Enterprise Minnesota Magazine - Summer 2017

RISE OF THE ROBOTS

Helping Manufacturing Enterprises Grow Profitably SUMMER 2017

BoundlessOptimism Minnesota’s manufacturers forecast record growth and profitability

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Fifty-four percent of manufacturers say they have a formal strategic plan to achieve profitable growth.

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SUMMER 2017

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READY FOR ANYTHING Manufacturers used the lessons of 2009 to retrench their companies against outside pressures.

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THE EMERGING FUTURE OF MANUFACTURING

THE STUDENTS SPEAK

MANAGING GROWTH AND PROFITABILITY

The State of Manufacturing® student focus groups introduced us to some exceptional young leaders. Here are three of them.

Students at St. Paul College discuss the skills gap and why more students don’t select a technical education.

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2 Good News for Everybody Manufacturers’ exploding optimism should put a smile on all our faces.

Growing companies need to assess their performance and resources.

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Company Loyalty?

Rise of the Robots

Hope in Numbers

PGC co-CEO Susan Hanson would prefer employees to be loyal to the work and each other.

Brainerd High School’s robotics team proves a potential breeding ground for local manufacturers.

Pine Tech President Joe Mulford says the job prospects are out there.

Communities and manufacturers just have to get to them earlier.

Visit the Enterprise Minnesota website for more details on what’s covered in the magazine at www.enterpriseminnesota.org.

Subscribe to The Weekly Report and Enterprise Minnesota® magazine today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit www.enterpriseminnesota.org/subscribe.

SUMMER 2017 ENTERPRISE MINNESOTA /

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bob kill

GoodNews for Everybody Manufacturers’ exploding optimism should put a smile on all our faces.

T

his ninth edition of our State of Manufacturing® survey will reveal that Minnesota’s manufacturers have reached a record level of optimism about their prospects in 2017. They are bullish on the economy, optimistic about their companies’ growth potential, and less concerned about the challenges that confront them—all in record proportion during the history of the survey.

That’s, of course, great news for

them, but too few Minnesotans truly comprehend how this optimism translates into their lives as well. Manufacturers preside over a job-creating engine that not only drives our macro economies but feeds the economic vitality of our 2

/ ENTERPRISE MINNESOTA SUMMER 2017

home communities as well. They provide high-quality jobs that pay well and offer strong job security, particularly in Greater Minnesota, where some small communities struggle to retain their local identities.

Minnesota’s Department of Employment and Economic Development

On the whole, there are hopeful conversations about how manufacturers are collaborating to reach students in creative ways.

(DEED) supported this conclusion when it recently released some eye-opening data. Our state’s manufacturers, they said, deliver 16 percent of Minnesota’s GDP—the single largest private-sector contributor—with an average annual wage of $63,236, 15 percent higher than the average for all industries.

And manufacturers stimulate economic contributions from other businesses. For every person employed in manufacturing, there are 1.9 people employed by firms that provide services and products to manufacturing companies.

So you can see that when manufacturing does well, we all do well; manufacturers’ exploding optimism should put a smile on all of our faces.

And when you think about thanking a manufacturer, you don’t have to go to 3M or Medtronic or any of our terrific locally-based Fortune 500 companies.

You probably don’t have to venture far from your neighborhood. Fully half of Minnesota’s manufacturers employ 20 people or less, and 56 percent of them reside outside the seven counties in the Bob Kill is president and CEO of Enterprise Minnesota.

Helping Manufacturing Enterprises Grow Profitably

Publisher Lynn K. Shelton

Custom Publishing By

Contributing Writers Jeremy Zwart Shane Ramnarine

Contacts To subscribe subscribe@enterpriseminnesota.org To change an address or renew ldapra@enterpriseminnesota.org For back issues ldapra@enterpriseminnesota.org For permission to copy lynn.shelton@enterpriseminnesota.org 612-455-4215 To make event reservations events@enterpriseminnesota.org 612-455-4239 For additional magazines and reprints contact Lynet DaPra at lynet.dapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event chip.tangen@enterpriseminnesota.org, 612-455-4225

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All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine.

Additional magazines and reprints available for purchase.

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Twin Cities metropolitan area.

Manufacturers’ attitudes about some of their challenges also seem to have acquired a more hopeful tone in this year’s survey. The skills gap, for one, has dogged manufacturers for almost a decade now, as they try to negotiate an evolving labor pool in which they will replace retiring Baby Boomers with a generation of Millenials who are far less numerous and who need to become qualified to operate the increasingly sophisticated equipment

For every person employed in manufacturing, there are 1.9 people employed by businesses that provide services and products to manufacturing companies. on their manufacturing floors.

I’ve always believed that the market forces that usually bring stability to the American economy will eventually bring balance to the labor issues. And as you read the focus group transcripts in this year’s book, you’ll get a sense that the market is responding. On the whole, hopeful conversation replaced the anxiety of past focus groups. Many related how they are collaborating to reach students in creative ways. They are strengthening their relationships with schools, talking directly to students, teachers, and counselors. They’re helping to equip high school manufacturing labs with better equipment and more satisfying curriculum. And they’re far more aggressive with internships.

That sense of optimism also emerged in the five focus groups we conducted that consisted solely of students, this year including high schoolers for the first time.

The message is getting out there. You can’t read the focus group with Brainerd high school students, for example, without having the sense that we’re turning the tide on the skills gap, in a big way.

Automation is another market force that will help alleviate the skills gap challenges as it brings greater efficiencies to manufacturing operations. Executives were universally quick to acknowledge in focus groups that automation is an increasingly valuable tool, but not to

eliminate their reliance on employees, as we sometimes see or read in the occasional hair-on-fire media reports.

Hardly, they say. These efficiencies will help them cope with the predicted declines in working-age populations.

They all emphasize that automation will increase the number of new high-quality jobs as they need to find people to operate these machines.

And now we have some people to thank for making this State of Manufacturing project such a success. I say this every year because it is always true. The State of Manufacturing would not succeed without the selfless collaboration of so many organizations and individuals. As always, we’re all grateful to our sponsors, whose financial backing helps us defray the considerable costs of the survey project and whose insights and ideas always contribute to a meaningful questionnaire and whose individual networks always plug us into a new set of thought leaders.

Pollster Rob Autry has conducted the survey in each of the nine years.

Rob, the founder of Meeting Street Research, is one of America’s premier pollsters. We’ve drawn credibility from his creativity, patience, and keen analytic skills. And Tom Mason, our long-time consultant, has also been with us from the beginning. He has now added another 15 focus groups to the long list he’s done over nine years. Tom, whose company produces Enterprise Minnesota® magazine, also publishes the State of Manufacturing® book, along with creative director Scott Buchschacher.

A special thanks goes to Lynn Shelton, the director of marketing and legislative relations at Enterprise Minnesota, who has directed the State of Manufacturing project since it was nothing more than a concept. Lynn and her staff—Lynet DaPra, Constance Fantin, and Chris Morse—devote their considerable talents to ensuring The State of Manufacturing work achieves Enterprise Minnesota’s business objectives.

Finally, I want to again extend sincere thanks to the manufacturers who take time out of their busy days to talk to our pollster, the many people who participate (often year after year) in our focus groups, and those who will attend events in which we present and discuss the results.

Expanded opportunity.

Resilient economies.

More at www.ruralpulse.org

Vibrant. Rural. Community. www.blandinfoundation.org blog: outposts.blandinfoundation.org

LIKE OUR MAGAZINE? Subscribe to Enterprise Minnesota’s publications to get the latest news, events and stories driving Minnesota’s manufacturing industry.

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CREATIVE CULTURE

Company Loyalty?

PGC co-CEO Susan Cary-Hanson would prefer employees to be loyal to the work and each other.

P

GC recently completed a survey in which company employees said the company’s top attribute was “the people they work with.” No finding would have been more pleasing to Susan Cary-Hanson, co-CEO at the Edina-based custom manufacturer.

Cary-Hanson places a high premium on a culture of satisfied employees, not so much as a hot-button weapon in her HR arsenal but to squeeze as much quality and productivity as she can from her personnel.

Employee loyalty is merely a side benefit.

In the end, Cary-Hanson says she cares less about loyalty to PGC than having employees show loyalty to the work they’re doing and the people they’re doing it with. “If push came to shove,” she says, “I’d rather have employees have friends at work, because the more friends they have at work, the more difficult it is to leave. They’re a fabric of your life and everything you do. Our employees do a lot of celebrations together that we don’t even know about, but I think that’s wonderful, and I’d rather have that. I’d rather instill a culture of teamwork.

“I’d rather have the people work together to solve the problems at the level that they can solve them,” she adds. “We spend a lot of time working with staff to work together.”

PGC is a 67-year-old custom manufacturer based in Edina. Cary-Hanson, a nurse by profession, joined the company when her husband, Steve Hanson (the other co-CEO), purchased the company through a leveraged buyout in 1996.

“It’s about continuous improvement.

Our machines don’t operate on their own,” Cary-Hanson says. “Someone has

PGC co-CEO Susan Cary-Hanson says working on company culture always takes much longer than you think it will.

to program and run them. And so, you work in lockstep with your employees and listen to their feedback. You’re as good as your weakest link, and if you don’t put in the efforts to hear your employees, then how can you expect them to achieve objectives?” she asks.

