Enterprise Minnesota Magazine - September 2012
HELPING MANUFACTURERS GROW PROFITABLY
Year in Review
Enterprise Minnesota looks back on an exciting year for Minnesota manufacturers.
From new consulting services, grants, events and awards to revealing results in the fourth-annual State of Manufacturing® poll, Enterprise Minnesota has been honored to assist Minnesota manufacturers in their efforts to grow profitably. Read on for highlights from Enterprise Minnesota’s past year.
Bridging the GAP
Enterprise Minnesota partners with IRRRB to offer business improvement services and Growth Acceleration Program funding to Iron Range manufacturers
In 2008, the state of Minnesota launched the Growth Acceleration Program (GAP) to encourage job creation in the manufacturing sector. This past January, Iron Range Resources and Rehabilitation Board (IRRRB) and Enterprise Minnesota teamed up to concentrate more specifically on manufacturers in the Taconite Assistance Area, which includes areas in Cook, Lake, St. Louis, Itasca, Crow Wing and Aitkin Counties.
Funded by a $50,000 grant from the IRRRB, the service reimburses qualifying area companies for business improvement services from Enterprise Minnesota. Specifically, they can take advantage of its Growth Acceleration Program (GAP), which provides small manufacturing and manufacturing-related companies with matching grants that help them boost efficiency and eliminate waste.
Companies receiving consulting services from Enterprise Minnesota are required to match the IRRRB funding dollar-for-dollar and apply for other available funding to offset the cost. Eight Iron Range companies have received IRRRB GAP grant funding, including Aitkin Iron Works, American Peat Technology, Anderson Lubricants/PetroChoice, Conveyor Belt Services, Detroit Diesel Remanufacturing LLC, Minnesota Twist Drill, NexLink and Sure-Fab.
The statewide GAP program was designed to encourage manufacturers to keep investing in their people and companies even during hard times. To date, it has helped 192 manufacturing companies across Minnesota create or retain 1,700 jobs. Participating manufacturers have realized a $30 return for every $1 spent on GAP, with some companies reporting a 40-to-1 return.
Paving Pathways to Success
Enterprise Minnesota kicks off year two of the Pathways to Business Growth service.
On March 14, Enterprise Minnesota entered the second year of its Pathways to Business Growth service with a celebration of Enterprise Minnesota business growth advisors and service participants at Padilla Speer Beardsley in Minneapolis.
Pathways “is about assessment, discovery, where to start and what can really help an individual company the most,” said Enterprise Minnesota President Bob Kill, speaking to kickoff attendees.
Enterprise Minnesota administers the Pathways service with a $515,000 grant from the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST/MEP). Its mission is to help participating companies achieve profitable growth by working with Enterprise Minnesota advisors on training initiatives including strategic planning, innovation and idea mining services, business assessments, organizational and leadership development, and marketing strategy. Enterprise Minnesota is also using lessons learned from working with each company to develop industry-wide best practices for helping manufacturers drive growth within their companies, which NIST/MEP will share with MEP centers nationwide.
In 2011, Enterprise Minnesota worked with 10 companies on the Pathways service, including The Aagard Group, Absolute Quality Manufacturing, Alexandria Pro-Fab Company, Akkerman Inc., Automated Equipment, Fiserv Solutions Inc., Ideal Aerosmith, Innovance Inc., Pequot Tool & Manufacturing and Ultra Machining Company. This year’s companies include Jones Metal Products, Harmony Enterprises and Hutchinson Manufacturing.
Jason Zoubek, sales manager at Absolute Quality in Minneapolis, says Pathways has reinvigorated his company with a new web site, new marketing plan, and newfound clarity around its mission and vision. It has also transformed Absolute Quality’s perspective on employee empowerment.
“Now, what we’re seeing is more interaction between our employees and management,” Zoubek says. “We’re really drilling down to the lowest appropriate level to make decisions within the organization.”
Getting the Facts
Enterprise Minnesota’s fourth-annual State of Manufacturing® poll reveals executives’ continued confidence in the future of their firms amid growing worries over finding qualified workers.
Hundreds of manufacturers, educators and political figures gathered at the Minneapolis Convention Center February 21 to learn Enterprise Minnesota’s annual State of Manufacturing® poll results. The event, which featured pollster Rob Autry of Public Opinion Strategies and included an introduction from Sen. Amy Klobuchar, kicked off a series of similar poll presentations across the state, drawing a collective audience of more than 800. Now in its fourth year, the poll surveyed 400 Minnesota manufacturing executives to discover their perspectives, experiences and opinions regarding the manufacturing industry’s current state. Twenty focus groups held across the state provided additional insights.
