Minnesota Manufacturers Remain Confident in Outlook

Despite a dour economy, the state's manufacturers show confidence in future

The news for Minnesota manufacturers is "optimism" according to a survey released this week at events around the state

"Call it cautiously optimistic, call it guarded optimistic, but you have to call it optimistic," said Public Opinion Strategies partner Rob Autry, the pollster who conducted the survey. During the first two weeks in December 2008, Autry interviewed 400 manufacturing executives, representing a geographically proportional cross section of Minnesota. Seventy-nine percent, nearly eight out of ten, are confident in their company's financial future.

"People that run enterprises just have to be optimistic. It's a trait," said Eric Wagner, president of Minnesota Wire and Cable in St. Paul, Minn.

While manufacturers are optimistic about their long-term health, they are more reserved about short-term projections. Only 23 percent believe that their firm's gross revenue will increase in 2009, 17 percent believe that their profitability will increase, and 19 percent say that their capital expenditures will increase.

Survey respondents ranked stability (35 percent) as the most important factor in retaining current workers. Pride in company ranked second (20 percent), and their work (19 percent) third, followed by wages (15 percent) and benefits (6 percent). Many executives believe that their company culture is positive, with 65 percent saying that "most employees are highly engaged and committed to the organization" and "there is a high degree of trust between management and employees."

In addition to retaining workers, manufacturers are concerned about recruiting new workers. Fifty-five percent of manufacturers say they have trouble attracting new workers to fill job vacancies. Salary and wage are the most important factor (43 percent) in recruiting new employees. Forty-one percent expect wages to increase over the next two years, and 34 percent of those who expect a continued recession in 2009 believe that their firm's wages will increase.

"Manufacturers are an optimistic bunch because they've been through tough times before," said Bob Kill, president and CEO of Enterprise Minnesota. "It's not unbounded optimism. They know the economy is challenging, yet they also know that downturns are full of opportunities. It's a chance to reposition, become more competitive, and invest in future long-term growth."

"Manufacturing in the United States has been hit hard in the past and has become much leaner and stronger in adjusting to competition in a flat world," said Denny Dotson, president of Dotson Iron Castings in Mankato, Minn. "Most manufacturers are confident that their companies will lead other industries out of this recession."

Kill said the relatively optimistic attitudes of manufacturers should represent cautiously good news to communities who worry about jobs. A recent study by the Minnesota Department of Employment and Economic Development found that more than one in ten Minnesota jobs are in manufacturing. Each one of these jobs supports another 1.3 related jobs - meaning that nearly 800,000 jobs in Minnesota are associated with the manufacturing industry. That equals 29 percent of the state's workforce. These manufacturing jobs pay higher than average salaries. In 2007, a manufacturing employee in Minnesota received an average $1005 weekly wage, compared with $853 for all industries combined.

Enterprise Minnesota presented the findings at meetings across Minnesota in Owatonna, Mankato, St. Cloud, and Alexandria. The main event was held at the Minnesota History Center in St. Paul with more than 200 attendees. Governor Tim Pawlenty opened the St. Paul presentation with remarks about the value of manufacturing to the state's economy, and the impact of the survey itself.

"There are certainly a lot of challenges and a lot of clouds on the horizon, but this is a hopeful and optimistic survey," Pawlenty said. "Having these annual benchmarks about the state of manufacturing in Minnesota will be a very helpful tool to policy makers, business leaders, and community leaders. About not just the direction we're headed, but whether or not we're making progress."

Partners for the State of Manufacturing include Bremer Bank, LarsonAllen LLP, Minnesota State Colleges and Universities, and RJF Agencies.

For further information, full survey results, pollster analysis and more, visit www.stateofmanufacturing.com.

January/February 2009
Enterprise Minnesota Magazine

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