TALE OF LGC Biosearch Technologies is innovating life science THE TAPE technology from seed genomics to pandemic response.
Helping Manufacturing Enterprises Grow Profitably WINTER 2023
What Just
Happened Minnesota’s manufacturers are still trying to grasp how to cope with the latest legislative mandates.
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WINTER 2023
WHAT JUST HAPPENED?
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Minnesota’s manufacturers are still trying to grasp how to cope with the latest legislative mandates.
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Wary Optimism
A National Model
Manufacturing executives voice concerns about legislative mandates, the ongoing worker shortage, and a little optimism about the economy.
NBC uses Delkor to illustrate how employment numbers impact the economy.
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Peerless Collaboration
Tale of the Tape
Execs at MDI and AMGS use their peer council relationship to shore up their operations.
Alexandria’s LGC Biosearch Technologies is innovating life science technology from seed genomics to pandemic response.
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Unintended Consequences
Where Training Takes Off
Veteran Strong
Making Connections
Winegar finds a win-win program that helps working vets find additional benefits.
Manufacturers need to show state lawmakers how they provide great jobs, boost economic growth, and strengthen communities.
The Legislature introduces growth-stifling measures.
NASA supplier Windings creates in-house ‘university’ to help employees soar.
CORRECTION: The lead Innovations story in the fall 2023 issue incorrectly described Minnesota State College Southeast in Winona as “Winona State.”
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Unintended Consequences Just as the manufacturing climate seems to be stabilizing, the Minnesota Legislature has stepped in with a new round of growth-stifling measures.
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look at results from the latest State of Manufacturing® survey shows the business climate has somewhat settled down post-COVID, giving manufacturers a welcome dose of breathing room to tackle issues they might have put on the back burner in recent years. The SOM survey data — combined with insight from focus groups — shows something we haven’t seen for a while: stability. A respite from runaway inflation, acute worker shortages, and supply chain shocks could finally allow time- and resource-strained manufacturers to shift focus to growing their companies. Thanks to the Minnesota Legislature, manufacturers now worry they won’t be able to enjoy that much-needed break. A handful of sweeping employment laws enacted during the last legislative session have manufacturing executives deeply concerned. The changes include expanded paid leave requirements; a new employerfunded paid leave program; and cannabis legalization, along with new workplace drug testing policies. Our SOM focus groups of 104 executives were acutely aware that legislators allowed no exemptions for small and tiny manufacturers who don’t have the resources to shoulder these immediate administrative burdens. Many will need to seek expensive help from outside legal or HR professionals. The changes have 76% of SOM survey respondents very or somewhat worried. That’s a strong reaction for a group who historically expresses a great deal of confidence, even in the face of historic upheaval. 2
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Legislators seem to believe there’s a tension between business owners and their employees that can only be managed with heavy-handed and costly regulations. But the manufacturers we work with know their success depends on their employees’ satisfaction, and they constantly strive to improve work environments. Manufacturing employees across the state work in clean, well-run, modern buildings. Jobs at these companies anchor communities with higherthan-average wages and abundant opportunities for career growth. Manufacturers regularly work with us on strategies that improve employee engagement through talent development or that reduce repetitive and physically taxing aspects of a job through automation. When employers face costly administrative burdens and additional payroll taxes, they often delay or cancel these projects, and in some cases, make agonizing decisions to cut positions, reduce hours, or limit hiring. A good rule of thumb, in business and in life, is to know the reaction before you take the action. If legislators had reached out to manufacturers, they might have anticipated the consequences of these laws. To help legislators understand potential outcomes, we’re ramping up efforts to connect them to the manufacturers they represent through company tours. These visits give lawmakers a firsthand look at companies and the outstanding employees who make their products. Bob Kill is president and CEO of Enterprise Minnesota.
Helping Manufacturing Enterprises Grow Profitably
9001:2015
Publisher Lynn K. Shelton Editorial Director Tom Mason Creative Director Scott Buchschacher Managing Editor Chip Tangen Copy Editor Catrin Wigfall Writers Joe Bowen Sue Bruns Suzy Frisch Tom Mason Robb Murray Peter Passi Photographer Robert Lodge
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 ©2023 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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EMPLOYEES
Where Training Takes Off NASA supplier Windings creates in-house ‘university’ to help employees soar.
The manufacturer of custom-built electric motors has created Windings University, a comprehensive training program for all of its 130 employees.
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ew Ulm-based Windings is a company that manufactures products so precise and so technologically advanced that, when NASA was building its Mars Rover, it included Windings parts in the vehicle’s robotic arm and coring turret drill. But when it comes to training its employees, Windings recognized its status quo needed a blast of innovation, and so now its workers will be going back to school. Sort of. The manufacturer of custom-built electric motors has implemented a comprehensive new training program for all of its 130 employees called Windings University. The program, prepared by Enterprise Minnesota Business Growth Consultant Abbey Hellickson, provides
a new and logical training system for Windings — something the company has never had before. Windings’ management has always trained workers, of course. But the new program brings structure, branding, tech, transparency, and efficiency to something that could otherwise feel dull and compulsory. The hope is that Windings University will help the company’s training initiatives really “take off.” “We’ve intentionally given Windings University a very professional approach,” says company CEO Heather BraimbridgeCox. “That’s made training at Windings feel important, feel necessary, and just really put training in the spotlight.” It all begins with branding. When a Windings employee gets an email about
a Windings University training session, it comes with Windings University branding. And the training itself doesn’t just take place in a conference room. It might be on an iPad screen, or in an app on the employee’s iPhone. “One of the things we focus on is growth, and related to that growth is innovation and getting rid of things like paper,” Braimbridge-Cox says. “So I think that definitely shows growth at Windings.” Training at Windings University comprises four areas, or what the program calls “academies”: leadership, development, wellness, and ownership. • Leadership includes both practical leadership development, offered specifically to expand the skills of current leaders, as well as providing opportunities for emerging leaders. One element is the “Emerging Leaders Development Program,” designed to build a strong pipeline of future leaders. • Development offers online and inperson opportunities for employees to grow in knowledge, skill, and ability.
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These include the “Employee Journey,” which “focuses on bringing out the best in all of us as leaders, as teams and as a company.” This academy also highlights the purpose of Windings committees, such as safety, first responder, and the employee stock option plan committees. • Wellness focuses on social, financial, physical, and community well-being. • Ownership enables new and current employees to explore and understand the concept of an employee stock ownership plan (ESOP) company. Understanding the value of working for an ESOP and what it means for employees, Windings says, is crucial in retention and recruitment. Braimbridge-Cox says the curriculum includes information about the ESOP to educate younger workers, especially, who are often less inclined to ponder retirement possibilities.