Poll results revealed manufacturing executives’ continued optimism in the futures of their companies, as well as a spike in concern over finding qualified workers. Eighty-two percent of executives reported confidence in the future of their firms. However, worry over finding qualified workers has doubled over the past year. Thirty-one percent of executives say this issue is a concern for their firm, up from 14 percent in 2011.
The 2012 poll was conducted by Public Opinion Strategies, and sponsored by statewide sponsors Baker Tilly Virchow Krause, LLP, Granite Equity Partners, Gray Plant Mooty, M&I, a part of BMO Financial Group, RJF, a Marsh & McLennan Agency LLC Company, Trusight and Xcel Energy, and regional sponsor The Blandin Foundation.
For full 2012 poll results, visit www.stateofmanufacturing.com
Worker Shortage Enters National Spotlight
Enterprise Minnesota president and CEO testifies on qualified worker shortage before U.S. Senate sub-committee.
In April, the qualified labor gap gained national attention when Enterprise Minnesota President and CEO Bob Kill traveled to Washington, D.C. to testify before the Senate Subcommittee on Competitiveness, Innovation and Export Promotion, chaired by Senator Amy Klobuchar. Kill stated that manufacturing’s chronic shortage of qualified workers poses a significant and escalating challenge despite high national unemployment rates.
Kill’s testimony used data collected from this year’s State of Manufacturing® poll to illustrate that anxiety over attracting qualified workers has more than doubled in the past year, with 31 percent of Minnesota manufacturing executives saying it is a concern, up from 14 percent in 2011. Nearly six out of 10 (58 percent) manufacturing executives also say it is a challenge to attract qualified workers to their companies, up from 45 percent in 2011.
“Rapidly changing technology... widens the gap between the sector’s existing workers and the skills that are needed in today’s manufacturing environments,” Kill told Senators.
In the fourth quarter of 2011, Kill said the skills mismatch left 4,925 jobs unfilled in Minnesota’s manufacturing sector, accounting for 9.8 percent of the state’s job vacancies. Nationally, there are approximately 600,000 vacant positions in manufacturing. Kill concluded that attracting more students to industry careers will depend on using public/private partnerships to expose students to manufacturing’s wide variety of career opportunities.
Enterprise Minnesota staff receive 2012 “Practitioner of the Year” and “Newcomer of the Year” Awards from the U.S. Manufacturing Extension Partnership.
In May, the 2012 National MEP Awards in Orlando, Fla. named Enterprise Minnesota’s CEO Peer Councils and managing staff “Practitioner of the Year.” The staff members include business growth advisors Jan Hepola, Mary Connor and Deb Bly.
In addition, Constance Fantin, a sales assistant at Enterprise Minnesota, was named MEP’s “Newcomer of the Year.”
The Peer Councils were created eight years ago with a single group of CEOs. Today, more than 85 manufacturing CEOs belong to one of 10 councils throughout Minnesota. Each council convenes one full day each month for a combination of topical presentations and open-ended conversation. In this way, members function as an informal, off-the-record advisory board for each other.
Membership is by group invitation only, which fosters a high level of trust, confidence and respect among members. It also ensures that council members have a similar level of “business sophistication.” Each day’s meeting is organized and facilitated by the award-winning team of business advisors.
Between the monthly meetings members receive one-on- one coaching from Enterprise Minnesota consultants toward their specific improvements, with ROI measured every six months.
Fantin, winner of the “Newcomer of the Year” award, joined Enterprise Minnesota in August 2010 as a parttime sales support assistant, taking on a role previously filled by two full-time employees. By streamlining several areas of sales support operations, she freed up eight business development staff and 10 consulting delivery staff to focus solely on their core responsibilities of sales and delivery with manufacturing clients. Fantin has also taken on the role of coordinating logistics of Enterprise Minnesota’s monthly Business Events and annual State of Manufacturing® poll.
Enterprise Minnesota partners with the University of Minnesota’s Carlson Global Institute to offer Global Market Strategy.
Enterprise Minnesota and the Carlson Global Institute at the University of Minnesota have teamed up to offer Global Market Strategy, a series of four full-day sessions that give participants the information and one-on-one instruction necessary to develop an international sales strategy.
