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new High-Performance Manufacturing Program THE BIG PICTURE: A presents a holistic (and testable) view of lean processes

Helping Manufacturing Enterprises Grow Profitably WINTER 2019

Minnesotan fromTree to Barrel Co-owner Heidi Korb with Russ Karasch, her father and mentor

Black Swan Cooperage competes in the surprisingly competitive world of making barrels for distillers and brewers

Enterprise Minnesota 2100 Summer St. NE, Suite 150 Minneapolis, MN 55413


9001:2015

Enterprise Minnesota

Enterprise Minnesota FY 2019 Manufacturing Workshops and2019-2020 Business Events FY Manufacturing Workshops and Business Events

Enterprise Minnesota’s events offer outstanding professional expertise Enterprise Minnesota’s events offer outstanding professional and expertise and practical business solutions to improve competitiveness growth and practical business solutions to improve competitiveness and growth opportunities for Minnesota’s manufacturers and related industries. opportunities for Minnesota’s manufacturers and related industries. DATE

DATE

TOPIC

CITY

TOPIC

CITY

Oct. 8 8/7/2018

Continuous Improvement

Continuous Improvement Continuous Improvement

St. Cloud

9/6/2018

Strategy

White Bear Lake

Sept. 24 7/10/2018 7/26/2018

8/23/2018 Oct. 30

Nov. 7 9/27/2018

Strategy Strategy

St. PeterSt. Cloud

Fergus Falls

Plymouth

Leadership/Talent Heights Executive Manufacturing ForumInver Grove Rochester

Continuous Improvement Leadership/Talent

Anoka

Brooklyn Park

10/9/2018 Nov. 19

Continuous Improvement Leadership

Wyoming Woodbury

Dec. 5 11/8/2018

Continuous Improvement Continuous Improvement

Eagan

Prior Lake Plymouth

10/25/2018

Continuous Improvement

Shoreview

11/13/2018 Dec. 17

Strategy Strategy

Anoka

Jan. 14 1/8/2019

RevenueImprovement Growth Continuous

Roseville St. Cloud

12/6/2018

Leadership/Talent

Burnsville

1/24/2019

Leadership/Talent

Winona

2/7/2019

Continuous Improvement

Willmar

3/7/2019

Continuous Improvement

Mankato

3/27/2019

Strategy

North Branch

4/9/2019 March 10

Leadership/Talent Revenue Growth

Apple Valley Mankato

March 19 5/22/2019

Leadership Continuous Improvement

Bemidji Edina

Jan. 30

Feb. 11 2/19/2019 Feb. 26

4/25/2019

6/27/2019 April 7

Continuous Improvement

Executive Manufacturing ForumShoreview Maple Grove The Value of Peer Councils Continuous Improvement

Continuous Improvement Leadership/Talent Leadership

North Branch

Eden Prairie Anoka

23 Revenue Growth STATEWIDEApril ENTERPRISE MINNESOTA EVENTS 5/14/2019

Litchfield

2019 State of MayManufacturing 7 ® Leadership Statewide Release

Brooklyn Center

Hutchinson Owatonna

Earle Brown Heritage Center

Willmar

For more information and registration, go to www.enterpriseminnesota.org, or email us at events@enterpriseminnesota.org. Sponsorship opportunities are available. Please call Chip Tangen at 651-226-6842 or email chip.tangen@enterpriseminnesota.org.

9001:2015


WINTER 2019

MINNESOTAN FROM TREE TO BARREL

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Black Swan Cooperage competes in the surprisingly competitive world of making barrels for distillers and brewers

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Leading for Results A new program helps manufacturers align performance with overall organizational goals while building team competencies

Strategy. Management Systems. Continuous Improvement. A complete approach to a healthy company

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The Big Picture A new High-Performance Manufacturing Program presents a holistic (and testable) view of lean processes

Workforce Partners A focus group of college presidents will give particular relevance to our next State of Manufacturing® survey

Growing Jobs While the Sun Shines, eh

Built to Order Litchfield’s Custom Products builds its reputation one cab at a time—literally

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A Strategic Shift in Culture States Manufacturing harnesses the power of ISO to evolve into global markets

Canada-based Heliene hires 130 people as it reclaims Mountain Iron’s solar panel manufacturing plant

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14 Climbing Success

Mind the GAP

New Brighton-based entrepreneur Ryan Angelo sets his sights on the $50 million wall-climbing industry

The Growth Acceleration Program helps Enterprise Minnesota reach Greater Minnesota while posting a stunning ROI

Visit the Enterprise Minnesota website for more details on what’s covered in the magazine at 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 enterpriseminnesota.org/subscribe. WINTER 2019 ENTERPRISE MINNESOTA /

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Helping Manufacturing Enterprises Grow Profitably

Workforce Partners

Publisher Lynn K. Shelton 9001:2015

A focus group of college presidents will give particular relevance to our next State of Manufacturing® survey

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don’t mind admitting that Joe Mulford, president of Pine Technical & Community College, is among the most fascinating personalities I’ve encountered in this job. He is an idea machine, he knows his mission, he thinks continually about the value his school provides for students, and he understands his role in his community. Mulford’s mix of passion and expertise are two reasons we value his role as a member of Enterprise Minnesota’s board. But these reasons are also why we are particularly enthused that the next publication of our annual State of Manufacturing® (SOM) survey will feature a focus group panel of college presidents. The SOM retains one of America’s top public opinion pollsters to annually conduct a statistically valid survey of Minnesota’s small and medium-sized manufacturers. We augment this objective research by conducting between 14 to 18 focus groups around the state. These interviews primarily consist of manufacturers, but we’ve also discovered intriguing insights by recruiting separate groups of students, parents, and high school guidance counselors. This year, we’ll interview a selection of college presidents who represent the Minnesota State Colleges and Universities System, with a particular emphasis on the executives who lead technical colleges. We think a group interview with college presidents will be particularly relevant as manufacturers grapple with how their ability to attract and retain employees—particularly skilled employees—affects their ability to grow profitably. 2

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Past research has revealed how manufacturers look to post-secondary educators—particularly from technical colleges—as a resource for advice and assistance. We think input from college presidents through this focus group will significantly guide those conversations. Their insights on how Minnesota’s manufacturers can help develop public/private partnerships—both in their communities and statewide—will help address skills development and the worsening crisis in employee availability. These challenges aren’t going away, and they certainly aren’t going to be solved solely by one-off plant tours or community job fairs, as valuable as these activities may be. The real long-term solutions will likely require systemic changes about how manufacturers, their communities, and their educators view their ability to collaboratively sustain their local economies. Technical colleges—and their presidents—are ground zero for that discussion. These focus groups will also give manufacturers a glimpse into the complicated realm of college administration. While college presidents are naturally inclined to quickly react to manufacturers’ recommendations and insights, the financial and internal administrative hurdles college presidents face will give everyone empathy for what they are up against. Bob Kill is president and CEO of Enterprise Minnesota.

Custom Publishing By

Creative Director Scott Buchschacher Copy Editor Catrin Wigfall Writers Sue Bruns R.C. Drews Dan Heilman Maria Surma Manka Robb Murray Catrin Wigfall Photographers Sarah Miller Sarv Mithaqiyan Jeremy Petrick 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 ldapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event chip.tangen@enterpriseminnesota.org 612-455-4225 Enterprise Minnesota, Inc. 2100 Summer St. NE, Suite 150 Minneapolis, MN 55413 612-373-2900 ©2019 Enterprise Minnesota ISSN#1060-8281. All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine.  Enterprise Minnesota magazine is published by Enterprise Minnesota 2100 Summer St. NE, Suite 150, Minneapolis, MN 55413 POSTMASTER: Send address changes to Enterprise Minnesota 2100 Summer St. NE, Suite 150 Minneapolis, MN 55413

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NICHE COMPANIES

Minnesotan from Tree to Barrel Black Swan Cooperage competes in the surprisingly competitive world of making barrels for distillers and brewers

PHOTOGRAPHS BY SARAH MILLER

Co-owner Heidi Korb with Russ Karasch, her father and mentor

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he scent of freshly planed white oak hangs in the air at the Black Swan Cooperage in Park Rapids, Minnesota. Heidi Korb, co-owner and president of the barrel making plant, oversees the operation. Stacks of cut and planed white oak boards wait to be shaped into barrel staves (the boards that become the barrel). Tongue-and-grooved hexagons will next be rounded into barrel ends or “heads.� The oak logs from Minnesota or Wis-

consin that get transformed into the barrel staves will flavor and mature the spirits of hundreds of distilleries across the country. Saws and planers hum and buzz as local craftsmen quarter the big logs and then cut them into 40-inch lengths. The boards must be straight and without knots or knot holes. The crafters plane them, remove the bark, and shape the staves, tapering the boards on top, bottom, and both sides. Korb, one of very few female coopers (barrel-makers) in the U.S., learned the trade from her father, Russ Karasch, who

worked as a cooper in the St. Paul area for 20 years before starting a business of his own. As a teenager, Korb worked with her father, learning each part of the barrelmaking process. After earning an associate degree in marketing and sales from Ridgewater College in Willmar, she formed a partnership with Brian Lee, then owner of a distillery in New York, and Black Swan Cooperage was born. The name, indicative of something very rare, is appropriate for a cooper, as there are only about 40 cooperages in the U.S. today, and even more

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fitting for a woman cooper. The market for barrels has grown considerably, but the number of coopers has not. Black Swan first opened in 2009 in Eagle Bend, Minnesota. Two years later, Korb relocated the company to the industrial park in Park Rapids. Now, in a 10,000-square-foot building, Black Swan produces around 4,500 barrels per year. It’s a small operation, Korb says, but the demand is there, and Black Swan’s reputation for producing quality barrels has resulted in sales to over 200 different distillers across the U.S., Canada, Mexico, and even Peru. The market for used barrels has also grown. Home brewers and distillers of other spirits prefer used barrels not only because they are less expensive, but they also come with tones of flavor they’ve picked up through previous distillings. Korb says several used Black Swan barrels have been sold to distilleries in Europe. Until two years ago, Korb bought staves

The art of barrel making has not changed much in over 2,000 years. Historians trace the barrel as far back as 325 B.C. and credit the Celts with its origin. from several different vendors, but white oak is getting harder to find. Diminishing supplies throughout the U.S. make it difficult for stave makers and coopers to obtain enough prime white oak to meet demands, and recent weather conditions have made it difficult for Minnesota loggers to harvest the wood. In 2017, Korb expanded Black Swan’s operation to include stave making. By investing in more equipment and adjusting the production process and schedule, the company now controls both the quality of wood and the craftmanship of the staves. The art of barrel making has not changed much in over 2,000 years. Historians trace the barrel as far back as 325 B.C. and credit the Celts with its origin. The use of staves and the art of bending them into water-tight containers is remarkably similar today to the early days of the barrel. Staves are narrower at the ends, and all edges and ends are tapered so that, as the barrel is shaped or “raised,” the boards come together into water-tight seams. Twenty to 40 individual 4

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Korb, one of very few female coopers (barrel-makers) in the U.S., learned the trade from her father, Russ Karasch, who worked as a cooper in the St. Paul area for 20 years before starting a business of his own.

staves are required, depending on the size of the barrel. Metal rings secure the staves, with the largest ring at the barrel’s center (bilge) to determine the desired circumference of the barrel. Black Swan produces barrels using three types of staves—traditional, cross-grooved, and honeycombed—in sizes ranging from 5 to 53 gallons. Developed by Korb’s father, cross-grooved and honeycombed staves have been patented by Black Swan. Both are customized methods of cutting or

drilling into the inside-facing staves to expose more of the wood’s end-grain. Barrels made without grooves or honeycombs are “traditional” barrels. Black Swan, Korb says, “is the only cooperage to use end-grain extraction.” Because more wood surface is revealed from grooving or drilling into the staves, more flavor tones are released from the wood’s natural sugars, and maturation of the product is accelerated. Black Swan’s website boasts, “Our staves provide the largest


