Growing UP in a down economy

Ideal Aerosmith recently ran radio ads seeking four new technical-assembly workers for its East Grand Forks, Minn., plant. The company got more than it bargained for.

Thirty-six people showed up at this month's job fair.

"We were surprised. We would have been happy with 15," said Barbara Schultz, a senior vice president.

The company's location usually makes it tough to get candidates, she said. No more.

Resumes have flooded into Ideal Aerosmith since word spread that the company is growing despite the economy. It already has inched up by five workers this year, to 110. And this month, it hired an engineer, a technical buyer and four assembly workers.

Schultz, asked if the recession might force cutbacks, said no way. "It's hard to say 'cut back' when we are trying to grow right now," she said. "Our capacity is pretty much tapped. While [the economy] is in the back of our minds, we are not dwelling on it."

Ideal Aerosmith, which makes avionics testing equipment for the armed forces and for commercial contractors, represents the flip side of this economy: small, fast-growing companies that are avoiding some of the woes that have beset larger firms.

While 3M, Andersen Corp., Hutchinson Technology, Best Buy, Tenant, Graco, Pentair and other big-name Minnesota-based companies shed 7,000 workers since September, dozens of small Minnesota manufacturers are growing and hiring.

Those medical and high-precision parts makers, rent-to-own auto dealers and defense firms are investing in new equipment and expanding as if the boom times still were here, note economists and economic-development bureaucrats

Stark contrast

The growth lies in stark contrast to what the 10,000 member National Association of Manufacturers is seeing: thousands of layoffs and billions of dollars in cost reductions reported in recent weeks. Nationally, manufacturers whacked 600,000 jobs this year, including 85,000 last month.

Ideal Aerosmith and companies like it are exceptions. Companies thriving in the midst of a global recession tend to be innovative and offer customized, high-tech and engineering services in niche industries.

"These people are either investing, buying or growing in some way," said Bob Kill, CEO of Enterprise Minnesota, the quasi-government business assistance group that helps small manufacturers pare waste and raise productivity.

"Nimble small companies can take advantage of [this economy] if they have invested previously in their own plants and equipment," Kill said.

He said small Minnesota manufacturers that are avoiding layoffs and beating the economic doldrums include the medical device firm Avicenna Technology in Montevideo and Jordan Transformers in Jordan, which does refurbishing work. Metal Craft in Elk River recently added workers and celebrated a new plant opening, Kill said. And tunneling contractor Akkerman Inc. in Brownsdale added skilled employees, as did display-case maker Felling Products in Waite Park.

Cliff Waldman, an economist with the Manufacturers Alliance/MAPI, noted that today's trendsetters often are firms that previously updated their plant equipment, streamlined production processes or worked to enhance efficiencies, delivery time and ultimately, profits.

Getting outsourced work

Ideal Aerosmith has enjoyed growth in both its commercial and military product lines, Schultz said. "One reason is because of defense and some new markets we are getting into. The other reason is that larger commercial companies are outsourcing what they don't want to do anymore," she explained.

Ideal caught business from Honeywell, Lockheed Martin, Alliant Techsystems and other high tech and defense firms. With the war expected to drag on in Afghanistan, if not in Iraq, defense firms are buying parts and expanding their civilian commercial divisions.

Douglas Machines, which makes giant robotic packaging machines in Alexandria, Minn., for Pepsi, Frito Lay and others, just hired 30 workers and plans to add a few new engineers this month to its staff of 540. Annual sales jumped 5 percent and earnings rose 10 percent this year, said Vern Anderson, who expects similar earnings next year.

Last year, Douglas Machine improved its factory floor plan, expanded its Alexandria plant and consolidated operations, closing its plant in Deerwood, Minn. It also beefed up its research and development and expanded into a new business -- building automated DNA testing machines for seed companies.

"We don't sit back," said Anderson. "We give it our all."

Utility vehicles selling

Chris Carlson, president of Sportech, Elk River, which makes enclosures, roofs, doors, quick-release parts and other supplies for Polaris, Arctic Cat, John Deere and other makers of rugged utility vehicles, said design innovation and strong demand have been the key to his company's growth.

"The truth is that this market is still growing. The utility vehicle market is solid and strong. People are buying them," Carlson said. "So despite what you read in the newspaper, not everybody is ready to file bankruptcy. People are still buying these vehicles."

That's why Sportech doubled its plant size in October, hired 40 new workers and plans to add 10 more next year. "In 2009 we think that business will be up. We're projecting 20 percent growth," Carlson said.

Jim Haglund, owner of Central Container in Brooklyn Park, hired nine people this year and recently signed a six-figure contract that will require overtime work through the holidays. His company generates more than $30 million a year in packaging goods and making corrugated display cases for companies such as Best Buy, Target and Sam's Club.

Haglund said he picked up business by spending several million dollars on new specialty die cutting and gluing equipment to make unique corrugated display cases, such as those with clear plastic windows.

"It helps separate us and puts us into a specialty part of this business," Haglund said.

But Haglund said he's still unsure about the future. "I am forecasting next year from zero growth to a negative 15 percent," he said. Regardless, he doesn't intend to lose a single member of his newly expanded staff.

"We are going to try to inflict the least amount of pain as possible with our workers," he said. "If the time comes, we will ask for voluntary time off ... and what we will probably do is go down to reduced hours corporate-wide to a 35-hour week."

Recession or not, Haglund said, it's important that workers keep their health insurance. "Because I came from a farm in northern Minnesota and I stared out with just $15,000 years ago, I can't imagine coming home during the holidays and telling my family that I don't have a job."

Dee DePass • 612-673-7725