Mixed economy matches forecast from State of Manufacturing survey

 The 2011 State of Manufacturing survey showed that the worst of the recession was over, but recovery might be a mixed bag.

When the 2011 State of Manufacturing survey results came out in late February, Minnesota manufacturers predicted that the economy this year might feel more like a set of stairs than an elevator ride. That forecast is showing impressive prescience seven months later.

Chaska-based Super Radiator Coils experienced firsthand the on-again-off-again nature of this year's economy. After a strong start to refill inventory, orders fizzled out in May. Now, company President and COO Rob Holt says the company is expecting a record pace.

"We saw a little lull, but the second half of the year looks pretty strong," Holt said. "Orders keep coming in. Customers keep calling and they're very busy. Things seem to be pretty solid."

Those results match the 2011 State of Manufacturing survey, which found that executives expected a mixed bag. The survey found that less than one in 10 manufacturing executives (9 percent) anticipated a continued recession in 2011, while 40 percent foresaw economic expansion.

However, more executives expected an increase in revenues, profits, and capital expenditures in 2011 at their own company. In fact, the percentage of respondents who projected increases nearly doubled over the past two years. Fifty-one percent expected their firm's annual gross revenues to increase in 2011, up from 44 percent in 2010, and up from just 23 percent two years ago. Thirty-nine percent expected their firm's profitability to increase, up from just 17 percent two years ago. Thirty-two percent projected their capital expenditures to increase, an increase from 24 percent last year and 19 percent two years ago.

Even with a spastic stock market, companies are finding work steady. Holt says most customers are past needing inventory replenishment and are acclimating to a new normal.

"People don't want to hold a lot of inventory," Holt said. "Now orders are coming in again as people find that happy medium on where they are comfortable from an inventory standpoint and match that to their customer needs. That's creating a little volatility."

Super Radiator Coils is growing this year. After peaking at nearly 380 workers in 2008, total employment is back at 348 workers. The company plans to add several front office positions and floor workers are getting overtime shifts.  A recent project with NASA for large 50-foot coils has even prompted plans for a facility expansion next spring. The new space will add 35,000 square feet and allow the company to take on larger projects and further grow business.

In Jenkins, Pequot Tool and Manufacturing is watching a similar market unfold. After surviving 2009 without a sales loss, business dipped in 2010. But President Mark Shervey says this year has been as busy as ever.

"It's as busy or busier than it ever has been," Shervey said. "The need for companies that do quality work, that are responsive and can get the jobs done is so great that there's more work out there than there is capacity."

Shervey expects Pequot Tool to grow 15 to 20 percent in 2011, and has already expanded the 120-employee workforce by 10 percent since January.

The 2012 State of Manufacturing survey findings will be announced at a statewide event on February 21, 2012. Registration opens Monday, October 3, at www.enterpriseminnesota.org.

The Value of Your Business: What Expert Buyers Are Looking For

October 27, 2011
8:00am-11:00am
Egan Company
7625 Boon Ave N., Brooklyn Park
$79 Early Bird Rate (Before October 20) or $110 Regular

How can your business achieve strategic Value in the eyes of an investor? Investors will ask... Is your company known and competing in a market niche that can be successful? Do you deliver products/services most efficiently? Do you differentiate products and services within markets with the greatest potential?

The key lies in how well your company understands the role of Values in the journey to create business Value. Do your company's Values fit well with prospective partners? How do you know? How can a company raise its Value? Can a company and prospective partner agree? How does this negotiation take place?

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Granite Equity Partners will share their experience investing and partnering with fifteen companies over the past nine years. Granite Equity is a Minnesota-based company that invests equity capital in established, private companies to facilitate phased owner retirements and staged ownership sales. In addition, several company leaders will discuss their perspectives about transitioning a business, and the role of a company in raising both Values and Value.

Speakers:

Pat Edeburn, Partner, Granite Equity Partners

Tim Hartigan, President, St. Paul Brass & Aluminum Foundry

Tom Renk, President, United Machine & Foundry

Moderator:

Kevin Kaufman, Business Growth Advisor, Enterprise Minnesota

Register online today