pierre? Has that worked out like everyone promised?

    Did I miss the speech from the mayor of Vermillion talking about how he was putting $4 million of taxpayer dollars out for an out of state company?

    Pretty gutsy for a mayor to lay out that kind of money without going on the record or asking his citizens if it is OK he spends that kind of money.

    After watching the press conference I heard the term off-shoring several times...are we really just a small upgrade to third world talent?

    Did I miss something in the media coverage that talked about the Eagle market place and their viability vs. their competition?

    There was a shout out to DSU and how their technology program would be involved, but no one asked why the state's leading 4 year technology school would be involved...or why Eagle wouldn't just locate in Madison if that is the talent they are looking for.

    Oh my, so many questions.

    Again, I think its great the Eagle is coming to SD and that paying for a new degreed program and giving them a new $4M building is a great deal...just thinking that there are more questions to be asked.

    Welcome to SD Eagle, we'll still like you even if we don't get answers to where our money is being spent.

  12. Jana 2013.03.15

    Sorry for the long post.

    Maybe if we had a personal and corporate income tax, everyone would be more concerned about how Pierre was spending our money and ask better questions.

    Sorry, carry on.

  13. Old guy 2013.03.15

    Just a FYI.. Eagle isn't given a $4,000,000 building. They pay fair market rent which pays for taxes and payment plus they sign a long term lease.

  14. caheidelberger Post author | 2013.03.15

    But the city is still incurring an expense that the business does not have to bear. Why is the market not responding to Eagle Creek's needs?

  15. As I posted on Facebook when this story broke, I am confused on how our Senate Majority Leader Russel Olson, who has the Governor's ear, could not convince him to develop these programs at DSU? We could have added more HEARTLAND TECHNOLOGY BUILDINGS to help with the initial growth. Another 200 jobs could create another 800 in population (if these individuals have 4 person families). This would have led to a population boom in Madison, housing growth, service industry growth, etc.

    Instead, we watch Vermillion grow, steal more of our education programs from DSU, and sit on the sidelines.

    As I have said before, we need to move into the 21st century jobs and industry. We try so hard to hold on to manufacturing industries in Madison, but do nothing to retain our thousands of Tech grads from DSU. Vermillion and Brookings do a good job of retaining grads and have been growing for a number of years.

    Madison, however, is stagnant at best.

    I hope all of the Mayor candidates are ready to talk about this issue. I hope one of them is ready to pick up the phone to do some talking with our Senator Olson. He dropped the ball on this again. If we are going to keep doing corporate handouts.... we better be doing them the right way and helping Madison get a piece of the pie.

    As they say on SNL..... I mean REALLY?!?!?! REALLY!>!> REALLY SENATOR OLSON!>!!?? DSU THANKS YOU.

    I mean this used to be his day job and is still kind of his day job at Heartland. I mean REALLY?!?!?

  16. WayneB 2013.03.15

    Let's do some back-of-the-envelope math.

    Assume 150 jobs at $20k per job (they said many will be $40k, but let's be conservative, shall we?). That's $3,000,000 in gross income.

    Granted, you have to give some of that to Uncle Sam, so let's say it's $2.4 million left to circulate in Vermillion - buying houses and paying rent, so supporting the property tax base of the city & county. Purchasing food, entertainment, etc. means supporting the community and lining the city coffers from the 2 penny sales tax. Add to it the company pays rent for the building, and the city should come out better off for the investment.

    What confuses me, though, is the call center just went out of business not too long ago... so there's an empty building which probably could do a good job of housing Eagle Creek already... why build?

  17. John 2013.03.15

    We cannot afford a state school every 50 miles up and down the interstates and cannot afford 7 college adminstrivias that do the same thing. If DSU is soooo tech savy then why are they unable or unwilling to provide tech solutions to this wasteful situation? If USD is soooo business savvy then why are they unable or unwilling to provide business solutions to this wasteful situation? Google or Yahoo or Microsoft or WalMart or Costco would not operate with this mostly dead management/admisitriva overhead and we should not tolerate it either.

    DSU's most likely future, if it has one, is broadening as a technological school granting 2 year and some for 4 year degrees covering a far wider range of tech services as opposed to teeny, tiny masters and doctoral programs.

  18. DB 2013.03.15

    Ashley, you have a bit of a warped view on this matter and I think I can help clarify a few things. First off, DSU never had programs stolen by USD. In fact, USD had them first and I am willing to bet they graduate twice the amount of tech degrees than DSU. It makes sense to put the graduate program where more will utilize it, so if that is the theft you are talking about, I call that just being efficient with tax payer dollars.

