Enterprise Minnesota Magazine - January 2013
HELPING MANUFACTURERS GROW PROFITABLY
5 Great Places to be a Manufacturer in Minnesota
How communities collaborate to strengthen the job-creating power of manufacturing.
By Andrea Lohouze
With 7,400 manufacturing companies employing about 13 percent of the state’s workforce, there is no question that Minnesota is a hotbed for manufacturing and innovation. While examples of the state’s manufacturing success shine from Iowa to Canada and everywhere in between, five communities are taking additional measures to ensure the continued success of their local manufacturers, and in turn, their schools, families and economies. Read on to find out why Alexandria, Mankato, St. Cloud, St. Paul and the Iron Range made our list.
Alexandria: Packing Progress
In Douglas County, manufacturing makes up 16.6 percent of local employment opportunities. And with four automated packaging machinery manufacturers within Alexandria’s city limits (and a few more just down the road), it’s no wonder that Alexandria has been dubbed “the Silicon Valley” of the packaging equipment world.
Those companies recently combined forces and launched their own packaging equipment company association, the Packaging Machine Manufacturers’ Consortium (PMMC). Member companies use the Consortium to pool resources for non-competitive activities such as recruiting, hiring, and retaining qualified employees. Member companies include Aagard, Douglas Machine, ITW Heartland, Massman Automation Designs, LLC and the Alexandria Area Economic Development Commission.
“Even though all of our companies compete for orders, we also compete for employees,” explains Rick Paulsen, president and COO Douglas Machine. “We all have similar needs for certain skill sets for our industry, and if we can work together and promote our industry and the jobs that we have in our businesses, it will be beneficial for all.”
With Alexandria Technical & Community College as their facilitator, the companies work closely with local schools to spark and sustain student interest in manufacturing careers—not least by helping to design a robust industrial program for the area’s new high school. When Alexandria Area High School opens in the fall of 2014, it will include a state-of-the-art industrial center and lab in a highly visible spot in the center of the building. PMMC has also provided funding, materials and mentorship to the Alexandria School District’s FIRST Robotics team, which requires students to combine, science, technology, engineering and math skills to build and program a robot to complete required tasks in competition with other FIRST Robotics teams.
PMMC member companies offer internships and tours to local college and high school students
as well, and regularly open their facilities to students in ATCC’s courses, including machine tool technology, welding, mecha-tronics, fluid power and mechanical drafting. They have even hosted junior high and high school teachers from the Alexandria School District for weeklong summer programs, “so they can understand better, as influencers of young people, what job opportunities exist in manufacturing,” Paulsen says.
Paulsen believes the PMMC’s efforts are key to building the future pool of qualified talent to grow their companies and their community.
“The more we can do to communicate the job opportunities to young people, the more we’ll be able to add jobs to the area, which brings families into our community, which helps the local economy and the school system,” Paulsen says. “We feel that manufacturing is a vital link to the success of any local economy.”
Once hired, manufacturing employees in the Alexandria area also have access to world-class training in specialized skills, thanks to a long-standing program from community foundation West Central Initiative.
WCI’s Workforce 2020 program began in 1992 to boost the nine-county region’s manufacturing and industrial employee base. The grant-making program offers 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.
Workforce 2020 originally focused on training workers how to operate computer-controlled manufacturing equipment and later moved on to lean and six sigma, and Training Within Industry (TWI). Its latest focus is on providing training in areas like Toyota Problem Solving and advanced geometric dimensioning and tolerancing, or GD&T, which involves creating engineering drawings and three dimensional, solid models for products.
Enterprise Minnesota has remained a steadfast partner in the program throughout its existence. As a part of the national Manufacturing Extension Partnership network, Enterprise Minnesota connects companies with world-class instructors who teach in a combination of both classroom and applied learning.
WCI Program Director Wendy Merrick says the training benefits employers and employees alike.
