Minnesota manufacturers hopeful but concerned about hiring, health care

Most Minnesota manufacturers say that they are optimistic about their outlook, but that confidence remains overshadowed by rising health care costs, higher taxes and the dearth of skilled factory workers in the state.

The fifth annual State of Manufacturing report, being released Thursday, found that 82 percent of executives surveyed remain positive about the future of their own companies. However, Thursday's survey also showed that 15 percent of CEOs and production managers expect a recession this year, which is "a change from the notable optimism that emerged two years ago as the recession began to subside," said Robert Kill, CEO of Enterprise Minnesota, the manufacturing assistance group that conducted the survey.

Issues nagging manufacturing executives included uncertainty about new health care regulations related to the Affordable Care Act. They also complained about the inability to find highly skilled workers for their plants and other facilities. Both issues negatively affected firms' forecasting abilities, the survey found.

Results are "pretty consistent with the concerns we hear about health care and taxes," said Josh Bushard, who tracks Minnesota manufacturers for the Grant Thornton accounting firm. "I think executives are concerned mostly because of the unknown. For a while, with [the Affordable Care Act] there was talk of [repealing] it. But now it is here to stay. But most executives don't really know what the heck that means."

Bushard, who was not involved in Thursday's study, said that while executives have credible concerns, they should not be severe enough to derail optimism in revenue and growth plans.

Already, there have been signs of hope among the area's manufacturers, including a report earlier this year by Creighton University that showed the largest improvement in business conditions among manufacturers in 15 months.

Thursday's survey, conducted by Virginia-based Public Opinion Strategies on behalf of Minneapolis-based Enterprise Minnesota, surveyed executives from 400 manufacturers across the state during March. In addition, executives took part in 20 focus groups designed to understand what themes were helping and hurting their businesses.

Lastly, executives fretted more in 2013 about their ability to recruit and retain skilled workers than in the past.

The survey found that 60 percent of factory executives were concerned, which is a 40 percent leap from 2010. Larger firms were the ones most concerned about finding skilled talent with technical training and experience.

Despite the difficulty, most employers do not plan to spend more on developing employees, the survey found.

Contradictions between worry and action also were found in a state study released last month by the Minnesota Department of Employment and Economic Development.

In that study, labor market economists found that manufacturers frequently reported concern about the "job-skills gap." Yet many admitted that they were not paying competitive wages and that they had no plans to provide on-the-job training or to alter strict educational and experience requirements for candidates.

Separately, Dunwoody College of Technology, Hennepin Technical College, the regional Carpenters Union and many others are working to expand manufacturing apprentice partnerships with companies across the state.

Enterprise Minnesota's Kill said there is a big push to attract more young people into the field of manufacturing. For years, guidance counselors have dissuaded high school and college-bound students from considering the field because it was shrinking. Turns out, it's still going strong, Kill said.