Every worker at Windings who stays with the company for six years is 100% vested in the plan. The plan contributes to employee ESOP accounts based on the company’s financial performance, and in recent years those contributions have been as much as 15% of an employee’s salary. “That money can grow,” says Windings Training Coordinator Jane Meyer. “We’ve sent people out the door millionaires, basically, if they’ve been here 20, 30, or 40 years.” Meyer says a more robust approach to training will go a long way in helping everyone understand their roles and perform at a higher level. “Working with Abbey, we learned that we needed to figure out a way to shorten the amount of time it takes to train a production person,” Meyer says. “We have skill blocks in place and skill evaluations. We recently created a skills matrix — a lot
of good information for each department on every single skill that a new employee needs to learn. Now, how do you take that and put it together and package that training so that it’s easily transferable, and so that our trainers can become experts at using that information and getting people trained?” And standardizing training efforts has become — in the past 12 months — a much more important concept. About a year ago Windings acquired McCully Corp., a California-based manufacturer with a similar mission. Braimbridge-Cox says one of Windings’ goals with its new training approach is to codify standard operating procedures for training that can be easily implemented
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across multiple locations with zero deviation. Hellickson says the plan Windings has put into action will accomplish this goal and more. “The ultimate goal is that any facility Windings owns will have a standardized production method so that there is consistent quality in serving the company’s clients,” Hellickson says. “Windings is now applying standardized processes and training in the acquired facility.” Windings management hopes the new training program will enhance the company’s efforts to recruit and retain employees. Like most manufacturers, Windings has struggled at times to fill out its workforce. Things were worst during the pandemic when companies were doing anything they could — including offering attractive signing bonuses — to get people to jump ship at their current employer. But lately those issues have eased up, at least for production floor jobs. It’s still difficult, Braimbridge-Cox says, to fill some upper-level vacancies. “It’s leadership positions. That’s a struggle,” she says, adding that the company is currently looking to hire a quality manager, a senior buyer, and an engineer. “That’s why we have to develop our own people. Recruiting’s tough in a small town. We can go to Mankato and get some talent but still, it’s a challenge.” Braimbridge-Cox and Meyer say they hope Windings University can attract all kinds of talent. Employees, they anticipate, will appreciate the clarity Windings University will bring to training, and how it will show clear training paths with sessions scheduled months in advance. And by introducing tech to the equation, the goal is to appeal to a younger generation that grew up with tech all around them. Although they’ve just started using Windings University, Braimbridge-Cox says feedback has been “pretty positive.” Added Meyer: “Windings University gives our training a structure. It’s purposeful, it’s meaningful. I think people like the fact that we’re no longer going to be saying, ‘Oh, there’s a training class tomorrow.’ It’s thought out, it’s well planned, people can prepare, and it really helped us, too, to be more organized.” —Robb Murray WINTER 2023 ENTERPRISE MINNESOTA /
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NEWS
Enterprise Minnesota Announces Key Hires E
nterprise Minnesota recently announced the addition of three new staff members. Amy Thimmesh and Ryan Steinert have joined the staff of Enterprise Minnesota as business growth consultants. Amanda Baumgart has joined the staff at Enterprise Minnesota as a research analyst & supply chain specialist, a new position within the organization. Thimmesh specializes in helping Minnesota manufacturers build, implement and sustain ISO business management systems. Amy utilizes her decades of quality management experience to guide clients in developing process controls
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and operational best practices in pursuit of their ISO 9001:2015 certification. Her experience includes manufacturing operations, programming analysis, and leading QA and QMS teams through management, customer, and supplier audits. Prior to joining Enterprise Minnesota, Thimmesh served as lead auditor and ISO implementation specialist at Alexandria Industries in Alexandria. She achieved an Associate of Applied Science in computer programming and supervisory management from Alexandria Technical & Community College. She received an ISO 9001:2015 Lead Auditor certificate
Ryan Steinert
through Exemplar Global. A resident of Alexandria, she is an active runner and competitive weightlifter. Steinert is a continuous improvement and lean manufacturing expert. His nearly 13 years of experience in managing and practicing Continuous Improvement with Minnesota manufacturers enables him to integrate business and operational systems for a wide variety of manufacturers. Ryan brings a practical approach to Continuous Improvement and Lean, engaging employees to drive business results through their own ideas to improve safety, reduce costs, reduce lead times, and improve quality. Steinert also works with manufacturers to identify where automation solutions, both through robotics and software, can make their employees’ day
Amy Thimmesh
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easier and more productive. Prior to joining Enterprise Minnesota, Steinert served as continuous improvement manager for Lakeshirts in Detroit Lakes. He also served in various roles in Quality, Lean, Engineering, Scheduling, and Plant Supervision for Team Industries and Lamb Weston (ConAgra Foods) in Minnesota. Steinert received a Bachelor of Science in industrial engineering & management from North Dakota State University. He has achieved master black belt certification in Lean Six Sigma. Baumgart works to support Enterprise Minnesota’s efforts on MEP’s Supply Chain Optimization and Intelligence Network (SCOIN) project. This nationwide effort supports comprehensive supplier scouting services; research and analysis of manufacturers’ capabilities and capacity; categorizing current and future requirements of the connections between Minnesota OEMs and suppliers; and identifying consulting services that will foster greater productivity within supply chains. Amanda most recently worked on sales and marketing data analytics for a producer of plant-based foods and ingredients. Before that she supported research and strategy in several earlystage companies. Amanda earned her bachelor’s degree in business administration and economics from the University of St. Thomas and went on to earn her master’s degree in entrepreneurial leadership from Babson College in Massachusetts.
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NMMA members recently toured Roseau High School’s Tech Ed wing. They include: Kellie Roth – Polaris, Kurt Weston – Citizens State Bank, Rhody Heneman – Security Sate Bank, Mark Karl – Karl Manufacturing Solutions / Heatmor, Andrew Faken – Border Bank, Tom Jerome – Roseau School District Superintendent, Mike Roberts – Marvin, Adam Baumgartner – Polaris, Nathan Voll – Intercept Industries, Tom Johnson – Intercept Industries, Chad Bakke – Heatmor, and Jim Johnson – Intercept Industries.
WORKING TOGETHER
Teamwork Members of the Northwestern Minnesota Manufacturers Association collaborate to find local solutions to local challenges.
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anufacturers in northwest Minnesota say they confront challenges that go beyond hiring and retaining qualified workers. They contend with a range of employees’ needs from health and housing to daycare and quality of life. If you build it, they may come, but they won’t stay if there’s no place to live or no daycare for their children. The Northwestern Minnesota Manufacturers Association (NMMA) is a 50-year-old alliance of manufacturers who share concerns and challenges and explore solutions. They know that working together is essential for advancing their companies and sustaining strong communities. NMMA’s membership includes Polaris Industries, Marvin, Security State Bank, Citizens State Bank, Border Bank, Central Boiler/Altoz, Karl Manufacturing Solutions/ Heatmor, and Intercept Industries LTD. Mark Karl, current president of the NMMA and CEO of Karl Manufacturing Solutions in Roseau, says the organization convenes
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10 times a year to focus on common challenges and explore possible solutions. “Although we certainly compete for some of the same employees, we have a deep respect for each other and understand that manufacturing is the largest driver of our local economies and community viability,” says Mike Roberts, director of operations support for Marvin in Warroad. Karl says NMMA’s networking helped its members navigate the pandemic: “We did a lot of cross communication during COVID about what we were implementing, how we were handling the six feet of separation, the cleaning, the sanitizing.” But post-COVID issues are long-term, expensive challenges to tackle. “We’re focused on the health of our communities, housing, and daycare,” Karl says. “Supporting youth and youth activities is important. Our organization supports things like robotics programs and industrial education programs — welding, injection molding, machining.”
During a recent focus group in Roseau as part of Enterprise Minnesota’s annual State of Manufacturing® project, Enterprise Minnesota President and CEO Bob Kill emphasized that companies in small, northern communities can’t just deal with one issue at a time; rather, they need to address the health, education, and financial needs of those communities and the region as a whole. Kill led the meeting through a series of issues from hiring, housing, and flexible scheduling to effects of new legislation and applications of AI. Northwest manufacturers provide opportunities for young people to explore manufacturing while they’re still in high school through tours, job shadowing, and job fairs. They also provide avenues for current employees to get additional training to move into new roles within the company. In January 2022, Marvin partnered with Northland Community & Technical College in East Grand Forks to launch the Advanced Resource Center (ARC), an accredited mechatronics program in Warroad. “We’ve had on-site college programs for 25 years,” says Peggy Anderholm, education manager of the ARC. Anderholm herself has a 25-year work history with Marvin, having started its training department in 1998. She says that five years ago Marvin started to explore ways to open up these programs for the greater community. “We wanted to help develop a degree program for all northwest Minnesota
industries to scale up their workforces and provide skills to incoming employees. We have jobs,” she says. “We just don’t have people.” Marvin provided the building in Warroad and a private funder financed the equipment. Businesses offer assisted or reimbursed tuition while their workers learn new skills and earn certificates and degrees. “If we can bring 10 new people into one of the communities, that’s 10 fewer local people we’re competing for,” Karl says. “And that’s a good thing for all of us.” But bringing in new people means meeting needs for housing and daycare, too. Some manufacturers are investing in the construction of new apartment buildings. Karl has purchased a building in Roseau for his business that might house a daycare for 20-28 children. He says he’ll offer the space rent free to a daycare provider. Daycare is an issue, especially for 0-2 year olds, says Kellie Roth, senior HR manager for Polaris. Some workers, she says, who are unable to find daycare take advantage of flexible scheduling, working night shifts while their spouses work days.
Eric Etherington, Central Boiler’s finance director and mayor of Greenbush, says the community is on track for a $1 million congressional grant to construct a local daycare facility that would accommodate 70 children including 16 infants. “We’re waiting for those budgets to be finalized and signed by the President
“Nothing is off the table.” –Kellie Roth, senior HR manager, Polaris
for next year,” he says. “At that point things will start to move really fast.” The community hopes to have the facility constructed and open prior to the start of the 2024-25 school year, Etherington says. The daycare facility could also serve commuters who drive through Greenbush to get from their homes to jobs in other communities. Other solutions to ongoing challenges include recruitment of immigrant employees, automation, and AI applications for identifying flaws in products and
projecting markets. “Nothing,” says Roth, “is off the table.” Kill says the challenge facing manufacturers still boils down to workforce, workforce, workforce. “These northwestern manufacturers will do almost anything to keep people. They’re going to automate where they can; the technology, the automation that they’ve invested in is really phenomenal.” Contrary to popular belief, he adds, the Minneapolis-St. Paul metropolitan area is not the only place with sophisticated manufacturing. “The farther you get away from the Twin Cities, the more advanced companies are in their employee retention work, their commitment to their employees, and their commitment to new technology.” Kill is impressed by the sense of community in the northwest corner. “It’s almost undefinable to people who have never visited. This focus group showed what an off-the-scale commitment there is here to keeping the vibrancy of their companies and communities.” —Sue Bruns
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Among other community involvements, Dawn Loberg appears weekly on a four-person panel of political pundits on a Saturday public affairs radio program from 10 a.m. to 11 a.m. on St. Cloud’s KNSI (AM 1450 and FM 99.3).