“Workforce training increases the competitiveness of manufacturers,” she says, adding that they are more profitable and better able to endure economic downturns. “And then that gets passed on to employees in the form of better workplace experiences and better pay. ”
Sam Wagner, director of advanced manufacturing at Donnelly Custom Manufacturing, says his company’s employees were inspired and motivated by their recent training in TWI.
“Training certainly helped our operations, but more than that, it helped change our mindset,” Wagner says. “When you realize you’re getting world-class training, you realize that you are working for a world-class organization.”
Statistics bolster Donnelly’s support of the program. 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. And 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. Lubov is currently conducting a follow-up study to retrieve the latest numbers.
Merrick says WCI plans to continue its Workforce 2020 program for at least the next five years.
St. Paul: Harboring the Entrepreneurial Spirit
Last summer, following a months-long effort to determine where in North America to place a $50 million metal casting investment, Brazil-based steel manufacturing giant Gerdau settled on the City of St. Paul. And with good reason. Minnesota’s capital and second-most populated city sits at a unique nexus of transportation infrastructure, from air and rail to highway and water. Though it’s 1,300 miles from any coast, St. Paul is home to a major Mississippi River harbor, which sees between five and seven million tons of commodities shipped in any given year and provides direct transportation to 10 states.
St. Paul manufacturers also have a unique advocate in the St. Paul Port Authority. Originally founded in the 1920s when U.S. Congress made the decision to dredge a nine-foot channel in the Mississippi River between Saint Paul and New Orleans, the Port Authority has been managing the city’s harbor since 1932. Its mission today is “to create quality job opportunities, expand the city’s tax base, and advance sustainable development”—all by helping industrial businesses to succeed.
“There are a lot of fabulous reasons for the manufacturing sector to want to be in St. Paul. Our job is to make sure that they have places that they can go and prosper here,” says Port Authority President Louis Jambois. The Port Authority granted a $500,000 forgivable loan to Gerdau for its new metal casting facility, provided it continues to employ at least 330 workers through 2015.
In addition to providing financial support and managing the transfer of commodities passing into and out of the Saint Paul Harbor, the Port Authority plays an integral role in local redevelopment. It buys industrial land that is often contaminated or occupied with dilapidated buildings, tears down the buildings and decontaminates the land, installs new infrastructure and sells the land at a reduced rate for modern industrial development. Since 1962, it has helped redevelop more than 1,200 square acres of land—more than the land area of downtown St. Paul.
The redeveloped acres now hold 22 business parks with about 500 industrial businesses, which employ more than 17,000 people. One new business is Matsuura Machinery, a machining equipment manufacturer in Japan. Looking to create a new sales and demonstration facility in North America, Matsuura decided on St. Paul’s River Bend Business Park after speaking with Port Authority representatives and learning about St. Paul’s unique location. Jambois hopes other Japan-based companies will soon follow.
While some companies travel across the globe to set up shop on the Port Authority’s redeveloped land, others travel just down the road. Stewart, Minn.-based Form-A-Feed Inc. is constructing a new 60,000-squarefoot shipping facility in the harbor in order to use the river to ship its products. The livestock feed and agricultural chemical producer also provides topsoil and seed to golf courses, and has recently formed a partnership with the Port Authority to receive a portion of the dredge material that is removed from the St. Paul harbor, which it will repurpose as topsoil.
“We spend a lot of time and money dredging the St. Paul harbor, and some of the dredge material that we pull out of the harbor is fabulous dirt for topsoil. If we can’t find a use for that topsoil, we actually have to landfill it, so Form-A-Feed is going to help us turn what could be a financial liability into a financial asset,” Jambois explains.
According to Jambois, the proximity of like-minded manufacturers sparks many similar partnerships in St. Paul. It also makes the city an excellent place for local residents and policy makers to get a firsthand look at modern manufacturing and shed any “dark, dirty and dangerous” misconceptions. The Port Authority regularly arranges tours of local businesses to show locals what goes on inside, and how the community benefits from the companies that occupy them.