(patented) surface area of any stave on the market…[allowing] for faster extraction of oak barrel components…. We have been accused of having the sweetest whiskey barrels on the planet.” Once the barrel staves are harnessed by the rings, the barrel is placed in a “hot tub” for about 45 minutes—a process Korb calls “water bending,” as it makes the boards more pliable. It also releases tannic acid from the oak, reducing the harsh notes in the wood and turning the clear water in the tank to blackish-brown. After the barrels have been soaked and the staves have expanded, the splayed staves on one end are brought together with a wire rope or cable device to form the full barrel shape. No glues or adhe-

sives are used; the staves come together in watertight seams. Black Swan barrels are then raised before they are toasted and charred. During this heating process, a slow fire of oak shavings toasts on the inside of the barrel. The toasting further enhances the flavor tones of the oak and releases more tannins. Once the barrels have been toasted and charred, steel hoops are placed to maintain and secure a barrel’s shape. Steel strips purchased from a vendor in the Twin Cities are cut, curved and riveted to fit the barrel. The barrel is then capped as the “heads” or ends are put into place. The rims of the round heads are beveled to fit snugly onto the barrel tops and bottoms. Finally, the bung hole is drilled by hand, with the same type of tool used hundreds of years ago, and a plug is inserted. Black Swan barrels could easily be stamped “Made in Minnesota” from acorn to distillery. Most of the white oak harvested for staves comes from Minnesota, harvested by Minnesota loggers. The metal rings used to shape the barrels are crafted by an ironsmith in central Minnesota. The steel strips are also made in Minnesota and then formed into barrel hoops by Black Swan’s craftsmen. With the rising popularity of craft distilleries, the demand for well-crafted barrels is not about to taper off any time soon. The market is strong, and the small company’s 11 employees will continue to make staves and barrels to meet the demand. But coopers and stave-makers, including Black Swan, face one main challenge: finding enough white oak to build the barrels in a world where demand is growing and forests are declining. —Sue Bruns

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Mike Block, founder of ELITE Additive

TECHNOLOGY

Added Dimension After a decade at Stratasys, entrepreneur Mike Block took his expertise back to Bemidji

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s a student studying design technology at Bemidji State University in 2003, Mike Block’s first exposure to 3D printing opened up limitless possibilities. “It was amazing,” he recalls. “You could design something on the computer, send it to a printer, and it physically made an object!” He wondered what the product development landscape looked like for this technology and found that everything seemed to be transitioning to additive manufacturing (i.e., 3D printing). After graduating from BSU in 2006, Block worked as a machinist for Fastenal and then gained experience and expertise in additive manufacturing (AM) through 10 years at Eden Prairie-based Stratasys, one of America’s innovators in 3D printers and production systems. During Block’s ninth year at Stratasys, he trained college and technical school students in

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3D printing technologies. Meanwhile, Block was looking for a way to move his family back to northern Minnesota and continue his career. After Stratasys accepted his proposal to work remotely from his garage, Block relocated—first to Grand Rapids and then to Bemidji in November 2017. His business idea was to print 3D parts for manufacturers upon request or for individuals with an idea to bring to the market. The interested party could come to Block with a napkin sketch, and he’d refine it as a CAD design and then provide an affordable platform to produce a prototype. Before he even purchased his first 3D printer, Block initially pitched his idea in Bemidji at a Launchpad event, which is a weekly meeting of entrepreneurs, business owners, investors, and advisors—

people with ideas. Attendees at the Launchpad meeting were intrigued. “This was something they hadn’t had the opportunity to work with before,” Block says, “but they saw the vision for it.” Although 3D printing dates back to the 1980s, the concept and the technology were not common to the general public until the mid-2000s. Many manufacturers are still unfamiliar with its potential applications. Encouraged, Block put together a business plan, and, with the help of the Northwest Minnesota Foundation and financial backing from Security Bank USA

“This company can be world-wide,” Block says. in Bemidji, he started ELITE Additive while continuing his work for Stratasys. During a six-month transition, Block trained his replacement at Stratasys and has maintained a relationship with the company’s channel network. “They call us into presentations so we can try to reach whoever is interested,” he says. For about five months after starting ELITE Additive, Block was a one-man


operation, focusing on small jobs. His first parts order was a $62 rain sensor cap for a boat company—not a huge money maker, but it was satisfying to work with a local company and eliminate expensive tooling costs. ELITE could 3D print the part on site. To expand his customer base, Block used social media to connect with companies that use 3D printing services. He posted marketing videos, sent out introductory letters through LinkedIn, made countless phone calls, and relied on word of mouth. Initially, many of his clients were local or regional, “but this company can be world-wide,” Block says. A client can send him an email with a file attached; EA can print the object and ship it to the client. Gradually, Block landed more parts orders and established strategic business partnerships, allowing him to

“The industry has the ability to be the Amazon.com of manufacturing.” expand the range of services EA could provide. The original vision had been to provide parts for manufacturing, but Block recognized that manufacturers needed advice and guidance to incorporate Additive Manufacturing into their processes and assistance with specific post-printing needs. “There’s a bottleneck after the printing process,” Block says. A company might have 30 to 40 printers with capabilities of producing hundreds of parts, but 3D printed objects don’t usually spring from the printer ready to use. Support pieces required for printing must be removed; surfaces need smoothing or refining. While more manufacturers were moving to 3D printing, the finishing process was slowing things down. Block’s expertise could help manufacturers improve the quality of AM parts and introduce them to mass finishing and automated finishing options. He decided to revise his business plan, expanding it to help companies that already owned 3D printers and adding consultation services along with sales and marketing. “The industry is advancing by in-

troducing more materials that can be utilized in the printers,” Block says. Today’s printers work with a wide range of materials: 25 to 30 different polymers, thermoplastics, acrylic based plastics, certain types of rubbers, and 15 types of metals. Different materials require different throughput processes, and with specialized partners and subcontractors, Block says, ELITE Additive can now tackle just about any project sent its way. “Our strategic partners help us serve the needs of customers from start to finish without the huge expense of equipment.” And ELITE Additive’s professional consulting division (“The Additive Guys,” www.theadditiveguys. com) advises companies on printing and finishing needs. ELITE Additive has partnered with Hammond Roto-Finish and Abrasive Finishing, companies that specialize in various finishing methods from abrasive and vibratory to water tumbling and more. ELITE is also a sales rep agency for Hammond, adding sales and marketing to the company’s services. As the business concept expanded, Block moved the operation out of his home and leased a workspace in Bemidji from LaValley Industries, for whom he became an on-demand resource. Today, ELITE has 24 different accounts in fields that include automotive, dental, aerospace, and consumer products, with room to grow in industrial and medical applications. Block estimates that 90 percent of his business involves designing, 3D printing, and consulting. Roughly 5 to 10 percent is equipment sales, which he predicts will grow. Block believes the future for 3D printing is in full manufacturing. “The industry is moving to more autonomous manufacturing. We may get to the point where we can say, ‘Hey, Google’ or ‘Hey, Siri, build me a cup from the Cloud,’ and that could happen even without someone sitting at the printer. The industry has the ability to be the Amazon.com of manufacturing.” Under ELITE Additive’s revised plan, Block sees evolving opportunities for his company and for manufacturing. “It can be intimidating approaching Additive Manufacturing for your product development or manufacturing needs,” he says, “so with ELITE, there’s no need to worry. We can make life a lot easier.” —Sue Bruns WINTER 2019 ENTERPRISE MINNESOTA /

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STAFFING

New Employees Enterprise Minnesota strengthens its competitive edge with key hires

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nterprise Minnesota recently added two new professionals to its employee lineup. Robert Lodge is the new director of digital marketing and media relations. He comes most recently from the National Sports Center in Blaine, where he spent six years as a graphic designer and marketing manager and then was director of marketing. With a BFA in graphic design from the University of Minnesota-Duluth, he has also worked in graphic design for several companies. “It’s exciting to be a part of a company

that has such a positive reputation in the community,” Lodge says. “Enterprise Minnesota has been the voice of the manufacturing industry for a very long time, and it’s fun for me to step into this role and be able to build on our previous success. Communications is critical for any organization to navigate a ‘noisy’ landscape and stay relevant to its customers and stakeholders.” “I’m looking forward to getting out into the community more and meeting manufacturers,” he adds. “There are great stories to tell about the people behind the products. By showcasing the innovation

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“By showcasing the innovation and community value that our industry provides, I want to help inspire more people to get into manufacturing.” – Robert Lodge


and community value that our industry provides, I want to help inspire more people to get into manufacturing.” James Holthaus was recently named a business growth consultant at Enterprise Minnesota. He spent the previous 11 years at Watlow, a Winona-based manufacturer of electric heaters, sensors, and controls for commercial and industrial applications. At Watlow, Holthaus started his time as a staff engineer for the Thermo Solutions

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Group. In 2012, he transitioned into the functional lead for the embedded software company and quickly gained a passion for implementing lean principles into product development. As a continuous improvement manager of Watlow’s Winona facility, Holthaus emphasized lean principles in the production environment as well as the office environment, incorporating the use of Agile and Scrum. “Manufacturing is the lifeblood of Minnesota,” Holthaus says. “It brings jobs and opportunities for everyone. Being a part of helping manufacturers be more efficient and competitive enables me to be a part of keeping this great economic resource growing.” Before joining Watlow, he served as an engineer at TRW Automotive, also located in Winona. Prior to that, Holthaus worked as a consulting engineer for Omni Engineering, where he worked with companies in several industries, including automobile, aerospace, climate control, and OTRs. He received a BS in electrical engineering from St. Cloud State University and has also achieved certification as a Scrum Master.

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“We needed to start running the company in a more organized fashion and put more systems in place,” Joe Shallbetter says.

MANAGEMENT

A Strategic Shift in Culture States Manufacturing harnesses the power of ISO to evolve into global markets

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t’s not an uncommon story: A familyowned company has operated for generations, but there’s a feeling among leadership that today’s complex economy requires the company to reach for higher levels of efficiency and sophistication if it wants to evolve from a regional business into a global player. Founded in 1924, States Manufacturing of Minneapolis makes a broad spectrum of custom electrical and metal products. President and CEO Joe Shallbetter, the youngest of seven children, represents the third generation to lead States. As he considers his legacy to the fourth generation of ownership in the coming years, Shallbetter is passionate about building a better infrastructure and smarter processes that will support States’ success far into the future.