Inside Enterprise Minnesota
An ongoing series.
ESTEEMED COLLEAGUE
Trusted Advisor Business developer uses perseverance and straight talk to build prosperous relationships.
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hen Dawn Loberg was a relatively new business developer at Enterprise Minnesota, she decided to visit a company that had long ceased using consulting services. The company CEO began a tour of his plant by saying, “I don’t see anywhere Enterprise Minnesota can help us.” Friendly, but definitive. Undaunted, Loberg completed the tour and kept up the outreach with the CEO and his leadership team. “I knew they were going to be expanding,” she says. “I was just trying to create a relationship. My role is to understand what the company is trying to achieve in three to five years and then help bring them the resources they need to get there.” In the intervening years, with Loberg’s guidance, the company understood where
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Enterprise Minnesota’s consultants could play a role in its growth. They’ve helped the company map its strategy, improve productivity through lean work, introduce two value stream mappings, and moderate several Kaizen events. Enterprise Minnesota also partners with them to organize employee development for all company leaders. The lesson: The most enduring customer relationships are never based on telling the customers what they want to hear. “I feel like I am a trusted advisor to all my clients,” Loberg says. “I meet with them even if we’re not delivering a service; I get to know what’s important to them. They know I really want to help them be successful. And sometimes that means delivering a really hard message.” Now entering her seventh year as a
St. Cloud-based business development consultant at Enterprise Minnesota, Loberg received this year’s “Esteemed Colleague” award. It is an MVP honor bestowed by coworkers to the colleague who brings substantial value while reflecting the organization’s culture and priorities. Loberg grew up in Lombard, Ill., a suburb of Chicago, where one of her primary interests revolved around studying the piano. She began lessons at
The lesson: The most enduring customer relationships are never based on telling the customers what they want to hear. age five and culminated her high school years studying at the Hillsdale College Conservatory of Music. For college, she landed in Winona to attend St. Mary’s College. Part of the school’s attraction was the school’s faith community and small size. “I still talk with my college friends three to four times per week. I like being a bigger fish in a smaller sea. It’s important to me to be able to make a
difference,” she recalls. She told a St. Mary’s admissions officer that her post-college ambition was to be a concert pianist or play in a piano bar. “I’m not kidding,” she says. Paternal guidance helped her settle on dual marketing and management majors while she satisfied her musical cravings by playing classical music on a piano in the student union and in a few rogue bands. Loberg graduated from St. Mary’s and spent a year selling electric typewriters (prior to the invention of computers) before she upgraded to a company selling data networks and phone systems. In her second year, she won a national sales competition that earned her a round at the famed Augusta National, a Georgia-based golf course whose notability evolved from hosting the Masters Tournament and (at the time) for its notorious male-only policies. Loberg took her mother as her guest golfer. “We could golf, but we couldn’t go in the clubhouse,” she remembers. The visibility of successful job performance prompted executives at Northwestern Bell (now US West) to recruit her into a position where Loberg managed the data, voice, and strategic planning for the top Fortune 50 companies in Minneapolis. “I remember when we closed the deal with the Timberwolves and the Target Center. The US West president, vice president, and I dressed up in Timberwolves’ attire to attend the contract signing.” She likes to make work fun. When, newly married, she moved to Wahpeton in 1990, US West created a job for her where, for the next seven years, she oversaw sales, installation, network, and technical design for the company’s $30 million North Dakota market. Her North Dakota experience gave Loberg an enduring appetite for mentoring employees — and now client companies — and growing their potential. “It’s always been extremely rewarding for me,” she says. And then a personal tragedy forced Loberg to reexamine her own professional trajectory. A baby boy, Ryan, was born stillborn at 39 weeks. “Work meant nothing,” she recalls. “I just wanted to invest in my family.” So, she “retired” and stayed home for 17 years. Being a stay-at-home mom, however, didn’t mean idleness. From her home office, Loberg raised monies to create a local park in Breckenridge and ran
a part-time nutrition business. When she moved to Sartell, she served on the board of her church and volunteered marketing services to help the local Catholic school develop their preschool into a feeder program for the school, increasing enrollment from 11 kids per class to two sections per class over five years. She put together a team to help raise $100,000 in 10 days to build a new school playground, with a statue of Jesus, at age 13, welcoming the children to the playground. And then, in 2016, someone alerted her to a position at Enterprise
“I looked at this job and saw how it would help small manufacturers in all these small towns. It’s helping them grow.” Minnesota. Intrigued by the consulting model that would tangibly help small- to medium-sized manufacturers grow, she was also attracted to how the prosperity of her clients would benefit their home communities. “I learned living in Wahpeton and Breckenridge that loyalty to community and helping economic development really affects everybody. I looked at this job and saw how it would help small manufacturers in all these small towns. It’s helping them grow. It’s helping their employees stay. It’s helping fund the schools. I so appreciate what our manufacturers do for their communities.” Loberg’s colleagues also like to talk about how her personal involvement in communities extends that mission. Among her extracurriculars is her commitment to helping 17-to-25-yearold women who have been homeless find their way in the job market. “I want them to understand that they have developed huge life skills from their life experience, even being homeless. I think that women, and I’m going to say women in general, sell themselves short. I probably learned more communication, how to influence without authority, and soft skills staying home than I would have in the workplace.” She currently coaches eight to 12 protégés a year. —Tom Mason
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EnterpriseMinnesota.org WINTER 2023 ENTERPRISE MINNESOTA /
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Chris Thissen and his service dog Pete
platoon was missing. One of his men. He wasn’t about to leave him behind. So Thissen charged back out, found the soldier face down in the street, picked him up, and carried him back to safety. As he sits in his workstation at Winegar Manufacturing in Waseca and tells the story of what happened to him, a 120-pound pitbull/mastiff named Pete listens closely. And as Thissen’s voice quickens and wavers — the memory of a near-death experience will do that to a guy — Pete’s ears perk up. As a service dog trained to help Thissen get through emotionally difficult moments, Pete knows when to step in and give Thissen the kind of emotional support he needs. “When I have a PTSD (post-traumatic stress disorder) episode, I shut down. I am non-aggressive, but I know very well that if I lose it, really bad things can happen,” Thissen says. “I’ve gotten to the point where I shut down and Pete comes up and will get
Being known as a VA-certified employer will help with recruitment, according to Craig Ryan, Winegar’s CEO. He says they’ll be updating the company website soon to reflect their participation with the VA.
DOING GOOD
Veteran Strong Winegar finds a win-win program that helps working vets find additional benefits.