For Jambois, the excitement of touring a new manufacturer in St. Paul never fades.
“Getting into a new plant after the company has built on one of our redeveloped sites and seeing the production that’s going on there, the workforce, feeling the energy that exists in the facilities…that is what blows my hair back.”
Mankato: Inspiring Talent
On October 24, hundreds of students, parents, teachers, job seekers and curious locals got a chance to see what goes on inside 12 manufacturing companies in South Central Minnesota during the region’s Tour of Manufacturing. The annual event is a joint effort between manufacturers and local workforce and economic development organizations that make up the Economic Growth Collaborative of South Central Minnesota to showcase the region’s variety of manufacturing career opportunities, while casting off industry misperceptions.
This year’s tour included a variety of manufacturing companies, from Dotson Iron Castings to medical device company Coloplast. Each company hosted between 70 and 350 visitors, including 150 students from the Mankato School District, and additional students from other area schools like Madelia and Maple River. “A busload” of job seekers sponsored by Mankato WorkForce Center also toured four of the companies.
Barb Embacher, vice president of Greater Mankato Growth, says the tour is changing industry perceptions one person at a time, particularly when it comes to local students.
“I like seeing students’ reactions, because a lot of students today just don’t know what’s available to them in their home communities,” Embacher says. “They may just think about getting that big job in the Minneapolis-St. Paul metro area, and until they take the tour, may not realize there are really good-paying jobs right here in their backyard.”
Area students who choose to pursue manufacturing careers can get the right training in their backyard, too. The region’s Minnesota State University-Mankato and South Central College each work closely with local manufacturers to be sure to be sure they are teaching the skills those companies seek in new employees. Tom Kammer, a manufacturing consultant at South Central College’s Center for
Business and Industry, says regular outreach to local businesses is the biggest part of his job at the college.
“Being a community college, we take a lot of pride in making sure that these companies get what they need,” Kammer says. “Everybody who works at the Center for Business and Industry has a list of companies assigned to them, and we meet with those companies on a regular basis to find out both their current and their anticipated future needs.”
Those open communication lines have kick-started several new offerings at the college for both future and incumbent manufacturing workers. When local companies were struggling with either time or finances to provide basic lean training to all of their employees, the college created an online lean training program that allows employees to complete the training on their own schedule and at their own pace. The program teaches basic lean terminology and concepts in a matter of hours and in a more economical and convenient format than in-person training.
Kammer is currently developing an Industrial Maintenance Certificate program for machine maintenance. The six-month program will provide instruction in electrical schematics, programmable logic controllers, hydraulics and pneumatics—“all of the basic tools that they need for maintenance in an industrial location,” Kammer explains, adding that it will benefit both job seekers and incumbent workers looking to update their skills.
South Central College also caters to manufacturers looking to attract new CNC machine operators with the Right Skills Now program. Established by the Obama Administration, Right Skills Now is an accelerated program that trains talent for manufacturers that need qualified workers. South Central College and Dunwoody College of Technology in Minneapolis are the first two colleges in the nation to be selected to deliver the training.
Right Skills Now teaches basic CNC machine operation over 16 weeks of intensive instruction, using a curriculum based on competencies from the National Institute for Metalworking Skills. It includes measurement, materials and safety, job planning, bench work and layout, turning operations and milling operations. At South Central College, students learn on state-of-the-art CNC machining equipment from machine tool manufacturing giant Haas Automation in the college’s new Haas Machining Center of Excellence.
Students follow classroom study with another 16 weeks of on-the-job training at local companies. Each participating company agrees to take in a predetermined number of students and hire them if all goes well.
“The beauty of the program is that students know they have a place to go when they complete it,” Kammer says.
Right Skills Now graduates earn 20 college credits, if they choose to return to college. In its first year, 42 students graduated from the program. The program is now in its second year.