Though exporting opportunities hold tremendous value for manufacturers, many seem to be deterred by three significant obstacles: lack of knowledge about practical matters such as shipping, language, and currency; uncertainty about how to establish business partnerships; and overall anxiety over where to begin. Global Market Strategy addresses all three concerns while helping companies shape a focused strategy.
Enterprise Minnesota Director of Consulting John Connelly says Global Market Strategy differs from other exporting programs and offices because it works helps companies make a strategic choice to pursue exporting in the first place, then develop a strategy for success.
In the first session, participants walk through different exercises to establish clarity about their objectives. The sessions are held one month apart, giving participants time to work with their assigned coaches and complete their “homework.”
During the second meeting, participants focus on developing a business plan, sharing the results of their research, and refining their unique selling proposition, says Greg Thomas, a business growth advisor for Enterprise Minnesota. “We also spend time considering things like sales distribution options, logistics, and financing,” he says.
The final sessions include a review of each participant’s strategic plan by a panel of international business experts. “You’ll hear things like, ‘I didn’t go to that country because of these cultural issues or these requirements,’” Connelly says. “The panel adds so much to the secondary research because they’ve been there and done that.”
By the end of the series, manufacturers have a carefully reviewed international strategy and the knowledge and contacts to begin carrying out their plans. With follow up and individualized coaching, participants also receive feedback going forward. “We’re not just putting a plan together, but helping them implement and execute that plan,” Thomas says.
Enterprise Minnesota continues longstanding Workforce 2020 program partnership with West Central Initiative to bring new skills to the region’s manufacturing workforce.
In 1992, West Central Initiative (WCI) launched Workforce 2020, a service that offers financial support for companies to train their current employees in the evolving skills needed to remain competitive. Its goal is to strengthen the nine-county region’s economy by developing its current manufacturing and industrial employee base.
Workforce 2020 has since helped to fund training for more than 9,000 manufacturing workers. Its mission is to provide financial support for manufacturing training that is not widely available in post-secondary schools. As such, the types of training eligible for funding change over time.
The service began by training workers how to operate the computer- controlled manufacturing equipment coming into the marketplace in the early 1990s. It then moved on to lean and six sigma, and later, Training Within Industry. Its latest focus is on providing training in geometric dimensioning and tolerancing, or GD&T, which involves creating engineering drawings and three-dimensional, solid models for products.
Enterprise Minnesota has remained a partner in the service throughout its existence. As a part of the national Manufacturing Extension Partnership network, Enterprise Minnesota connects companies with instructors across the United States. They travel to Minnesota to provide the highest level of skilled training on a specific topic.
Statistics show the service is working on multiple fronts. A study conducted by Andrea Lubov, PhD, found that in 2005, participating firms enjoyed a turnover rate of 26.2 percent, while turnover rates for non-participating firms were 54.8 percent. And an Enterprise Minnesota study of 30 participating firms in 2007 and 2008 found that companies increased sales by a total of $15.1 million and reduced spending by $4.63 million.
Cultivating Continuous Improvement
Enterprise Minnesota combines environmental and efficiency considerations in new GreenLean™ consulting service.
Launched by Enterprise Minnesota last year, GreenLean™ is a consulting service designed to help companies foster a culture of continuous improvement and growth by eliminating time and energy wastes.
Rooted in the famed Toyota Production System, lean practices have long been valued by manufacturers for cost savings and efficiency. “Green” manufacturing practices also have popped up in business plans, but usually for reasons based in altruism. Now, more manufacturers are combining green practices and the more traditional procedures of lean enterprise to maximize bottom-line benefits.
“The potential savings are huge for every company when you tie lean and green initiatives together,” says Enterprise Minnesota Business Growth Advisor Samuel Gould. “It’s hard to separate the two. If I am able to stop a ton of metals being poured because I fixed a process issue, then I saved a lot of energy, and that’s green. There are also savings there, so they’re tied together,” he says.
At an Enterprise Minnesota business event earlier this year, speakers from Medtronic and Foldcraft Company presented snapshots of their green and lean journeys, and, along with Xcel Energy Field Sales Manager Ryan Bruers, offered tips for instilling a lasting, results-oriented lean and green culture.