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hris Thissen was in the fifth year of a five-year commitment to the U.S. Marine Corps — a year where he volunteered to serve in an infantry unit after four years in a non-combat role — when he found himself under heavy fire in a desert town in Iraq. He was in command of a patrol unit
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ambushed by a barrage of rocket-propelled grenades (RPGs). One exploded a few feet away from him. Shrapnel sliced through his skin. The impact concussed his brain so badly he’d later need holes drilled into his skull to relieve pressure. But before getting help that day, Thissen had a problem to solve. A soldier in his
up in my face. He gets me out of the back of my head into the front of my head.” Understandably, Thissen’s time in the military and his combat experience changed his life forever. He’s been deemed 100% disabled and suffers from PTSD. He wouldn’t have to work if he didn’t want to. But for a Marine with a strong work ethic, not working wasn’t an option. But what about Pete? Few jobs will allow a 120-pound dog to tag along. Luckily, Thissen found Winegar. Founded in 1979, the Waseca-based manufacturer provides machining services to OEMs. It offers a variety of contract machining services including machining intermediate-size steel and iron ductile castings, aluminum castings and bar stock, stainless steel, and other materials. Winegar President Craig Ryan says it was during an Enterprise Minnesota Peer Council that he first heard about a
program that helps manufacturers establish a pipeline for veterans to get additional benefits. Ryan says that veterans who access it are eligible for benefits such as equipment reimbursement and housing allowances. In one case, Ryan says the program reimbursed a veteran for the $1,000 she spent on tools. For employers, the up-front financial benefits are negligible. Ryan says they get $1,000 per year per employed veteran from the VA. But what they don’t get in cash, they get in uniquely desirable workers. Former service members come from a world of discipline and respect for authority, as well as an admirable work ethic. Being known as a VA-certified employer, Ryan says, will help with recruitment. He says they’ll be updating the company website soon to reflect their participation with the VA. Ryan adds that most veterans make ideal employees because — as any Hollywood depiction of basic training will confirm — they’re used to getting “feedback.” “A lot of people are very sensitive to constructive criticism. Veterans are
very used it,” says Ryan with a chuckle, suggesting anyone who has gone through basic training and subject to drill sergeants will find feedback on the manufacturing floor slightly less visceral. “But as the boss, I can tell you they’re also used to giving it back. But I like it. I appreciate it.” By employing Thissen, though, they also employed Pete. That meant precautions had to be enacted to keep Pete safe, even while he rested comfortably on his mat a few feet from Thissen’s workstation. Pete wears protective goggles and earmuffs — resembling a canine bush pilot — and little booties on all four paws. Shop
floor rules apply to all, even dogs. One other accommodation had to be made for Pete. “I tried to keep Chris somewhere where Pete will be a little bit more secluded from traffic,” Ryan says. “And also by a door for when he needs to take Pete outside.” Enterprise Minnesota Business Growth Consultant Abbey Hellickson admires how Winegar is helping veterans. “This is a really important program for all of our manufacturers to be aware of,” Hellickson says. “I think we have a population of people who we can tap into that would be good employees for anyone. I’m so impressed with Winegar’s alternative approach to helping people be successful in their environment. And this is the first time I’ve ever seen a manufacturer have a service dog on the floor.” Pete, however, isn’t a puppy. He’s actually nearing the end of his life as a service dog. Luckily, Thissen is a certified trainer of service dogs, and has another one, Ember, in the pipeline to take over when Pete retires. —Robb Murray
WINTER 2023 ENTERPRISE MINNESOTA /
13
often up-front, for information about the company’s ISO certification, and Batten suspected that lacking it was a hindrance. When searching for parts for one of its manufacturing processes, for instance, an aerospace company sent a questionnaire that asked about Batten’s ISO bona fides or, in its place, information about similarlyminded processes there. Batten suspects that filling out the information in lieu of the certificate meant his company might not land the job. “I know for a fact that we’ve missed out on a few opportunities…simply because I couldn’t provide the certificate,” Batten says. In May 2022, the company contracted with Enterprise Minnesota to pursue ISO certification. Batten earned the distinction in August 2023. Marty Olson, a business development consultant at Enterprise Minnesota, says
Dan Batten
MANAGEMENT
No More Missed Opportunities Batten Tool & Machine uses new ISO certification to uncover other business prospects.
D
an Batten believed that his small machining business was missing out on some contracts. The reason, he explained, was relatively simple: his company, Burnsville, Minn.based Batten Tool & Machine, was not certified by the International Organization for Standardization (ISO), a Swiss firm that sets forth quality-assurance standards for manufacturing, shipping, food safety, and other industries. Staff at Batten make custom metal components for companies in the agriculture, military, medical, and chemical industries — valves meant to be installed deep inside an oil well, for instance. A handful of retirements mean six people work there currently, including Batten himself, but they’d typically boast 11-13
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/ ENTERPRISE MINNESOTA WINTER 2023
employees, he says. Being understaffed has hampered the company’s production to an extent, Batten says, and they’ve compensated with more capable equipment. Parts that used to require three machines to complete now can be done with a single one. “Has it hurt our production to lose 50% of our workforce? You bet it did,” Batten says. “But we’re working out of that.” The company has been in business for almost 30 years, and staff there have long considered it to be largely compliant with “ISO” practices, even if they hadn’t achieved the official certification. Many customers, Batten says, knew the company wasn’t ISO certified but were satisfied with the systems already in place there. But other potential clients asked,
“I know for a fact that we’ve missed out on a few opportunities… simply because I couldn’t provide the certificate,” Dan Batten says. the certification could potentially open new opportunities. “We were able to understand where they were at, what they wanted, and we were able to articulate a clear path to get there,” he says. James Thomas, an Enterprise Minnesota business growth consultant, worked to get Batten certified. He specializes and understands CNC and lathe, something Batten appreciates. “We were talking the same language,” Thomas says. Before they started, Enterprise Minnesota estimated that Batten’s company was already about 70% compliant with ISO standards. Batten and Thomas spent months sorting out changes that staff there would need to make to earn the certificate and determining “key performance indicators” to note if the company is meeting ISO requirements. “We started with them from scratch,” Thomas says. “How are they capturing customer input? They had to develop a corrective action system. They had to develop how they monitored their suppliers
and vendors.” But ISO certification, Thomas says, doesn’t call for fundamental changes to what a company does. Changes might include monitoring vendors and “capturing” customer satisfaction if staff there weren’t doing so already. “It’s minor tweaks, rather than change what you do as far as being a company,” he explains. That means going through each of a company’s key individual processes and determining potential risks, Thomas says. Those risks could range from possible equipment malfunction to a “nonconformance,” or to a problem that might cascade further down the line. Beforehand, staff at Batten might shop for materials for a job, then order them from a specific vendor via a short email, according to Batten and Thomas. PostISO, the company sends more formal purchase orders instead. Staff there have also instituted similar practices for customer complaints, in which they elaborate the root cause of a problem
to a customer and how they’ll meet the customer’s needs in the future, according to Thomas. The company also calibrates its inspection equipment more regularly, Batten says, among other changes. “It is a lot of work. It’s a lot of paperwork. It’s mostly just trying to document our processes and put it in a manual, which we did. I can’t tell you how many hours we had into it. It wasn’t as bad as I thought it was going to be, but it’s still a lot of work, especially for a small company like this,” Batten says. “We were doing things a certain way but weren’t necessarily documenting exactly what we
did.” He says he wasn’t surprised by any aspects of the ISO application process, and that he didn’t find any challenges getting company staff to buy into the idea. In all, earning the certification cost about $35,000 initially, Batten says, not including staff time. It also costs money to retain the certification, but Batten wasn’t sure how much that would be. The company’s certification arrived in the mail the week of September 22. ISO certification can sometimes change a company’s management practices, but Batten, who notes that his company was already 70% compliant when it first contracted with Enterprise Minnesota, says the changes haven’t been dramatic. “The guys know more about how critical it is that they follow up with the correct paperwork, such as inspection reports and stuff like that,” Batten says. “Other than that, it really hasn’t changed a whole lot around here.” —Joe Bowen
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WINTER 2023 ENTERPRISE MINNESOTA /
15
Four Questions
INNOVATIONS
Matt Varilek hopes to bring both patience and urgency to his new appointment as DEED commissioner.
W
hat opportunities attracted you to take on the job as DEED commissioner? Before I applied to become DEED commissioner, my wife and I decided we should talk about the opportunity with our three kids, Willa (14), Mae (12), and Rhys (8). That’s because we knew the job would increase the amount of time I’d spend away from home, and we didn’t want to take that on if there were any family objections. So, I said something like, “You know how proud I am of the ways we get to help people at [my former job as president of] the
What are the top challenges that you have had to confront in your early days on the job, and how have you responded to them?
It’s a “One Minnesota” job, meaning DEED is supporting good work in every corner of the state. As a new leader at the agency, I wish I could be every-
“We’re very actively partnering with numerous stakeholders to grow that pipeline of workers.” Initiative Foundation? Well just imagine if I could do many of those same things — helping business people get started or get financing to grow their business; helping current and future workers find good jobs and move up the career ladder into key sectors like manufacturing and childcare; providing funding for community infrastructure and projects that make Central Minnesota an even better place to raise a family — but with even more resources, and in all of Minnesota instead of just part of it.” “Oh, and imagine I could do it as a teammate of Gov. Tim Walz and Lt. Gov. Peggy Flanagan (whom the kids have admired since meeting them at a childcare roundtable in Little Falls back in 2019).” I’m not totally sure my eightyear-old knew what I meant by “key sectors” and so forth. But overall, the kids thought that sounded like a pretty cool gig, and they blessed the idea of me submitting an application.
