Minnesota’s manufacturers are more confident in their firms’ future than at any point since 2009, according to the sixth annual The State of Manufacturing®, a survey research project sponsored by Enterprise Minnesota and partners. Health care costs, government policies and regulation, and the ability to attract and retain qualified workers also top the list of growing concerns among manufacturers.

Overall, 84 percent of executives say they are confident about the future of their firms, which is the highest recorded mark in the survey’s six-year history. The number of manufacturers who claimed they were “very” confident in their company’s future jumped eight points from 28 percent in 2013 to 36 percent this year. And, confidence is especially high (96 percent) among companies with more than $5 million in annual revenue.

This optimistic outlook extends to the economy as a whole. Only seven percent of manufacturers have recessionary concerns for 2014. Fifty-four percent expect a “flat” economy in 2014 and 37 percent anticipate economic expansion.

The cost of health care is once again the top concern among manufacturers at 59 percent, followed closely by government policies and regulations at 55 percent. The ability to attract and retain qualified workers continues to be a growing issue statewide with 34 percent of respondents listing it as a key concern, a 20-point jump since 2011. In Greater Minnesota that number jumps to 43 percent, while in the Metro area, 28 percent of manufacturers consider worker shortages a key concern.

Minnesota’s business climate is increasingly seen as unfavorable by manufacturers, with 51 percent saying the state is on the wrong track, the highest total since 2010. Forty eight percent of respondents said issues “such as taxes, regulations and policy uncertainties” might negatively impact their firm’s growth. Rising health care and insurance costs were seen as the next largest potential growth inhibitors at 31 percent.

The full results of The State of Manufacturing® will be revealed at a series of briefings with manufacturers, business leaders, educators, policymakers and media throughout Minnesota from May 8 – June 13 in Minneapolis, Eveleth, Grand Rapids, Brainerd, St. Cloud, Alexandria, Mankato, Albert Lea, Winona, Red Wing, Owatonna, Rochester, Elk River, Litchfield, and Fergus Falls. Click here to register for The State of Manufacturing events.

Pollster Rob Autry from Alexandria, Va.-based Public Opinion Strategies (POS) conducted phone interviews with 400 manufacturing executives, representing a geographically proportional cross-section of Minnesota between February 28 and March 13. The poll has a margin of error of +/- 4.9 percent. The research was complemented by 14 focus groups of manufacturing executives from around the state.

“It is clear that Minnesota’s manufacturers are more confident about their future today than they have been at any point since the start of the recession,” said Enterprise Minnesota President & CEO Bob Kill. “The looming concern, however, is that many manufacturers are having difficulty finding qualified workers to remain competitive and sustain their growth. This challenge is significantly acute in Greater Minnesota.”

Statewide sponsors for the State of Manufacturing include: Baker Tilly; BMO Harris Bank; Doherty; Granite Equity Partners; Gray Plant Mooty; Marsh & McLennan Agency; and MRA.


Growth: Manufacturing executives are slightly more optimistic about the revenue projections of their own companies than they were in 2013, with 45 percent expecting an increase in gross revenue, up from 41 percent last year. In terms of profitability projections, 35 percent of respondents anticipate an increase in profits, up from 32 percent in 2013. Overwhelmingly (76 percent) manufacturers said that this growth would come from new customers. The number of manufacturers expecting an increase in capital expenditures remains flat at 27 percent.

Worker shortage: Virtually all (97 percent) of Minnesota’s manufacturers expect to maintain or grow their workforce in the year ahead. About a third (30 percent) expect their firms to grow, split proportionally between companies in the Twin Cities and Greater Minnesota. The “ability to attract and retain qualified workers” continues to grow as an increasingly chronic concern for manufacturers. Two-thirds (67 percent) say it is difficult to attract qualified applicants to fill vacancies, the highest mark in the survey’s history. This problem is especially pronounced in Greater Minnesota (75 percent), which is a 33-point jump from just four years ago and notably higher than the Metro area (61 percent). Companies with over $5 million in revenue are feeling this problem even more acutely, with 82 percent reporting trouble finding qualified applicants.

A majority of executives expect to increase wages for the first time since the recession. Fifty-four percent said that on average, wages over the last two years have gone up, an 11-point increase from 2013. A whopping 62 percent expect wages to increase in 2014, a 14-point upsurge from those polled in 2013. Greater Minnesota firms are more likely to say their wages are going up (66 percent) than those in the Metro. A quarter (25 percent) of the manufacturers surveyed predicted they would “invest more in employee development as a percent of payroll” in 2014, seven percent higher than last year. This interest is greatest (42 percent) among companies with more than $5 million in revenue and/or more than 50 employees.