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After buying out his brother from the company, Shallbetter began significantly shifting States’ culture. He hired a director of manufacturing and created new positions, including an inside sales team, a director of sales, and project managers. In the last three years, States has grown its sales by 80 percent and doubled its margin. Despite these results, Shallbetter knew more could be done to strengthen and sustain the company’s success. “We needed to start running the company in a more organized fashion and put more systems in place,” he says. His conclusion: States needed to become ISO 9001:2015 certified. ISO 9001 is an international standard for quality management systems. Organizations around the world that are certified in ISO 9001 have met standards of process

efficiency and continuous improvement, and they are able to consistently meet customer and regulatory requirements. “ISO is the best practice of manufacturing practices,” explains Joel Scalzo, a business development consultant at Enterprise Minnesota. “It’s about defining how you’re going to run your day-to-day business and ensuring you have the right measurements in place to understand whether you’re doing what you say you’re doing, and, if not, how you correct it through internal auditing, analysis and corrective action. If you’re going to work at a higher level, big companies may require you to be ISO certified in order to be your customer.” Shallbetter and his team initially attempted to complete the ISO certification process on their own, which they quickly discovered was a huge challenge. “There were six of us trying to do the certification for about two months,” Shallbetter recalls. “Then we realized this was something we couldn’t self-implement.” States turned to Enterprise Minnesota to lead the company through the process. “More companies are starting to understand that it’s okay to raise your hand and get help with a specific area versus trying to grind through it or reinvent the wheel,” Scalzo says. “Our work with States was about helping them understand what they’re good at and what they need help

“There were six of us trying to do the certification for about two months. We realized this was something we couldn’t self-implement.” strengthening.” Scalzo’s colleague Keith Gadacz helped States integrate ISO with existing systems and worked with staff in sales, quality control, engineering, and other areas to ensure they understood how ISO could make their roles easier and more productive. ISO gave the company clarity on how to grow its ideal customer base and information on how daily performance metrics impact the business, he says. As a result, States has created smarter processes that ensure better quality, time to market,


and profitability. Gadacz guided States through an ISObased management system for daily operations called BOSS: Business Operating System Software. Paul Reed, States’ director of manufacturing, explains that one of his current focus areas is using BOSS to process non-conforming items, along with reviewing systemic issues that need a process or action change to prevent the issue from happening again. “I am taking all the observations and notes I had from the certification audit and making them corrective actions in order to formally bring them into focus for the next management review,” he says. ISO certification has helped shape States’ strategic direction, as well. For the first time in its 95-year history, the

Shallbetter’s experience with Enterprise Minnesota “became the first time in my 34-year memory of working here that we had a consultant who was 100 percent effective and helped us achieve what we were trying to achieve.” company has a written vision and core values: Communication, Ownership, Leadership, Opportunity, and Respect (“COLOR”). Shallbetter explains, “[The values] are simple. Employees come up with ideas for improvements and how the core values fit into their daily work. They say things I never thought about, like the idea that respect can mean having respect for even your tools. It really is neat.” In all, Shallbetter is more than satisfied that his ISO experience has made States Manufacturing a stronger player in the industry. “Over the years, we’ve spent hundreds of thousands of dollars on business consultants,” he says. His experience with Enterprise Minnesota “became the first time in my 34-year memory of working here that we had a consultant who was 100 percent effective and helped us achieve what we were trying to achieve.” —Maria Surma Manka

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on the company’s quality management system. “They contacted us because they were looking at having a quality management system that was specifically designed Left: Brian Ruether for their business,” says Right: Jeff Diehm Joel Scalzo, an Enterprise Minnesota business development consultant. “They interviewed three companies, and we were chosen as their partner.” Working with Avonix, Scalzo took the approach that Enterprise Minnesota traditionally takes with its clients: defining a company’s leadership team in a way that TECHNOLOGY will help create a business management system that works for the company. “We facilitate best management practice,” Scalzo says. “We’re not going to cut and paste from a quality management textbook. We’re not going to say, ‘This worked for another Avonix Imaging uses 3D X-ray technology company, so that’s what you should do.’” in industrial settings Scalzo worked to make sure Enterprise Minnesota hen they started Avonix ImagIn the case of 2D X-ray product inspecmatched its resources with ing in 2012, Brian Ruether and tions, images of a part are captured live on Avonix’s to ensure a sucJeff Diehm knew they were heading into a monitor and can be shown in a video or cessful project. He helped uncharted waters. in a still photo. The X-rays pass through the Avonix’s staff understand their best opporAvonix’s business is industrial 3D part and subsequently are converted into an tunities and greatest challenges. X-ray imaging, which is a relatively new electronic signal with a digital detector. Meanwhile, Keith Gadacz, a business field. By providing 2D digital, real-time But because 2D imaging misses out growth consultant based in Brainerd, X-rays along with more advanced 3D CT on depth and details, Avonix also offers concentrated on the nuts and bolts of the (computed tomography) imaging, Avo3D imaging. The capturing of that image project, such as helping Avonix earn ISO nix’s products provide inside and close-up takes place on a rotational stage, where it’s registration. inspections of clients’ manufacturing parts rotated 360 degrees while images are taken ISO 9001:2015 implementation, accordfor quality assurance. at specific intervals. That group of images ing to Gadacz, revolves around the creation “When you go to the hospital to get is then rebuilt to render the 3D X-ray model of a business management system—includa chest X-ray or CT scan, we do the of the part, which offers far more examining how a company operates its company, same thing but on parts and pieces,” says ing options. from its top-level strategic plans through its Ruether, managing director of the Maple Avonix serves an array of industries, cascading objectives into individual conGrove-based company. including aerospace, automotive, electrontributor participation, as well as mapping Diehm and Ruether hit the ground runics, food, medical devices, pharmaceutical, key processes for effectiveness to deliver ning with their new business thanks to the and plastics. The company likes to keep its the output the company expects. reputation they built as standard bearers in process simple: once the scope and cost of “I’m with them for 20 sessions over the area of inspection services and system a scanning project is agreed on, the client 10 months, about twice a month,” Gadacz design and manufacturing. company ships the part to be scanned to says. “The first half is building the system They both originally worked for North Avonix, who then turns around its imaging the way they want it to function for their Star Imaging in Rogers, an X-ray equipprojects in as little as a day. business. The second half is watching the ment supplier. They left, Ruether says, If that sounds like an efficient process, it system run. The final step is getting it regiswhen the company was bought by a large is. But Diehm and Ruether knew there was tered to the ISO 9001:2015 standard.” conglomerate. “We pulled up stakes and room for improvement, so Enterprise MinWhy go to all that bother? According to moved on. It was a growing opportunity.” nesota was recruited to provide guidance a Harvard Business Review article from

CAT Scans for Parts & Pieces W

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2012, Gadacz continues, most companies experience 10 percent higher revenues and profits and typically higher employee satisfaction with ISO registration. It also lets them do business with companies that expect them to be registered. “Other companies use that registration to monitor suppliers without having to do hands-on auditing,” he says. Scalzo says that ISO registration can be something that companies feel they have to do but don’t necessarily want to do. Luckily, Avonix was 100 percent on board. “When people embrace a business management program, they recognize how it’s going to help separate them from their competition,” Scalzo says. “Avonix has realized it has an aggressive growth plan. The company has a much better chance of achieving that now that it has

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Avonix has transitioned from industrial X-ray imaging services to designing and producing the equipment used to provide those services. better processes in place.” Over the years, Avonix has transitioned from industrial X-ray imaging services to designing and producing the equipment used to provide those services. ISO registration will help the company continue to grow and innovate. “Ultimately, achieving the registration will help us run a better business,” Ruether says. “Having the company under a standard helps make it easier for us to translate our business management systems to our customers when they ask what processes we follow.” —Dan Heilman

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Climbing Success New Brighton-based entrepreneur Ryan Angelo sets his sights on the $50 million wall-climbing industry

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he sport of indoor wall climbing, already a $50 million business worldwide, is poised to grow even faster as it gets incorporated into the 2020 summer Olympics in Japan. And New Brightonbased Escape Climbing is ready to capture a larger share of that business. Escape Climbing manufactures polyurethane holds and related equipment for climbing walls. Company Founder Ryan Angelo estimates that his company derives a third of its revenue from the holds, a third from associated hardware, and another third from training tools. Angelo became a climbing enthusiast when he built a 16-by-30-foot climbing wall in a backyard storage barn as a high school student in Rib Lake, Wisconsin—a town of about 900 people located approximately 170 miles east of the Twin Cities. Angelo honed his interest in the sport while working at commercial gyms in the

Twin Cities as a student at the University of Northwestern-St. Paul. Realizing first-hand that climbing holds could be prohibitively expensive for people who wanted to build their own walls, he designed and constructed holds in his dorm room, which he then sold on eBay. From there, he began making his products in a garage and eventually turned it into a business. “All along the way, I received validation from my customers that I was making a good product,” he says. In 2012, Angelo quit his job at a local climbing gym and became a full-time manufacturer. After two years of sporadic growth, the company got a foothold in the lucrative Asian market and evolved into the commercial gym market. Angelo currently employs 15 people with revenues around $3 million annually. Today, he says, Europe constitutes about half of the world market for climb-


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ing holds. “We’re a very niche market. But us only doing a handful of a million dollars a year is just scratching the surface of a $50 million market,” Angelo says. A market differentiator for Escape Climbing, Angelo says, is “cadence, how fast you’re releasing new products and then the quality of those new products. That’s what gets me to come to work in the morning—the new, interesting product lines that we’re launching.” Given the explosive growth in the market, only time will tell if larger companies like Dick’s Sporting Goods start to acquire and claim the marketplace, Angelo says. In the meantime, he continues, “I come to work thrilled because I like growing a business. Just as I was early on, I’m really interested in designing a high-end product that makes a difference. And then, as you grow, you have more capabilities to serve your customers.” Escape Climbing is growing its market share by creating multiple brands designed to appeal to niche markets. “Escape is more like the one-stop shop,” Angelo says. The future will include wall building, consulting, and flooring systems. “There are a lot of opportunities to branch out and grow.”

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Four Questions Sheila Swancutt, HR Director, Sportech, Inc.

T

he modern HR executive wears so many hats. From ever-growing government regulations and coping with the chronic shortage of employees, to maintaining health care policies and trying to encourage a positive company culture. How do you prioritize all of those responsibilities? It helps to have a company purpose of “People Over Plastics.” At Sportech, we prioritize culture first and do our best to keep recruitment, benefits, and compliance moving along, knowing there will be hiccups on the way. I believe HR professionals are most successful and effective in prioritizing when they have

members across all levels and departments within the organization. More recently we’ve added a Sportech Leadership Academy

INNOVATIONS

101 and SLAM (the academy’s master’s program). These courses have been significant in providing our team the tools and resources they need. More than 40

“The HR Peer Council has been a game-changer.” the support of the company’s key leaders. Our team has that! We’ve been empowered to be partners to the business and that is impactful. We strive to provide a culture true to our values, a calendar of fun events and celebrations, relevant company metrics, and solutions to our business needs. We currently have over 300 employees in three buildings on six different shifts, but we consider ourselves one rock star team! How are you dealing with the worker shortage? We want to retain our amazing and talented people; we also know we need to continually grow our bench. We are working hard to develop people internally who can continue to stretch in their roles. In 2014, we created the Sportech Leadership Academy. We annually select a group of 10 to 14 employees who go through a yearlong program to develop into strong leaders for the organization. We include team

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Sheila Swancutt

Sheila Swancutt is the HR director at Sportech, Inc., a leader in the design, development and manufacturing of vehicle cab enclosures, windshields and styling elements. Sportech believes in delivering high quality products and customer service by utilizing its core values: integrity, excellence, attitude, collaboration and innovation. Prior to joining Sportech in 2010, Sheila served as a senior HR business partner for Cuyuna Regional Medical Center, a recruitment specialist at the Star Tribune and a benefits administrator at Rollerblade, Inc. She has a Bachelor of Science degree in business administration from Minnesota State University Mankato.


people applied for 12 spots this year. Our director of training and development produces new curriculum annually that we tweak based on identified needs or trends. We make our staff selections based on business needs, employee performance, and an interview process. It takes time and a financial commitment but has been a huge differentiator for us.

Do you get Enterprise Minnesota’s WEEKLY REPORT?

You are a founding member of the HR Peer Council facilitated by Enterprise Minnesota. What value do you get out of it?

“We are working hard to develop people internally who can continue to stretch in their roles.” The HR Peer Council has been a game-changer for me. I’ve been a member for about four years, and I highly recommend it. There is a fantastic feeling of affirmation when I meet with other HR leaders who are dealing with similar concerns, whether it be a compliance issue, employee concern, request for policy advice—the list is long! It’s wonderful to converse with peers and seek suggestions. Michele Neale is my current peer group facilitator, and she is outstanding. She provides great energy, the agenda for the meetings, and relevant topics for discussion. You started out as a one-person HR department at Sportech. What advice would you give to employees at small or medium-sized manufacturers? Definitely join a peer group! HR professionals are tied to confidentiality, and yet we need a safe place to discuss real-time topics. SHRM (Society for Human Resource Management) is also an outstanding resource. They provide the latest legislation updates, templates, tools, and resources online. Finally, find a mentor, they can be invaluable. There is always more to learn and share in the HR arena.

Lynn Shelton, vice president of marketing at Enterprise Minnesota

More than 7,000 people

already receive Lynn Shelton’s timely and insightful reports in their email.

