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MINNESOTA
From Site Selection magazine, March 2023
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A Blueprint For Building What Matters

MINNESOTA
Photo: Getty Images
by MARK AREND
A

n annual Manufacturing Business Conditions Survey conducted by the Minnesota Department of Employment and Economic Development (DEED) and the Federal Reserve Bank of Minneapolis found that most Minnesota manufacturers expect mostly unchanged conditions in 2023, and most saw improved or unchanged conditions in 2022. A release issued by DEED on January 13th outlined the following key findings: 

  • 73% expect unchanged exports;
  • 55% expect the same production levels;
  • 51% expect constant productivity;
  • 44% expect unchanged employment levels; and
  • 41% expect the same level of profits.

A large percentage of manufacturers expect an increase in wages and benefits for employees, with 60% of respondents expecting wages to increase between 3% to 5%, while close to 40% anticipate a rise in benefits in the same amount.

“Manufacturing is the backbone of Minnesota’s economy. DEED continues to work closely with manufacturers to help them meet their workforce needs and train new and current employees,” said DEED Commissioner Steve Grove, who later in February announced he would be leaving DEED to serve as CEO and publisher of the Star Tribune as of March 3. “Through DEED’s new Automation Loan Participation Program, and our Automation Training Incentive Program, we’re also partnering to push cutting-edge solutions to today’s productivity challenges.”

“This partnership with DEED allowed us to reach 389 manufacturing operations across the Federal Reserve’s Ninth District,” said Joe Mahon, regional outreach director at the Federal Reserve Bank of Minneapolis. “This provides a vital source of information for us on economic conditions and on the impacts those conditions are having on businesses in the communities we represent.”

Survey results show that, compared to 2021, most manufacturers showed improved or unchanged conditions in 2022. Fifty-two percent of respondents indicated an increase in the number of orders and 51% experienced unchanged productivity. Forty-one percent indicated constant levels of employment and production levels, and 36% of respondents reported unchanged profits. Additionally, 45% reported an increase in investment in plant/equipment.

A new question on the survey inquired about supply chain bottle neck problems compared to the year before — 64% of respondents indicated that problems got worse with labor issues at suppliers and 60% reported transportation/logistic issues.

Manufacturing is the backbone of Minnesota’s economy. DEED continues to work closely with manufacturers to help them meet their workforce needs and train new and current employees.” 

— Steve Grove, outgoing DEED Commissioner, January 13, 2023

Manufacturing accounted for $53 billion or 13% of the state’s gross domestic product and provided more than 313,000 jobs or 11.3% of statewide employment in 2021. Workers took home $23.4 billion in wages from Minnesota manufacturing jobs in 2021, the second-largest total payroll among private sector industries. Average annual wages for workers in manufacturing are $74,630, 11% higher than across all industries in Minnesota.

Automation Financing Program Debuts

In November, DEED announced a new program to support automation at manufacturers, the latest component of the $97 million State Small Business Credit Initiative (SSBCI). As part of the Automation Loan Participation Program, DEED says it will make companion loans to cover financing gaps and expand financing opportunities for businesses purchasing machinery, equipment or software to increase productivity and automation.

“Facing the tightest labor market in America, we know Minnesota businesses can’t create a larger workforce out of thin air,” said Grove at the time. “A key strategy has to be automation — which is why DEED’s new Automation Loan Participation Program will help manufacturers automate more quickly to drive innovation and productivity gains that will help our economy grow.”

DEED loans through the new program can be worth up to $500,000 and need to be made in conjunction with private financing. The new program is designed to support manufacturing, distribution, technology, and warehousing businesses with 500 or fewer employees. These businesses have historically been less likely to pursue automation and are more likely to be unable to secure full financing for automation improvements from other lenders. 

The new loan program joins other DEED initiatives to help manufacturers implement automation. DEED’s Automation Training Incentive (ATIP) program provides grants to small businesses for the purpose of training existing workers on new automation technology. Grants of up to $35,000 are available to small businesses in the manufacturing or skilled production industry to train workers on new technology. 

Mark Arend
Editor Emeritus of Site Selection magazine

Mark Arend

Mark Arend is editor emeritus of Site Selection, and previously served as editor in chief from 2001 to 2023. Prior to joining the editorial staff in 1997, he worked for 10 years in New York City at Wall Street Computer Review, ABA Banking Journal and Global Investment Technology. Mark graduated from the University of Hartford (Conn.) in 1985 and lives near Atlanta, Georgia.

 



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