A robust U.S. economy helped bolster overall sales for Minnesota’s manufacturers last year as they weathered a litany of challenges, such as a severe labor shortage, rising freight costs and the trade war with China.

Manufacturing is Minnesota’s largest and most diverse sector on the Star Tribune 50, with expertise ranging from motor homes to ice cream bars. Several of Minnesota’s largest manufacturers in the past 12 to 18 months announced or closed major acquisitions, many of them ranking among their largest deals ever.

Pentair, Toro and Donaldson all announced purchases in the hundreds of millions of dollars. This spring, Northern Oil and Gas agreed to buy a bundle of North Dakota oil properties for $295 million plus stock, its largest deal yet, and 3M announced plans to acquire wound-care company Acelity Inc. for $6.7 billion, its largest deal ever. 

Some of these were bolt-on deals that folded nicely into the company’s existing businesses, while others were more transformative. General Mills in April lapped its first full year with Blue Buffalo Pet Products, a brand it bought for $8 billion — the second-largest acquisition in its more than 150-year history.

“General Mills was looking at its portfolio and they were able to see that the pet plays an important role in the family,” said Billy Bishop, president of General Mills’ pet segment and co-founder of Blue Buffalo. “[The acquisition] fit with their timing and what they were looking to do, and fuel[ed] our growth for Blue Buffalo for years to come.”

Minnesota’s publicly traded food manufacturers, General Mills and Hormel, both saw expanding market capitalizations last year, while many of the state’s industrials saw a contraction as signs of a global industrial slowdown erupted.

During quarterly earnings released in late April, many Minnesota producers — such as 3M, Graco, Ecolab, Polaris Industries and Tennant Co. — acknowledged struggling with tight labor, rising material and freight costs, negative foreign exchange rates and/or fresh multimillion-dollar expenses tied to tariffs imposed by the Trump administration on goods imported from China, Mexico, Canada and Europe.

The statewide challenges mimic national pressures for factories, according to several recent reports. To fight back, many industrial giants are slashing costs, racing to find new suppliers and further automating U.S. factories.

This spring, 3M, which makes items from Post-it Notes to automotive films and safety harnesses, slashed its 2019 global forecast and announced it will cut 2,000 jobs as it wrestles with double-digit declines to first-quarter profits. In May, Polaris Industries CEO Scott Wine said rising tariffs could be “catastrophic” for the outdoor vehicle maker and signaled the company will consider moving some production to Mexico unless other remedies are found.

 

Includes reporting by staff writer Dee DePass.