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Matt Varilek became the commissioner of the Minnesota Department of Employment and Economic Development (DEED) on June 20, 2023. Since late 2016, he served as president of the Little Falls-based Initiative Foundation, which supports economic and community development in the 14 counties and two sovereign tribal nations of Central Minnesota. Previously, he was chief operating officer for the U.S. Small Business Administration (SBA), regional administrator for U.S. SBA Region VIII, and a candidate for a South Dakota U.S. House seat. He also served as an economic development director and speechwriter for the offices of U.S. Senators Tom Daschle and Tim Johnson, and director of policy and research for Natsource LLC, an energy brokerage based in New York. Commissioner Varilek earned a B.A. from Carleton College, a M.Phil. in economic development from the University of Glasgow, and a M.Phil. in environment and development from the University of Cambridge.
where, meet everyone, and see everything all at once, so I could instantly be up to speed and have all the relationships one needs to have to make a difference. But of course, that’s not how it works — you can only be in one place at a time, and you’ve only got so many hours in a day to have those meetings, do those tours, get those briefings, forge those relationships. So, one challenge is weaving in a little
“We’re at a point where DEED and other state agencies have been provided historic levels of funding. We are working hard to get that funding out the door and put it to work.” patience to balance with the urgency and eagerness I have felt since learning I would have the honor of doing this job. When it comes to economic challenges, we are so fortunate to have a really strong economy in Minnesota. You see it when you’re at a busy restaurant, a crowded concert, or a humming factory floor. And I see it when I look at statistics on the Minnesota economy, with steady job growth — and now six straight months of a growing labor force. Even so, demand for workers still far outstrips the supply. So, we’re very actively partnering with numerous stakeholders to grow that pipeline of workers. Finally, I’ll add that we’re at a point where DEED and other state agencies have been provided historic levels of funding. We are working hard to get that funding out the door and put it to work in communities as quickly as possible — all while maintaining high integrity throughout this process, knowing that every taxpayer dollar is precious. How did your experience with the Initiative Foundation/McKnight Foundation prepare you for your new job? I should begin by calling out the
fact that my time at the Initiative Foundation gave me the chance to partner extensively with Bob Kill and the great team at Enterprise Minnesota! Sponsoring and taking part in the Central Minnesota release of the State of Manufacturing® survey was an annual highlight for me, and one of the ways I tried to get smarter about what was on the mind of employers in a sector that is a source of such pride and so much prosperity in Minnesota. In addition, when I first arrived at the Initiative Foundation, I was someone who had worked in the private sector and in government, but never in the nonprofit or philanthropic sectors. Leading the foundation for more than six years gave me an appreciation of all the ways those sectors have positive impacts on our communities. My time there also provided a firsthand education on numerous economic and community development realities in Greater Minnesota, related to the foundation’s role as a small business lender, a trainer of entrepreneurs, an active partner on workforce development, childcare, communitybased fundraising, and more. That’s all knowledge I try to use in my current role. At the end of the day, how will you determine the level of your success in the job? I start with our mission statement: “To empower the growth of the Minnesota economy, for everyone.” That’s what we’re working toward, and that’s how I measure our success. To measure success, I ask whether we are driving greater prosperity in Minnesota, and whether we are helping more Minnesotans contribute to and benefit from that prosperity. Beyond that, we’re in implementation mode. We have the honor and great responsibility of deploying historic levels of appropriations for our existing programs and exciting new ones like paid family and medical leave, which we think is going to make Minnesota even more attractive to workers. So, we’re focused on implementing efficiently and professionally in a way that delivers maximum benefit for Minnesotans with the resources entrusted to us. WINTER 2023 ENTERPRISE MINNESOTA /
17
What Just
Happened Enterprise Minnesota’s 15th annual State of Manufacturing survey reveals that alongside questions about the economy, Minnesota’s manufacturers are still trying to grasp how to cope with the latest legislative mandates.
By Suzy Frisch 18
/ ENTERPRISE MINNESOTA WINTER 2023
Through these meetings, manufacturers illuminated their deep anxiety about new requirements that the Minnesota Legislature placed on companies of all sizes. told, these conditions have fostered a prevailing mood of uncertainty and trepidation among manufacturers. Enterprise Minnesota’s 15th annual survey, the State of Manufacturing® (SOM), found that just 16% of respondents believe that 2023 will be one of economic expansion. This is the lowest level since the rock bottom 8%
Legislative sea change
Through these meetings, manufacturers illuminated their deep anxiety about new requirements that the Minnesota Legislature placed on companies of all sizes. Especially worrying to executives is the lack of a small business exemption for paid family and medical leave, with more than three-fourths (77%) noting that they are very concerned. “It struck me how concerned Minnesota manufacturers are with what’s been happening at the State Capitol and the impact it will have on their businesses,” Autry says. “We haven’t seen that level of anxiety and concern about what’s going on in St. Paul traditionally.” In addition, 72% of respondents are very concerned about the costs associated with the new payroll tax, split between employer and employee, to fund the paid leave program. Add in 68% who are very concerned about new requirements for paid sick leave, plus 60% who are very concerned about cannabis in the workplace and limits on being able to regulate
it. Combined, this makes for a highly unsettled sector. Manufacturers believe that these new regulations contribute to Minnesota becoming a less attractive business climate. In total, 60% reported that the new legislation makes the state less attractive for business, including 42% who say it is much less attractive. These changes are prompting mixed reactions. In focus groups, some manufacturers shared that they are creating
“We haven’t seen that level of anxiety and concern about what’s going on in St. Paul traditionally.”
Cheri Alguire / Shutterstock.com
F
ears of recession are easing for Minnesota manufacturers, and many have returned to grappling with the normal aches and pains of operating a business. But that doesn’t mean they are bullish on the state’s economy. Manufacturers of all sizes anticipate a near future of economic stagnation, coloring their decisions about hiring and investing in their companies. Pair that with deep worry about the changes enacted by the Minnesota Legislature in 2023 — notably requirements to provide paid family and medical leave and paid earned sick and safe leave. All
recorded during the 2008 Great Recession. “There’s no confidence right now that the economy is growing,” says Rob Autry, founder of Meeting Street Insights, a South Carolina–based survey research company that has conducted the SOM survey since its start in 2008. “That could explain why so many manufacturers are apprehensive about hiring. They are skittish.” The pollster annually surveys 400 manufacturing executives statewide and an oversampling of 50 executives in each of the six McKnight Initiative Foundation regions, revealing the latest trends in key business areas including growth, workforce, supply chain, economic confidence, and more. Respondents represent a broad mix of manufacturers by region, employee count, and annual revenue, who provide insight into the state’s economic engine. A random sample of Minnesota manufacturing executives participate in the telephone survey, including owners, CEOs, CFOs, COOs, presidents, vice presidents, and managing officers. It has a margin of error of ±4.9%. Enterprise Minnesota also pairs its SOM polling research with 12 focus groups held in the fall to gain deeper understanding from manufacturing leaders.
–Rob Autry, pollster, Meeting Street Insights
jobs in other states with better business climates or waiting on making new hires. Others note the difficulty of moving an entire manufacturing operation and dozens of employees to a new state, making leaders resigned to the changes, says Bob Kill, president and CEO of Enterprise Minnesota. “They are still trying to figure out what these new regulations mean for them. It adds more uncertainty” in a time where conditions are already difficult with hiring struggles, high inflation, and supply chain issues, Kill says. “It’s really a huge burden for the smallest manufacturers.”
On shaky ground
Looking to 2024, manufacturers are mixed
WINTER 2023 ENTERPRISE MINNESOTA /
19
Fig. 1 Minnesota Initiative Foundations The State of Manufacturing survey did an oversample of 50 interviews with manufacturers in each of the six Minnesota Initiative Foundation regions.
Northwest Minnesota Foundation
West Central Initiative
Northland Foundation
Initiative Foundation
Southwest Initiative Foundation
about the near-term economy they will face. Fears of a recession have dropped 23%, from 43% worried about it in 2022 to 33% this year. But that doesn’t mean they are predicting a bright and shiny future. When asked their views about whether economic stagnation is on the horizon, 23% more believe that they will be facing a flat economy. In 2022, 35% foresaw a flat economy while 43% expect a flat economy in 2023. Looking ahead, manufacturers predict 20
/ ENTERPRISE MINNESOTA WINTER 2023
Southern Minnesota Initiative Foundation that the biggest challenges that could put a damper on growth are attracting and retaining a qualified workforce (39%), inflation (32%), and increases in costs of materials needed to make products (31%). Still, manufacturers are confident about the future, with 85% sure that they could withstand an economic downturn in the next year. When considering their companies’ financial future, 86% of manufacturers feel confident. There has been slow and steady improvement in
confidence since the pre-pandemic peak of 93% in 2019 and subsequent drop to 85% in 2020. The smallest manufacturers, with 50 or fewer employees and those with less than $1 million in revenue, have the lowest confidence in their companies’ future.
2024 worries
The prevailing sentiment among manufacturers is one of pessimism for the future. A total of 73% project a
Fig. 2 Business executives are very concerned about the recent state legislative session, especially the paid leave requirements.
future flat economy or recession in 2024. However, this is slightly better than how they view the current year, with 78% anticipating a flat economy or recession in 2023. Though usually an optimistic bunch, just 22% of manufacturers believe that 2024 might be a time of economic expansion. Even so, the contingent of those with a sunnier view grew by 38%, gaining from 16% in 2023. Overall, the Minnesota business climate has gotten worse according to a bigger percentage of manufacturers. The current survey found that 50% believe it is getting worse, an increase from 46% in 2021 and 2022. This year, 34% believe
Business executives are very concerned about the recent state legislative “Thinking about some of these issues, I will read you a few short descriptions of recent session, the paid leave developments coming outespecially of the legislative session, and requirements. I want to know how concerned “Thinking about some of these issues, I will read you a few short descriptions of recent developments coming out of the you are about this legislation and its effect on your business.” legislative session, and I want to know how concerned you are about this legislation and its effect on your business.”