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The Value of People

LEADING FOR

RESULTS

A new program helps manufacturers align performance with overall organizational goals while building team competencies

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An interview by Catrin Wigfall

S

trong leadership at all levels within an organization is essential for achieving organizational excellence. Leaders must not only focus on growing and developing their skills but ensure all members of their teams have the tools necessary to maximize their talent, resulting in a magnetic workplace that fosters employee engagement. Enterprise Minnesota’s multi-session series Leading for Results will help leaders of small and medium-sized manufacturing companies develop a workplace culture that aligns performance with overall organizational goals while building team competencies.

“We wanted to give leaders a stronger toolset to help them amplify employee performance.” —Abbey Hellickson Under the guidance of Enterprise Minnesota Business Growth Consultants Abbey Hellickson and Michele Neale, the state’s manufacturers can build on the knowledge, skills and abilities they have as leaders to improve retention and develop an overall positive working environment. Describe the development of Enterprise Minnesota’s new series, Leading for Results. Abbey Hellickson: Leading for Results complements our Leadership Effectiveness series, formerly called Learning to Lead, which created a foundation for emerging leaders all the way through senior leaders. Now, these leaders can continue to build and grow and strengthen their leadership skills when it comes to their direct reports—the teams of employees they are responsible for leading and managing every day. Leading for Results will really focus on giving leaders that next level of direction and help them maximize results out of the employees

Abbey Hellickson works with manufacturers to help them engage their workforce, maximize productivity, improve company culture, and strengthen their leadership teams. Drawing on a wealth of experience in talent and leadership development, Abbey enables companies to drive performance at all levels of their organizations and develop the effective leaders they need to build and sustain profitable growth. Prior to joining Enterprise Minnesota, Abbey served as the director of business and workforce education at Rochester Community and Technical College and as a corporate training instructor for Fastenal. Michele Neale helps manufacturers build stronger company cultures and develop effective leaders at all levels of their business. With an exceptional track record of implementing talent and leadership strategies, Michele knows how to help manufacturing companies engage and empower their employees to achieve operational excellence and drive profitable growth. Prior to joining Enterprise Minnesota, Michele served as a human resources leader for Massman Automation Designs, LLC in Villard, MN and as a senior leader in training and development for Tastefully Simple in Alexandria, MN.  

they lead. Michele Neale: After meeting with clients who participated in our Leadership Effectiveness workshops, we discovered there were still gaps, and those who went through the first series of sessions were looking for something more. We took the information from those follow-up conversations, and we started recognizing a theme. So, we decided it would make sense to put together another series that elevates our clients’ needs and focuses on filling those continued gaps. What will Leading for Results focus on that takes it to that next level?

Hellickson: There is so much to leadership, so we felt like there were more tools to share to help leaders be successful, and we wanted to give leaders a stronger toolset to help them amplify employee performance. A couple of questions that leaders bring up a lot are, “How do I get people to successfully do their job? How do I set those daily priorities? How do I manage that daily work that then aligns to my organization’s overall strategy?” We wanted to give the leaders who are asking these questions a little bit more around that concept. This series will focus on creative problem solving along with maximizing team interactions. When leaders

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value leading over doing, organizations can meet strategic vision and utilize the full talents of each individual performer. Neale: Leading for Results will help any leader at any level continue to learn and develop; there is always an opportunity to learn more. There are fundamental skills that are foundational to any leader’s success. It’s about communication, employee engagement, change, accountability. This series takes those topics a little deeper: problem solving for leaders, leadership and the leadership pipeline, managing conflict and developing teams, performance development, and the art of influence and coaching. I think you would be hard-pressed to find a leader who says

“When organizations focus on developing individual performance that is aligned to organizational strategy and goals, they create for themselves a competitive advantage.” —Michele Neale he or she can’t increase those skills at all. With this series, we can help leaders apply these skills beyond themselves and to their teams. They will focus on behavior changes that they want to see with their teams and shape a workplace culture that improves retention and creates not only individual success but team success and, ultimately, organizational success. What are the benefits of participating in the Leading for Results program? Hellickson: Developing leaders at all levels will lead to increased productivity and customer satisfaction; plus, there is the competitive advantage, higher revenues, better margins, and more market opportunities for participating organizations. Leaders will also learn how to improve retention and increase overall leadership skills, which leads to increased productivity and customer satisfaction. Neale: Participants will better understand what transformational leadership looks like and how to communicate and motivate action toward a vision. Because leaders set the tone, motivate, inspire and

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shape the workplace culture, they will learn how to identify and apply the six laws of problem solving and incorporate problem solving techniques into their methods of developing effective teams and overcoming team dysfunctions. You mentioned there are five different components the series will focus on. What key takeaways will each session offer? Hellickson: One session will be about problem solving. When problems arise at work, employees often panic, feel apprehensive about approaching the problem, or pass the problem on to someone else to solve. If an organization has a problem-solving culture, it fosters ideas and activities that extend beyond the problem and encourage innovation. Leaders who demonstrate creative problem solving must also encourage and coach employees to be creative problem solvers as well. Together, they can come up with solutions that lead to long-term success, increased productivity, customer satisfaction, a positive work environment and overall profitability. A second session will focus on the benefits of leadership and the leadership pipeline. By making leadership development at all levels a priority, positive results in productivity, retention and morale will follow. There are different skills and values required at each level of leadership within an organization, and strong leaders who recognize this can maximize employees’ performance and ensure that work and decisions are done quickly and accurately. Supervisors, managers, team leads, or anyone who directs the work of others will learn how to focus on the right tasks for their level of leadership. In the session on managing conflict and developing teams, participants will explore the critical role a leader plays in developing effective teams through their ability to successfully manage conflict, coach employees on developing conflict management skills, and develop a culture based on integrity and trust. Team dysfunctions will come up, but there are methods to overcome these. Knowing the conflict resolution techniques and methods that can be applied in a team environment to foster positive communication and workplace relations will directly lead to overall increases in customer satisfaction and profitability. When leaders

successfully manage conflict and address issues impacting team performance, teams perform well. Neale: The performance development session focuses on four key components that include assisting leaders in establishing and communicating goals with

“There are fundamental skills that are foundational to any leader’s success. It’s about communication.” —Michele Neale employees, defining and assessing good performance, conducting regular performance conversations, and evaluating progress. When organizations focus on developing individual performance that is aligned to organizational strategy and goals, they create for themselves a competitive advantage. These leaders can then cascade those goals through their team and have performance focused discussions to ensure employees are on-track with their own goal attainment that will ultimately benefit the organization and its overall productivity. Giving participants an opportunity to apply what they are learning to real workplace situations will help them reach their goals and ensure their employees reach their goals as well. The last content-based session, the art of influence and coaching, dives into the true mark of a leader: one who is able to positively influence and coach others. Participants will explore the five components of influence that will assist them in building positive relationships throughout the organization and maximize communication, increase efficiencies, and foster strong work environments. Leaders can also influence through coaching by connecting the organization’s goals to individual goals. Strong leaders use their influence to decrease silos and maximize effectiveness. What is incorporated into each session that ensures leaders are getting the most out of the series? Hellickson: There are a lot of different aspects to each session that keep participants engaged and interacting with the material in a meaningful way. From small and large group discussions to case studies and activities and exercises that appeal to


different modes of learning, we always make sure that we have highly interactive sessions so participants can easily apply the concepts they are learning to their work environments. The other main piece we incorporate is called action plans. At the end of every session, participants are asked to identify their key takeaways and choose one thing from the session to implement or try. That might be an application or trying out a model or technique or tactic. Then, when they come back for the next session, the first agenda item is action plan shares. It is an opportunity for them to share what they have been working on from the last session, what worked, what went well, what were the challenges, and they get feedback from the group. It creates an interactive discussion about what is happening in the real world through application of the concepts presented in class. We push the action plans and the action plan shares to really solidify that learning. Neale: It is so important we end every session with time for them to look at their takeaways and create that action plan. They can really start to make connections between the session content and the changes they want to see in their workplace environments. What are you going to focus on? What is one behavior change you want to see within your team? Then, when we reconvene, there is accountability involved, as Abbey mentioned. What was your action plan and how did it go? What successes did you have? What challenges? What would you do differently? We can hold participants accountable but also not overwhelm them. We encourage them to take one or two items and try it out. Behavior changes are not easy to make. After the content sessions, we have a sixth session, a follow-up session, which is implementation support. We help them pull everything together that we have talked about in the action plan shares and then help them plan another strong action plan for the future. If they want additional coaching or onsite work, we set up a meeting to dig deeper. What will the schedule for the series look like? Hellickson: The series includes five content-based sessions and one implementation session (a follow-up session) that Michele was just referring to. The sessions are held semi-weekly and are four hours

each. We do a four-week to six-week break between the final session and the follow-up session so participants have enough time to implement the concepts they learned during the series. We will offer Leading for Results in different locations across the state, targeting the same regions where we have had prior success and where we know there is demand and interest. The majority of our sessions will be outstate, Greater Minnesota. We had a lot of success with our Leadership Effectiveness series in Rochester, Owatonna, Mankato, Brainerd, and Alexandria, so we will be targeting those areas again. Neale: As partners in crime, Abbey and I will split the state. Abbey will primarily lead the sessions in areas south of the Twin Cities, while I will cover the areas north of the Twin Cities. It will be our usual multi-company format, with expected attendance in each location to be around 12 participants and maxing out at 16. Abbey and I developed the series together

“We want leaders to be more comfortable in their role, feel confident in the conversations they are having, and successfully communicate the vision of the organization and connect it with their daily work and daily priorities.” —Abbey Hellickson and are ready to roll it out. We both have sessions launching in January. How would you summarize the goal or goals of the Leading for Results series? Hellickson: I think our overall goal is we want to help leaders make their jobs easier. We want leaders to be more comfortable in their role, feel confident in the conversations they are having, and successfully communicate the vision of the organization and connect it with their daily work and daily priorities. Many times, leadership is the foundation for success in other areas. So, that is where we anticipate helping people go. Maybe there is a different focus area that they weren’t ready for prior, but now they have the

leadership skills to successfully implement changes and initiatives. Neale: The names of the sessions reveal a lot; the topics are going to be elevated from previous series we have offered. It’s a deeper dive that will ultimately help leaders and their teams make meaningful behavior changes to better themselves and their employees. It’s truly about leadership development. Are you developing yourself? But more importantly, are you developing others? The goal of this series is to get leaders thinking more about developing others. Organizations get a variety of employees with different social styles, and leaders can better their organization by encouraging and coaching employees in ways they will respond best to. Once leaders complete the Leading for Results program, what is the next step? Hellickson: Once the series kicks off and gets further underway, we can analyze how the sessions have been going and see if there are any obvious areas for us to expand on. So, for right now, it is hard to tell what that next step could be. Typically, though, next steps will include a couple of things. First, leaders should really work on the action plans they created throughout the series. There is so much individual growth and development within their organization they can glean from those action plans. Second, based on where they are at, there are options to help support them with continued growth in other areas. It may be outside of the talent area; it may be in continuous improvement; or, maybe it is with a management system. By looking at Enterprise Minnesota’s other service areas, now that they have the solid foundation, there is an opportunity for leaders to think about other areas of their business that they want to improve or grow. Neale: Leaders in manufacturing, naturally, are destined to focus on process and production. That is just in their DNA. So, sometimes they forget about the people component. If you don’t have people, what are you left with? The Leading for Results series will help manufacturers become knowledgeable, in-house leaders so that once the series is completed, they can continue working on changing how they engage with their workforce. With the workforce the way it is, it is important they continue asking themselves, “Are we investing in our people?” People are their biggest asset.

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Integrated to Grow

STRATEGY.

MANAGEMENT SYSTEMS.

CONTINUOUS IMPROVEMENT.