Foldcraft used green and lean to move a recently acquired company under its existing roof, eliminating the need to rent, light and heat at least 35,000 square feet of space, saving $634,000 in utilities and even more in avoided truck traffic between sites. At its Brooklyn Park facility alone, Medtronic’s green and lean efforts have saved 1.5 million gallons of water, reduced wood and packaging by 200,000 pounds, and have sustained an annual savings of $215,000.
Independent survey of 200 Enterprise Minnesota customers reveals company is highly effective in supporting profitable growth.
In 2011, manufacturers reported $210 million in economic impact after hiring Enterprise Minnesota for a wide range of consulting, including continuous improvement projects, strategic planning, obtaining certifications, and business growth services.
The data was collected by an independent survey of more than 200 Enterprise Minnesota clients, and also reported that these manufacturers retained or created 1,765 jobs. A third party conducted the annual survey on behalf of the National Institute of Standards of Technology (NIST) Manufacturing Extension Partnership (MEP), which operates out of the U.S. Department of Commerce.
Over time, the survey has demonstrated that Enterprise Minnesota’s consulting services gave manufacturing clients a 20-to-1 return on their investment. Its current survey for the past four quarters showed a 32- to 35-to-1 return, says John Connelly, Enterprise Minnesota director of consulting.
“The survey is evidence that Enterprise Minnesota works with clients to help them achieve measurable business growth,” Connelly adds. “It’s not enough to just bring a methodology or experience, and it’s not enough to coach on the application of tools like lean or strategic planning. It’s got to be about achieving actual business results.”
Enterprise Minnesota teaches strategic approach in new Proactive Marketing consulting service.
This year, Enterprise Minnesota launched Proactive Marketing, a service developed to help manufacturing companies use a strategic approach to grow their business. Specifically, the service assists companies in defining their ideal target market and their competition, then looks for ways each company can differentiate itself from its competition to provide the greatest value to its customers.
The service gathers representatives from six to seven different companies for four half-day sessions over three months. Similar to Enterprise Minnesota Peer Councils, company representatives learn from each other by sharing their experiences and challenges with the group. In between each group session, Enterprise Minnesota travels to each individual business to coach them on applying what they learned. In the fourth session, representatives from each company come forward and present a marketing plan around a specific opportunity that they would like to pursue in their business.
Deb Bly, Enterprise Minnesota business growth advisor, says the 20 companies that have completed the service within the past year now have a clear vision of what is important to their customers.
“They understand that while growth can come from new markets or new customers, it can also come from winning more business with existing customers. They focus on delivering value, and they do it by looking at their business from the customer’s point of view,” she says.
Enterprise Minnesota partners with a Puerto Rico MEP center to teach GreenLean™ to Spanishspeaking workers.
When St. Paul Brass and Aluminum Foundry was invited to receive GreenLean™ consulting services from Enterprise Minnesota, it had an unusual request. Close to 50 percent of the company’s workers speak Spanish as their first language, so company leaders asked if it would be possible to offer the consulting services in both English and Spanish.
To make it happen, Enterprise Minnesota networked with Puerto Rico Manufacturing Extension (PRiMEX) to fly lean enterprise expert Julio Lugo to Minnesota for the Spanish session. Smith Foundry in Minneapolis had also requested the consulting services be offered in Spanish, so the two foundries pooled their workers together for two sessions over two days.
GreenLean™ alternates rounds of classroom learning with rounds of a hands-on simulation in which each participant is assigned to a different department of fictional circuit board manufacturer Buzz Electronics. Each round, participants are instructed to assemble and “ship” a certain amount of circuit boards. Between rounds, they learn how to apply lean techniques like kanban systems, 5S methodology and a lean plant layout to become more productive and efficient in the simulation.
Enterprise Minnesota business growth advisor Tim Bjorgum, who led the session in cooperation with Lugo, says instructing in Spanish allowed workers to gain a comprehensive understanding not only of lean practices themselves, but also of the thinking behind them.
“We needed somebody who could say, ‘This is what we mean when we’re talking about point-of-use storage or the 5S program.’ Obviously in Spanish, there are no five s’s because they are different words. We were lucky to get Julio because he understands the lean implementation, and was able to both translate it and add the green aspects to it,” Bjorgum says.
Plant Manager Dan Daubenspeck says having Spanish-speaking instructors helped workers to feel at ease. “A lot of the guys that typically keep to themselves and are quiet opened up with the Spanish-speaking teacher because they were more comfortable,” he says.
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