Minnesota factories expect robust growth in 2015, but face challenges replacing retiring workers, according to the State of Manufacturing report issued Wednesday.
Enterprise Minnesota surveyed 400 factory executives and found that 89 percent were “confident about the future,” making the results the best in the report’s seven-year history and five percentage points higher than 2014.
“Minnesota’s manufacturers are undoubtedly bullish about their prospects for 2015,” said Enterprise Minnesota CEO Bob Kill. “[They] overwhelmingly expect to parlay recent success and a sturdy economy into solid business growth in 2015.”
The confidence comes despite many manufacturers in Minnesota and nationwide being hurt this year by severe East Coast storms, lingering port disputes on the West Coast and effects of a strong U.S. dollar.
About 450 manufacturers, state college and economic experts attended the State of Manufacturing event Wednesday at the Minneapolis Convention Center where the report was released.
About 110 of the companies surveyed are increasing or plan to add staff this year, up more than 25 percent from last year. Forty plan to cut workers, while 244 companies will keep employment steady.
Finding skilled workers for openings, though, is increasingly difficult, the report found.
“What surprised me is that this workforce issue has kind of spread like a virus into the metro. Before, it was always seen in the rural areas. But now it’s statewide,” Kill said. Manufacturers “are scrambling to fill the void of people [retiring after having] extended their stay after the downturn. So you see a lot of scrambling to fill that knowledge.”
About 70 percent of executives at city plants said it was hard to fill vacancies, up from 61 percent a year ago and 54 percent in 2008. In rural areas, 72 percent of respondents had difficulties finding replacements, down from 75 percent last year.
Kill noted that companies such as Central Package & Display in Brooklyn Park, Midwest Rubber in Plymouth, Delmar in Lakeville, and Absolute Quality in Minneapolis “are clearly all growing revenue” and have added staff in recent months.
“Business conditions have improved. That is the main thing” behind the decision to hire additional workers, said Jim Haglund, who heads Central Package.
Ron Kirscht, president of Donnelly Custom Manufacturing in Alexandria, told Enterprise Minnesota that he added about 20 workers to his 230-member team.
“We have workers retiring, and we have to hire behind them,” he said. “Plus, we had to add people because of increased customer demand.”
The survey also found that 58 percent of surveyed firms will raise wages in 2015, a positive sign for Kill.