An education committee provides PGC executives with input on their training expectations. “We expect people to be lifelong learners,” Cary-Hanson says.

That means employees must fit the PGC model of business, and put themselves in a position to grow into something more. “So, as people learn our processes, they usually can be more effective and efficient and productive, and want to learn, they’ll have

#InnovateMN a natural career path.”

PGC uses a comprehensive software package to help the company conduct mandatory training four times a year for compliance. Employees can use the software on work or personal time.

PGC inaugurated its wellness program in 2010 when the Hansons brought in a personal trainer to work on stretching techniques with employees.

After that, several employees pitched in and purchased a Universal weight machine and placed it in the company’s “backdoor” workout facility. Realizing

“I’d rather have employees have friends at work, because the more friends they have at work, the more difficult it is to leave. an opportunity to improve the company’s culture—as well as mitigate the company’s risk—the Hansons bought the weight machine from employees and installed shower facilities so employees can work out on their schedules, before, during, or after the workday.

Today the trainer participates actively on the of the company’s employee-driven wellness committee, chaired by their HR manager and consisting of employees who represent every department within PGC. The committee’s wellness agenda has expanded beyond physical fitness and today encompasses a holistic package of wellness elements that address emotional, spiritual, financial, and social aspects.

But the centerpiece of their employeebased priorities is a pair of innovative performance-based paid-time-off incentives. Exempt staff can earn extra weeks of vacation by accomplishing objectives on a division scorecard.

Hourly staff can acquire up to six additional days off per year by meeting a series of targets based on attendance, safety, quality and on-time delivery.

Manufacturing is key to Minnesota’s economy. That’s a lot of jobs – with a lot of stories to tell.

We’ve launched a campaign to celebrate the innovative and entrepreneurial ecosystem that is unique to Minnesota.

Do you have a story about an innovative product or service?

We want you to be part of the Minnesota story! Tweet using #InnovateMN and we’ll show the world a whole different side of Minnesota!

www.mn.gov/deed/business #InnovateMN

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SUMMER 2017 ENTERPRISE MINNESOTA /

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HR

The Big Value of Being a Little Bit Better Metal Services’ competitive pay packages include paying 100 percent of an employee’s health insurance and hospitalization.

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ike most every other small town manufacturer, Dennis Heimerman, president of Metal Services in Blooming Prairie has had to contend with the challenge of how to attract and retain qualified personnel in his 30-person plant.

His solution has been to be “just a little bit better” than the competition through compensation, profit sharing, and health care benefits.

Health insurance stands out: Heimerman pays 100 percent of the health insurance and hospitalization for every employee. Always has and always will, he says.

“Because it is such a hot button issue, I use it as a method to get employees,” Heimerman says, “I try to get workers by being a little better than the average, and it has pretty much worked. I don’t have to advertise it; it travels by word of mouth.

When we get an opening, we can get it filled.”

Heimerman has worked in Blooming Prairie his whole life, since leaving the family farm, west of town. He entertained the idea of college, he says, but liked the idea of being a welder. After working for other companies for a while, he eventually fulfilled an entrepreneurial dream and opened his own business in 1984, a repair shop at first and ultimately transitioning to subcontract work, which today contributes 90 percent of his revenue. He built a new plant in 2007.

We believe that it has worked; that is why we just keep doing it.

Heimerman has had to tweak his package, he says. At the advent of the Affordable Care Act, Heimerman realized that the rates of small companies with healthy employees would get kicked hardest as the government program worked to even out the overall risk. And they did. After he had weathered a 60 percent increase in rates, he looked for alternatives, ending up by joining a professional employment organization (PEO), in essence, a collaboration that joins small companies so they

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Dennis Heimerman says that his “little bit better” package works. “You don’t have to advertise it,” he says.

“It travels by word of mouth.

When we get an opening, we can get it filled.”

can enjoy large-group rates.

The PEO business model required that he allow the company to assume responsibility for payroll and other HR functions, all under the same federal EIN number.

Heimerman pays 100 percent of coverage for each employee, not their families, so the lower rate brought additional ben-

efit to the employees with families.

“At the end of the day, my company was not spending any less money because I was buying a membership in this group, which is a co-employer with us. But my rates were staying lower so that my people, as they are buying healthcare for their families, wives, kids or whatever,

they got the same kind of rates they had before the 60 percent increase. A lot of companies are paying a percentage of the whole family package, and they are probably doing just as good as I am in the long run. You almost really have to dissect the rates and take a look at what they are doing.

Heimerman’s insurance consultants admit that few companies underwrite 100 percent of hospitalization, a fact that they emphasize to employees.

“They say, ‘Look nobody is doing this anymore.’”

Heimerman works similarly with

Heimerman’s insurance consultants admit that few companies underwrite 100 percent of hospitalization, a fact they emphasize to employees. compensation. He uses an annual wage survey prepared by the Fabricators and Manufacturers Association International to make sure his pay schedules are competitive. Employees also pay quarterly profit sharing.

“We believe that it has worked,” Heimerman says. “That’s why we just keep doing it.”

Heimerman says employees typically show appreciation. “Some will always come up to you and thank you for quarterly profit sharing.” The great recession erased a sense of entitlement for profit sharing, Heimerman says, because employees understand they can’t take it for granted.

He says his last two operations managers have skillfully underscored the value of Metal Services’ employee packages. “They are both seasoned guys who have been in a lot of places,” Heimerman says. They can reinforce that most companies do not underwrite these benefits. Plus, he says, his office manager makes sure that employees receive quarterly statements that tell them what those things cost.

When they see it, Heimerman says, “They think, ‘Oh, I could be paying this myself.’”

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NEXT GEN

Rise of the Robots Brainerd High School’s robotics team proves a potential breeding ground for local manufacturers.

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ny manufacturing executive who is worried about how or where he or she will find the next generation of manufacturing leaders would be comforted to visit the high school students who comprise the robotics team at Brainerd High School. A handful of them this year participated in the 2017 State of Manufacturing® survey, sponsored by Enterprise Minnesota.

The FIRST Robotics Competition is a 25-year old international contest in which more than 3,000 teams of high school students from two dozen countries (primarily the United States) independently construct robots to compete

We are encouraging students to be independent and to work with other students to solve problems. in games that test the quality of their machines.

“We got into robotics because I felt like it was a good connection to my engineering curriculum,” says Brian Bordwell, an engineering instructor at Brainerd High School and advisor to the robotics team for each of its 10 years at the school. A 1992 graduate in industrial arts education from Bemidji State University, he is also a master teacher for Project Lead the Way, another national non-profit that develops STEM curricula for K-12 educators, as well providing development training for instructors.

Ten years ago the team consisted of just 10 students, but recent teams have had 20-30 participants, he says. As a feeder system for his robot team, Bordwell also supervises a STEM club in which middle school students compete in a high-altitude balloon competition.

The competition works like this: Teams 8

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receive a problem or a game in which their robots will compete. A 100-plus page instruction manual prescribes rules, size parameters, and required components.

The team is given six weeks to build its machine. After initial brainstorming, Bordwell divides his teams into groups

that start working on programming, electronics, pneumatics, and mechanisms.

Students even design their own website.

Brainerd focus group participants said the intense six-week time commitment of the design-and-build process could intimidate students from participating.

good run for us,” Bordwell says. “We had a good team and a really good time.”

The overall cost is between $12$15,000, which includes a $5,000 entry fee and expenses for travel, food, and lodging. Students raise money through

We had a good team and a good run.

Students work on the machine from the moment school adjourns at 3:10 p.m. until at late as 11 p.m. They arrive on Saturdays by 9 a.m. and sometimes stay until 6 or 7 p.m.

Teams then participate in a series of regional contests. This year, the Brainerd team finished 11th out of 63 teams in the regionals, which were held in Duluth and the Twin Cities. The team finished 41st out of 215 teams in Minnesota. “It was a

an annual spaghetti dinner, and local businesses provide monetary support and volunteer mentors to the program. The Brainerd team regularly receives help from 3M, Precision Tool Technology, Graphic Packaging International, Lindar Corporation, and MaxBotix.

Bordwell has also spread the word to other potential student groups in nearby communities.

Michael Ruen, an advisor to the Brainerd team who works at Current Lasers in Wadena, was himself a member for three years. He has said that a major attribute of the robotics program is that it

teaches students to “think for themselves and be independent.”

“A lot of times students will come in and ask how things are done and why things are done. We are teaching them to start asking themselves (those questions), encouraging them to be independent and to work with other students to solve problems.” He says it provides a helpful preparation for college “because the students are going to be ready for the challenges that they are going to face.”

Among the 12 robotic team members who participated in the focus group, 10 will attend engineering schools, almost all going to North Dakota State University.

Robotics is “a very fun thing,” one student said. “Unlike football, where every year you have the same skills to work on, the same plays, you have to get better at; you develop your skills in robotics. You work on those skills, but you’re not applying them in the same way at all. It changes drastically every year; just like it would in an engineering firm if you were given a new design by a different company.”

