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BizBuzz: Brainerd Homes closes

After 32 years in business, Brainerd Homes has closed its doors. The Oak Street business started during the tough years of the recession in 1982, but the downturn with the Great Recession proved to be too much. Brainerd Homes President Rock Ylini...

After 32 years in business, Brainerd Homes has closed its doors.

The Oak Street business started during the tough years of the recession in 1982, but the downturn with the Great Recession proved to be too much.

Brainerd Homes President Rock Yliniemi said after the real estate meltdown they put everything back into the business they'd made in the last 30 years to keep it going. At some point, he said, it comes down to deciding when to stop the bleeding. There were the sleepless nights thinking of how to increase sales, if there was a way to market the business differently, if there may be a niche market left unexplored, how to layoff an employee.

"It's really a tough decision because there were 32 years we were in business," Yliniemi said.
"There comes a time when you have to say enough is enough."

The business closed Jan. 1.

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After the Great Recession, Yliniemi said needing 20 percent down for construction put home building at a disadvantage compared to the 5 percent down for existing homes. After slow sales, activity was picking up but not enough to save the business.

"We really should have closed the door five years ago and waited for things to turn around and that would have made a big difference on spending money that never came back, but it's tough - it's really a legacy - because its gone," Yliniemi said.

Brainerd Homes offered both manufactured and modular homes. Models included at 52-foot home with three bedrooms, two baths and a two-car attached garage. Yliniemi's dad started the business in Brainerd in 1982. Business grew each year until 2007 when the housing meltdown and Great Recession began. And then business was slower in 2008. Slowed more in 2009 and actually went down in both 2010 and 2011. Brainerd Homes went from 19 employees to three.

During the previous boom years of 2005 and 2006, Yliniemi said the business did as many as 149 homes in a single year.

"When the bottom dropped out it dropped out quick," Yliniemi said.

He said extensive regulations on the installation of manufactured homes added to the mix with a state building permit of 30 pages and a state inspection requirement that added $300 to $500 to the cost. Yliniemi, a state association board member, was part of the effort to lobby to change the requirement from a state inspector coming from the metro area to the use of local building inspectors. In the last five years, people were willing to buy homes but, he said, the banks said no. Appraisals were not coming in with the numbers people expected on lots or equity.

Yliniemi said while the state stated it wanted to be a model for the nation with the program, he thinks they were out of touch with the public and the builders. Yliniemi is now working for Lakes Area Plumbing, work he said he enjoys. "I'm always looking to the future for whatever it brings."

Yliniemi was born and raised in this manufactured and modular home business. His dad managed Anderson Homes in Sebeka and when an expansion to Brainerd was broached, the elder Yliniemi decided to open his own business here instead of an Anderson Homes branch. The decision came with the backing of Yliniemi's grandfather at Anderson Homes, he said.

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The Oak Street property will go up on the market. There are two homes still for sale. The inventory of building items such as doors and windows, along with furniture used to stage homes is likely to go to a spring auction.

Yliniemi said maybe making some cuts a little earlier may have helped as one down year added to another. And it lasted so much longer than expected. After tightening belts and putting money back into the business, Yliniemi said "you just have to say 'When do we have to stop.'"

Yliniemi said they never sold a product not built for the northern climate, using builders such as Schult and Wisconsin homes. Schult Homes are part of Clayton Homes, which is part of Warren Buffett's Berkshire Hathaway holdings.

"I'd like to thank all the customers that made it possible for us to make it as long as we did," he said. "We had a lot of repeat customers, as well as their friends and their family. We worked really hard to really take good care of our customers and give them good service and give them a really quality product. We never sold a cheap product."

J.C. Penney reported holiday sales for the nine-week November and December period represented a sales growth of 3.7 percent compared to the previous year. And the company announced it is closing about 39 stores this year, none in Minnesota according to published lists.

"Our highest priority over the last year has been to restore profitable sales growth at JCPenney. This holiday season was instrumental in that effort - and our teams delivered," said Myron E. Ullman III, CEO. In the news release, Ullman praised the companies hardworking staff and said customers responded to the retailer's merchandize and compelling promotions. "We are proud of these results, and believe the work we are doing will fuel the continued growth of our business."

Ullman was quoted last week, the same week the store closings were announced.

"While store closings are usually a sign of trouble for a retailer, in Penney's case, they should buoy anyone concerned about the department store's longer term prospects," Fortune Magazine reported, noting Penney's shares were up 20 percent Wednesday. "The fact remains that Penney's annual sales, expected by Wall Street analysts to reach $12.2 billion in the fiscal year ending this month, are still well below the levels of a few years ago to justify its then-1,100-store fleet."

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Also in the picture are struggling malls and growing e-commerce, Fortune reported.

The store closings mean laying off 2,250 employees.

Jack Pine Brewery owner Patrick Sundberg met with Baxter city officials earlier this month to discuss the future of the brewery and taproom in the city. Sundberg and the city have been at opposite ends of a debate on whether food trucks, specifically Barefoot Burrito, could park at the tap house off College Road in the city's industrial park area.

Sundberg said his business was one of the few left out when the city established its food truck ordinance. No other area in the city is zoned to allow mixed manufacturing and retail like a brewery and taproom, Sundberg said. The brewery's parking lot is at the edge of the 200-foot separation the city established. After the city council consensus was not to change the ordinance, Sundberg started a grassroots campaign to develop a petition and show support for the idea. He established a separate Facebook page entitled "Free the food truck." A Free the Food Truck rally was planned for Baxter's Jan. 6 city council meeting.

On Jan. 2, Sundberg reported he met with city officials for a two-hour discussion.

"After two hours of discussion with everything being laid out on the table, a path forward was established," Sundberg wrote on his Facebook page. "Unfortunately, that path does not include hosting a food truck at the brewery taproom at this time."

The rally was canceled.

Sundberg said the first time he heard the city wants his business to stay in Baxter was at the two-hour meeting to talk about where he fits.

"Time to start planning the next brewery," he stated in a tweet after the meeting. In an interview, Sundberg said: "In order to grow the business, I must relocate to a suitable location. It will be a few years to pull together the details and financing for the next big adventure, but I feel that the city will be on board with an expansion project. The city just isn't comfortable with much more growth in my current location."

RENEE RICHARDSON, senior reporter, may be reached at 855-5852 or renee.richardson@brainerddispatch.com . Follow on Twitter at www.twitter.com/Dispatchbizbuzz .

Renee Richardson is managing editor at the Brainerd Dispatch. She joined the Brainerd Dispatch in 1996 after earning her bachelor's degree in mass communications at St. Cloud State University.
Renee Richardson can be reached at renee.richardson@brainerddispatch.com or by calling 218-855-5852 or follow her on Twitter @dispatchbizbuzz or Facebook.
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