“The Mankato region is very fortunate to have a really diverse manufacturing base and we want to keep that,” he says. “We help our local manufacturers get their employees the skills they need to keep up.”
St. Cloud: A Common Voice
In January 2008, a dozen St. Cloud area manufacturers gathered at the American Legion. They were there to host what they hoped would be the very first meeting of the new Central Minnesota Manufacturers’ Association—a 7 a.m. breakfast meeting—and it was 24 degrees below zero.
“We thought we’d be lucky if 25 people showed up,” remembers Les Engel, CMMA president and founder of Engel Metallurgical, a manufacturing product inspection, testing and failure analysis firm in Sauk Rapids.
When 105 fellow manufacturers walked through the doors, they were astounded. “We looked around at each other and thought, we must be onto something,” Engel says.
Central Minnesota at last count had nearly 37,000 jobs at about 1,200 manufacturing firms—many being firms of one. Engel says the idea for CMMA sprung from a desire to unite those companies for their mutual benefit.
Since its founding, CMMA has grown into an alliance of 110 regional manufacturers and institutions that want to create a common voice for manufacturers, to facilitate networking opportunities, and to develop the local workforce.
Members gather monthly to hear a speaker, tour a company and enjoy a breakfast, with plenty of networking in between. Meetings draw an average of 60 people, and are also open to non-members for a small fee. State and federal legislators, for example, have discovered them as surefire ways to gauge the industry’s concerns. Staff members from Rep. Michele Bachmann’s and Sen. Al Franken’s offices are regulars, and Bachmann attended a meeting last fall.
CMMA also coordinates a number of programs to help build the skilled workforce in future years. Last spring, CMMA sponsored multiple class field trips to “How People Make Things,” an exhibit at the Minnesota Children’s Museum. The exhibit gave young students a hands-on introduction to manufacturing with molding, die-cutting and assembly activities.
For junior high and high school students, CMMA sponsors $1,000 kits for local students to participate in the VEX Robotics Program. The afterschool program enables student teams to build a robot from a kit – often with one-on-one help from member companies -- then send it into competition with other robots to complete designated tasks. Regional winners compete in U.S. and world championships.
“We want to let kids know that this is a very viable career path,” says Randy Pelletier, CMMA board member and president of Pellco Machine, a custom CNC turning and milling operation in St. Michael. “It doesn’t take four years of college to be in manufacturing, typically. It’s a good career choice for anybody, girls and boys, and so we’re trying to spread the word.”
They appear to be succeeding. In 2009, CMMA board members originated what has since become the annual Statewide Tour of Manufacturing, modeled after Minnesota’s annual Parade of Homes tour. Its goal was to take a “seeing is believing” approach to changing public perception of modern manufacturing by opening up local manufacturers’ facilities for public tours.
“The idea was to get the whole family to go, because workforce development is not a matter of just selling the kids. You have to sell the parents, too, because the parents do not know about these jobs, either,” Engel says.
The inaugural tour of 12 businesses drew more than 5,000 people, with many students, parents and teachers in the mix. It also drew the attention of Minnesota’s Department of Employment and Economic Development, which launched the annual Statewide Tour of Manufacturing in October 2011 to coincide with Minnesota Manufacturers Week.
The Iron Range: Work Hard, Play Hard
Like many Minnesotans, Bob Menne enjoys spending weekends at his lake cabin “up north.” But for
Menne, the trip from home to cabin doesn’t require hours of driving time. He is president of Premier Plastics, a rotational molding and thermoforming plastics manufacturer specializing in plastic products for the marine and recreational industries. Ten years ago, Menne relocated Premier Plastics from Wyoming, Minn. on the northern outskirts of the metropolitan area to Hoyt Lakes, in the heart of Minnesota’s Iron Range.
Menne says the move resulted from a love of two things: Northern Minnesota and its famously dedicated—and low-turnover—workforce. About one-third of the employees he hired 10 years ago remain with the company today, and have helped it to grow exponentially. Last month, Premier Plastics expanded into a second facility in Eveleth, where Menne hopes to add about five employees to his staff of 38 over the next few months.