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STRATEGY

Reserve Methodical Growth Your Ad Space TODAY! F

FlexMation uses Seven Smart Steps to Revenue Growth to expand sales.

Helping Manufacturing Enterprises Grow Profitably Inside Enterprise Minnesota® magazine you will find in-depth information and unmatched insights into the latest innovations, business successes, and ingenious company leaders among Minnesota’s manufacturing community. The magazine reaches over 42,000 readers, including CEOs and additional key decision-makers.

Chip Tangen Relationship Manager 651-226-6842 Chip.Tangen@enterpriseminnesota.org www.enterpriseminnesota.org

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lexMation President Steve McClintick realized his 12-person business had confronted a growth crossroads. The Burnsville-based, 12-person company builds custom lean-enabling work stations for manufacturers using extruded aluminum. But the company’s growth had begun to plateau because of space limitations, so McClintick knew he would have to focus instead on expanding the part of their business that distributes parts and kits for do-it-yourselfers.

“We needed to do something different,” McClintick said. “After 14 years in business, it is smart to look at things and say, how has the world changed and what could we be doing better and different?

This was a great opportunity for us to look at how we can increase some additional lines of business.”

He attended a workshop at Productivity, Inc. in which Enterprise Minnesota consultant presented a program entitled Seven Smart Steps to Revenue Growth, in which he describes how strategic growth can be designed. It clicked. “Steve’s steps made sense to me.”

FlexMation retained Haarstad to develop a two-part exercise that would first develop strategy and the design implementation.

During the strategy phase, Haarstad helped company executives methodically analyze the current state of their business, project some realistic revenue goals, and plot how to reach those goals by identifying opportunities selling spare parts and DIY kits. They evaluated their customer base, and how to group new customer “buckets” that filled with prospects for the new product lines. McClintick’s team discovered that 80 percent of his current customers could cross over into the new opportunities.

Haarstad had them analyze these groups according to their needs, wants, and values. Instead of just identifying them by traditional demographics, we’ve identified them by the things that they value,” Haarstad says. That knowledge, he adds, would enable FlexMation to

FlexMation President Steve McClintick

target specific sales messages that would resonate with them.

The team then determined differentiating value messages that contrasted with competitors, and prioritized which customer buckets should come first.

McClintick has also been pleasantly surprised at how these new additional products have developed new customer relationships. “It is pretty nice when you get asked to come in and visit a place that you might not have been aware of and they’re ready to talk to you. It makes life a whole lot easier.”

In the end, FlexMation now transitions into the implementation stage with more confidence. “We went from a vague plan that said, ‘Let’s sell more,’ to a detailed action plan on paper. Those steps are going to get us to these metrics.”

Four Questions

INNOVATIONS

Bill Martinson, business growth advisor, Enterprise Minnesota

W

hen you started working, it was with an organization called the Greater Minnesota Corporation, something engineered

by Governor Rudy Perpich. You must consider yourself something of a pioneer as the organization transitioned first to Minnesota Technology and then to today’s Enterprise Minnesota.

I started in March of 1990, almost exactly 27 years ago. I was not the first employee, but close; I’m probably the first one still standing within the organization. I might be close to being one of the first employees in the national network. When we first started, there was nothing that told us what we were supposed to do. We were created for a purpose, but there was no one to train us, and we didn’t have any products. We had to develop expertise because we didn’t have it in house. It was truly a startup. There was a period when we had business developers and delivery people in house, but all the delivery was basically subcontracted through a third-party network of providers.

What were the important plot points in your experience?

The first thing I had to do was go out and build a relationship with companies. And I had tell them who I was.

At first, all we could do was go around and provide business advice.

Then lean started to emerge. Lean initiatives really surged. There are probably a lot of people who think that’s all we are. We have added a lot of capabilities, but it takes a long time to change your positioning in the marketplace.

After 27 years, what is the most satisfying part of your job?

The real key in the rural areas is to be a trusted service advisor. We are much more than a consulting company. We represent our clients’ interests. There

is nothing more satisfying than feeling like you have truly helped a company, in whatever way they define their needs. I never cease to get over the satisfaction I get when a company feels that I have really helped them.

I stopped at a company in Perham to do a survey. I always talk about what people need. She said, “we really appreciate what you do. You seem to come around at the right time. You seem to have the right solutions for our needs.” That was really satisfying.

The real key in the rural areas is to be a trusted service advisor.

You don’t always do it right. One of the hardest parts of the job is when you didn’t do so well for a company. There are some of those. And they really hurt. I sometimes feel guilty when I don’t get in to see a client as often as I would like to. Just yesterday I visited one that I hadn’t seen for a long time.

He gave me a project. I thought he might hold it against me that I don’t come around very often. He didn’t at all. He seemed to appreciate that I am a resource person.

What’s the challenge of managing such a very large territory for Enterprise Minnesota? It goes from Canada in the north to Morris, and all the way west to Bemidji.

Travel can get hard. I put in about 3,000 miles a month. There are other people in the organization who drive, too. The trip that I find really hard is the one to Minneapolis. There are so many of them, I almost have a mental block. I try to break it up. Last summer, I stopped in a restaurant halfway down. There was a guy in there. He said, you know you need to take a break every two hours. That’s what I do. I have to break it up. That’s a long trip.

Bill Martinson is a long-time and iconic business advisor at Enterprise Minnesota.

Working from his home, he represents a large swath of northeast Minnesota, specializing in product development, manufacturing technology, business strategy-and-analysis, financial analysis, facility design, and operations management. He serves as a business development consultant and has been a facilitator on several Enterprise Minnesota Manufacturing Peer Councils.

Before joining Enterprise Minnesota, Bill served as an engineer for White Farm Equipment, a systems engineer for Steiger Tractor Company, and general manager for Wahpeton Canvas Company.

Bill holds a bachelor’s degree in agricultural engineering from North Dakota State University and an MBA from Moorhead State University. He is a registered professional engineer in the state of North Dakota, and is a member of the American Society of Agricultural Engineers and the Society of Automotive Engineers.

SUMMER 2017 ENTERPRISE MINNESOTA /

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Jazmine Darden is somethings asked whether she will pursue graduate school. No, she says, “my associate’s degree is the best thing that I’ve done. I’ve learned more applied work here than I did in my four-year school.”

The Emerging Future of

By Shane Ramnarine

Manufacturing The State of Manufacturing® student focus groups introduced us to some exceptional young leaders. Here are three of them.

More Than Amusement With a childhood dream to build amusement park rides, Jazmine Darden entered Dunwoody already in possession of twin degrees in math and physics.

Jazmine Darden took a rather nontraditional path to the degree in engineering drafting & design she will receive from the Dunwoody College of Technology in May. 12

/ ENTERPRISE MINNESOTA SUMMER 2017

She had already graduated from Augsburg College with twin degrees in physics and mathematics, fueled by a dream to build amusement park rides.

“That’s how I got into physics,” she says now. While friends chatted in line at Valleyfair and other amusement parks across the country, she would stare silently at the rides, trying to figure out how they work, what makes them go.

After graduation from Augsburg, Jazmine took a job as an associate educa-

tor with the Minneapolis Public Schools, where she mentored students, then mentored the mentors. She also wrote curriculum around a “bridge and tower” program that taught some 800 K-8 grade students the theory of engineering by building popsicle stick structures and, later, more sophisticated projects made of balsa wood.

Darden was working with inner city students in Minneapolis schools who she felt might benefit from thinking about a technical college education rather than a

four-year degree. So one day she “randomly” stopped into Dunwoody and asked for a tour.

“I honestly don’t know what brought me there that day. My main intent was that I work with these students. I’d heard a lot of good things about the school. I would drive by there twice every day, to and from work. I just stopped in there one day.”

After one tour and a meeting with E.J. Daigle, the school’s charismatic dean of robotics and manufacturing, she says, “I was like, oh, how do I sign up? This is where I need to be.”

Darden has spread the word to other potential students who she thinks could benefit from Dunwoody. Two of her former protégés are today top first-year students at Dunwoody. “I told them they should just tour (the school), she says. “I know you didn’t do well in high school because you weren’t challenged. Just check out Dunwoody.’”

Aside from the instructional methods,

sources right now to try to be creative and do my own thing, rather than jump right into the corporate business. I want to take time for myself to really figure out what I want to do.

She’s not nervous about her prospects.

“Dunwoody has like a 98 percent placement,” she says. “I think pretty much I could pick where I want to work, especially have two Bachelor’s degrees already.”

What about the amusement parks? “It is still a dream of mine,” she says. “We’ll we where we end up.”

A force to be reckoned with After a service-related injury, a subsequent “hobby” led to renewed purposes in life.

Jacob Rylander’s left index finger was taken from its tip to the wrist in an industrial accident involving a Power Take-Off while he was in the Air Force. This miss-

ing limb ended up opening new doors.

“After my amputation, I was depressed by the inevitable life and career changes I would have to make. I was inspired by others around me in physical and mental therapies who were overcoming their new demons and challenges. I picked up ‘making’ as a new hobby and began to make it a point to work more with my hands as a means of therapy.”

The hands-on nature of this diversion (he started with minor woodworking and 3D printing), coupled with educational pursuits, has grown into what has become a passion for custom fabrication.