A complete approach to a healthy company

By Maria Surma Manka 22

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A

shift is happening in how manufacturers think about being profitable and growing sustainably. No longer are the bottom-line numbers simply a reflection of how many orders were placed in the last quarter; instead, companies increasingly recognize that leadership, employee engagement and customer satisfaction are all key drivers behind a good balance sheet. They’re taking a closer look at tying company strategy to production floor tactics, and at examining how the daily management of an organization drives sustained profitability. Enterprise Minnesota’s core service offerings—Strategy for Growth, Talent and Leadership, Peer Councils, Continuous Improvement, and ISO Management Systems—are each vitally important to the success of a business. But to achieve sustainable profits and growth, an organization must approach these service areas holistically and with an understanding of

The framework for success is based on multiple connections Five Solutions to service Growing Profitably among the areas. STRATEGY FOR GROWTH

ISO MANAGEMENT SYSTEMS

CONTINUOUS IMPROVEMENT

9001:2015

TALENT AND LEADERSHIP

MANUFACTURING PEER COUNCILS

how each service integrates with the other in terms of company strategy, management systems and daily tactics. Strategy for Growth: Setting the vision and priorities; figuring out where the business is going and how to get there Talent and Leadership: Growing skills in leadership and developing engaged employees Peer Councils: Gaining honest perspectives from your peers; working on the business instead of in it Continuous Improvement: Maximizing time utilization and achieving customer value, employee satisfaction and business satisfaction ISO Management Systems: Management methods— grounded in strategy—to deploy and execute business objectives at all levels

Steve Haarstad helps manufacturers better understand how they can grow their top-line revenue and strengthen their leadership culture. Prior to joining Enterprise Minnesota, Steve served as global customer support manager, global education manager, and marketing training manager for Emerson Process Management in Eden Prairie and Rosemount.  Abbey Hellickson works with manufacturers to help them engage their workforce, maximize productivity, improve company culture, and strengthen their leadership teams. Drawing on a wealth of experience in talent and leadership development, Abbey enables companies to drive performance at all levels of their organizations and develop the effective leaders they need to build and sustain profitable growth. Prior to joining Enterprise Minnesota, Abbey served as the director of business and workforce education at Rochester Community and Technical College and as a corporate training instructor for Fastenal.   Greg Langfield has experience that ranges from enterprise-wide lean transformations to targeted improvements including various lean workshops and lean certifications. Before joining Enterprise Minnesota, Greg worked as an engineering manager for Covidien, as a project engineer for Automation Services Inc. and Doboy Packaging Machinery, and also as a design engineering manager for Laser Machining Inc. Steve Haarstad, Abbey Hellickson and Greg Langfield are Enterprise Minnesota business growth consultants who guide manufacturers through each service offering and developing holistic solutions for growing profitably. While each consultant works in a specialized area— Steve on the Strategy piece, Abbey on Talent and Leadership, and Greg on Continuous Improvement and ISO Management Systems—all three integrate their work with Peer Councils and with each other’s service areas to bring comprehensive solutions to Enterprise Minnesota clients. To learn more about how manufacturers are approaching the chal-

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lenge of growing profitably and sustainably, we interviewed the three of them about the connections between strategy, management systems and continuous improvement. How do you help clients think about distinct areas as an integrated whole? Haarstad: Each area of Enterprise Minnesota’s consulting adds value to the other, and that’s something that’s often overlooked. A business may need individual help in one area, but we’re finding that the more we can bring our consulting services together and blur the lines between individual services, the more value we can bring to our clients and the better performance they can get out of their business. That said, the service wheel is deliberately oriented with Strategy at the top. You need to start with Strategy and understand who you are and where you’re headed. Once you have that established, you can work on the other areas, but it is important to always link the work back to the Strategy. Langfield: All of the service areas help an organization grow profitably, but looking at them together helps leaders think about the business holistically. For example, Continuous Improvement isn’t something you just go off and do. A manufacturer should think about the connections that need to be established across each service area in order to have long-term sustainment with profitable growth. How do you define profitable and sustainable growth? Hellickson: It’s critical for an organization to have foundations in all of the service areas in order to be successful and sustainable. One area alone won’t help you reach profitable or sustainable growth. But whatever service area you’re working with at the time, the work should come down to three components: the customers, the business, and the employees. To achieve sustainable growth, a leader should think about how he or she meets each of those three components’ needs. Langfield: Customer satisfaction is about top-line business results and whether you are meeting customer expectations; business satisfaction is about cash flow and whether the business is healthy; and employee satisfaction covers attracting and retaining talent. Lots of companies miss the employee satisfaction part when thinking about growing profitably. For example, I worked with a manufacturer

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that was struggling to make money, which means they had an issue with cash flow and therefore the “business satisfaction” piece. But I discovered that one of the causes was their labor force. Employees thought they were doing the right thing, like taking 45 minutes to clean up a work area. That made the employee feel good, but it wasn’t doing anything to satisfy the customers or the business. So, how does leadership ensure that an employee knows what’s important and when it’s important? Employees want to show up and do the right thing, but sometimes there’s weakness in how we communicate priorities. Profitable growth is making sure employees at every level know what they need to do every day. How do employees know what to do every day? What does that look like in practice? Hellickson: The core of any business is Daily Management; that’s what translates the vision of a Strategy into the day-today reality and tactics for employees. You have to have a plan for Daily Management to sustain your efforts within each of the service areas and ultimately achieve profitable growth. Langfield: The principle elements of Daily Management are Engagement, Action, and Sustainment. Although Steve, Abbey and I work in different service areas, we challenge companies to think about those three areas no matter their current priority. For example, how do you connect Action to vision? How do you make something Sustainable with accountability and follow through? You need to think about it from more than one area. Haarstad: Daily Management is where the rubber meets the road. It’s the actions, behaviors, systems and tools that a company uses to carry out business. It’s how companies find ways to make small improvements and leverage solutions or ideas from all of the service areas. It’s the methodology of making it all work on a day-to-day basis. How do you define Engagement? Hellickson: We define Engagement as employees knowing what the business is trying to accomplish, they know their role in that, and they are active participants in the business. When we work with clients, we ask leadership, “What conversations do you have to empower employees?” Langfield: The Gallup Engagement Hierarchy visualizes how to transform

employees into participants. Engagement is all about communicating the why of the vision, setting expectations, following up or having accountability conversations regarding those expectations, and developing employees to be stronger problem solvers. This is where Continuous Improvement (CI) and the idea of small, incremental steps are really important. At the employee level, Engagement rarely happens if you ask them to think about big ideas. But when we ask them for small ideas that could improve the little, every day things… that’s when Engagement happens. Ask them to look at the things that don’t add value and go after that, no matter how small it may seem. Haarstad: The small things make a really big impact for overall Engagement in an organization.

Growth Teamwork Management Support 

Basic Needs

The Gallup Engagement Hierarchy The Gallup Engagement Hierarchy transforms employees into active, engaged participants in the business.

Basic Needs: Do employees know what’s expected of them and do they have the resources to do their job?

Management Support: Can employees

apply their talents in their job and receive regular feedback about their performance?

Teamwork: Do employees feel that their

coworkers are committed to the organization’s mission?

Growth: Do employees have the opportunity to grow?

If employees can answer “Yes!” to each level of the hierarchy, they are an engaged team member.


How does Engagement lead to Action? Langfield: Daily Management takes each of the Enterprise Minnesota service areas and connects them to what employees are doing on the floor. It’s what’s being done every day to drive the business forward. Hellickson: The right Action happens when leaders clearly communicate the priority of the day to employees. That’s the goal. Employees have to know how to prioritize properly so they can get the right things done. For example, I worked with a leader who was frustrated that an employee was doing inventory when everyone else was focused on getting product out the door for a big customer. After I asked the leader a few questions about why the employee might be prioritizing inventory over a large order, the leader realized he had told the employee on Monday that—“no matter what”—inventory had to get done that week. He never communicated that the product order was now the priority. Haarstad: Action in terms of Daily Management is about doing things the right way. The little things make a big impact and small tasks add up to take us where we are trying to go. When an employee is taking Action that contributes to the profitable growth of the company, they get a sense of accomplishment. When leadership communicates correctly, the outcome is that employees are doing the right thing, at the right time, in the right way. So, an employee doesn’t have to have a really big idea to make an impact? Langfield: We want employees to have any idea and share it. Engagement is about rewarding the little ideas for Action and taking the time to listen. Valuing employees’ opinions increases Engagement. Leadership should be looking for ideas as to what’s non-value add for employees, the business or customers. Or ideas for value-added changes. It’s helping the employee see him or herself as a problem solver. How does a company achieve the Sustainment portion in a Daily Management approach? Haarstad: Sustainment is the committed and disciplined effort toward the attainment of a goal while embracing and learning from both success and failure. In practice, this means leading and supporting people to help them solve problems.

Hellickson: There isn’t just one tool that leads to Sustainment. There are many solutions within the service areas that, when combined with this perspective of customer, employee and business, can help support Sustainment. Langfield: Some examples would be daily huddles, the Leadership Team Approach or the Visual Workplace. The key is discipline. Can you explain those examples a bit more? Haarstad: The Leadership Team Approach is about having leaders who are actively involved. You can’t manage by spreadsheets. This approach fosters commitment and discipline through three areas: Go & See, which gets leadership

“Daily huddles tell employees how the week is going and communicate daily priorities.” ­ —Greg Langfield onto the floor to see the value add and non-value add process steps; Employee Focus, which is an approach of questioning employees to learn from them rather than telling them what to do; and Defined Priorities, which helps define and align priorities and makes sure they are communicated to employees daily. The Visual Workplace is having visuals in place that help us make an improvement because they signal what’s normal and what’s not. With a visual production floor, employees should be able to quickly see when something isn’t right. Langfield: Nothing can be sustained without daily huddles. You have to communicate and measure how you’re going to have a good day. Using visuals like red and green dots communicates that quickly. Did everyone go home safe? That’s a green day. Did the product miss metrics? That’s a red day. Daily huddles tell employees how the week is going and communicate daily priorities. It’s a way to Sustain the good Actions of employees, and they feel Engaged because they know which Actions to take. It’s all connected. According to the 2019 State of Manufacturing® (SOM) survey, 48 percent of manufacturing executives said the

biggest impediment to growth was attracting qualified workers; and only 49 percent were enthusiastic about the future performance of the U.S. economy. How can an integrated approach to growth help buffer these challenges? Langfield: I believe both challenges are addressed through an increased focus on employee productivity. The SOM results also reveal that 54 percent of companies say maximizing productivity is the top thing they are doing “to navigate around the worker shortage challenges.” However, they are investing little in leadership training: Only 38 percent of metro-based companies and 35 percent of non-metro based companies make a modest investment in leadership training. Enterprise Minnesota’s integrated approach is relevant to the potential slowing down of the economy. If a slowdown does occur, I see this as really no different than the worker shortage challenge. Companies still need to ensure that employees are doing the right work at the right time. In fact, during an economic slowdown it becomes even more important to focus on these areas to ensure the bottom line is protected. Hellickson: The principles supported by the service areas of Engagement, Action and Sustainment promote stronger workplace environments. With Engagement: In January 2019, Gallup found that companies who score in the top 20 percent for employee engagement have 59 percent less turnover and 41 percent less absenteeism. Enhancing engagement from both the leader and employee level makes a significant impact on recruitment, retention and the bottom line. In fact, these organizations outpace competitors with 21 percent higher profitability, according to statistics from Forbes in 2019. With Action: When employees know what’s expected of them at work, it creates the foundation for strong engagement. You cannot foster a strong workplace that attracts and retains employees without communicating the priorities that require daily action. And finally, Sustainment: Organizations that are sustaining their initiatives and fostering continuous improvement are building higher levels of engagement and attaining higher profitability. When you’ve created accountability within the organization, you’re at a higher level of engagement, which results in increased attractiveness and tenure.

