Focus Group Discussion
Each year, as a supplement to the State of Manufacturingâ„¢ survey, Enterprise Minnesota conducts a series of roundtable focus group discussions with manufacturing executives around the state to gain in-depth insights about the industry. The following is an excerpt from this
year's Waite Park focus group, held in January.
Do you get the sense that legislators understand manufacturing in terms of its value and its obstacles?
- I don't get that feeling at all. Earlier you mentioned the comments towards the banks lately have been negative. My understanding there is that the banks have gone out of their way to cooperate with their manufacturing lenders and that indeed it was the banking regulators who
are forcing the banks' hands. I happen to have just left another excellent bank just because they weren't quite big enough, and I did it just in time to weather the recession.
- We were fine financially - the bank even said we were fine; they would love to give us the money. It finally turned out that the regulators were involved and it took us probably six months to finally - and I don't know how they did it - ignore the regulators; not interested in
that. We finally got what we wanted, but what we went through was hell.
- I don't have as much trouble currently with the OSHA regulations as I do the EPA regulations that have come out. They are just a money generator. All they want us to do is paperwork and to send it in.
- For a couple of years now, the legislators don't get it. In our industry, people are going into the Dakotas. They don't have the hassle there. They're short of people, and our legislators sit down there and they say, "What do we have to do? I'll go anyplace to get that one
job.'" But at what cost?
- I think what Enterprise Minnesota could do is give the legislators a tour of South Dakota businesses. Pop them on a bus, drive Hwy. 29 along the Minnesota border and look at all the Minnesota companies that have expanded in North and South Dakota. These companies should have
been in Minnesota. A lot of these companies were developed in Minnesota and have employees who were educated in Minnesota. We sit here with such a wonderful education system and all these other things we talk about, and talk about, and talk about. The Dakotas, my boys, are
actually doing it. They're putting the people to work. They have figured out how to do it, and they're not saying they have a great education system; they're not saying they have great roads; they're not saying any of that. They are just doing it.
- When you hear policy-makers talking, the message that I hear is: a job is a job, if they're working in retail, or if they're working as a welder.
- You've got to encourage a real broad understanding. If lawmakers appreciated it, I think a lot of the other stuff would go away. It's almost like we need to hurry up and get the legislators educated. Hurry up and get them to understand the value of manufacturing jobs in
contrast to service jobs.
- Somebody did have a comment about the I-29 corridor. We looked at South Dakota and whether we should move over there. We looked at all the incentives they offer you. It's really nice. Minnesota is home, but there is a lot of money out there that a lot of other people are
offering you to move.
- I'm from Sioux City, originally. I have traveled that corridor a lot over the last 40 years. It's unbelievable around Sioux Falls right now for anyone that is not familiar with that I-29 corridor. Take heed, it's real!
- The real message to the legislature should be: make it competitive. Make it a competitive state for us to stay here. Don't keep loading us up with more taxes and regulations. You can't force.
Are you better off as manufacturers today because of what the federal government did in reaction to the explosive economic downturn that it feared and the recession?
- Not at all. In fact, we're in worse shape.
- I don't think the legislators understand what they're doing, or else maybe their party's leadership is just saying, "Hey, if you don't want to go along with us, we'll kick you out of office."
- I think, by any measure, the economic recovery act added weight and drag to the economy, not lift and thrust. There is no measurement I can look at that tells me in any objective way - regardless of what your political outlook is - that the economic recovery act made it
better, that there was a benefit.
During the recession, did you look for opportunities in the economic downturn to retool and retrain, to get rid of some of your "dead weight" or acquire some additional people?
- Well, we did buy equipment. Good equipment that came up from companies that didn't make it. If we live to fight another day, we want to be ready to fight, so we bought great used equipment. Cutting-edge, late model equipment was available.
- It feels like there is more uncertainty in this recovery than in past. I don't mean to be making it all a bash on the government, but there is a lot of uncertainty about how health care is going to manifest, and there is a lot of uncertainty in the air in general right
now.
A lot of manufacturers may have realized that they could do a lot more with fewer people. Does that portend something of a jobless recovery in the near future in the manufacturing sector?
- We're hiring temps. We have six temps right now, and because of uncertainty, we don't know where we're going.
- It's a sensible thing to do with so many people on the street. It is only when things tighten up again where you'll have to hire. The pendulum will swing. But it is probably a good thing for the overall economy that temps are getting hired.
- We definitely asked our general manager if he had open positions to upgrade. There was a lot of talent on the street. We did, by and large, come out hiring better people at lower costs. I think some of the fruit of that is still to be borne down the line.
How much of a factor is increased competition from foreign sources for you in your business?
- It's a big factor to us. Unless it is a "buy American" deal where they have to buy it here. If it's not, it's a big deal.
- In our case, some of our customers went offshore for a while. The results were dismal, and they're back to buying from U.S. suppliers again. Eventually, the offshore people, especially China, these are very, very smart people. They will get it and it's going to be a problem
again. But this year is improved over two years ago.
How about the financial stability of your vendors or key customers?
- Not much now, but I think it's going to get worse if the economy picks up.
- We've had a lot of pain around that, but I think most of it is past.
- I would say even in the building products industry, most of that is sorted out. The dead branches have died, and the ones that are there are more on sound footing right now. We don't have as much of an issue with bad receivables as we did 18 months ago.
How confident are you that health care reform that is gradually taking effect in 2014 will alleviate some of the health care problems that manufacturers face as employers?
- The 'reform' was the benefits for the employees. Health care costs are becoming less and less affordable as an employer every year. I haven't seen any health care reform, I've only seen insurance reform, and it went the wrong way.
- My confidence is very low.
- My CFO simplifies it by saying, "People who have insurance are going to pay for the people who didn't."
Let's talk about availability of a trained workforce in the future. Do you worry that students are not receiving enough training in the skills that you will need in your future workforce?
- They're cutting out all the training. Welding, machining, carpentry... electro plumbing. They're cutting it out. You think plumbers are getting a lot of money today? Just wait.
- The problem is, the students have no idea what the opportunities are, especially for manufacturing. We started that thing in central Minnesota, we had 5,000 people through 12 industries. The latest word that is out, is that there is talk afloat about having a statewide tour of
manufacturers, for the whole state on one day. We're still working on that, to see where that is headed. The whole thing is, the regular folks have no idea what goes on in these places.
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