“I was led to utilizing my GI Bill benefits at Dunwoody because of its Yellow Ribbon status and its immediate immersion- and lab-based coursework over lecture- and theory-based curriculum. I love the hands-on interaction during my lab time as it provides me the opportunity to see the application of the order of operations and the significance it has in every manufacturing process.” Dunwoody’s facilitation of collaboration between its

After one tour and a meeting with E.J. Daigle, the school’s charismatic dean of robotics and manufacturing, she says, “I was like, oh, how do I sign up? This is where I need to be.”

Darden appreciates that Dunwoody holds students to high standards of excellence. “If tech schools have any chance of survival, it’ll be the ones that kind of follow closely in Dunwoody’s form of doing things where everything is properly certified; everything is incredibly strict. If you just want to laze about through things, just go to a normal college.”

Many of her colleagues who are currently in master’s programs ask her if she intends to pursue a graduate school education. No, she says, “my associate’s degree is the best thing that I’ve done. I’ve learned more applied work here than I did in my four-year school.”

As for the future, Darden intends to keep her options open.

“I don’t have anything lined up. I have ideas that I want to pursue. I have re-

Jacob Rylander is planning to create Reveille, a veteran-based industrial makerspace focused on incubating veteran-owned and operated small manufacturing ventures.

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students and several manufacturers is also something the school “does an amazing job at.”

He started in the welding program, will be transitioning to the Engineering Drafting & Design program this fall and, ultimately, will enroll in the Industrial Engineering program. “I hope the cumulative knowledge base will assist me in growing my future business ventures such as “Handsome Hippo Design,” a custom fabrication outlet, and “Reveille,” a veteran-based industrial makerspace focused on incubating veteran-owned and operated small manufacturing ventures.”

“Reveille” will not be Jacob’s first business undertaking. He already has a long-standing involvement with a local nonprofit, Minnesota Emergency Services Partners (MNESP), which manages a

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‘Best chance for a guaranteed job’ after graduation reroutes Ivy League dreams Like a lot of high school students, Alexandria’s Paige Hawkins struggled to answer, what next, or more specifically where next?

She had excelled in science and math since elementary school and devel-

During lab time, everyone is on the same playing field and works together to complete the project. We share success strategies and warn each other of potential failure points.

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Though he left the military, he has found another setting where teamwork and dedication are keys to an individual’s success. “Something I’ve observed universally is that, during lab time, everyone is on the same playing field and works together to complete the project. We share success strategies and warn each other of potential failure points. While it’s technically all individual tasking, it’s the group/ team environment that evens out the learning process and builds more than a project; it builds professional relationships and sets the performance standard.”

With his efforts in nonprofit administration and the future projects he has on the horizon, it’s easy to see that this former “Outstanding Airman of the Year” (2012) has not forgotten one of the three core values of a US Airman; “Excellence in all we do.”

Paige Hawkins sees opportunities for women. “As much as it sickens me to say this, people see tech/trade work as ‘a man’s job.’”

oped an early interest in the workings of machinery. High school aptitude tests suggested a career in engineering, aeromechanics, or design. There was never a question that she would attend a four-year university. “That was the assumption,” she recalls. “That’s what you always think when you finish up high school.”

Her dream school, MIT, demanded more extracurricular activities than she had posted at Minnewaska High School and the $62,000 price tag far exceeded her budget. She considered North Dakota State, but opted eventually for Alexandria Community and Technical College, in part to stay close to home and help her single mom care for two younger siblings.

Discovery “Alexandria had good reviews and an interesting course curriculum,” she says. “Logically it was the most economical choice, and also had the best chance for a guaranteed job after graduation.”

The instruction at Alex Tech impressed Hawkins, especially for how teachers link general education curriculum to the specialties. Her physics teacher, for example, made sure to incorporate problems and themes that were directly relevant for Mechatron-

Our teacher made sure to incorporate problems and themes that matched scenarios we might face in our field and tried to link his lectures to what we were learning in our core classes. ics, her specialty.

Hawkins’ love of the complexity in manufacturing fuels her enthusiasm for advancement in a career traditionally dominated by men. “As much as it sickens me to say this, people see tech/trade work as ‘a man’s job,’ while women are groomed to seek out women-dominated industries, adding that half of her female high school friends pursued careers in nursing.

“Working in this field is like getting the best parts of mechanics and engineering mixed into one industry,” she says. “An industry that makes the production of the entire world thrive.”

Hawkins says she skipped the usual internships because she needed a paycheck, and in March started working as an assembler at Brenton Engineering in Carlos, about nine miles northeast of Alexandria. She intends to stay there with the ambition of becoming a controls engineer.

“I do plan on further schooling. I’m not exactly sure where. I want to get some experience under my belt and— fingers crossed—hopefully get sponsorship from my company.”

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E X C L U S I V E

P O L L

BOUNDLESS

OPTIMISM Minnesota’s manufacturers forecast record growth and profitability

T

he ninth edition of the State of Manufacturing® survey reveals that Minnesota’s small and medium sized manufacturers are incredibly— and I don’t use that word carelessly— optimistic about the prospects of their company over the coming year.

Lifted by their perceptions of positive conditions in the U.S. economy and their own business circumstances, a whopping 94 percent of manufacturers feel confident about the futures of their companies, the highest number we have registered in the history of our survey. In record numbers, manufacturing executives are optimistic about the economy and bullish on their companies’ projections of revenue and profitability for 2017. Their concerns about the global economy are at all-time lows, as is their worry about government regulations.

Perhaps even more impressive is the fact that manufacturers’ level of

certainty exceeds anything we’ve ever tested. Fully 57 percent said they are very confident, up 14 percent in just one year. That’s a staggering 30-point improvement over our first survey in 2008.

Their optimism is no doubt rooted in their sense that America is poised for a period of economic expansion. For the first time in the history of the poll, more manufacturers predict economic expansion in the coming year over a flat economy. “Flat economy” has been their projection every year since 2010. This year, 58 percent of manufacturers forecast expansion, with only 32 percent choosing “flat.” In contrast, the 2016 poll revealed that 48 percent of respondents indicated “flat,” with just 32 percent indicating “expansion.”

That’s dramatic. And it’s across the board statewide, no matter the size or location of the companies. It’s the first time that’s ever been above fifty percent, and up sixteen points in the course of a year.

By Rob Autry

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/ ENTERPRISE MINNESOTA SUMMER 2017

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‘Attracting and retaining a qualified workforce’ experienced the largest bump up.

That optimism continues with respondents’ projections about revenue and profitability. A record 55 percent of manufacturers expect to see increases in gross revenue this year, 11 points higher than the responses to the same question last year. Fortyfour percent expect increases in profitability, seven percent higher than last year and 14 percent higher than two years ago.

And, it gets better. Thirty-five

to the fact that the fielding of this year’s survey coincided with the highly visible attempt by the White House and Republican leadership in Congress to repeal and replace the Affordable Care Act. “Government policies and regulations” was a distant second concern (32 percent), along with “attracting and retaining qualified workers (31 percent).

It may be interesting to note that concerns about “government regulations” have fallen by nearly 30 points since 2011, while “qualified workers” has more than doubled during that same period.

At 17 percent, “economic and global uncertainty” is another concern that saw a dramatic decline. It was 39 percent just last year.

WORKFORCE

percent of manufacturers expect revenues to increase by more than 10 percent in 2017 and 27 percent expect a double-digit increase in profitability, also record numbers.

CONCERNS

The cost of health care coverage remains the top concern for manufacturing executives (59 percent), as it has for all nine editions of this survey. The intensity of this concern had diminished in the past few years, falling to 51 percent in 2016, but its resurgence may be attributed

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“Attracting and retaining a qualified workforce” experienced the largest bump up (from 26 to 34 percent) when manufacturers were asked to name the one or two biggest challenges that might negatively impact future growth. It is especially worrisome for companies over $5 million in revenue (56 percent), compared to companies with revenues in the $1 - $5 million range (38 percent) or those with less than $1 million (26 percent). Manufacturers placed the difficulty of attracting qualified workers at 68 percent, similar to the past several years. The difficulty is even more pronounced in Greater Minnesota (75 percent) than in metro (62 percent).

Perhaps because of this, the concern over qualified workers has grown by 40 percent in Greater Minnesota, while only 23 percent in the metro.

Among companies that have had difficulty attracting qualified candidates, most said applicants lacked needed skills or education (51 percent), or just a lack of applicants or interest (42 percent).

Breaking the data out by region provides a more nuanced sense of the data. Twin Cities-based manufacturers say their top concern is that “applicants do not have the needed skills or education” (55 percent), followed by a “lack of interest” on behalf of applicants (39 percent) or that their company is “too small to compete” (32 percent). Manufacturers in Greater Minnesota cite approximately the same intensity for all three factors, followed closely by “company location” (34 percent).

Machine operators are now the most in demand by Minnesota’s manufacturers (38 percent), a nine-point increase from 2015. It is followed by assemblers (20 percent) and welders (nine percent). The need for machine operators is most acute in Greater Minnesota (41 percent).

The number of retiring Baby Boomers continues to have an impact on about 30 percent of manufacturing companies in the state, virtually the same percentage as in the last three surveys. What’s

After rising for the fourth straight year, financial confidence is at an all-time high.