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PREPARATION

THE

BIG PICTURE A new High-Performance Manufacturing Program presents a holistic (and testable) view of lean processes By R.C. Drews

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PHOTOGRAPH BY JEREMY PETRICK

E

nterprise Minnesota recently launched a comprehensive eightday program to help manufacturers develop continuous improvement leadership and a high-performance work organization. The High-Performance Manufacturing Program was designed by leading manufacturing organizations—the Society of Manufacturing Engineers, the Association for Manufacturing Excellence, and the Shingo Prize for Operational Excellence—to create a single standard for lean knowledge and certification. The program is often called the Lean Enterprise Certification Program (LECP) because it can culminate in a certificate of accomplishment, based on an exam. The curriculum includes five days of classroom education, a two-day Kaizen event, and an optional “Lean Bronze Certification” exam. Sessions include: Principles of Lean Manufacturing— Lean 101 combines lecture and video simulation to introduce the principles and tools of lean, all designed to heighten attendees’ ability to eliminate manufacturing waste. Concepts include Eight Wastes, 5S, One-Piece Flow, Total Productive Maintenance, Cellular Production, Takt Time, Pull, Flow and Kanban, Point-of-Use Storage, Quick Changeover, Quality at the Source, Batch Reduction, Teams, Standardized Work, and Visual and Plant Layout. Workplace Organization describes how 5S affects the appearance and functionality of a workplace. Participants perform an in-depth audit of workplace organization through a Workplace Scan. The unit further describes how 5S can improve workplace environmental health and safety. Participants learn how to apply the concepts they have learned and how to measure the impacts.

High-Performance Teams and Kaizen explains how to construct effective teams through trust, eliminate conflict, commit to ideas and gain consensus, hold each other accountable, and measure results. Participants learn how to use teams to change behaviors that then save time, money, and resources. Standardized Work describes the importance and benefits of standardized work, along with associated measures and metrics. It introduces the tools of Standard Work: the combination sheet, spaghetti diagrams, job breakdown analysis, and time study. Quick Changeover and Total Productive Maintenance illustrates how changeover improvement reduces

Matt Riewer, Kit Masters

“We should be asking, ‘Can we make simple changes, and make things more efficient, so we don’t need quite as many people?’” —Matt Riewer, Kit Masters or eliminates setup times through improved planning. Participants also learn how the Total Productive Maintenance (TPN) process increases productivity by improving safety, quality, delivery, cost, and creativity by all employees. WINTER 2019 ENTERPRISE MINNESOTA /

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Pull/Kanban describes the difference between Pull and Push Systems. It involves how to manage demand to meet customer requirements, and how to locate and size markets in the system. Principles of Cellular/Flow Manufacturing describes how to group manufactured products into product families, establish Takt time for a product family, review work sequence, and combine work to balance a production process. Root-Cause Analysis and ProblemSolving instructs participants on the elements of a problem (methods, people, equipment, environment, materials, and systems) and the structured problemsolving process. It emphasizes the importance of standardizing the “One Best Way.” Value Stream Mapping shows how this type of mapping is an overarching tool that gives managers and executives a picture of their companies’ entire production process—both value and non-value creating activities. Participants learn how to create a paper-andpencil representation of every process in the material and information flow, along with key data. Examination Preparation reviews the lean body-of-knowledge and exam structure, and includes practice examinations and test-taking tips and techniques in preparation for taking the SME Lean Bronze Certification exam. Company Kaizen focuses all attendees on the resolution of a previously selected problem by applying the concepts of rapid continuous improvement (Kaizen) and the Plan-Do-Check-Act problem-solving methodology. The following mini-profiles describe companies that have participated in this program and how they have incorporated the education into their cultures.

Kit Masters and Swan Machine – Perham

Kit Masters, Inc. and Swan Machine occupy a sprawling manufacturing complex representing more than 100,000 square feet in two Minnesota cities (Perham and Grand Rapids). Kit Masters manufactures fan clutch kits for heavy-duty applications, while Swan Machine’s CNC milling technology manufactures parts for a wide array of industries—from industrial componentry to aftermarket AR-15 firearm parts. With 165 employees, lean manufacturing practices are an integral part of the companies’ cultures. 28

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Brett Hallberg, Northern Contours

As plant manager for Kit Masters, Matt Riewer has watched the business double in size twice over, contributing to Swan Machine’s second plant that opened in Grand Rapids in 2017. He hoped the new expansion would attract viable candidates amid a workforce shortage. The investment has paid off, he says, while also providing ongoing challenges. Faced with a limited workforce while in the middle of aggressive growth, Riewer and other company leaders knew they needed a better solution for the future. “We used to schedule machines to run Monday through Thursday. Now, we might not have an individual there, so we have to schedule the individuals rather than the machines,” Riewer says.

“Thanks to how interactive (the HPM session) was, and the large class, people could bounce ideas off one another.” —Brett Hallberg, Northern Contours An easy solution might be to just add another body, he continues, but lean thinking suggests, “it’s taking a step back and making sure that you even need that position. We should be asking, ‘Can we make simple changes, and make things more efficient, so we don’t need quite as


many people?’” The organization reached out to Enterprise Minnesota for input. “When we learned about the HPM possibility, we brought in an Enterprise representative—he heard us out and learned more about our bottlenecks and shortcomings,” Riewer recalls. In response, Enterprise Minnesota returned with a list of recommendations. At the top was HPM and its lean manufacturing processes. Riewer describes the HPM education in a nutshell. “It’s mainly becoming efficient and doing more with less.” The program revealed inefficiencies in the companies’ inventory management, which often held on to too much material. Thanks to today’s visual indicators,

ground-level team members can see within seconds what items are understocked and then fill empty shelf space to a predetermined limit. Identifying exactly how many units of any given product should be maintained took a concentrated effort, but Riewer says the pull-based approach to inventory has paid back. “That was one of the best things we’ve ever done. We used to call, page, and email across the facility. Now we have visual indicators.” “Our goal is to get our product from spindle to the customer as fast as possible,” Riewer continues. “The time between there is where your cost is—your holding inventory, your lead times, and everything else. The people who know

“We thought it was a great fit for us to help long-term employees learn something they typically wouldn’t without going back to a trade school or going back for more education.” —Allan Cronen, GVL Poly

Left: Nathan Hulstein, GVL Poly Right: Allan Cronen, GVL Poly

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the best way to route things are really the people who have to do that on the floor.” It didn’t come naturally at first. Floorlevel staff who hadn’t experienced the HPM education didn’t always recognize the big picture. So, the companies, along with Enterprise Minnesota, worked with floor-level staff as well. Once the full team appreciated the potential, lean manufacturing became a company effort at every level. Riewer speaks positively about the SME High-Performance Manufacturing course and his company’s long relationship with Enterprise Minnesota. “Their staff is excellent,” Riewer says confidently. “Their instructors are awesome—they work with you, they make sure you understand, and I’ve never had anybody give a negative review on their HPM program.” More than 150 Swan and Kit Masters team members have participated in Enterprise Minnesota sessions over the years, including HPM, and Riewer doesn’t hesitate to encourage fence-sitters to do the same. “We have a partnership with Enterprise Minnesota. They’ve helped us grow and reduce costs,” Riewer says. “Any time we can become more efficient and reduce costs, we become a better company.”

Northern Contours – Fergus Falls

Northern Contours was founded in 1992 in Fergus Falls by Mike Rone & Duaine Miranowski with a business plan that intended to use “membrane pressing”— an innovation created in Europe—to manufacture cabinet doors more costeffectively. It worked. Coupling that with wood veneer products, the company eventually expanded its product line to include pressed surfaces, panels, and more intricate products. The company currently uses more than 420,000 square feet of space and employs more than 450 people in Fergus Falls, and it also has facilities in Kentucky, Arizona, and London, Ontario. Brett Hallberg entered Northern Contours at a time when the company had undertaken countless development programs without a cohesive plan toward completion. With the organization’s IT department, Hallberg helped implement software solutions that provided a sharper view of the work in progress. Since that early success, his position has become an embodiment of high-performance principles. 30

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As the continuous improvement program manager, Hallberg works with team members at every level to fight an aggressive and unapologetic war on waste. “Any time you can remove that waste, you’re going to cut your costs,” Hallberg explains. “You have to stop wasting any of your core product; you have to stop wasting your labor; and you have to stop wasting time.” Hallberg recently participated in one of Enterprise Minnesota’s HPM sessions and describes the expert learning sessions as invaluable. “The class itself and the content is fantastic, and it was very well covered and paired with great examples. Thanks to how interactive it was, and the large class, people could bounce ideas off one another.” Policies at Northern Contours focus heavily on employee feedback and involvement practices that are reinforced through company-wide education on HPM concepts. “It’s really helped our company realize—and the employees—that their ideas are valuable. It’s been a great program. It’s been very well received.” Hallberg says lean practices benefit the entire company, even outside the manufacturing floor. If your business works with a process of any kind, HPM will pay dividends. “Everyone would gain from understanding what lean brings,” Hallberg says. “Those methods can be applied to almost any environment.”

GVL Poly – Litchfield

Ten years ago, Allan Cronen was named CEO of GVL Poly when a new ownership group took over the Litchfield-based company. Cronen had watched the company for years from his position as an area banker and saw it was a business with potential. Asked today what motivated the purchase, he laughs and says, “It made a lot of money. It was a unique company. It was small and very profitable.” Von Grotto founded the company in 1993 with his invention of the GVL Poly Snout, an innovation that significantly improved corn harvesting. His company grew steadily, but it had more potential. When Cronen and his team acquired the company, they understood what was at stake. “We either had to land all of the OEM business making corn snouts or we had to land other business.” So, they offered engineering and design services to manufacturing clients, but

expansion wasn’t easy. Paired with a limited workforce in a rural community, GVL struggled to attract engineers and top talent. Good fortune struck in 2012 when Bobcat relocated its Litchfield operation to North Dakota. Many of the left-behind employees chose careers with GVL Poly. The Cronen-led company continued to push innovation. In 2015, it invested $1 million to install one of the largest 3D rotational printers in production. Cronen pounced again in 2015 when GVL became the first company in North America to install a Leonardo Smart Rotational Moulding Machine, designed and produced by Persico Rotomoulding of Italy. The impressive technology ran on a fully automated cycle, saving nearly 10 percent in material costs and 15 percent in energy. The company partners with businesses in all industries to handle product development from concept to creation, employing 42 persons in its 51,000-square-foot facility. In a time-intensive industry like rotational polymer molding, efficiency is critical. Nathan Hulstein, an experienced engineer and today the president and COO of GVL Poly, saw room for improvement. He encouraged the firm toward lean manufacturing practices, and Cronen spotted an opportunity with Enterprise Minnesota to make it happen. “We thought it was a great fit for us to help long-term employees learn something they typically wouldn’t without going back to a trade school or going back for more education. It really worked great for us,” Cronen recounts. The Litchfield-based manufacturer hosted an HPM session in October 2018. As the host, case studies from GVL’s facility were examined, and valuable feedback came from the instructor, GVL employees, and even employees from other companies. The education inspired action; Cronen and Hulstein knew it now needed to be applied. At GVL, Cronen says the SME HighPerformance Manufacturing course has helped their team learn to “speak the same language.” With everyone working together, the return on investment manifested in greater production efficiency, rapid problem solving, and error proofing that reduces loss through better quality control and diminished scrap waste. “If you have scrap rates that get out of hand, it doesn’t matter how many you make; you can’t ship them,” Cronen says. Hulstein, meanwhile, emphasizes that—in the same way a flowing stream


Rhonda Gass, Falcon Industries

becomes a deep gorge over time—it’s about small changes accumulating toward more. “A lot of small things, when they’re all added together, equal great things in the end.”

