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Northeast Region

northwest-minnesota-mapHome to the state's second-largest metro, the Northeast Region has a strong industrial sector, tied largely to the area's abundant natural resources.

Most of the manufacturing base centers on mining and forest products industries. More than half of the sector's employment is in paper and machinery manufacturing.

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State of Manufacturing Survey – Results are in

7/15/2019 3:52:25 PM

Erik White

Enterprise Minnesota, a consulting organization that works with manufacturing companies to help them compete and grow profitably, has released its 11th annual State of Manufacturing survey results. Based on interviews with over 400 Minnesota manufacturing executives, the State of Manufacturing shows a confident industry that’s optimistic about the future, despite growing challenges like the workforce shortage:

  • 93 percent of executives feel “confident” about the future of their companies and only 5 percent are “not confident”, the lowest number in the history of the survey
  • 49 percent of respondents anticipate economic expansion, down 15 points from last year, while 39 percent anticipate a flat economy, and only 5 percent predict a recession for 2019
  • 58 percent expect employee wages to increase in 2019, and the greatest increases were projected by large companies and metro companies

The top concern of manufacturers continued to be the costs of providing health care coverage to employees, as it has been for the previous 10 years of the survey, but 66 percent are highly concerned about one of the following worker issues:

  • attracting qualified workers
  • retaining qualified workers, and
  • developing future leaders

The challenge of a workforce shortage was especially impactful with larger manufacturers: 74 percent of manufacturers with over 50 employees reported that as the biggest challenge to growth, compared to just 41 percent of manufacturers with 50 or fewer employees. Impacts of a worker shortage seem to be felt differently based on geography as well, as Southern Minnesota manufacturers had higher scores than Northeast Minnesota manufacturers.

Differences in regional manufacturing could be attributed to these scores as the concentration of the industry is much less in Northeast Minnesota. Manufacturing makes up only 6.1 percent of total employment in the Northeast region, compared to 11.2 percent statewide and greater than 15 percent in Southern Minnesota, making Northeast less competitive for attracting and retaining workers than in those regions where concentration is greater (Figure 1). For more detail on Northeast Minnesota’s manufacturing industry, see 2018 Manufacturing Highlights.

Figure 1. Concentration of Manufacturing Industry, 2018

To combat the worker shortage, many manufacturers are turning to automation and increasing the productivity of its current employees. Despite the focus on people and processes for increased productivity, only 23 percent of companies have a formal leadership development program, an area which could help with attraction and retention. Two-thirds (64%) of manufacturers deploy some form of automation in their operations, with 8 percent more considering it. However, small manufacturers that depend on custom work have a more difficult time deploying automation than larger manufacturers, who can get more out of automation and afford the capital costs.

Along with projected wage increases, the manufacturing industry is looking to offer more flexible hours and benefits like child care or transportation to help retain workers. Promoting a career in manufacturing to high school students was noted as a way to increase the potential workforce, according to survey results.

Despite the recent optimism, the manufacturing industry is projected to decline by 8.8 percent (nearly 750 jobs) in Northeast Minnesota by 2026, according to DEED’s Employment Outlook tool. However, this projection masks the continuing opportunities for employment in this industry as there will be a need to replace current workers who retire or move onto other occupations. Accounting for these labor market exits and transfers, there is projected to be more than 7,000 total hires by 2026 within common manufacturing occupations in the region. In the meantime, many of these occupations are showing strong current demand and offer higher-than-average wages despite relatively low education requirements (Table 1).

Table 1. Occupations in Manufacturing, Northeast Minnesota

The latest results of The State of Manufacturing show an industry remaining optimistic despite the underlying uncertainty of a shortage of workers. In Northeast Minnesota, opportunity remains high within the industry, despite projected declines and less concentration than other parts of the state.  Attraction and retention are key and will continue to challenge manufacturers as the labor market continues to tighten.

For More Information

Contact Erik White at 218-302-8413.

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