The lack of small business exemption for paid leave, meaning small businesses will be forced to provide the same benefits as larger corporations
56% Very
The costs associated with funding the new paid family and medical leave program through a new payroll tax, split between employer and employee
47% Very
The new requirements on an employer for paid sick and safe time
38% Very
Cannabis in the workplace and limits on being able to regulate it
38% Very
The new wage theft law that makes property owners and developers responsible for any wage theft by construction subcontractors
20% Very
The ban on non-competes
15% Very
77% 72% 68% 60% 44% 35% 6
“They are still trying to figure out what these new regulations mean for them. ... It’s really a huge burden for the smallest manufacturers.”
Fig. 3 Most manufacturers think the new legislation has made the state MostMost manufacturers manufacturers thinkthink the new the businesses. legislation new legislation has made has made the the less attractive for state state less attractive less attractive for businesses. for businesses.
“Do you think these legislative developments have made Minnesota more attractive or
“Do you think “Do you these think legislative these legislative developments developments have made have Minnesota made Minnesota more attractive more attractive or less attractive or less attractive for businesses, for businesses, less attractive for businesses, ornoitdoes it have noorone real effect way or the other?” or does itor have does real have effect no real oneeffect way theway other?” or theone other?”
60% 60%
–Bob Kill, president and CEO, Enterprise Minnesota
the business climate is the same and 14% think it is better. “A lack of economic confidence and a real sense that the business climate in the state is at its worst level yet seems to be impacting perceptions of revenue growth and profitability growth this year,” Autry says. “Then add in the legislative piece. Manufacturers are clearly taking a waitand-see approach.”
Manufacturers’ top concerns
What gives manufacturers the most heartburn? Their main pain points include attracting qualified workers (44%), the cost of health care coverage (43%), and overall inflation (38%). However, worries about inflation have dropped 17 points since 2022, while concerns regarding health care have increased two points. Prompted by legislative activity, a couple of focus group participants referred to the “fear of administrative burden.” Concerns about attracting qualified workers have eased slightly. It declined as a top worry by 9 points since 2022. “One reason is that most communities have experienced layoffs, which then expand the pool of job seekers for other businesses,” Kill says. However,
Total LessTotal Less AttractiveAttractive
Less Less Attractive Attractive
30%
3% 3%
Metro companies Metro companies
30% 18%
3%
42%
42%
18%
3%
Much MoreMuch Somewhat More Somewhat No Effect NoSomewhat Effect Somewhat Much Less Much Less More Less Attractive Attractive Attractive More Less Attractive Attractive Attractive Attractive Attractive
54%
54%
Greater Minnesota companies Greater Minnesota companies 72%
72%
Less thanLess $1 million revenue than $1inmillion in revenue53%
53%
$1-5 million revenue $1-5inmillion in revenue
69%
69%
Over $5 million revenue Over $5inmillion in revenue
69%
69%
50 or fewer employees 50 or fewer employees
60%
60%
Over 50 employees Over 50 employees
70%
70% 8
Fig. 4 Recessionary fears are starting to fall, but economic stagnation is rising. “And, even though we only have a few months left in 2023, as you think about this year, 2023, as a whole, do you think this year will be one of economic expansion, a Recessionary fears are starting to fall, economic stagnation is rising. flat economy, or abut recession?” “And, even though we only have a few months left in 2023, as you think about this year, 2023, as a whole, do you think this year will be one of economic expansion, a flat economy, or a recession?”
Economic Expansion 56%
53%
49%
32%
26%
2008
19% 2010
9% 2011
10%
2012
58%
54% 46%
40%
34%
8%
55% 34%
37%
7% 2013
42% 42%
15%
2014
Flat Economy
13%
2015
64%
48%
49%
32% 15%
2016
Recession
32%
28%
4%
4%
2017
2018
39%
40%
20% 2020
43%
45%
Flat
33%
35% 35%
36%
5% 2019
44%
18%
19%
2021
2022
Recession
16%
Expansion
2023 9
WINTER 2023 ENTERPRISE MINNESOTA /
21
8
Fig. 5 Manufacturers are even less optimistic about 2024. “And, even though we only have a few “And, what about about next year? If you had Manufacturers are even less optimistic 2024. months left in 2023, as you think about this to make a projection about the year even though we only have a few months left in “And, what about next year? If you had to make a year, “And, 2023, as athink whole, doyear, you2023, think this year 2024, do you think 2024 whole 2023, as you about this as a whole, projection about the year 2024,as doa you think will you think this year will beexpansion, one of economic 2024 asof a whole will be a time of economic a flat will bedoone of economic a flat be a time economic expansion, expansion, a flat economy, or a recession?” expansion, a flat economy, or a recession?” economy, or a recession?” economy, or a recession?” 45% 36%
37%
A Flat Economy
A Recession
33% 22% 16%
Economic Expansion
A Flat Economy
Economic Expansion
A Recession
10
Fig. 6 Attracting workers and health care costs top the list of concerns. Concerns Ranked by % Concern (8-10) (Highlighted havelist changed 10%+ since 2022) Attracting workers and health care costsissues top the of concerns. Changed Since 2022
Concerns Ranked by % Concern (8-10) (Highlighted issues have changed 10%+ since 2022) Attracting qualified workers
44%
-9
The costs of health care coverage
43%
+2
Overall inflation
38%
-17
Costs of employee salaries and benefits
36%
-5
Retaining qualified workers
35%
-8
Recession
29%
Data breaches and cybersecurity
+1
24%
Incoming and outgoing supply chain issues Implementing automation
-10
31%
Developing future leaders
Not Asked
-26
22% 7%
Roadblocks to growth
Not Asked
15
Fig. 7 Manufacturers want to be known as having a great work environment.
Manufacturers “When want to be known as having great environment. thinking about attracting and a hiring newwork employees, what does your company want to be known for?”
“When thinking about attracting and hiring new employees, what does your company want to be known for?”
Changed Since 2022
Work-life balance
59%
+3
Competitive salary
58%
-4
Safe work environment
56% 50%
Flexible shifts
-6 +3
Industry leader
43%
0
Career growth
42%
+4
Great benefits
40%
-3 31
22
/ ENTERPRISE MINNESOTA WINTER 2023
it’s not smooth sailing, with 83% of manufacturers reporting that it is tough to find qualified candidates. Top worries vary depending on where manufacturers are based and their size. Attracting workers is a struggle particularly in northeastern Minnesota (56%), southwest Minnesota (51%), central Minnesota (49%), and southern Minnesota (47%). Inflation is a top concern in northwestern Minnesota (46%) and southern Minnesota (47%). In the Twin Cities region, it’s the rising cost of health care at 45%, followed closely by attracting workers at 44%. For companies with less than $1 million in revenue, the increasing costs of materials needed to make their products and inflation are their two chief worries. Those with revenue between $1-$5 million cite attracting and retaining their workforce and increasing costs of materials as their top two. Manufacturers with more than $5 million in revenue highlight attracting and retaining a qualified workforce and inflation as their biggest concerns. As inflation cooled and hiring pressures eased this year, there has been a noted shift in manufacturers’ operations. “Companies are back to making decisions that made more sense before COVID,” Kill says. But even with some conditions improving, “we haven’t gone back to where it’s sailing along with a big strong wind at our back.” Overall, manufacturers believe that inflation and attracting and retaining a qualified workforce are the biggest factors that could impact their future growth. The outlook for the economy, the difficulty of finding workers, and the uncertainty of new regulations are combining to suppress hiring. A majority of manufacturers are not looking to hire, with the smallest companies being the least likely to add employees. And those that are hiring have fewer positions available. Overall, 55% of manufacturers have no open positions, an increase from 47% in 2022 and 38% in 2021. Manufacturers have put a lid on hiring, even though many acknowledge that onboarding new people is a critical component of future growth (43%). Securing new customers and markets (40%) also is vital, along with boosting productivity (18%).
Stressing training and retention
Instead of trying to hire more people, many manufacturers are emphasizing employee retention. That entails investing in workforce training and development, as well as finding ways to use automation to handle the mundane jobs people don’t really want, Kill says. “Following COVID, more people want to work someplace where it’s a downright great place to work. That’s becoming more common, along with a focus on retaining key people,” Kill says. “Smart executives know that people doing the mundane jobs would like greater opportunities, and that’s part of retaining people.” To that end, manufacturers are devoting significant energy to operating companies that are attractive to potential employees. It’s no longer just about having a place to go to work. Manufacturers highlighted several elements that they want their companies to be known for. Providing work-life balance tops the list at 59%, followed by competitive salaries at 58%, and a safe work environment at 56%. These desired characteristics are consistent across manufacturers of all sizes.
