Northern Star Cooperative: Delivering Competitively Priced Energy Solutions

Northern Star Cooperative (NSC) opened its doors in 1922 as “The Farmers Exchange,” a group comprised of local farmers in Northern Minnesota. Now, 90 years later, the business has adapted to a changing demographic and continues to operate as an energy cooperative, serving a growing region.

NSC has grown immensely from the early days, and the scope of services has shifted toward modern demands for many types of fuel and consumer goods. With a main office in Deer River, and satellite facilities in Backus, Hill City, Littlefork, Long Prairie, Northome, Pine River, Remer and Walker, the cooperative operates to serve customers across a broad 250-mile swath of Minnesota (from Sauk Centre to the Canadian border).

Dave DeLawyer, general manager for NSC, has been with the business for over 17 years. He has managed at three different co-ops since the age of 25, when he entered the industry through a management apprenticeship program through CHS after graduating from U.W. River Falls “I’ve been in the co-op system for 37 years,” he says.

His experience led him to NSC, where he works with members to deliver competitively priced energy solutions for businesses and homes that offer a return on investment. “Of course, location is important, as well as excellent customer service, but what really sets us apart and carries our long-term success is that we’ve developed a model of how a cooperative should work,” explains DeLawyer. “We are here to supply our customers, but when all is said and done we give back our profits to our customers.”

Products and Services

NSC employs around 130 people, although the numbers fluctuate seasonally. That workforce provides co-op clients with three major products: propane, gasoline and fuel oil. The team strives to deliver complete energy services, including the bulk delivery of propane, fuels and lubrication products to farm, home and industry, as well as the sale and delivery of transport loads of petroleum products to businesses and logging customers.

NSC is a total energy product distributor with a broad range of energy services, which has allowed the co-op to remain stable throughout the recession. “We’re in a mature market,” says DeLawyer. “With the housing market collapse and fewer new homes, people are being more conservative. We’ve been figuring out how to grow and keep upgrading our facilities. We’ve always been in the grocery business and have convenience store operations. As we grow, we have an interest in strategic locations. We are always willing to buy out competitors to increase our footprint. We don’t have heavy population density, so it is necessary for us to cover a large geographic area. We probably have 10,000 propane customers.”

Reinforcing that proactive approach, the co-op is consistently one of CHS-Cenex top energy-purchasing partners. “We’re currently the biggest propane purchaser in Minnesota from them,” notes DeLawyer. “We’re in the process of buying some prime property in Deer River and demolishing an existing business to put up something new to help the community and draw in more people. Our Deer River convenience store is one of the most successful in the whole system.” Cenex has even awarded NSC its 2011 Cenex Energy Summit Grand Summit Award in recognition of outstanding business achievement, customer service and partnership.

NSC is known for its volume growth, department profitability, programs utilization, collaboration philosophy and industry leadership, and members commit to NSC for services that help to control costs and ensure that a home or business is never short on fuel. The co-op works with members to develop custom-tailored programs that combine scheduled delivery service, budget pay, tank level monitoring and forward contracting. These services are available to the public, but DeLawyer reinforces the benefits of membership are attractive to a diverse range of customers. Membership is only an application away, and once members sign up the co-op tracks purchases and offers growing dividends for years to come.

Giving Back

In DeLawyer’s time with NSC, the cooperative has given over $13 million back to members in cash. “That’s our added value,” he says. “It sounds simple, but my pride is in knowing that we run a good business, with a strong bottom-line. We’re focused on staying fair and equitable on price, but you have to do something to make yourself stand out from other businesses. We give the profit back to our members in a cash dividend. “That’s our added-value mantra.”

In order to continue increasing returns for customers, DeLawyer says the business must continue to grow. “We’re always looking for opportunities to help our company continue to be successful while sticking to our core areas of expertise,” he says. “We’re also willing to expand into areas that aren’t as traditional for co-ops. We’re capitalizing on renting mini-storage, for example. We have eight buildings with 179 units and we rent a majority of them year-round. It’s a new concept for us, but we’re fulfilling a need. It’s definitely not a co-op thing in the traditional sense, but we’re meeting a need that our customers have.

“Our main goal is not to be tremendously bigger, but to be successful for our customers,” he continues. “We want them to come out with a good return on their investment. Many co-ops do enjoy success, and if you’re doing things in the spirit of how a cooperative is meant to work, it’s a very successful business model.” Even after nine decades in business, Northern Star Cooperative is enjoying this kind of success because the business continues to push new initiatives, along with core products and services that fulfill customer needs, while benefiting a dedicated membership base.