Survey: Overwhelming majority of Minnesota's manufacturers feel confident in economy

Minnesota's manufacturing leaders are now feeling the economic recovery almost across the board and believe it will continue.

An annual Enterprise Minnesota State of Manufacturing survey, released Tuesday, found a sector that has learned from the recession, diversifying businesses but also taking a conservative approach to capital expenditures and raising red flags about a tightening workforce.

The survey started in 2008, when companies were dealing with the recession. So it's no surprise that business confidence is higher now.

The survey found 94 percent felt confidence in their company's future, and 58 percent forecast economic expansion — while those surveyed predicted a "flat economy" every year from 2010 to 2016.

"There really is a much stronger feeling today than there was two or three years ago, and that's across the board," said Robert Kill, CEO of Enterprise Minnesota. "During the downturn, they realized they had to invest in process, invest in people, in stronger relationships — now they're seeing the results as the economy turns up."

Of the companies surveyed, 55 percent — compared with 44 percent in 2016 — said they expected an increase in revenue, and 44 percent an increase in profits, up from 37 percent last year.

"It's very good for one of our largest industries, to see such positivity from our business owners," said Shawntera Hardy, the state's commissioner of Employment and Economic Development. She said there are 314,000 jobs in the sector.

While surveys of economic progress have had varied results in some past years, the State of Manufacturing results show movement in the same direction of some of the state's studies and those like the Mid-America Business Conditions Index put out by Creighton University.

"When they do match up, it works better," Kill said. For example, Enterprise Minnesota surveys top executives and owners, while Creighton usually interviews supply managers. "With more executives, they tend to be more optimistic, and it doesn't necessarily trickle down."

The surveys also have shown a growing concern with Minnesota's tight labor market, one that could strain future growth, Kill said.

The shortage can be especially seen when you break out greater Minnesota companies from those located in the seven-county metro area.

Overall, 68 percent of companies said it is difficult to attract qualified job candidates. But among outstate Minnesota companies, the concern rose to 75 percent.

The area showing the most strain, he said, was the southwest region, which is dependent on agriculture and small businesses. Without a small city center such as Rochester or St. Cloud like other regions have, the area is struggling to attract or keep younger residents who would have worked at those small 25- to 50-employee plants.

One positive development on that front, he said, is the relationship between employers and technical colleges.

"It's pretty amazing. Manufacturers realize they have to have a tighter relationship all the time," Kill said. "They can't just show up in May and expect to get kids. They better be at the head of the line."

Advanced machining is currently the largest need for manufacturers, according to the Enterprise Minnesota survey.

From that perspective, Hardy said, "advanced manufacturing has huge technology components. It's not one of those things where we need to wholeheartedly change the conversation away from engineering."

Hardy also noted that technical colleges and companies are starting to realize that they need to take their partnerships a step further.

"We're thinking of the continuum, every tool for the different needs of our workers — from apprenticeships to thinking of mature workers, do they have another life inside of them from a workforce perspective, to those on the sidelines," Hardy said.