Health care: This is the sixth year in a row that health care costs were listed as the top concern of manufacturing executives at 59 percent, down from 67 percent in 2013. Companies over $5 million in revenue were the most anxious about healthcare costs at 66 percent followed closely by companies in Greater Minnesota at 64 percent. Manufacturers also continue to state that health care is the dominant factor in recruiting the best talent over salary and wage expectations by almost 20 points (51 percent to 32 percent). The cost of health care coverage was also named the most important factor (59 percent) when it comes to attracting and retaining qualified workers.

Trade: Nearly one quarter (23 percent) of manufacturers said they ship 11 percent or more of their products internationally. This represents an 11-point increase over last year and signifies the highest level we’ve reported in six years. The top potential market for future business remains Canada at 17 percent, while Europe moves past China into the number two spot at 13 percent.

“Home-sourcing” or “reshoring,” the trend of OEMs bringing their supplier work back from foreign sources, has benefitted 24 percent of Minnesota manufacturers statewide, 34 percent for companies with more than $5 million in revenue. Of those benefitting from home-sourcing, 31 percent said that “shorter lead times” were the primary reason the supply-chain relationships changed.

The value of strategic planning: Companies that engage in formal programs regarding marketing, strategic planning and quality management processes exhibited sharply better revenues and profitability than those that don’t. Roughly half the companies surveyed engage in formal processes for marketing (48 percent) or strategic planning (50 percent). About 37 percent of companies have a formal quality management system, such as ISO. Companies that have a formal marketing process expect an increase in gross revenues by a 2-to-1 margin (60 percent-31 percent) over those that don’t. These companies also expect better profitability (46 percent-26 percent).

Public Opinion Strategies is a survey research company specializing in corporate, public policy and litigation research, with offices in Washington, Denver and Los Angeles. Since its founding in 1991, it has completed more than 10,000 research projects and interviewed more than 4 million Americans across the United States.

Bob Kill, president & CEO of Enterprise Minnesota, is available for media interviews. Interviews can be arranged through Chris Morse of Enterprise Minnesota at (612) 455-4213.

Full top-line results and cross tabulations are available at www.enterpriseminnesota.org/state-of-manufacturing

The survey briefing schedule:

Monday, May 12, 2014 10:00 a.m.
IRRRB Administration Building
4261 Hwy 53 South
Eveleth, MN 55734

Monday, May 12, 2014 1:30 p.m.
Grand Rapids
Blandin Foundation
100 North Pokegama Avenue
Grand Rapids, MN 55744

Tuesday, May 13, 2014 8:30 a.m.
Central Lakes College
501 West College Drive, Room C223
Brainerd, MN 56401

Tuesday, May 13, 2014 2:00 p.m.
St. Cloud
St. Cloud Technical and Community College
1540 Northway Drive, 1-179
Rooms 1-443 & 1-445
St. Cloud, MN 56303

Thursday, May 15, 2014 10:00 a.m.
Alexandria Technical and Community College
1601 Jefferson Street
Rooms 209/211
Alexandria, MN 56308

Monday, May 19 8:00 a.m.
South Central College
North Mankato Campus
1920 Lee Blvd, Conference Center A
North Mankato, MN 56003

Monday, May 19, 2014 1:00 p.m.
Albert Lea
Freeborn-Mower Cooperative Services
2501 Main Street East
Albert Lea, MN 56007

Tuesday, May 20, 2014 9:00 a.m.
Southeast Technical College
1250 Homer Rd, Room 205
Winona, MN 55987

Tuesday, May 20, 2014 2:00 p.m.
Red Wing
Southeast Technical College
308 Pioneer Road, Room 314
Red Wing, MN 55066

Monday, June 2, 2014 9:00 a.m.
Riverland Community College – Owatonna Campus
965 Alexander Drive SW, Rooms 140/142
Owatonna, MN 55060

Monday, June 2, 2014 1:00 p.m.
Rochester Community and Technical College
851 30th Ave SE
Coffman Building, Rooms 206/208
Rochester, MN 55904

Thursday, June 5, 2014 1:00 p.m.
Elk River
Elk River City Hall
13065 Orono Pkwy NW
Elk River, MN 55330

Friday, June 6, 2014 9:00 a.m.
Meeker Cooperative Light & Power Association
1725 U.S. Hwy 12
Litchfield, MN 55355

Friday, June 13, 2014 10:00 a.m.
Fergus Falls
Minnesota State Community and Technical College
1414 College Way, Legacy Hall
Fergus Falls, MN 56537

About Enterprise Minnesota
Enterprise Minnesota is a consulting organization that works with medium-size and smaller manufacturing companies to help them compete and grow profitably. It is also one of 60 Manufacturing Extension Partnership (NIST/MEP) affiliates associated through the US Department of Commerce to bring world-class services to its manufacturing clients.



Leave a Reply

Your email address will not be published. Required fields are marked *