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Bob Kill, CEO and president of Enterprise Minnesota, talked about the findings of the annual “State of Manufacturing” survey in Alexandria last Thursday.

Confidence grows among manufacturing firms in state

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news Alexandria, 56308
Alexandria Minnesota 225 7th Ave E
P.O. Box 549
56308

Manufacturing companies in Minnesota are more confident about their financial future now than they were before the last recession hit.

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But their assessment of the state’s business climate is not nearly as bright. More than half say Minnesota is headed down the “wrong track” for providing a competitive business climate for manufacturers.

Those findings and a wealth of other reactions were contained in the sixth annual “The State of Manufacturing,” a survey research project sponsored by Enterprise Minnesota and partners.

The information was discussed in detail with more than 50 manufacturing executives who attended a briefing at the Alexandria Technical and Community College last Thursday.

The results were obtained from phone interviews with 400 manufacturing executives, representing a geographically proportional cross-section of Minnesota.

“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 and 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.”

Worker shortage is expected to be an ongoing problem since 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.

About two-thirds of the manufacturers, 67 percent, say it’s difficult to attract qualified applicants to fill vacancies, the highest mark in the survey’s history. The problem is especially pronounced in Greater Minnesota, where it jumped to 75 percent, which is a 33-point increase from four years ago and notably higher than the Metro area (61 percent).

Still, most manufacturers are optimistic. Overall, 84 percent of executives said they are confident about the future of their firms, which is the highest 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. 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, Kill noted. Only 7 percent of manufacturers have recessionary concerns for 2014. Fifty-four percent expect a “flat” economy and 37 percent anticipate economic expansion.

The cost of health care was again the top concern among manufacturers at 59 percent, followed closely by government policies and regulations at 55 percent.

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.

A total of 48 percent of respondents said issues “such as taxes, regulations and policy uncertainties” might negatively impact their growth. Rising health care and insurance costs were seen as the next potential growth inhibitors at 31 percent.

The survey also touched on 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 or strategic planning. About 37 percent of companies have a formal quality management system, such as ISO.

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