Survey: Manufacturers are hopeful, but workforce worries loom large

WILLMAR - Attracting and keeping qualified workers remains a persistent challenge for Minnesota manufacturers, and there are indications that the problem is spreading.
Two-thirds of the manufacturing CEOs surveyed for Enterprise Minnesota’s annual “The State of Manufacturing” report said it’s difficult to recruit, and many have begun to list it as one of their key concerns.
The sixth annual report is being shared around the state in a series of meetings that began in May. The most recent meeting was Friday in Litchfield. Another one is scheduled this week in Fergus Falls.
The survey, based on interviews with 400 manufacturing CEOs and an additional 14 focus groups of manufacturing executives, provides an important barometer for what’s happening in manufacturing, said Bob Kill, president and chief executive of Enterprise Minnesota.
“It verifies some of the things we hear day to day,” he said. “The data gets to be very eye-opening.”
Overall, manufacturers are feeling more optimistic than at any point since the recession. Eight in 10 say they are confident about the future of their firm, the highest level since the annual survey was initiated six years ago.
Nearly half said they expect their gross revenue to increase this year, and 35 percent expect their profits to grow. A significant majority, 75 percent, said that most of this growth will come from new customers.
In another sign that manufacturing is regaining strength, work that was lost to offshore sources is starting to trickle back.
About a quarter are seeing opportunities come back to them, said Kill. “It’s not a tsunami coming back but it’s starting to reach a balance.”
In many cases, it’s because customers are looking for a shorter lead time that can be better supplied through home-sourcing, he said.
Despite an increasingly positive outlook for Minnesota manufacturers, there are worries about the workforce, especially in outstate Minnesota.
Manufacturing has become highly technical and requires skilled employees, Kill said. “Half of all manufacturers are looking for training and they want people with experience.”
Although virtually all of the manufacturers who responded to the survey said they planned to maintain or increase their workforce this year, two-thirds are finding it difficult to recruit and retain employees.  The problem is becoming especially acute in rural Minnesota, where three out of four manufacturers have trouble finding qualified workers to fill vacancies.
“It’s what we hear anecdotally all the time,” Kill said.
In response, manufacturing firms are beginning to invest more in training and development. A quarter of those interviewed said they planned to budget more for training this year, 7 percent higher than last year.
“That’s a trend that really started showing up this year,” said Kill.
Manufacturing needs to dispel the longtime stereotypes of Rust Belt-era factories and replace them with images of modern-day plants that are clean, automated, highly technical and advanced, he said. “One of the things we need to do is start talking about these opportunities as careers. … To solve the workforce issue, we have to all be thinking bigger than we are.”
As Enterprise Minnesota travels around the state, collecting interviews for the annual “State of Manufacturing” report and then sharing the findings, a dialogue that’s important to the state economy is beginning to happen, Kill said.
When the first survey was conducted six years ago, there was a 4 to 5 percent return, he noted. This year it has grown to 60 percent, and the survey results are resonating long-term with manufacturers, policymakers, economic development professionals and elected officials.
Enterprise Minnesota was still giving presentations on last year’s survey this past February while pollsters were conducting surveys for the 2014 report, Kill said.
“The thing that surprised us is that it’s had a 12-month life. That’s been the gratifying thing,” he said of the report.