And for the first time, a majority of manufacturing executives say they are “very confident” about their firms’ financial perspectives.

interesting is that the impact is greatest among companies with over $5 million in revenue (49 percent) and those that employ more than 50 employees (41 percent).

Executives feel better equipped to handle departures of key personnel (74 percent to 77 percent). In contrast, 36 percent feel “not well prepared” to handle the departure of CEOs or owners.

This issue is most troublesome with companies that have less than $1 million revenue (51 percent “not well prepared).

In contrast, 71 percent of companies with more than $5 million in revenue feel “well qualified” to hand the departure of

a CEO or owner.

One reason for that confidence is that 70 percent of those companies have a formal succession plan in place for the retirement of senior leadership, compared to 50 percent statewide.

WAGES & DEVELOPMENT

Fully 95 percent of Minnesota’s manufacturers expect their employee wages to increase (46 percent) or stay

about the same (49 percent). For those who expect increases, 25 percent expect the increases to be 5 percent or less, 12 percent expect increases between five and ten percent, and seven percent anticipate increases of ten percent or more. The most frequent wage increases will come from companies over $5 million in revenue (70 percent) and companies with more than 50 employees (69 percent).

Less likely to increase are companies SUMMER 2017 ENTERPRISE MINNESOTA /

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More than ever, these executives expect increases in gross revenue and profitability this year, though few expect increases in their capital expenditure.

The number of executives expecting double-digit growth in revenue and profitability are at an all-time high.

About the pollster Rob Autry, founder of Meeting Street Research, is one of the nation’s leading pollsters and research strategists. The Meeting Street Research team has over 25 years of combined public opinion research experience and 2,000 research projects under its belt.

Autry has conducted all nine State of Manufacturing surveys.

Before founding Meeting Street, Autry was a partner at Public Opinion Strategies.

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/ ENTERPRISE MINNESOTA SUMMER 2017

The cost of health care coverage is the top factor executives say their companies are concerned about.

in-house/company-specific training (17 percent).

TRADE & SUPPLY CHAIN RELATIONSHIPS

Thirty-four percent of companies say they have gained new business from customers wanting to have suppliers closer to their location, up from 26 percent in 2015 and 32 percent in 2016.

The largest increase (49 percent) was realized by companies with more than

Two-thirds of executives say it is difficult to attract qualified candidates to their firm’s vacancies.

50 employees. The main driver for those gains was “shorter lead times” (33 percent), “total costs versus only product costs” (26 percent) and “closer relationships” (20 percent). with less than $1 million in revenue (31 percent) or companies that have been in business less than 15 years (38 percent).

Only about one-third of Minnesota companies are “investing in employee development or leadership training to attract and retain qualified employees and managers,” while about one fifth of those companies (21 percent) project investing more in those programs.

Only 17 percent of companies have a

“structured leadership development plan” for employees, down three percent from both 2015 and 2016.

COLLABORATION

In a new question, manufacturers say that local educational institutions would be most helpful by developing internship programs (32 percent), followed by “develop better trained two-year graduates (25 percent) and “provide

GROWTH

Companies are strategically planning for greater growth by a large margin.

Fifty-four percent of manufacturers now have created strategic plans, fully 16 percent higher than 2016. The biggest increase (19 percent) comes from Greater Minnesota and smaller companies (17 percent, companies with revenue of less than $1 million and 16 percent companies with revenue between $1-5 million).

SUMMER 2017 ENTERPRISE MINNESOTA /

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/ ENTERPRISE MINNESOTA SUMMER 2017

TheStudents

Speak

A recent focus group of students attending St. Paul College talked about the skills gap, opportunities in manufacturing, and why more students don’t select a technical education

Did you know, early on, that you wanted to attend St. Paul College?

Not at all. It was not until I was just about out of the military when I decided where I wanted to go.

I like working with my hands. I was going to go into greenhouses … either that or welding ... and I picked welding. We had our own greenhouse. The welding was a basic high school welding shop. We had a couple of booths and a couple of (BRAND) welders. We were a private charter school. We were publicly funded, and so we did what we could to get by.

I tried doing everything else; manufacturing-wise and assembly, some design work and different things, but machining is a core of a lot of that stuff.

I received a taste of machining at my last job and started looking for a program.

I assumed it would be longer. We spent three semesters with really thorough instruction. I looked into it, found it, and thought it was a good deal. I know this used to be (SCHOOL). I used to go here and found out it is a college now—instead of a technical school. They had the program available. I live in (CITY), and it’s close to home.

A long time ago we had a program in (CITY) where we could spend half the day at the (SCHOOL). It was there I took welding, and I enjoyed it. I always thought, “You know, someday when I grow up, I’ll take the real welding course, you know, the full-fledged one.”

What kinds of things did you do in between?

School … lawyer … computer tech … computer consultant … networking …

Finally, I said, “Okay, I’m done with all that crap. I want to go do welding.”

SUMMER 2017 ENTERPRISE MINNESOTA /

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How did you select this particular school?

There were two factors. Its location was probably the primary thing, followed by its reputation; it was the best school within a reasonable distance from my house. Another thing is I wanted to get into robotics.

None of the other schools had any robots.

I was looking to integrate my computer experiences with welding experiences and troubleshoot while dealing with robots, but there’s not a lot of that.

I jumped out of high school and went to (SCHOOL). I spent about a year there and found I just couldn’t get a lot of what I needed from my teachers because of how big the classes were. I strayed from that, tried working full time at (COMPANY), and performed cross-country forklift operations. I did some web designing on the side.

I figured I’d give a school a shot again. I tried going for carpentry at (SCHOOL). I tried doing some fun stuff at (SCHOOL), but that didn’t work out very well either.

This one—the classrooms are small enough for you to learn a lot and get enough attention from your teachers. That’s perfect for me.

In high school, there was more of the “read this by yourself, and you’ll have a test on it.” Here, my instructor will spend an extra hour in the classroom if we need to. We just finished a project, and half of us didn’t understand it. He assigned another project so we would get it. That has not happened to me before.

Who else, college?

I went to (COLLEGE) for two years, moved back here, and went to (COLLEGE) for a semester.

(CITY) school? I was pursuing a degree in education for a while, but the whole four-year college thing was very expensive, and I figured out that wasn’t really what I wanted to do. After a while of trying it and not feeling like that was my spot, I did a little research on welding, in particular, and where a good place to learn it would be. (SCHOOL) has a lot of awards and accolades about being the best place around here. I decided to try it out and have enjoyed it.

There are always fewer women than 24

/ ENTERPRISE MINNESOTA SUMMER 2017

I earned a degree, a bachelor of science in technical theater. … Eventually, I decided that not having benefits, a 401(k), or any retirement future, was terrible. I took the skills I had and moved them into a different field that had those possibilities.

Designing stuff—making stuff with my hands—transitioned into making things with metal instead of with 2x4s. men in these classes. Do you think there will be more and more women getting into manufacturing and the trades?

What age, sex, or body type you have.

You can fit in anywhere—no matter how strong you are.

I’m not trying to be sexist or anything, but I feel like our history is more of men in the trades. I feel like you have to be a certain kind of girl to break free from the norm and get into a trade. I believe that women are going to get into trades; hopefully, at least.

I went to (COLLEGE) for one semester while trying to take generals and figure out what I wanted to do. I hate sitting in a classroom. I wanted to get hands-on because I like to do stuff. I don’t want to work behind a desk and sit there all day. My brother, he’s a businessman, he said, “I’m going to (COLLEGE) because my friend goes there. He says it’s not bad—and he had a job—and that was important to me.”

He looked into it with me, at all the best schools and price points. This is the top of the line school in my area, for sure.

What inspired you to go to (COLLEGE) first before trying this?

It was close by. I thought I had to do something school-wise because you’re told in high school, “You have to get a degree,” and all this stuff. Unless you gravitate toward being in a trade or doing that kind of stuff in high school, you don’t know what’s out there, how much money you can make from it, or that it is a good living.

My dad and I were looking into this school, we found there was a tuition assistance program, and I hit an age where I could qualify as independent. That gave me the opportunity to jump back into school and get federal grant money so I could go.

I wanted job security; that was first on my mind. I thought, going through UPS

and forklift operations, that the most I was going to make were $45,000, at best, and they could replace you with anybody. In five minutes, somebody can learn how to run a forklift.

Doing the cooking, with management taking so long, I got stuck on second shift.

My kids were finally old enough to recognize, “We don’t see you anymore. Where are you? You need to stay home at night and tuck us in.” I realized, “Ooh, I have to find a job which will let me do that.” I knew right away that I was going to—even if it was line production—I was going to have to do some factory work, because they care. I have to get into some factory work, or some trade, where I’m required to do day shift.

If you’re CNC or a good welder, you can go into business on your own and be quite successful. In fact, it’s one of those career paths where you can start working for somebody, accumulate a little experience, and then you can take a step out into the industry on your own.

My dad owned his own machine business when I was younger. He eventually sold it, but I grew up around CNC machines my whole life, and I thought they were cool; you get to tell a robot what to do, and it makes parts. That’s what I do.

I have a bunch of friends who live on farms, and all you do is fix stuff yourself.

