This article gives background into why Hal Rosenbluth, president of Rosenbluth Travel, one of the nations three largest travel agencies, chose to locate in Linton, North Dakota town of 1,500 residents. In 1988, many farmers in Linton were struggling due to drought conditions that gripped their area. Hal researched the cost of locating in Linton. He was aided in this venture.  A this writing, they had plans on expanding their staff numbers

Ekstrom, Brenda L.

Leistritz, F.L.

NDSU Libraries Institutional Repository

Becoming part of the solution ... Asuccess story for rural North Dakota F. Larry Leistritz and Brenda L. Ekstrom What does a Philadelphia-based firm with sales of nearly $800 miUion want with a remote North Dakota town of only 1,500 population? The answer, people and profit. What started as a philanthropic idea, spawned one hot summer day in 1988 by Hal Rosenbluth, president of Rosenbluth Travel, turned into the key to survival for man9 rural families and the key to added profits for one of the nation's three largest travel firms. HISTORY Rosenbluth Travel (HT) called the North Dakota Depart­ment of Agriculture on June 29, 1988, to learn which areas of the state were most severely affected by the drought. After later talking to Economic Development Commission officials who identified three candidate towns, an RT com­pany task force was on the airplane to North Dakota within two days. After visiting the three towns, they decided on Linton, and the townspeople helped them convert a deser­ted farm machinery building into an office space within four weeks. Jim Weisser, former president of the Linton Indus­trial Development Corporation, admits that they were lucky in acquiring RT. 1. Weisser believes the availability of a suit­able building was the major factor that swung the decision linton's way, along with access to major highways and a nearby major airport (Bismarck) . Set-up costs to RT were about $32,500, excluding build­ing lease payments. Most of these expenses were for a heating system and for furniture, carpeting, and paint. The City of Linton contributed about $1,000 toward the first three month's rent. THE REASON BEHIND THE MOVE What prompted Hal Rosenbluth to expand into North Da­kota was a combination of a concern for farm families caught in the worst drought since the thirties and a need to cut back on paying overtime for hard-to-find service work­ers.2 He found that the cost of doing business is reasonable in rural North Dakota and that its people possess a strong work ethic . Leistritz is professor and Ekstrom is research associate, Department of Agricultural Economics, North Dakota State University. A recent study by agricultural economists at North Dakota State University reinforced that idea. They found that begin­ning farmers in North Dakota derived 35 percent of their total farm family income from off-farm employment and that 41 percent were working off the farm at an average wage of $7.85. Another 14 percent planned to look for work, were willing to commute 20 miles or more, and would accept a wage of $5.00/hour.3 The study further found that only 4 percent had not completed high school and that 67 percent had received formal education beyond high school. In addi­tion 61 percent of their spouses were also working off the farm at an average wage of $5.77. The message is clear: rural North Dakota has a skilled workforce ready to work. STAFF AND FUTURE PlANS Over 80 people applied for the 20 full-time pOSitions in­itially available. Rather than affect 20 families, Rosenbluth decided to hire 40 part-time people and thereby benefit twice as many families. The Linton office was initially super­vised by personnel from the head office but is now run en­tirely by local people. Rosenbluth Travel, which was recent­ly named Service Company of the Year by Tom Peters (author of In Search of Excellence), is known fOT developing the work potential of its human resources through periodiC training sessions and providing workers with the opportunity to create and to learn new things. For example, the firm transported the entire new staff to a company conference in Washington, D.C., and some workers wUl return to the East for an eight-week reservations-training program. Rosen­bluth has also turned most of those initial part-time jobs into full-time jobs with benefits for those people who wanted to work full -time. Only a few wanted to remain part-time because of conflicting farm work loads. The linton office is currently staffed by 34 entry-level data processing operators who update profiles, enter data perform commission tracking, and work on special projects. No special skills were required to obtain a position, although typing is helpful for some tasks. All operators were trained by the company and are paid $5.00/hour. The office also has one office coordinator who is paid slightly more. Rosenbluth has not been disapPointed with his venture in­to the northern Great Plains. He has found there is "virtually no turnover or absenteeism here in North Dakota ." He was so pleased by the productivity of the workers that he is ex­panding the linton office from data entry to a reservations 1Telephone interview, October 12, 1989. 2Personal interview, July 15, 1989. 8 3Leistrttz, F. Larry, Brenda L. Ekstrom, Janet Wanzek, and Timothy L. Mortensen , Beginning Farmers in North Dakota. Agr. Econ. Rpt. No. 249. North Dakota State University, Fargo, 1989. and telemarketing center using a fiber optics network. Rosenbluth stated in a personal interview that there are no big drawbacks to doing business long distance; all that other companies need in order to do similar kinds of expansion is a strong commitment to do so and an awareness of the po­tential for expansion into rural areas . COOPERATION None of this could have been accomplished without the cooperation of personnel from the state and local levels. Rosenbluth's idea of helping drought-stricken families was turned into reality just one month after contacting the North Dakota Department of Agriculture, the Economic Develop­ment Commission, and the target community, Linton. Rosenbluth stated that he would not have done anything differently, if doing it over again. He emphaSized that he received good cooperation from the city and state leaders. The community of Linton is as pleased with RT as an employer as RT is with the Linton area workers . Jim Weisser said that the injection of a $400,000 payroll into the local economy has started people thinking about other ways to expand their economic base . People are more positive, Weisser stated, and other communities are asking Linton how they, too, can attract businesses . THE MOBILITY OF SERVICE FIRMS Rosenbluth Travel like so many service firms, is not con­fined to large urban areas but is free to locate in remote areas that are often brimming with underemployed or un­employed skilled workers. Ann Cole, director of federa l af­fairs for the National Association of Towns and Townships, recently stated that "with computers and telecommunica­tions links, many of America's jobs can be done anywhere. It is beginning to happen. Forward-thinking corporations ... are beginning to decentralize, and smaller businesses are relocating to rural areas." She goes on to say that "we must begin by thinking of rural development needs in tandem with telecommunications technology. ,,4 Service sector jobs are growing by nearly 1.5 million per year, while manufac­turing jobs are dWindling. 