    Second, Russ has very little say when it comes down to town leaders putting up a care package to bring in businesses. He needs to look out for the state, not just Madison. Now, should we put up the cash, building, or tax break?...I'd say yes, but I have a feeling many would be against it.

    Next, you want to talk local retention? Don't go ripping into our local leaders while DSU leaders are pairing with software companies from out of state to put a presence on campus. Do you think that is going to keep people around? DSU can't keep up with the demand of this town, let alone an entire new company. Go check the job postings once. There have been about 6 tech jobs posted for about 4 months now.

    Lastly, don't blame this all on Sen Olson as if he single handily could bring this business to Madison. The leaders of DSU, the mayor, and our ec dev com. should have all been working together as soon as they heard they were looking to expand. Then again, who knows who even knew? Maybe this was their announcement to see what they can get around the state? Sounds like they just expanded their current operations a little and are still looking. Is it too late?....I don't think so.

  19. larry kurtz 2013.03.15

    Why does South Dakota have 66 county seats when Wyoming has 25? Why does South Dakota have seven universities when Wyoming has one?

  20. I am a bit biased, as a life-long Madison resident and DSU Graduate.

    I am a bit sick of hearing too many excuses.

    Not sure what good it is to have the "Senate Majority Leader" from Madison when we can't get big things done for this community.

    I am just frustrated by the lack of progress on the technology front and White Collar jobs in Madison.

    Our leaders need to get off of auto-pilot and step up and really start making things happen, before we become HOWARD.

    I am just fearing the day that DSU is closed and all of the programs are transferred to USD, SDSU, and Sioux Falls.

  21. So forgive me if you will... I am a bit upset as this cuts close to home for me. I want to see my community prosper and DSU prosper. If that means Madison has to cut some back room deals and tax breaks to get more jobs here instead of Vermillion, or Sioux Falls, or even Brookings. DO IT. We elected Russ Olson to represent Madison, not the entire State. Same reason we send representatives to Washington. It is really to line the pockets of our own states and bring home the bacon. When it comes to local politics, you better take care of your local constituents first and not be worrying about your future run for Governor or US House. Bring home the bacon to Madison, just get it done already.

  22. DB 2013.03.15

    I'm with you on that one Ashley. I am trying to help spur some tech industry here. I love Madison and moved from out of state to make this my home. We have the potential. We have the students. We have a few business owners willing to invest in us, but we need more. I graduated from DSU as well, with only 6 other people in my degree. That may be part of why they are going to Vermillion. DSU has the education and integrity, but Madison just can't pull the people to fill the degrees. There are a lot of job openings and workers are few and far between. Even with competitive wages, it's tough to talk people into moving from the bigger cities. Madison has a lot to offer, but it's tough to compete with the D1 schools, especially when talking to 18 yr olds. It will be tough for Madison to become an economic hub with so many large towns so close. Our rural pull is limited in that aspect as well. I don't know the answer, but we could be doing more. I just don't think singling out one guy is going to solve anything. There are many who dropped the ball and it didn't start last night. Far as I'm concerned, DSU has never cared where their graduates go, just as long as they can keep their rates up for employed graduates.

  23. Mark 2013.03.15

    Somebody certainly has researched incentive-driven economic development, including its success stories. Does anyone know whether this has been done in SD?

  24. We need better marketing. We have great, brand new schools. A great community center. Nice parks, nice lakes, nice quality of life. Improving competition in town (Dollar General has $2.75 Land O Lakes milk everyday, giving the Grocery store some competition hahahah). We have some positive things happening on growth of jobs (mostly industrial though) and a real chance to improve main street.

    But we definitely need to improve on bringing more things to town that young families want. Food, Entertainment, and good housing. Ohh and Jobs Jobs Jobs.

    I think our current economic development team is the most progressive that we have had in years. We will have a new Mayor soon and some attitudes are changing on the city and county commissions. SOOOOO... we are making progress. Just not fast enough.

    I just have dreams of us becoming the silicon valley of the Midwest and it will take years of hard work, great marketing, and killer execution.

    I am not going to lay off on Russ too much though, he needs to bring home the bacon for our district. Period. Or he needs to stage some vote lockouts on the Governor and his team. Republicans need to be able to stand up to their fellow Republicans and stop this lock step march. The only thing that really matters in Pierre is MONEY. All the other crap they waste time on never amounts to anything. Get a chunk of that budget ear marked for Madison and Lake County projects and I will be a happy guy. I would like to pretend that there should be less corporate cronyism and votes on moral issues and blah blah blah, but it really all comes down to the money. Who is paying it in and who is taking it to the bank. Show Madison the MONEY.