A bunch of my buddies have parents who welded, so I tried it there, tried it in high school, and I loved it. I heard (COLLEGE) had one of the best instructors and the best program. I asked, “Why not?”

I was home-schooled, but my local high school offered a program where you could take high school classes at (COLLEGE).

One of those offered was called Auto Dismantling. Once a week we did welding.

It wasn’t a very big area, and I didn’t care.

At that point, I was just looking forward to

welding once a week, and then it took off from there. I decided to come here because a teacher talked about (COLLEGE) a lot if you want to do welding.

My parents don’t come from any manufacturing background at all. My dad was in advertising, and my mom was a lawyer before she passed. When I got out of high school, it was, “You will go to a four-year college and get a degree.” Coming out and saying, “No, I’m going to go to a two-year college and will get a technical degree,” definitely was met with some skepticism at first. I think there’s a lot more information out there now about how lucrative this career path can be. After showing my dad a few resources, he was convinced quickly that it was a good move.

When we interview manufacturing executives someone will always mention that one of their obstacles to recruiting new employees is that parents, teachers and school counselors are always pushing for the four-year degree. What do you say?

That’s why I’m finally here; because I’ve done (COLLEGE) out of high school, (COLLEGE), (COLLEGE), and (COLLEGE) here. The only reason I went to (COLLEGE) out of high school is that they said, “You must get a four-year degree.” The good thing here is I’ve been working with (NAME), the dean of our school, about… I’ll end up with an associate’s degree because of the accumulated knowledge. Something (COLLEGE) does is work through associate degree stuff with you, as well as your diploma or certificate, whatever program you’re in. It’s another piece of the puzzle put together to take to somebody and show them.

A lot of high schools don’t push the technical stuff anymore. I lived in (CITY), ended up in (SCHOOL) because my parents worked there, and then I came here. I often joke with people that the only thing they taught me, there was white collar crime.

I agree with that. If you’re not really in a shop setting the majority of the teachers will push you to a four-year college.

Whereas, if you were to sit in a regular class and not a shop setting—English or something—they’re going to push you

more towards the four-year. If you go to the shop setting part of the school, they’re going to push you more towards trades and stuff like that. I have friends who are going to (COLLEGE), and they don’t even know what the hell they want to do. They’re just getting into generals. Everyone who was in the shop setting went into the trades, they all know exactly what they want to do, and they enjoy it.

Every teacher, my wife is a teacher, and all teachers are required to have four-year degrees. I think sometimes they miss the value. They miss the value of a two-year degree, but the school wouldn’t be there if it weren’t for trades and manufacturing.

What happened to change that? Back when I was in high school in the mid-‘70s, they pushed me toward the technical thing.

I did the welding, but I knew I wanted to go to college. I wanted to get a four-year degree. I did get all kinds of schooling.

I’m hearing all the people now saying they don’t even have a shop. We had a bell shop, a wood shop, an auto shop.

If you’re CNC or a good welder, you can go into business on your own and be quite successful. In fact, it’s one of those career paths where you can start working for somebody, accumulate a little experience, and then you can take a step out into the industry on your own.

Shops cost a lot of money in a high school.

The statistics show that people with a four-year degree, over a lifetime, make much more money than those who don’t have one.

I graduated from (SCHOOL), just down the road, and the closest thing we had to a metal shop—or any other kind of shop— was the technical theater that was tucked into the corner with some hand-me-down

saws and everything else. God, I wish there were some counselors who even bothered to suggest going to technical schools.

They were aware of it, but it was frowned upon. You’re going to a private campus school, so it’s assumed, with your better education, higher pay, and the money you’re putting into it, that you’re going to be the better student who can go and get a four-year degree and then keep going up.

This is short-sighted in the fact that the parents might have had higher aspirations, but I had my ten-year reunion, and the number of people who are now at (COMPANY), (COMPANY), and (COMPANY) moving boxes is phenomenal.

I earned a degree, a bachelor of science in technical theater, from (SCHOOL). I bounced around doing what I loved—theater related stuff—because that was what I was familiar with. Eventually, I decided that not having benefits, a 401(k), or any retirement future, was terrible. I took the skills I had and moved them into a different field that had those possibilities. Designing stuff—making stuff with my hands—transitioned into making things with metal instead of with 2x4s.

I went to (SCHOOL), and they had a lab with 3D printers and stuff like that. The counselors never told me to go to a trade school. They always told me to try and be an engineer or go to a four-year college and stuff like that. My shop teacher knew I didn’t like school, so he mentioned, “I think a trade school would be perfect for you.”

I went to a trade school. I was never told once by a counselor to go to a trade school.

I was homeschooled for pretty much all of my life. I took some courses. What helped me get into the program was PSEO. That was a big deal. I was going to opt-in (SCHOOL) and ended up taking an auto body course. I did some welding on that one. I enjoyed the welding and the auto body, but once I decided to go for the full degree, the welding portion was fantastic, and I loved it. The auto body, not so much.

It was not my thing; I don’t know.

Is there anyone here that has any doubt that there’s a job awaiting them when they finish?

No doubt, but I plan on building resumes at the end of April or beginning of May so SUMMER 2017 ENTERPRISE MINNESOTA /

25

that I can time it right. I was going to do informational interviews because this is new to me. I don’t know anything about the companies, the work environments, or anything. I was going to do that and try to find one to work at this summer.

I don’t see an issue with trying to find

When we are in class, it’s kind of like we’re on the floor, you know? We’re informed either the day prior, or the Monday prior, what we have to get done.

We clock in, and we do it. a job as a welder or for any manufacturing. It’s not the type of manufacturing or anything like that. There are a ton of positions, and they’re all open. I’m linked to a website, and I get an email for every job that pops up for welding. There’s not enough, my personal belief, welders for the jobs that need to be filled.

But then you get that picky type of person, “Oh, I only want to be a (blank) for this company. Oh, I can’t find a job.”

Being a welder, you’re very versatile as to what you can do. There are multiple types of welding: TIG, MIG, short art, and spray.

It’s people getting the idea they want to do just one job for the rest of their life. It just doesn’t work out.

What surprised you about being a student here?

In high school, I felt like the teacher didn’t know what the heck she was talking about. I felt like my teacher was uneducated about welding. I hate to bash on the school, but when I came here it took me by surprise.

When we are in class, it’s kind of like we’re on the floor, you know? We’re informed either the day prior, or the Monday prior, what we have to get done. We clock in, and we do it. You hear whether we choose to take it or not. Break time, or eat?

It’s just like in the real world. We’re being put in an environment where, although 26

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we’re in school, we’re still working.

It’s simple enough to understand. I know we had one guy in our class, when we were working on tubes and trying to find the surface area of them, he was having such a hard time trying to grasp it. There are two circles you have to work with, but, after an hour of explaining, he finally figured it out.

It takes time, but math is simple.

I’m here from the military where I was an infantryman. I didn’t want to go to school, couldn’t apply myself to school or anything like that, at the time. I was honestly impressed with what my actual math and English scores were.

Another student and I had low scores on the math. The teachers got together and hired a tutor. The tutor was amazing. The math is hard for me.

We struggle because some of us are fine with the math and would like to move on but another portion of the class is struggling hard with it. It makes it difficult to gauge what the right speed to go at is for some of the math, depending on the student.

Manufacturing executives tell us that the skills gap is still a big challenge for them.

What advice would you give them?

Internships—I haven’t had one. There have been a couple of different places I’ve talked to about them, but I’ve seen internships as a trial for everybody. You get to learn the company or the job. You get to learn, and the company gets less expensive labor. There’s some risk involved for them, of course; learning or teaching and having somebody walk away, but that’s experience.

I would agree with that because right now the amount of comfort I have going into the welding is (low). If I were to have an internship, if there were more available options for an internship, I’d be more comfortable going into the field, whether it’s that you’re slowly moving into it, or you’re jumping into it right away.

All my jobs have been internships, and I was working with the baby boomer who has worked the job. Not this job, so much, but my last two. Learning from them and knowing the way to do it at a low price for them—I didn’t get benefits—well, I did with the union, but it’s cheap labor, compared to their entry…

Coming straight out of high school, it’s

going to be my first real job ever. I guess I’m nervous. I’ve never had a full-time job before. I worked part-time, 30 hours a week. I want a full-time internship, so I can get up, go to work every ... five, six days a week, and have that feeling I can do it.

I don’t know if there’s anything like this, but if there was an available list of which companies are readily available to give out internships… (COLLEGE) had a list of who was looking for interns—who they’re willing to teach while they’re working— stuff like that. That would also help. I think that would also help bring more people in and it would also help the workers,

Here, my instructor will spend an extra hour in the classroom if we need to.

We just finished a project, and half of us didn’t understand it. He assigned another project so we would get it. That has not happened to me before. themselves, become more knowledgeable about the job.

When I went to HVAC school, they had postings of about 30 different jobs. I thought that was nice. The problem with that is they say HVAC is one of the highest paid trade jobs, but they want three years of experience. The big issue was you can get paid $60,000-70,000 coming right out of school—some are willing to pay that if you’re willing to sell a bunch of crap. I would look up HVAC jobs, and most of them were looking for five or ten years of experience, and they were willing to pay six figures.