Strategic planning on the backburner
An emphasis on planning for the future continues to decline among manufacturers, with only 47% having a formal strategic plan. This is the lowest level since 2016. When it comes to succession planning, 45% report having a set plan compared to 50% in 2022. Manufacturers also are leaving an important tool unused. Creating formal mission, vision, and values statements coalesce employees around unified goals and prime companies for growth. Yet fewer than 43% report having them. This is especially true of companies with less than $1 million in revenue, with only 17% reporting having a statement.
EDITOR’S NOTE: Full results of the State of Manufacturing® survey can be viewed at www.enterpriseminnesota.org. They include the survey’s top-line results, a selection of cross-tabulations, and edited transcripts of all focus groups.
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FOCUS GROUP
WARY OPTIMISM Manufacturing executives voice concerns about legislative mandates, the ongoing worker shortage, and a little optimism about the overall economy. 24
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et’s talk about some of the legislative laws passed this past July. For example, small businesses will be forced to provide the same paid family and medical leave benefits as larger corporations. What’s your level of concern about that law? • I would probably say I am somewhat worried. We’re aware of it, but it doesn’t go into effect until what, 2026? So, we’re aware of it. We really haven’t done anything to address it one way or the other, but it’s on our radar. Another law requires employers to provide paid earned sick and safe leave. The next one is the cannabis law, and your ability to regulate it or not in the workplace. And then there’s a new wage theft law that makes property owners and developers responsible for any wage theft by subcontractors. What are your thoughts on all of those? • We changed our new employee drug policy. Cannabis used to be excluded; that’s not the case anymore. The question is how do you track it, police it, whatever it might be, at the workplace? I don’t think there are any answers yet in terms of how it is going to be enforced. • I work in HR, so the safe and sick time, there is a concern that is going to be demanded in addition to what we’ve already negotiated in our contract earlier this year. And then with cannabis, how do we monitor it? We’ve changed our pre-hire drug policy, and we’re doing a reasonable suspicion training for our supervisors in November. But it’s not clear what we can call out, what we cannot call out. We are very concerned. • We’re pretty concerned about all the new laws because we’re in multiple states. So, do we enact these things just in Min-
Editor’s Note: This is an edited transcript of a focus group of manufacturing executives conducted at Hennepin Technical College as part of the 2023 State of Manufacturing® survey research project. It was one of 12 focus groups.
nesota locations or do we enact across all of our facilities to be consistent? Do we have multiple policies? These are questions that we are asking ourselves at this point, and we haven’t come up with our solutions yet.
financing, so that’s encouraging. We don’t see a lot of customers projecting significant growth, instead more stable growth. It feels like a lot of business owners have learned from the last reces-
• We have employees who run forklifts and things like that, and there is concern with possible impairment and what we do. We have facilities in other states where cannabis is legal, but we decided if you still test positive, you can’t operate. And now I don’t know what we can do. You can’t test for it here, but you have to know if they’re impaired, especially if they’re running the machinery. • I’m worried to varying degrees for each new law. There are already people gone or just calling in sick because they don’t want to come into work. As far as the sick and safe time, we already have enough PTO given for that, but I don’t know if some employees will think that they deserve more as a separate thing. Cannabis we’re somewhat concerned about but not too worried. Let’s talk about the economy. How optimistic are you about the next 12 months? Are you pessimistic? Is it too early to predict? • We serve a lot of different businesses and do a lot of manufacturing around the state, as do our counterparts in the pallet industry. So, we get a feel for sort of what’s up and down. And I would say my optimism is sort of neutral. I’m not expecting the economy to really drive volume up or down for us over the next 12 months. I’m really looking to go win new business as a driver of growth. What we’re hearing from our customers is that it depends on the industry — some are up, some are down — and that is why we are more neutral with our outlook. • I don’t know what’s going on. It’s amazing to me that business is as good as it is when interest rates are so high. • I’ll echo that, too. All our customers still have nice backlogs. Interest rates are going up, but we’re still seeing equipment
“The legislative changes here in Minnesota are my biggest worries. If they continue in a fashion that’s not good for business, what does that mean? Does it continue to change the culture of your workforce?” sion that everybody’s set up to go lean if they have to with equipment and even staffing. • There are so many conflicting indicators out there that I don’t think I’ve ever seen before. So, you really don’t know what the most critical factor is. We’re a small enough company and hopefully in enough different industries that it’s going WINTER 2023 ENTERPRISE MINNESOTA /
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to come down to our effort and our focus versus the macro factors. That’s how we’re approaching it right now. Does your outlook influence or inhibit your ability to plan? How does uncertainty affect your plan? • The uncertainty makes us more cautious to spend, in terms of buying additional equipment. The way I see it is there’s nothing really indicating if the economy is going to go up, but we are in a couple of different sectors to help protect us. • We’ve been busy, and we have a pretty good backlog. So, I’m pretty optimistic that life is going to be good. An economist recently predicted things to be pretty good until 2030, which was kind of interesting, and he had a lot of statistics behind it.
“I’m pretty optimistic that life is going to be good.” • We’re probably going to spend less on capital, but we’re going to take the money and invest it in people — putting more training programs in place, putting more leadership development programs in place. Is the worker shortage here to stay forever or is it going to shift over time? • We have a critical succession situation that we need to take care of, so we’re trying to build that bench internally. Yes, it’s leadership development but it’s also skills gaps. • We’ve noticed that while it seems people are looking for jobs, if you do hire them, they try out the job for half a day, it might be a week, but then they just don’t show up. I mean, they got to tour the facility and ask questions before they were hired, and then they leave and don’t even hardly tell you. • Hiring has been hard. Yesterday, for 26
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example, I had an interview scheduled with a guy who was awesome on paper but didn’t show up. I called him and left a message saying, “Hey man, you’re 10 minutes late to your interview.” And he called me back three hours later and said his phone didn’t work. My staff is older, so we do have to replace and train from within and hang on to the people we have by any means. Our mentoring program is helping with that. What are you doing to engage employees? • Leadership development is one. We’re having a company party, and we usually do one holiday party. These are little things that I can think of right now. • We started a free forum for employees to show up and ask leadership anything. For employees who might not interact with our CEO or interact with me very often, it’s an opportunity to ask questions. And that’s in our various locations. We’re in multiple states as well as Canada. The intent is to take note of what everyone says. We want to become an employer of choice, so each year we’re trying to add in different things to engage employees. It has been received very well so far in pretty much all our locations. Let’s talk about supply chain. What are you seeing today? How are those issues impacting your organizations? Is it a big deal? Is it getting better? • For us, it’s not a big deal. It’s forced us to become maybe a little more lean because of availability. But during COVID it was hard because we had to buy more to get a better price. And now for us it’s leveled out enough that we’re not really concerned about it. • We have highly engineered metal components for some of our medical devices that still have 40-week lead times. So, we still have a lot of inventory to try to make sure there are no gaps in that lead time. • Stock material was definitely hard for us to get, but we ended up buying larger mill runs and having more inventory to help cover us. However, with our building addition, I’ve now been waiting nine months to get a power transformer for it from Xcel. So, it’s interesting where the shortages come from. There
“It’s interesting where the shortages come from. There are still things out there that are just unexplainable.” are still things out there that are just unexplainable. • For us, inventory’s the core of our business, and we have a replenishment formula that’s based on lead times and usage. We try to, of course, never run out of anything, but if all of a sudden the lead time goes from one week to 12 weeks, it really screws you up. • I think there’s a shakeout happening. The whole COVID supply chain excuse is not acceptable, but it’s still happening. You get it as a consumer, you sometimes get it as a business buyer. I just flat out tell people it is no longer an acceptable excuse. You have to fix whatever your problems are to get your products available for us. Let’s talk strategy and succession planning. Do you have a formal strategy in your organization? Does it include the succession of your people? • I don’t know if we necessarily have a formal plan, but we did have a round of people retire in the last three years. We really tried to focus on cross-training and having more backups for each major position — such as, a team of people able to do something important on the quality engineering side versus just this one person who is always running all the jobs through. We have, I think, three to four more people who will retire in the next two years, so we will continue getting other people trained.
them. So, my son has the team to take care of things. I mean, I still have my 83-year-old mother working every day to help take care of payroll. How can I retire when my mother’s still working? • We have a 10-year document we put together three years ago, and part of it is focused on people. Two years ago we put a succession plan together so that every three years we’re looking at the business and seeing where we think we need to be. Organizationally, a lot of that is to build up our leadership bench so that when I retire and some other execs retire, we’re able to fill it internally. We’re just in the early stages of that.
