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NEW ULM - There were good things to say about New Ulm's economy, there were bad things, and even a couple of ugly things at the New Ulm Area Chamber of Commerce's Hot Topics Breakfast.

The focus of the well-attended meeting at the New Ulm Country Club was the local economy - what impact the current economic situation is having on various sectors.

While the economic ills that are affecting the nation and the world are being felt here as well, there were some positives mentioned by the speakers.

Moderator Bruce Fenske read remarks from New Ulm Economic Development Director Brian Tohal, and Work Force Director Susan Allen.

Tohal listed some of the negative and positive developments - MCG, Inc. announced it is closing its operation in New Ulm, displacing about 80 workers. Other employers have made staffing reductions because of the economy. Two industrial prospects who had been looking at a local facility have put their plans on hold because of the economy, Tohal said.

The Larkspur Market closed, but on a positive note, it reopened this week, he said.

On the positive side, Kraft Foods added a product line this past year, South Beach Living Bars, a non-cheese product that brought 60 new jobs to the plant and involved a $19 million capital investment.

Windings has expanded into the former Stoney Point building near 3M, adding a handful of employees, and saw a 30 percent growth in sales in 2008. Firmenich added 10,000 square feet of production space, an investment in excess of $5 million, and NU-Telecom opened its Tech Trends store, adding three new employees. The New Ulm Medical Center is working on its Surgical Center expansion and remodeling, a $3.5 million investment. Fox Brothers, International, has purchased land in the Airport Industrial Park to build a truck sales and service facility.

Allen's report said that in January and February of 2009, 660 unemployment claims were filed in the New Ulm office, covering mostly Brown and Sibley County. These are a combination of permanent layoffs, temporary layoffs and seasonal layoffs. Not all claimants are eligible for benefits, she said.

There are jobs available, said Allen, averaging about 30 or 35 listings at a time. Some of the areas most available are personal care attendant, home health aide, and food service.

Kevin Paap, Farm Bureau President for the State of Minnesota, spoke on the farm situation. The Lake Crystal farmer divided his comments into "The good, the bad and the ugly."

The good, he said, is that farming is a renewable business. There is always another year coming, and a chance to succeed.

Some of the best opportunities are in value-added industries. Livestock production is a great example, he said. It takes the farm-grown crops and commodities and uses them to produce a more profitable source of food. Biofuels are another area of opportunity for farmers.

What's good about agriculture, he said, is that farmers in the U.S. produce more than we can use. But that means we need access to foreign markets.

The bad part of the industry is the uncertainty. Volatile prices and uncontrollable factors can make life difficult for farmers. The slowdown in the global economy has hurt exports, he said.

We all need to take responsibility for food safety problems that have come in recent months. The growers and processors, the government regulators and the consumers all need to do their part to make sure the food we eat is safe.

The ugly part of the industry, said Paap, is the disconnect between prices paid to farmers and the food in the grocery store. The gap is getting wider, he said. Of every dollar spent on food in a grocery store, about 19 cents is for the actual cost of the food. He cited corn flakes. The value of the corn in a box of corn flakes is about half of what it was last July, but the price of the box of corn flakes hasn't changed that much.

"Dairy is about as ugly as it gets," said Paap. Dairy prices are about half of what they were, and the cost of inputs has gone up.

New Ulm City Manager Brian Gramentz talked about the economic challenges facing the cities, especially in light of the state's budget problems. Gov. Tim Pawlenty expects cities to spend down their budget reserves.

Gramentz pointed out that at the end of 2008, Pawlenty unallotted $383,000 in Local Government Aid funds for New Ulm as a budget balancing measure. New Ulm stands to lose another $499,000 in 2009, and a lilttle over a million dollars 2010.

The government will allow cities to "levy back" to recapture lost LGA dollars, said Gramentz, but that would result in a 25 percent increase in city property taxes. So the City Council is looking at budget cuts and spending reserve funds to meet the deficits.

The city is looking at cutting $509,000 in the coming year, and he is recommending putting $550,000 of city reserve funds into the city's building maintenance fund to cover losses over the next four years.

"Our new motto is going to be maintain what we have, fix what's broken and change how we operate," Gramentz said. Some facilities may not be open the same hours as before, and snowplowing may take a little longer.

"We are going to have cuts. My goal is to make it as painless as possible," said Gramentz.

Asked about the city's approval of a pay increase for some employees recently, Gramentz said some of those increases are things that can't be controlled, like health care premiums and Public Employee Retirement Act obligations that are set by the state. But he said the negotiations with the employee group that led to the recent raise started last July, when gas was $4 a gallon, inflation was running wild and the economy hadn't yet blown up.

It's impossible, when bargaining in good faith, to go backwards in negotiations. He said the city did sign only a one-year contract instead of the usual three-year, and will be approaching future negotiations with a much different stance.