Some manufacturers have challenged with the so-called soft skills of younger employees. You know, coming to work on time, staying all day, staying off the phone, things like that. Do you agree that is an issue?

One of the biggest issues.

We lost out on our math portion last

semester because half of our class would show up about two hours late and then stay for three hours… not even three hours… maybe like an hour and a half, and then go home. The rest of us, we’re trying to learn as much math as we can.

Thinning the herd.

(SCHOOL) does that.

That’s what our instructor did.

Three days and he lost one letter grade.

Four days and he lost another…

We had people who fell off the face of the earth. Honestly, we don’t know where they went. We have people who show up when they want to. If they want to sleep in an extra couple of hours, they say, “Oh, I’m just going to go in late.”

I was going to say, for some people, at least in our class, we’ll have a Wednesday class where it’s a half-day. A lot of times the people who are driving in for 50 minutes, for them, they weigh it.

“Okay, I’m driving almost two hours for a half day of school, maybe it’s better if I just stay home.”

There are also the people who work 40 hours a week. I work a full-time job and go to school full time. A lot of times, around 11:30 or 12:00, I’ll leave school and go to work so I can make my hours and make my money to go here. Alarm clock issues? I’m a prime example. I have three different alarm clocks, and I have eight different alarms on my phone.

I won’t wake up to it at all.

Yeah, and some of us have been around long enough to figure out that, when you lose a job once, it’s, “Whoops, I won’t do it again.”

I’ll piggy back on that one. I paid for my education, worked hard, and I want to be here as much as I can be here—even if I stay late sometimes. “Okay, I have to stay late. I have to get my stuff done.”

I work at a car dealership and the turnaround... I work in the quick lane at a (COMPANY) dealership and the turnover rate for every person… Maybe that person will be there for about two months. It’s ridiculous.

The majority of them are high schoolers, but still, that’s ... They’re starting out in that state of mind. “Oh, that’s just a simple job, I can just go get another one.”

2017 State of Manufacturing® Event Schedule The State of Manufacturing® results will be unveiled at a series of meetings statewide. All are invited.

You can register at www.stateofmanufacturing.com.

Here’s the schedule.

Statewide Survey Release Event

Southwest Minnesota

Tuesday, May 9 4 - 7 pm Minneapolis Convention Center 1301 2nd Ave S. - Room 101 Minneapolis, MN 55403

Monday, May 22 9 am - 12 pm Southwest Minnesota State University Conference Center – Upper Ballroom 1501 State Street Marshall, MN 56258

Southern Minnesota

Northwest Minnesota

Wednesday, May 10 9 am - 12 pm Steele County History Center 1700 Austin Road Owatonna, MN 55060

Tuesday, May 23 9 am - 12 pm Northwest Minnesota Foundation 201 3rd St. NW Bemidji, MN 56601

West Central Minnesota

Northeast Minnesota

Wednesday, May 17 9 am - 12 pm Bigwood Event Center Kempfer Room 925 Western Ave Fergus Falls, MN 56537

Thursday, Jun 8 1:30 pm - 3:30 pm Detroit Diesel Remanufacturing 3895 South Hughes Road Hibbing, MN 55746

Central Minnesota Thursday, May 18 9:30 am - 12:30 pm St. Cloud State University Atwood Memorial Center 651 1st Ave S. St. Cloud, MN 56301 This event could not have been accomplished without the support (financial and otherwise) from Platinum partners: Bremer Bank, Granite Equity Partners, Gray Plant Mooty, Marsh & McLennan Agency, Minnesota Employment and Economic Development, and RSM. Gold partners include the Blandin Foundation and Central Package & Display.

SUMMER 2017 ENTERPRISE MINNESOTA /

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MANAGING GROWTH AND PROFITABILITY BY JEREMY ZWART

Growing companies need to assess their performance and resources.

28

/ ENTERPRISE MINNESOTA SUMMER 2017

G

rowth among U.S. middle market companies has outpaced national averages across the board since 2011.

Manufacturing is already the largest middle market sector (18 percent of organizations), with some verticals within the industry enjoying dramatic growth— middle market manufacturers of industrial, commercial and computer equipment increased revenues a whopping 163 percent between 2011 and 2016.

While there are sectors in our economy that are challenged, the United States remains one of the stronger economies in the world. Industry leaders are betting on growth by increasing their investments in information technology, equipment, facilities, training, process improvements, mergers and acquisitions, and research and development. They are also implementing strategic plans to capitalize on these investments in order to:

• Grow sales domestically and

internationally, both in existing and new markets

• Integrate or offer services along with their products

• Introduce new and improved products • Ensure profitable margins Each year new challenges to the world economy and corporate growth arise—and businesses should expect this to continue in the future. Experienced leaders know that while they can’t anticipate external events, they can control internal processes— and develop plans for growth that manage contingencies both good (e.g., an unexpectedly hot product or softness in commodity prices) and complicated (e.g., a declining U.K. pound that presents risks for the U.S. dollar).

DEVELOPING A GROWTH STRATEGY These plans require a rigorous review of a company’s current strengths and weaknesses, and often benefit from an outsider’s fresh perspective. Companies need to assess their performances and resources. They should also seek opportunities that uncover where to drive growth, how to manage that growth, and which customers and products to target to achieve their growth goals.

From this baseline, executives need to answer key questions in order to develop a realistic strategy for growth:

• Should you grow? Not every company should grow—or has

the resources to do so. Growth may require new leadership, new capabilities and new resources—possibly via merger, acquisition or strategic alliance. Making sure your company has a well-crafted M&A strategy, including market goals, valuation estimates and detailed plans for post-merger integration. The realization of forecasted synergies can ultimately determine if the acquisition is successful. Trusted advisors—financial, tax, human capital and legal—can both help you to prepare and find buyers or sellers.

• In what markets should you grow? Manufacturing and

distribution are capital-intensive industries. Unfortunately, many firms invest first and ask questions later, developing new products for the wrong customers, at the wrong time, with the wrong features—leading to the wrong financial

Experienced leaders know that while they can’t anticipate external events, they can control internal processes—and develop plans for growth that manage contingencies both good (e.g., an unexpectedly hot product or softness in commodity prices) and complicated (e.g., a declining U.K. pound that presents risks for the U.S. dollar). results. A better approach is to leverage existing customer data via research and analytics to identify new opportunities.

For example, manufacturers can find ways to leverage existing production processes in new markets or sectors to prevent over-reliance on a single, popular area.

• Where should you grow? It can seem overwhelming to

expand internationally—as well it should. Yet moving beyond traditional borders can be lucrative, and doesn’t necessarily require new facilities or staff in new countries.

For example, long-term opportunities may be found in emerging markets that have been hit hard over the past few years. An experienced third party can often help firms enter foreign markets—whether via partnership, licensing or joint production facilities—and identify and minimize their risks.

Sometimes caution is the best approach.

• Should you make a global move? On average, 37 percent of foreign- and domestic-made goods are sold outside of a company’s home country (29 percent for U.S.-based

SUMMER 2017 ENTERPRISE MINNESOTA /

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manufacturers and distributors). At the same time, middlemarket U.S. companies have a unique domestic opportunity given the appeal of the U.S. market: Foreign direct investment in the United States totaled $425 billion in 2015.

The United States is the home to the largest amount of FDI in the world.

• How should you grow? If management has determined that growth depends on increased volumes of existing products, it’s imperative that procurement, production and distribution be as efficient (and profitable) as possible. Make sure your supply chain is ready to keep pace, and consider investments in equipment and information technology to increase agility— and to build stronger customer relationships.

Following are some ideas to consider when asking yourself that very question:

• Evaluate consolidation of operations: Can you eliminate

excess capacity while providing for future flexibility when the signs of growth return? Many companies are taking a hard look at their activities to drive long-term value despite short-term costs.

• Reduce inventory levels: From raw materials to finished

goods, truly analyzing your data can help you find and reduce slower-moving items; changing your supply chain can reduce raw materials and other inventory; and focusing on process can identify areas for improvement.

Growth does not always mean revenues nor does it always generate corresponding profit increases, leading many executives to refocus their attention on margin management.

If growth is expected from new markets, products or services, how will you reach and manage new sales channels? How will you make customers aware of innovative products or value-adding services?

Developing a multi-sector sales approach—while maintaining current levels of customer intimacy and satisfaction—often requires new talent, including sales staff familiar with new sectors, development engineers skilled in emerging areas and suppliers able to meet new sourcing requirements. Staff will need to be found, recruited and/or transferred. For manufacturers the impact of FDI results in nearly 2.5 million jobs supported by majority-owned U.S. affiliates in 2014.

WHAT CAN MANUFACTURERS DO DIFFERENTLY THIS YEAR TO ENHANCE GROWTH? Growth does not always mean revenues nor does it always generate corresponding profit increases, leading many executives to refocus their attention on margin management. Among U.S. middle market manufacturers, the top methodology used to boost profits is to deploy operations improvements to reduce costs.

But some profit-motivated initiatives are expensive, and may not be strategic for all. Individual manufacturers should prioritize initiatives to increase margins, mitigate risk and support longterm growth—specific to their companies.