Falcon Industries – Cosmos

In her 32 years as general manager of Minnesota operations and director of administration and finance at Cosmosbased Falcon Industries, Rhonda Gass has watched a lot of innovation come and go. Falcon supplies custom augers and auger flighting that are manufactured to customers’ specifications and designs, ensuring its customers receive the precise product required for their needs and equipment. Change—and growth—have been constants for the company, according to Gass. “We can tackle pretty much anything that you want us to tackle,” she remarks. “We have equipment and personnel that

will take on any job.” Falcon does roughly 97 percent of its sales in the U.S. and Canada. And with 40 percent of the firm’s shares held by employees like Gass, the team truly does participate in the business’ achievements. Since Falcon experienced the powerful effect of lean manufacturing practices in its Ohio-based branch, Gass asked Enterprise Minnesota’s experts to begin an assessment of the Cosmos facility and to conduct one-on-one interviews. The quality of feedback from floor-level staff was impressive, and it highlighted opportunities for growth throughout the organization. But that wasn’t the end of the road. Late 2018, Gass and the firm’s plant manager traveled to GVL Poly to complete a course in High-Performance Manufacturing. It’s been a year since that education session, but the company hit a snag in July 2019. Before major takeaways

“By getting everyone on the same page, they can work together and get more accomplished.” —Rhonda Gass, Falcon Industries from the session could be implemented, Falcon’s plant manager separated from the company, leaving its new ship without an engine. The loss was ill-timed, according to Gass, but the team’s new manager is officially on the job and motivated to make HPM work. “I would say its value is for everybody because you want to get the company’s whole culture involved. By getting everyone on the same page, they can work together and get more accomplished. It’s only going to benefit them as an employee,” Gass says. WINTER 2019 ENTERPRISE MINNESOTA /

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Profile

Built to Order t’s a gloomy October day, but Scott Maki is all smiles. He dons protective eyewear and leads a visitor onto the manufacturing floor of Custom Products. Machines buzz as he strides past busy workers, stacks of variably sized sheet metal, and partially finished cab enclosures. A dark-haired woman rumbles by on a forklift. “Excuse me!” she says apologetically. 32

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Like a guide on a tour of historic homes, Maki never misses a beat as he gives details about everything happening at his company. He describes his enthusiasm for his plant’s productivity like some men talk about football. He points out the efficiencies management has brought to the plant, how they’ve reconfigured the

By Robb Murray

painting area to make things run more smoothly, how they’ve rearranged the order of operations here, relocated some tools there. All the while, workers can be seen running “tube-bending” machines or welding pieces of metal together. Others are assembling cabs, and still others are preparing to paint them. “My very first job was at Custom Products,” Maki says of the Litchfield-based maker of cab enclosures for industrial

PHOTOGRAPH COURTESY OF CUSTOM PRODUCTS

I

Litchfield’s Custom Products builds its reputation one cab at a time—literally


A bit o’ history

Custom Products was founded in 1959 out of the necessity local building contractors had for metal fabricators. The company’s first offering was something called “rafter sockets.” It didn’t take long, though, for founder Arvid Reinke to produce the item that would become the company’s bread and butter: the cab enclosure. Reinke produced the company’s first enclosure at the request of a local farmer who wanted one for his tractor. The business grew quickly, according to Custom Products’ own history documentation, and it moved to a larger, and current, location in 1965. After becoming vehicles. “Coming back six years ago was sort of a homecoming.” After bouncing around for several years at other companies, Maki returned to Minnesota to be closer to his family. But there was also another reason. “I love cabs. I’m super passionate about it,” says Maki, who has been in the industry since 1992. “I may not be able to do anything else, but I know something about cabs.” But this story isn’t about Scott Maki. It’s a story about a company in the slightly isolated city of Litchfield, surrounded by well-known competitors such as Bobcat, that has defied the odds and is thriving. With a work environment built on quality products and fair wages, Custom Products has turned into the kind of company that produces a guy who would say, “I love cabs.” Maki’s story is emblematic of the culture at the company. And even though Custom Products may not be the world’s largest manufacturer of cab enclosures, in Minnesota, it’s one of the most important.

Scott Maki describes his enthusiasm for his plant’s productivity like some men talk about football.

ROPS certified in 1972, Custom Products added “tube bending competencies” in 1981, computer-aided design and laser cutting in 1985, and manufacturing resource planning software in 1988. In 1995, Custom Products started a program that Maki says the company is most proud of: the 5-Star Engineering Apprentice Program. The program invests in the community by helping students thrive in the engineering disciplines. Every year, the company chooses one high school student to take on as an apprentice. Over the last 20 years, Custom Products has added solid modeling design software (both Pro/E and Solid Works), robotic welding, and a state-of-the-art powder coat paint system. Today, Custom Products supplies cab products to both original equipment manufacturers (OEMs) and the aftermarket.

Efficiencies

When asked how the company has gone about becoming a leaner operating plant, Maki points to the company’s ability to identify waste. “That was the core piece of it for us.” Within the last five or so years, Maki continues, they’ve really tried to incorporate better, smarter ways of doing

PHOTOGRAPHS BY SARV MITHAQIYAN

For the uninitiated, the cab of an industrial vehicle is the sexy part. Generally, companies that specialize in cab enclosures focus on the “extras”—heated seats, GPS, surround sound. Custom Products, though, focuses on safety. Their cabs come ROPS certified—rollover protection system. Custom Products also specializes in falling object protection systems. Their products not only look good but keep people safe while doing so.

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PHOTOGRAPHS BY SARV MITHAQIYAN

the work. He says they’ve had a few “champions” inside the company who had experience making things leaner, and those individuals were allowed to start working on some changes. “So, with my blessing, they started turning on what people already knew,” Maki says. In some cases, it came down to

“It’s using fully engaged teams of people and looking at what they really need to do their job.” using logic and common sense. And remembering the 5S system of visual management—Sort, Set in Order, Shine, Standardize, Sustain. “This lean manufacturing methodology uses fully engaged teams of people and looks at what they really need to do their job,” he says. “If you don’t need it, if it’s cluttering up your area, it goes. For example, the only tools that should be in a particular work area are the ones needed to do the job.” David Marotte, Custom Products’ design engineering manager, says that 34

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“Randy Reinke is the epitome of a manufacturing executive who really believes in the value of the private/public partnership.”

they’ve also changed their mindset about how work gets done. “Eight years ago, it was a lot of the batch-build mentality, old school thinking,” he says. “But over the last eight years—and really over the last two years—we’ve transitioned to the one flow.” One flow means that instead of building 10 cabs at a time and sending 10 cabs to get painted, they finish all the sub-assembly on each cab and send individual units on to get painted. “It allows for a better flow of product,” Marotte says. “It also helps out with quality so that issues and problems can be addressed quickly.” Transitioning to this style of production, Marotte continues—as well as

rethinking the company’s materials presentation—also allows Custom Products to more easily set up the tools needed for a particular job. Finally, Marotte says, producing one cab at a time reduces the amount of floor space needed to store the inventory. When 10 to 20 cabs are manufactured, they need a place to park. “That took up a lot of floor space,” he says. “It also required forklift use and man hours. Working around all that inventory was problematic.” Maki says that, so far, most employees seem to appreciate efficiency becoming a priority. “One employee said, ‘This is far superior to the caveman style,’” Maki says. “It’s significantly more productive.”

Hiring challenges

It’s no secret that attracting and retaining good workers is a challenge. Custom Products’ location—not on a major highway or in a metropolitan area and close to competing towns of similar size—isn’t doing them any favors either. So, Maki says, they do what they can to convince workers to give Custom Products a chance. “We had bagels today!” Maki jokes. “Actually, we’ve really tried to improve how we recognize our employees. We try to make sure they know we appreciate them.” By incorporating different types of recognition, along with bonuses, Custom Products is working to build team unity


“It’s using fully engaged teams of people and looking at what they really need to do their job.”

Products’ wages and benefit packages are competitive, which helps them get noticed when they’re hiring, but filling job vacancies—especially in the engineering department—is still a challenge, and it can take up to six months to fill a job. Bob Kill, president and CEO of Enterprise Minnesota, says the challenges Custom Products faces are real. “In Willmar, they have daycare centers and housing. But 20 miles away in Litchfield, there are daycare and housing challenges,” he says. “The population thins out pretty quickly when you get past Litchfield. They do recruit full time, though, and they’re pretty aggressive.”

Despite the challenges

and applaud top performers. The company also offers opportunities for advancement to help workers see that their job can easily turn into a career. These bold initiatives are needed, Maki says, because workers have options. “We see people leaving our job site on a Friday and then working somewhere else on a Monday,” he says. “And sometimes for more money.” The company has increased employee wages and even tried an attendance incentive program that gave employees $100 for showing up to work every day (they’ve modified that program slightly since its inception). Even in the offices where engineers work it’s hard to keep ranks full, Marotte says. “Finding engineers in the middle of Minnesota is difficult. As a small town, we are just close enough to the cities so that we end up competing with the suburbs.” Among the current staff of five engineers, Marotte continues, the average time with the company is about eight years, which says a lot about how Custom Products treats its employees. “I like the longevity and the knowledge gained by working with so many different (original equipment manufacturers),” he says. “It’s a good place to work for many reasons—it’s a small town community, everybody’s very friendly, and they care about what’s going on in people’s lives.” Marotte says he believes Custom

Kill says he believes Custom Products has remained successful because the company plays to its strengths and has developed a great product. “I think it’s a niche product, and they have a good strategy that has proven itself through thick and thin,” he says. “They provide products for the mining industry and agriculture, and they’ve really stayed focused on that, plus on

driving innovation and adding value. It’s worked—they’ve been around for 65 years.” Kill says the company’s president and CEO, Randy Reinke, has done a great job of continuing the legacy started by company founder Arvid Reinke. In 2016, when several state lawmakers visited Custom Products, Randy Reinke told the Litchfield Independent Review, “What we do saves lives. At the end of the day, our goal is to, No. 1 protect the operator, you know, make sure the design is safe from the standpoint of these (safety) standards. But secondly, our relationship with the OEM (original equipment manufacturer), the people making the equipment, is to put them in a better product liability situation.” Says Kill, “Randy Reinke is the epitome of a manufacturing executive who really believes in the value of the private/public partnership.” Through the company’s apprentice program, Kill continues, there is enthusiasm and youth brought to the plant, but also a willingness to invest in the community and the community’s human capital.

LO CA L F O C U S . G LO BA L R E AC H .

Granite Equity Partners is a private investment and long-term holding company with a mission to grow companies while enhancing local communities. Granite Companies are owned, headquartered, and rooted in Minnesota. This is our local focus. We source, sell, and develop business around the world. This is our global reach. 320.251.1800

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G OV E R N I N G A N D G ROWI N G CO M PA N I E S F RO M M I N N E S OTA WINTER 2019 ENTERPRISE MINNESOTA /

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THE RANGE

GROWING JOBS WHILE THE SUN SHINES, EH

Canada-based Heliene hires 130 people as it reclaims Mountain Iron’s solar panel manufacturing plant

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he 2018 opening of Minnesota’s only solar panel factory—and the first such facility to open in the United States that year—confirmed there is some truth to the saying, luck happens when preparation meets opportunity. Heliene Inc. and its new factory in Mountain Iron meet the energy demands of North America by producing solar modules for a variety of industries, including private industries and publicly-funded solar parks. Founded in 2010 by President Martin Pochtaruk and a group of investors with an initial investment of $12 million and a $2.5 million loan from the Ontario government, the company has grown to employ 78 people in its home base of Sault Ste. Marie, Ontario. The company’s annual revenue hovers just under $100 million. And it is a good industry to currently be in. The global solar energy market is expected to reach $422 billion by 2022, more than five times the amount the industry produced in 2015. Buffeted by a manufacturing facility in Barcelona, Spain, Heliene’s Sault Ste. Marie facility was originally the only one

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located in North America. But despite business being good, Pochtaruk was presented with an opportunity to grow that he couldn’t pass up. “We didn’t have specific plans to expand,” Pochtaruk says. “We were thinking about going into the U.S. market, and then the opportunity came up that made us think about it more seriously. As a small, entrepreneurial company, you become immersed in what’s happening day to day, chasing whatever is urgent, and not necessarily working on strategic matters.” Enter the town of Mountain Iron. Located slightly east of Hibbing, the town of 2,863 is best known for Minntac, the largest iron ore mine in the United States, and its city motto: “The taconite capital of the world.” Formerly the home of Silicon Energy based in Washington state, which also made solar panels, Mountain Iron housed the company’s assembly plant from 2011 until Silicon Energy filed for dissolution

BY DAN HEILMAN

in 2016. Rather than declaring bankruptcy, Silicon Energy sold the equipment in the Mountain Iron plant to the city for $1 as a goodwill gesture. Luckily, the city owned the 25,000-square-foot manufacturing building, which was put up with help from a $3.6 million loan from the Iron Range Resources and Rehabilitation Board (IRRRB). Between that and the equipment and stock waiting to be used inside, the old Silicon Energy facility was a nearly perfect turnkey opportunity for Heliene. Another incentive was the richness of the power-generating market. About 60 percent of the panels Heliene had manufactured in Canada during 2016 were sold in Minnesota. A portion of the demand is from community solar gardens that let people buy solar electricity without having to install panels on their homes. According to the Solar Energy Industries Association, Minnesota is expected to account for more than half of all community solar development in the country this year. “In April 2017, we were approached to take over the Silicon Energy facility,”


“We didn’t have specific plans to expand,” says Martin Pochtaruk, company founder. “We were thinking about going into the U.S. market, and then an opportunity came up that made us think about it more seriously. As a small, entrepreneurial company, you become immersed in what’s happening day to day, chasing whatever is urgent and not necessarily working on strategic matters.” WINTER 2019 ENTERPRISE MINNESOTA /

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Heliene has used the Mountain Iron building to take production from 30 to 900 solar panels a day—with an eye on up to 1,300 per day.