  25. DB 2013.03.15

    Marketing is going to be the key. That is for sure. We need to capitalize on our lakes and outdoorsy stuff. That is the one thing all the towns around us don't have.

  26. larry kurtz 2013.03.15

    Every lake in South Dakota is eutrophic and filled with heavy metal oxides.

  27. Oldguy 2013.03.15

    If this deal is like Pierre's all expenses are paid by Eagle creek. What Eagle does get is a new building at cost rent with no liability on there balance sheet. Plus they have a long term lease with options I think after 10 to renew. Where the city has their neck stuck out is payments are for 20 years which means they would have the building half paid for after ten years if Eagle left

  28. caheidelberger Post author | 2013.03.15

    I had enough of Dwaine Chapel's signs and banners to know that marketing, while key, is not the solution. To be a bit metaphorical, Madison doesn't need to tell its story better; it needs to change its story. I'm with DB (gack! choke): I don't know what the complete problem is or how to solve it. But as DB says, we aren't drawing the students USD draws (yes, the university is bigger, but Vermillion itself isn't that much more stunning a town than Madison). We won't get those students to tilt our way with fancier ads. We will get them with ads and word of mouth that tell about jobs, amenities, and other good things that apparently we don't have enough of yet to make the sale.

    So, mayoral candidates, what are those things, and how do we get them? (Anyone who responds, "Madison's great the way it is! We just need to advertise more" automatically loses my endorsement.)

  29. caheidelberger Post author | 2013.03.15

    Russell pretends to the title of city leader as well as state leader. We can include him and Heartland (which has its hands in nearly every big Madison economic development ploy, right?) on whatever blame there may be for failing (twice!) to recruit Eagle Creek.

    That said, Senator Olson did shake loose $900K in Senate Bill 236 to boost DSU's information systems and cybersecurity programs. How many profs and students will that add?

  30. Steve O'Brien 2013.03.16


    "I wonder what would happen if we offered a $20K homesteader bonus to every person who moved to South Dakota. ROI?"

    I had to laugh at this when I put it in the perspective of education. A new teacher will get paid around $7,000 above and beyond your "homestead bonus" to teach in SD - that is after they pay the costs of a four-year degree to be able to take that job.

    I understand the need for local and state economic development. When looking to bring jobs to a community, bringing in teachers has to be the most efficient, yet completely unused resource by local economic developers. One might also argue other benefits to having more teachers in a community . . .

  31. Charlie Johnson 2013.03.16

    Take care of education and local infrastructure--the rest will come in natural order. When a company sees that community and state takes care of business---the business of providing services to it's citizens, they come to respect that entity. When companies witness a lack of commitment to taking care of basic services(k-12 education is one of them), how are they to judge that further investment in SD is prudent? Being last in education and lacking in taking care of "first miles" is not a selling point-it's a turn off. We(governmental units) need to focus on our our own jobs first. Proving that you can provide reasonable, fair, and consistent revenue goes a long way fo bringing "focus".

  32. Vermtown Vermin 2013.03.16

    Bashing a better town for getting more jobs shows why Madison is dying.

  33. caheidelberger Post author | 2013.03.16

    Steve: interesting idea! Spend those local ecdev dollars to either hire five (10? 20?) more teachers for the local school district to reduce class sizes and increase course offerings, or subsidize teacher salaries to provide best pay in the state. Which would produce more economic gains?

    But would we ever be able to sell such a plan to ecdev honchos who will want to see numbers right now? Invest in teachers now, and the economic gains for kids are 10-20 years out, and dispersed all over kingdom come.

  34. caheidelberger Post author | 2013.03.16

    And while I await VV's e-mail confirmation, can someone point to the line in the original post or anywhere in this thread that may be deemed Vermillion-"bashing"? The closest sentence I find is my statement (3/15 17:06) that "...Vermillion itself isn't that much more stunning a town than Madison." I rather like Vermillion. I'm just pointing out that, in a fair fight, if Madison showed up for that fight, you'd think that after 30 years of dedication to the technology mission, Madison ought to be able to win Eagle Creek's affections hands-down.

  35. Tom W 2013.03.20

    According to Gov Daugaard's Twitter account, the reason for eagle creek to choose Vermillion is because of the Business School and Enrollment.

  36. caheidelberger Post author | 2013.03.20

    The B-School and enrollment... interesting. So just focusing on tech isn't enough: you've got to offer solid people in other areas to manage the company. Does that mean that for DSU to seriously compete for recruiting Eagle Creek, it needs to recapture its pre-Janklow liberal arts mission?

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