5 ECONOMIC IMPACT ANALYSIS would remain in their current role. Thus, actual payroll ex­penses for 1989 will be less than what we assumed they would be in a typical year hereafter. Total expenditures made by Rosenbluth Travel in North Dakota in 1989 are estimated to be $374,703. Nearly 90 percent of these expenditures are for wages and salaries. Communications, utilities, and rent make up most of the re­maining expenses. These expenditures will be spent and respent as a result of the multiplier process and will generate higher levels of busi­ness activity. Table 1 depicts the results of the input-output analysis based on the above assumptions and estimates. A total of $1.103 million dollars of business activity is genera­-ted as a result of the multiplier effect of dollars spent by Rosenbluth Travel. As expected, the largest share of this activity went to households in the form of personal income. The second largest share went to the retail trade sector . If total business activity ($1,103,061) is divided by total local expenditures ($374 ,703), and overall multiplier of 2.94 is obtained. This means that for every dollar spent by RT in North Dakota, another $1.94 is created in the economy. The business ac­tivity also results in the employment of an additional seven to 11 people in the area economy. As a footnote, Rosenbluth estimates the company's cost of operation in Linton is 30 percent less than in the East. Savings are experienced mostly in labor costs and building rental costs. Thus, by opening an office in rural North Da­kota, Rosenbluth Travel not only helps a depressed econ­omy but also adds to the business's overall profit. Continued on page 18 Table 1. Business activity generated in the local economy as a result of expenditures by Rosenbluth Travel. Input-output analysis was selected as the tool to study the Sector Business Activity impact of RT on the area economy. Input-output techniques yield detailed estimates of secondary employment and of business volume generated in the various economic sectors as a result of the multiplier effect. The technique specifically takes into account the interdependencies or linkages be­tween various economic sectors. Expenditures by Rosenbluth Travel in North Dakota were obtained from the company's headquarters for the first nine months of 1989. These expenditures were multiplied by 1.33 to arrive at an estimate of typical annual operating ex­penses. Because all but five of the employees have been shifted from part-time to full-time during 1989, payroll ex­penses were based on the assumption that these workers 4Cole, Ann . Telecommunications Can Bring Back the Vitality of Rural Ag Livestock Ag Crops Nonmetal Mining Construction Transportat ion Communications and Public Utilities Ag Processing and Misc. Manufacturing Retail Trade Finance, Insurance, and Real Estate Busi ness and Personal Service Professional and Social Service Households (Personal Income) Government Coal Mining Electric Generation Petroleum Exploration/Extraction Petroleum Refining $ 23,439 9,372 2,057 33,731 3,754 63,147 14,814 260,108 68,565 21,190 33,701 530,783 38,401 o o o o America." Governing (May 1989) :90. Total $1,103,061 ,5. 'Help Wanted: Jobs Around the Service Sector ." ASSOCiated Press. The Forum (October 9, 1989) :Al. Secondary Employment 7·11 9 cold fall rains, wind and snow become another stressor to Appreciation is expressed to Dr. Paul Berg and Mr. Phil Berg,challenge calves health. Once calves are on a moderate to NDSU Department of Animal and Range Sciences for grading car­high energy ration , minimal facilities and care during the casses in this trial. This trial is partlaUy supported by a grant from the winter are necessary to keep animals relativley comfortable. North Dakota Barley Council . Wind protection from trees windfences and buildings is im­portant but inside housing is not recommended due to mois­ture condensation and respiratory problems that often develop. Occasional bedding during cold weather is appro­priate. Continued from page 9 LESSONS LEARNED By bolstering a local economy, Rosenbluth has become part of the rural crisis solution. North Dakotans often say that the state's biggest export is its educated children. The state spends millions of dollars to educate a workforce for jobs in more urban states. By encouraging other companies to tap this workforce by expanding into rural areas with not just bare-bones jobs but with jobs plus benefits , states in the Upper Great Plains can work to solve their rural develop­ment problems. Successes are contagious; as towns succeed in expanding their economic base , other towns seek to do likewise. A positive way of thinking evolves, and hope for the future begins to replace despair. When Jim Weisser was asked what one thing needs to be done to help towns like Linton. he responded that "we need a way to get our foot in the door." The word needs to get out to other companies that rural America with telecom­munications links can become part of any business any­where with a skilled, motivated workforce. But getting that word out takes talented people and money . Linton recently lost a chance for another large corporation to locate in their community. The corporation went to Rapid City, South Da­kota because of the existence of a ' point of essenceu6 and low-interest loans from the state government. If telecommunications are to become a part of North Da­kota's future, the state must invest in upgrading this infra­structure. Noted sociologist Don Dillman and his associates7 point out that rural America is slow to adopt new technol­ogies. They warn that "a decade or so from now. rural America could be jeopardized by unconscious neglect." In addition to keeping pace with new technologies, the state must also support viable new and expanding businesses with fi nanciaJ incentives and promote North Dakota to the rest of the world as a good place to do business . &rhe nearer a company Is to a point of presence, the lower their telecom­munications costs . 7Dillman , Don A. , Donald M. Beck , and John C . Allen. "Rural Barriers to Job Creation Remain, Even in Today s Information Age ." Rural Develop­ment Perspectives (February 1989) :21-26. 18 

Becoming Part of the Solution... A Success Story for Rural North Dakota

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