Pochtaruk says. “We took it over mainly to supply the other Minnesota-focused programs. And we wanted to continue our investments in the U.S. market.” Heliene operated the factory with the old equipment for several months before the state of Minnesota authorized $3.5 million in loans to expand the facility and purchase new equipment. The cost of the loan was split between the IRRRB and the state Department of Employment and Economic Development (DEED). “The state, through IRRRB, invested money into rebuilding the plant where Heliene was building solar panels,” Bob Kill,

Bob Kill, Enterprise Minnesota’s president and CEO, says Heliene is a story about how good leadership, innovation, and a commitment to advanced manufacturing can transform a company. president and CEO of Enterprise Minnesota, says. “Heliene initially struggled because of high costs and a fluctuating solar panel market.” With the company’s 2019 payroll figures expected to be about $2.7 million, and $1 million of its IRRRB/DEED loan forgivable, Heliene will be able to pay the state back the remaining $2.5 million plus interest in its first year at the new location. The money made things easier for Heliene, but it guaranteed nothing. Despite mining jobs being some of the highestpaying in the state, a major challenge for the company was finding workers. 38

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“It wasn’t easy, and it continues to not be easy,” Pochtaruk says. “We have the number of people we need, but the fact remains that it’s shift work. It’s not easy to find workers to fill our shifts and also retain them for very long. I don’t know that it would be much different in any part of the state.” Including the loan from the state, Heliene invested about $18 million into the Mountain Iron plant and ended up hiring 130 employees. Terms of the loan also dictated that the company furnish employees $15-per-hour wages, fully subsidized health and dental insurance, and a retirement plan. After finding the workers, Heliene then needed to train them. That’s where Enterprise Minnesota stepped in. “We have been ISO-certified in Canada since 2011,” Pochtaruk says. “We needed a minimum of six months of operation in Mountain Iron to have the audit that certified that facility. To achieve it, we needed to train our personnel on the different procedures and processes.” The two-day course in internal auditing was taught by Enterprise Minnesota Business Growth Consultant Pat Pearson to help improve the organization’s operations through a systematic, disciplined approach. “One of the things we focus on is education,” says Jim Schottmuller, Enterprise Minnesota’s business development consultant who helped connect the organization with Heliene. “It’s for the manufacturer and their processes.” Enterprise Minnesota brings in its highlevel information and understanding about how to do internal auditing, Schottmuller says, but it uses the company’s processes

and paperwork and applies the training to their system. “The curriculum is in place already,” Schottmuller continues. “Our consultants understand the ISO process and the rules of certification. They can take the organization’s materials and plug them into that knowledge. It feels customized, but it’s a pretty consistent process across companies.” Helping Heliene attain and retain its ISO certification is a necessity as a management system. With that in place, Kill says, the company can now consider talent development efforts to attract and retain workers. “If you bring automation into your company, you can get a rebate from the state for your training costs. Heliene would be an ideal candidate for that.” Kill says Heliene is a story about how good leadership, innovation, and a commitment to advanced manufacturing can transform a company. “They’ve really embraced employee development,” he says. “Their facility is well lit with big windows and clean work areas. If you visited the building, you would think, ‘This is not the old-fashioned picture of manufacturing.’” But due to a number of factors, the solar panel industry can be fickle, and even with the help of the now-defunct “Made in Minnesota” subsidy, which offered tax credits and other incentives to companies in the solar market, many companies have failed. Pochtaruk is convinced that Heliene will be different, pointing out that there are no solar panel makers in any of the other Midwestern states. “In the U.S. in particular, the solar panel


Your local resource for subcontracting manufacturing needs. industry goes up and down,” Pochtaruk says. “Last year was flat compared to 2017, and 2019 was slightly better. We’re hoping for 20 percent growth from 2019 to 2020.” Thanks to Heliene’s state-of-the-art equipment and its full roster of workers, the company is the most efficient solar panel factory in the country, according to Pochtaruk. In its refurbished Mountain Iron plant, the company uses a $1.1 million German-made robotic arm with suction cups to quickly assemble individual solar cells into a grid-like pattern on each module and then send the solar panel down the automated production line. The company is also in the process of purchasing a robotic soldering machine. Currently, Heliene can produce 1,300 panels per day, at 42 minutes of manufacturing time apiece. To keep that pace, a rotating crew of 120 shift workers helps fill a third shift that is not easy to staff, Pochtaruk points out, even with the wages and benefits Heliene offers. “We’re competing with other companies that require shift workers—manufacturing and mining,” he says. “There are fewer and fewer people interested in shift work these days.” When the Trump administration placed 30 percent tariffs on imported panels, Heliene’s Canada facility had to adjust, but now it could work in the company’s favor with its new presence in the U.S. With an eye on Illinois as a significant

future market, Heliene plans to flourish as the wisdom of community solar programs keeps spreading. “We have a new product every six months,” Pochtaruk says. “We have to operate that way. The products we sell now are 20 percent more efficient than what we were selling in 2010. We’ve been growing in efficiency 3 to 5 percent every year, and we have to maintain those figures.” To further its commitment to advancing photovoltaic technologies, Heliene plows between 5 and 8 percent of its annual revenue into applied research and development, focusing on product efficiency, cost optimization, and connectivity to the smarter grid of the future. The company also plans to put an addition on its Mountain Iron facility next year, including a second manufacturing line, as space has become tight. According to Pochtaruk, the company hopes to have details finalized by April 2020. Heliene has used the Mountain Iron building to take production from 30 to 900 solar panels a day—with an eye on up to 1,300 per day. According to Kill, that uptick is the result of ambition, innovation, and intelligent services from the likes of Enterprise Minnesota. “They’ve got a beautiful building and a great work environment plus a lot of innovation,” Kill says. “In some ways it is advanced manufacturing, and they’re committing to things like process improvement.”

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WINTER 2019 ENTERPRISE MINNESOTA /

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Final Word

Mind the GAP The Growth Acceleration Program helps Enterprise Minnesota reach Greater Minnesota while posting a stunning ROI

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hen lobbyists in St. Paul describe their requests for government spending as an “investment,” they are typically speaking metaphorically. A rare exception to that rule, I’m pleased to say, is our Growth Acceleration Program (GAP), which talks about a literal dollarfor-dollar return on investment—one that is almost surreally impressive. The Minnesota Legislature created GAP in 2008 to help bring business improvement services to manufacturers with 250 or fewer full-time employees. Since its inception, GAP has helped 427 companies achieve eye-popping results. Generating an average $30-to-$1 return on investment, it has created and retained 10,040 jobs in Minnesota, boosted company sales by $1.01 billion, and saved these companies $177 million in business costs.  All funds awarded under GAP must be used to assist an eligible company with business services and products that will enhance the operations of the company. These business services must come directly through Enterprise Minnesota. Recipients may not use GAP funds for financing, overhead costs, construction, renovation, equipment purchase, or computer hardware. What’s better is the program helps manufacturers—the job-creating engines who sustain their local economies by providing a sturdy base for prosperity across Minnesota. Someone once said that “work is the elixir of life.” And politicians like to talk about how the availability of steady jobs can supplant the need for a lot of social programs. More and more policymakers understand that manufacturers create and retain jobs. Quality jobs. The number of people employed by manufacturers has grown nine percent since 2010, today comprising 13 percent of all our private-sector jobs. Each manufacturing job supports 1.9 jobs in other sectors of the economy. That means that fully one-third of Minnesota jobs are in, or supported by, manufacturing. And manufacturing jobs pay well. The 40

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Lynn Shelton is vice president of marketing at Enterprise Minnesota.

average annual wage for a manufacturing job is more than $63,000—15 percent higher than the average wage for all industries. It’s easy to see why both parties in the Minnesota Legislature view GAP as a government investment that works. In short, manufacturers give Minnesota’s politicians fertile grounds for agreement. GAP is an opportunity all legislators can address when the legislature convenes in January. We also enjoy the fact that policymakers, educators, and local leaders have come to trust Enterprise Minnesota as a dependable connector of small and medium-sized manufacturers with their communities and, candidly, with their state. One of our missions has been to truly understand manufacturing and manufacturers. Many observers conclude that our primary connection with the manufacturing community comes through our annual State of Manufacturing® survey, which is partly true. Our survey indeed delivers statistically accurate public opinion polling through one of America’s top pollsters and is the only survey of its kind in America, as far as

we know. The State of Manufacturing has become a vital source of valuable, objective data about the challenges and opportunities facing Minnesota’s manufacturers. But that project is only the most visible of our activities. Another comes from the tireless dedication of our president and CEO. We all draw inspiration from the fact that Bob Kill takes time every week to get out and visit manufacturers, CEO to CEO. He gets real-world insights in ways that help guide the targeting of the services we offer. No less valuable are the insights we get from our consultants. Our professionals work in the offices and on the plant floors of small and medium-sized manufacturers every day of the week—all across Minnesota. Consider this: Enterprise Minnesota’s people travel just over 320,000 miles per year visiting manufacturers. That’s the equivalent of driving from New York City to Los Angeles twice every business week. My point? We’re out there. Another significant contributor to our outreach has been the more than 300 times we have helped arrange opportunities for legislators to tour the facilities of their local manufacturers. Our fascination with this process never ends. We started inviting elected officials to tour our client companies because it had become alarmingly clear that manufacturers and their elected officials had become experts in talking past one another. They knew each other from Rotary, or from church, or by attending the occasional chamber of commerce meeting. But many elected officials didn’t fully understand how those same people, operating out in the industrial parks on the fringe of town, had transformed their industries. Many local manufacturers had become sophisticated global players, working in plants that were quite modern and clean, and home to an increasing number of high-tech, well-paid careers. Communication matters. And GAP helps lubricate that process.


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Fifty-three percent of manufacturers say they have a formal strategic plan to achieve profitable growth. Is your company one of them? Call us today at 612-373-2900 or reach us at enterpriseminnesota.org for a free 90 minute consultation with one of our strategy experts.

We can help you grow profitably! Scan here to learn more about how we can help your business. 2100 Summer St. NE, Suite 150 • Minneapolis, MN 55413


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Profile for Enterprise Minnesota

Enterprise Minnesota Magazine - Winter 2019  

Black Swan Cooperage competes in the surprisingly competitive world of making barrels for distillers and brewers. Issue highlights include:...

Enterprise Minnesota Magazine - Winter 2019  

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