In the last six months, the growth of Premier Plastics has also allowed Menne to establish a new business in Pine City. An outgrowth of Premier Plastics, Leisure Designs’ 25 employees now upholster all of Premier Plastics’ marine furniture.
For the Iron Range Resources and Rehabilitation Board (IRRRB), a state agency long-focused on economic development in Northeastern Minnesota, Premier Plastics is a poster child of manufacturing success on the Range.
“The Iron Range is a unique place where we work hard and play hard, says IRRRB Commissioner Tony Sertich, a fourth-generation Iron Ranger. “We love living minutes away from our cabins and being in the outdoors hunting, fishing and recreating in all four seasons. There’s just a certain breed of people who like to live up north, and making more opportunities for them to work here is a key part of our job here at the IRRRB.”
And IRRRB has been a key part of Premier Plastics’ ongoing growth, providing low-interest financing packages for both its Hoyt Lakes and Eveleth facilities, and helping to secure lower-interest financing when Premier Plastics purchased a $450,000 rotational molding machine last year. Menne says the new machine, which builds much of the company’s marine furniture, is “one-quarter to one-third more productive” than its predecessor, and also uses less gas and electricity.
“The IRRRB has been really good to work with,” Menne says. “They’re in tune with our needs.”
The agency is attentive to the needs of many other Iron Range manufacturers as well. Instead of trying to attract more manufacturers to the Iron Range, Sertich says the IRRRB focuses on developing those businesses that have already made it their home.
“So often, economic development agencies take a bag of money and travel all around the world trying to entice people into their region,” Sertich says. “We believe more in “economic gardening” here, where we look at existing businesses and ask them, ‘How can we help you grow?’”
IRRRB has nourished an ongoing partnership between local manufacturers and high education institutions to ensure skills taught align with industry needs. Many local manufacturers sit on the advisory boards of the local colleges to voice their wants and needs in the skill sets of current and future employees. IRRRB finances a portion of the customized training programs that are developed as a result.
One of those programs is Mesabi Range Community and Technical College’s new Iron Range Engineering degree. Established in January 2010, the four-year degree provides two-year technical college graduates with advanced engineering instruction in the context of industry engineering projects, rather than typical classroom study. Upon graduation, students receive a B.S. in Engineering with emphases in mechanical and electrical engineering. The program celebrated its first graduates this year. Though it is currently accredited through partnerships with both Minnesota State University-Mankato and University of Minnesota-Duluth, Sertich anticipates Mesabi Range will receive its own accreditation later this year.
Over the past year, IRRRB also has provided $50,000 in grant funding to help manufacturers in Northeastern Minnesota gain access to 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.
GAP funding targeted to the Range is structured on a reimbursement basis. Companies receiving Enterprise Minnesota consulting services are required to match IRRRB funds on a dollar for dollar basis and to apply for any other available funding to offset the cost.
The partnership between IRRRB and Enterprise Minnesota is modeled after the highly successful Growth Acceleration Program (GAP) for manufacturers. Established in 2007 by the Minnesota State Legislature to encourage manufacturing job creation, GAP provides small manufacturing and manufacturing-related companies with a matching grant for projects to eliminate waste and boost efficiency. The statewide program has helped nearly 200 Minnesota manufacturers realize an average $30 return for every $1 spent by GAP, and some companies have realized as much as a 40-to-1 return on investment.
Sertich says the grants, along with other IRRRB services, are helping Iron Range manufacturers find customers beyond their immediate surroundings. In 2012, financial support from IRRRB helped nearly two-dozen manufacturers to enter new markets in the U.S. and abroad.
“So often, these manufacturers started as vendors to the taconite industry, or other local industries,” he says. “But in this global marketplace, it’s really about seeing how we can help them expand beyond the Iron Range and beyond Minnesota.”
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