• By the end of 2016, many manufacturers were left wondering 30

where top-line growth will come from and when pricing pressures will ease. The short answer to both questions is that there is no easy answer. Some manufacturers will tell you they are already in a recession while others see continued pressure to drive sales in a sluggish worldwide economy.

Couple this with continuous pressure throughout the supply chain and you have an environment that begs the question, “What are you doing differently?”

/ ENTERPRISE MINNESOTA SUMMER 2017

• Leverage technology to increase productivity: Productivity

in U.S. manufacturing has slowed, but remains one of our greatest industry strengths when compared to other countries.

Having the latest machinery is only part of the equation; using data to drive efficiency and quality can lead to lower costs.

• Location, location, location: Many companies are looking at

their footprint to ensure they are close to their customers and their suppliers to reduce costs, reduce inventories and drive customer engagement. We’ve seen the “reshoring” trend for the past five years; don’t forget you can do the same thing in the United States.

• Timing for international expansion: There are many signs that navigating the worldwide economy is a challenge, but history shows that our economy runs in cycles. When business improves in certain parts of the world, is your company ready to reap the rewards? This approach is not without its pitfalls, but we are seeing companies slowly evaluate their options for international growth.

• To hedge or not to hedge: Betting on an increase in key

raw material prices is not really a strategy. Engaging in a comprehensive strategy is the only way to ensure a company wins over the long term. This would include a careful analysis of trends, protecting a set percentage of your material requirements and considering ways to protect the purchase as well as the sales side of the equation.

• Sales team structure: What worked in the past is not

guaranteed to work in the future. More companies are using multiple channels to drive sales. Relying on sales personnel or distributors who have driven sales in the past will not work by itself. Many companies are developing corporation-wide sales strategies, aligning sales teams by industry (vs. by geography) and employing social media for outreach.

• Investing in innovation: Do the

math: There has to be a return on your innovation investment, even if some new ideas don’t work.

The only way to ensure consistent investment is to have an innovation budget, assign responsibility and measure the results. Every year might not be a winner but, in the long run, a comprehensive strategy will ensure your company is around for decades to come.

Many executives talk about the importance of growth, but “growth” itself isn’t a strategy. Looking holistically at your organization’s strengths, weaknesses, opportunities and challenges along with asking key questions about where and who the company wants to be in three, five and even 10 years from now will help your executive team determine what the right “growth strategy” is to meet those objectives.

Gra n iteEqu ity.com

CUT DOWN COSTS WITH MOTOR REBATES. Electric motors are the workhorses of any manufacturing facility.

But if they’re not energy efficient, they may be driving up your operating costs. Make the upgrade to energy-saving permanent magnet alternating current (PMAC) motors today and earn rebates from $30–$13,500 per motor* , which will not only lower your up-front costs but also increase the return on your investment.

Jeremy Zwart is an audit partner in the Minneapolis office of RSM. He leads the manufacturing industry team in Minnesota and is a member of RSM’s national manufacturing industry team. He can be contacted at jeremy.zwart@rsmus.com.

For more information, contact an energy efficiency specialist at 855.839.8862 or visit xcelenergy.com/MotorEfficiency.

*Depending on horsepower.

4.7x4.75_MN-MotorsEntpriseMag_P01.indd 1

© 2017 Xcel Energy Inc.

3/31/17 8:56 AM

SUMMER 2017 ENTERPRISE MINNESOTA /

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Final Word

Hope in Numbers Pine Tech President Joe Mulford says the job prospects are out there. Communities and manufacturers just have to get to them earlier.

T

his year’s version of Enterprise Minnesota’s State of Manufacturing® survey taught us that while the depth and impact of the skills gap continue to trouble most manufacturers, there is emerging hope at several levels in the search for a solution.

This year, among the 15 focus groups that we hosted statewide to supplement the 500 telephone interviews our pollster conducted with manufacturing executives, we included five that were composed solely of students, three consisting of tech school students and, for the first time, two at high schools. Each discussion enlightened our understanding of the skills gap issue from the all-important perspective of students to such an extent that we’ll consider expanding the number of student focus

We’re talking to students who have made a decision to enjoy satisfying life-long careers in manufacturing. groups in the State of Manufacturing 2018 survey.

The value of these focus groups is that we’re talking to students who are engaged and involved and who have made (or likely will make) a decision to enjoy satisfying life-long careers in manufacturing.

Their experiences and insight can help manufacturers and educators develop bestpractice strategies. They can tell us how they developed their interest in machines or engineering, who encouraged them along the way, and what challenges might have obstructed their path.

But after sitting in on the focus group hosted by Pine Technical and Community College—the last in our series and always among the most insightful—it occurred to me that we are not getting insights from 32

/ ENTERPRISE MINNESOTA SUMMER 2017

Lynn Shelton is director of marketing and legislative relations at Enterprise Minnesota.

students who aren’t yet motivated to think about the fact that they might have a future in manufacturing. We need to find out who they are, and why they aren’t yet thinking about their futures.

And, according to Pine Tech President Joe Mulford, there might be a lot of prospects out there. Joe is one of our favorites here at Enterprise Minnesota (where he is a board member) because he is unafraid to roll up his sleeves and look for practical solutions.

During the focus group, he described that to improve recruiting at Pine Tech he analyzed student announcements at local newspapers to determine how many high school students intended to pursue opportunities in post-secondary education.

In one sample, he discovered that a whopping 40 percent of students were still undecided in April, just two months before

their graduation. We need to identify these students early on, and counsel them about opportunities in manufacturing and other careers that don’t necessarily require a fouryear degree.

That’s where, Joe says, it gets personal for him. “On a personal level for me, we’re not doing a good job.” If you look at a class with 120 students and just one guidance counselor for all of this, it’s “just bad math.” Joe started traveling to schools to make a presentation about the process of decision making. “I told them that life is probably not going to be overly kind if you’re undecided or just kind of cruising.”

“It’s about starting earlier in their senior year. These students have to start making decisions at that point,” Joe says.

He advises school counselors to focus on the undecideds. In a class of 120, he says, probably 40 of them already know what they are going to do by the end of their junior year. “They’re taken care of. It’s starting to funnel that down to the higherrisk kids.”

He advises them to look at three schools, so a bad experience or circumstance or location won’t sour them on the whole experience.

“We have to give them a nudge,” he says, usually adding that the time to arouse their interest might be much earlier, in middle school, and even elementary schools.

And by “we” I assume he means the whole community. Manufacturers have made impressive progress in that regard.

Their outreach and partnerships with local schools in places like Alexandria, Fergus Falls, White Bear Lake, Winona and Redwood Falls represent remarkable work.

But even the most successful educators and manufacturers in those communities would say that it is only a beginning. We’re providing information; now, at least in President Mulford’s calculation, we have to dig deeper and start communicating with prospects at a personal one-on-one level.

I have a feeling it’s going to happen.

THANK YOU TO OUR

2017 SPONSORS

Platinum – Statewide Sponsors • • • • •

Bremer Bank Granite Equity Partners Gray Plant Mooty Marsh & McLennan Agency Minnesota Department of Employment and Economic Development (DEED) • RSM

Gold – Allied Sponsors • Blandin Foundation • Central Package & Display

Silver – Executive Focus Group Sponsors

• 360 • Agricultural Utilization Research Institute (AURI) • Alexandria Area Economic Development Commission • Alexandria Lakes Area Chamber of Commerce • Alexandria Technical & Community College • Center for Rural Policy and Development • G&A Partners • Gray Plant Mooty • Iron Range Resources & Rehabilitation Board • Marvin Windows and Doors • Minnesota AgriGrowth Council • Minnesota Precision Manufacturing Association • Northwest Minnesota Foundation • Pine Technical & Community College • Saint Paul Port Authority • Southwest Initiative Foundation • TEAM Industries • West Central Initiative

Silver – Student Focus Group Sponsors • • • • • • • •

Alexandria Area Economic Development Commission Alexandria Lakes Area Chamber of Commerce Alexandria Technical & Community College Clow Stamping Company Dunwoody College of Technology Pequot Tool & Manufacturing Productivity Inc. Wilson Tool

Bronze – Manufacturing Sponsors • • • • • • • • •

Absolute Quality Manufacturing, Inc. Delmar Company Hed Cycling Products Mactech, Inc. Mars Supply Tolerance Masters Tri-State Manufacturers’ Association (TSMA) Ultra Machining Company, Inc. (UMC) Von Ruden Manufacturing, Inc.

Reception Beer Sponsor • Summit Brewing Company

FIND THE RIGHT SUPPLIERS RIGHT HERE. The Made in Minnesota Directory of manufacturers is a FREE online directory of products and supplies manufactured right here in Minnesota.

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Company Listings Include: Names and addresses of participating companies Corporate contact information and number of employees Products they make – and products they are interested in buying from Minnesota suppliers Information on products and suppliers to key Minnesota industries

Our Manufacturers Supply Chain Database makes it easy for Minnesota companies to find – and be found by – home-state suppliers that are a perfect fit.

It’s easy to use. Register – or search – now! mn.gov/deed/madeinmn For more information on the Made in Minnesota Directory, contact Magda Olson at 651-259-7183, email: magda.olson@state.mn.us