WILLMAR

—

Enterprise Minnesota,

a Minnesota-based business consulting firm, hosted the

2023 State of Manufacturing survey

event in Willmar, Tuesday, Nov. 14, as the first stop on a tour across Minnesota.

At each stop on the tour, Enterprise Minnesota presented findings from the survey to crowds of business and community leaders and hosted a discussion. Each of the six presentations was sponsored by a local group, frequently the region’s Initiative foundation.

“It is about the community. Manufacturing has an effect on Main Street. I have seen communities where a manufacturing business moves out and it is a lot like the high school closing. Main Street followed. It is painful. We really strive to get people to understand the power of manufacturing in the community,” Bob Kill, president and CEO of Enterprise Minnesota said.

The survey was conducted by contacting 400 manufacturing executives from across the state. Over sampling was conducted in more rural regions to ensure that they were properly represented in the survey.

This survey has been conducted every year since 2008, though Kill’s experience in the industry dates back further. In that time he has noticed some long-term trends and the growth of manufacturing in the Midwest.

“I think if you go back 25 years, American manufacturing 25 years ago was not known for quality, it is today. We make the highest-quality products in the world right here in the Midwest. Today quality is designed in. That is the number one thing. Along with that the value of manufacturing is more appreciated. Ten years ago my tagline was ‘making things is cool again’ and it really is still today,” Kill said.

Results of the survey show growing concern for the industry after Minnesota legislation passed in 2023. According to the survey, 60% of those surveyed believe that new legislation has made the state less attractive for businesses.

“It is like a funnel. We like to look at federal programs, state programs. Bottom line, you can look at certain communities, Willmar being one, (that) have done a really good job of working as a community. You look at local colleges helping to get people training and education, local programs bringing people in. They are very involved. Programs are wonderful, but the solution is at the community level,” Kill said.

Of the passed legislation, 77% of executives saw the new requirements for providing paid leave for employees, without exception for small businesses, as cause for concern. Other legislation they found concerning included the costs of paid family leave through a new payroll tax, the new requirements for paid sick and safe time and the potential use of cannabis in the workplace.

“This is the first time in 15 years that something the Legislature did had a direct effect. We anticipated that. I wouldn’t have guessed the level of concern, but we knew it was going to be a concern,” Kill said, “And it is not just manufacturing, it is every business. The fact that a small business has the same guidelines as a multibillion-dollar business is really a challenge for these small companies.”

The paid leave law requires employers to provide paid family and medical leave when employees cannot work due to health or caregiving issues. The law covers almost every employee in Minnesota regardless of the business’ size, part-time and full-time, in both the private sector and government employment.

“Because the concern rate, particularly on the paid family leave law, is so high, that is really worrisome for a lot, especially the small manufacturers. Some of the larger companies have the resources to deal with these issues. When you are dealing with a one- or two-person company or even a ten-person company, you don’t have these in-house HR, legal or insurance people. We will see what happens in the next legislative session,” Vice President of Marketing and Organizational Development Lynn Shelton said.

These concerns have led more manufacturing executives to believe that 2024 will bring economic change. When asked if they thought 2023 was a year of expansion, a flat economy or recession, 45% said that it would be a flat economy. This decreased when asked the same question about 2024, with only 36% of executives believing it would be a flat economy.

The percentage of executives who thought 2024 would bring an expansion and those who thought it would bring a recession grew. 22% of respondents said that 2024 would be a year of expansion, up six percentage points from 2023. 37% of respondents said that 2024 would be a year of recession, up four percentage points from 2023.

If a recession were to occur, 83% of businesses believe that they would be able to survive it. The majority of those who did not believe they could were small businesses making less than $1 million a year.

Employment of qualified workers was found to be the number one concern, with 44% of respondents ranking it the highest. While it is still the highest, it is down nine percentage points from 2022. The study also found that 55% of businesses had no open positions at the company.

For many businesses, automation seems to be a way to reduce the need for finding workers. According to Kill, many view automation as putting robots on the floor, but it is more than that.

“Hanson Silo doesn’t have paper following around their manufacturing process, they have it electronic. We are seeing automation in subtle ways that don’t catch the fancy of being a robot. … I think you have to automate in the applications that fit automation, not everything can be (automated). There are jobs that are going to require a person,” Kill said.

Shelton believes that automation will continue to expand in the workplace to fill the need for employees that many manufacturers are facing.

“I do think that there will be more automation because there has to be because we don’t have enough workers for the foreseeable future. That is good for companies and good for employees inside those companies because they are actually getting to do more interesting work than some of the repetitive work,” Shelton said.

Enterprise Minnesota’s tour of Minnesota will continue through February of 2024, stopping in Alexandria, Mahnomen, North Branch, Owatonna and Duluth for community discussions on recent legislation, business concerns and more, just like the one in Willmar.