• As far as our ownership and leadership, it’s my father’s company. He is still involved in the business, and he’ll probably never retire, but I’m in place to take over with a group of leaders as well. We have a really strong leadership team. • I have a plan B for anybody who leaves and how we’re going to fill that role short term, but not necessarily a succession plan in place or a formal strategy for the business. • We have a one-year plan and a five-year plan.
Let’s talk about automation. How do you all look at automation? Do you see it helping your companies going forward? How are your employees embracing automation? • Automation is critical for our business because we can’t find the people. So how do we make it, how do we replace workforce with machines that can do the same or better? • At first some people thought it was going to take away jobs, but it’s created more jobs. And there are some things that the robots do that no human being would want to do — like standing there and loading parts every 20 seconds and things like that. So, automation has elevated the skillset.
• We’re an EOS [Entrepreneurial Operating System] company, and EOS kind of forces you to have that one-, three-, and five-year vision and strategy set. So, I’m thankful for that. Otherwise, I’d probably wing it, and that wouldn’t be good.
• We don’t have robots yet, but I have been trying to encourage our people to really think about where we could put automation in. One area of focus is our inspection equipment, more automated inspections versus people checking. But we’re just at the very start of it. I have it as a priority for us. I think it’s very important. And it’s not just machines or robots. Think of a computer system, whether it’s scheduling or creating work orders instead of doing them manually. We are trying to find ways to automate some of it overnight so we can take some of the burden off of the people who are having to do that.
• My son is planning on taking over. I don’t ever plan on retiring, maybe slowing down a little bit. I’ve spent a lot of time identifying people who plan to retire and then putting people in place for
• It’s been tough to put automation in when you’re changing a job so often, but I think we’ve got to challenge that thinking and see if there are other ways we can do it given the labor situation.
• We don’t have a formal succession plan. There’s a particular person leaving soon who we’re still scrambling to figure out a way to fill his shoes. We’ve been cross-training so that multiple people can do the same job, so we’re working on it.
We’ve had an automated pallet assembly machine for more than 20 years. Next Friday we’re doing a massive electronics upgrade, which connects it all. So, I think we’re automated in some ways. And I’m trying to figure out where the next step is on that journey. • Human error happens all the time, so with inputting different numbers and invoices we’re trying to use AI to take all that data, put it into a file, and then kick it out where it needs to go. We’re constantly looking at AI platforms that we can bring into the fold. What is an issue that keeps you up at night? What are you concerned about for the future? • Our biggest worry is that our two largest customers are up on the Range, and they’re in a big battle right now. It just makes them really hard to deal with, and there’s nothing you can do out there. • I’m worried about the administrative burden of all the new laws and policies and procedures. I’m worried I’m going to miss something or not know something and it’s just going to catch me one day. So, I’m trying to stay out in front of that. I didn’t even know all these things were new laws. Fortunately, they’re not for a couple of years, but how to stay on top of them is tough. • I was going to say exactly the same thing. The employment law changes worry me immensely. • Inflation is what is worrying us quite a bit, especially with some sales being down. We want to make sure that the work is still coming in and that we’re managing our costs. For my dad, the owner, inflation’s the biggest thing on his mind. It definitely keeps him up at night. For me, it’s employees. We’ve had some attrition in certain departments, and now I’m just more worried about building a really good culture and keeping our employees. • The legislative changes here in Minnesota are my biggest worries. If they continue in a fashion that’s not good for business, what does that mean? Does it continue to change the culture of your workforce? WINTER 2023 ENTERPRISE MINNESOTA /
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EMPLOYMENT
A NATIONAL MODEL NBC uses Delkor to illustrate how employment numbers impact the economy.
A
few weeks ago, when the folks in the NBC newsroom in New York City wanted a creative way to talk about the latest job and unemployment numbers and their impact on the economy, they chose a small but mighty manufacturing plant in St. Paul to spotlight as a shining example of success. In the segment, Delkor CEO Dale Andersen walks among the myriad robotic machines that have helped the company double its revenue over the past few years, all the while paying top wages to its workforce — a workforce made up of highly educated workers. Delkor Systems, a company that manufactures packaging systems for product shelves in retail stores across the country (you’ve no doubt seen their packaging in Walmart and other retailers) is on a hiring spree. They’re looking to hire up to 30 more skilled employees to keep up with demand. Half the company’s workers hold bachelor’s degrees. They are typically engineers charged with identifying new ways to
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Delkor’s VP of Engineering, Rick Gessler, in front of ten Trayfecta case former/erectors ready for shipment.
develop product packaging and presentation schemes. The other half hold associate degrees. These are the workers trained for jobs in automation. Maintaining a highly educated workforce, company leaders say, is part of their recipe for success. Patty Andersen, vice president for human resources and training, sits on advisory councils for several technical colleges and helps guide their curricula to produce the kind of graduates the industry needs. “Not only can I be the voice for the OEMs, but I help them think about what they are teaching and what graduates need to know to be able to be successful in the workplace,” she says. “The other piece is career path mapping. In our engineering department, a third have a two-year degree. So many companies get boxed in by the belief that you cannot be successful in certain positions unless you have a four-year degree. I would completely disagree with
BY ROBB MURRAY
that. It is a combination of aptitude, experience and education. And when those three things come together, it’s amazing where you can go.” To illustrate that fact, Rick Gessler, Delkor’s vice president of engineering, shares the story of an engineer who went above and beyond to learn some of the finer points of robotics. “One of our principal engineers has a two-year degree from a tech school and taught himself linear algebra — really advanced mathematics — so he could program the motion on our machines,” Gessler says. “Why does somebody do that? They must be inspired by their work, they must enjoy it, and they must find it compelling and engaging and want to grow. You don’t teach yourself that kind of stuff just to get a paycheck on Friday.” In that NBC report, Andersen revealed that employees at Delkor, if they stay a few years and keep learning and growing with the company, can earn a salary of $100,000 or more. Staying ahead of competitors in
employee compensation, Andersen says, is one of the ways they attract employees and, more importantly, keep them. “We value our people as being our greatest resource,” Andersen says. “The challenge in the area of robotics is we have to invent things that have never existed before. And if you look at how that value translates to the individual — it doesn’t matter that someone’s 25 years old. If they have attained the skills to be able to do that, they deserve the compensation that goes with that responsibility.” Andersen says he’s repeatedly amazed at the talent that comes out of the technical schools. They come with solid baseline training and, after they arrive, they become sponges, learning new processes and contributing to the efficiency and effectiveness of the team. “If you put the people I’m talking about on an assembly line and paid them handsomely, they would quit because they are in love with their job and they are coming in every day and taking on new challenges,” Andersen says. “The person Rick was referring to who taught himself linear algebra on the side is the kind of person we’re talking about. Just amazingly talented. I was happy to see NBC News focus on this very exciting and futuristic career in robotics. It is important to get that message out to more people in the general public.” NBC likely came to Minnesota because the state is performing a little better than the national average. While both the state and nation have seen unemployment rates creep in the last month, Minnesota is still better at 3.1% versus the U.S. overall rate of 3.4%. According to the Minnesota Department of Employment and Economic Development, the state added 4,400 jobs in from July to August — the fourth straight month of labor force growth. And according to the U.S. Bureau of Labor Statistics, Minnesota’s manufacturing industry continues an upward trend in total workforce. Though hiring appears to be slowing in recent months, the industry as a whole has recovered from the pandemic, and there are more people working at Minnesota manufacturers than prior to the pandemic.
MOVERS & SHAKERS
A PIONEER MILESTONE
Delkor’s Cabrio Case®
Delkor’s Patty Andersen becomes the first female chair of the packaging and processing association. Decades ago, when Patty Andersen got into the manufacturing industry, becoming a pioneer wasn’t on her radar. But that’s exactly what happened. Andersen, vice president of human resources & after market services at the St. Paul-based Delkor Systems, recently became board chair for the Association for Packaging and Processing Technologies (formally Packaging Machinery Manufacturers Institute — PMMI), a trade association representing more than 1,000 North American manufacturers in the packaging and processing industry.
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The Association for Supply Chain Management
SUPPLY CHAIN FOCUSED: Education Networking Certifications Work Force
“You’re trying to modernize, and modernization means that you have to think a little bit differently and be more creative about it.” –Delkor’s Patty Andersen
Development Thought Leadership Corporate & Individual Memberships
PMMI was founded in 1933 in Buffalo, N.Y. For the first 89 years of the organization — which serves as an international advocate for the packaging industry — it was helmed by a man. But on Feb. 6, Andersen ended that streak. “I think they realized it was time to modernize some things,” Andersen says. “And the industry is changing.” Andersen has been with Delkor since 2005, joining as the company’s human resources director. A few years later, she was promoted to her current VP position. Her involvement with PMMI began in 2010 when she joined its Education and
Innovation
chair in 2020. “Patty has provided PMMI with valuable guidance as a leader and a board member. We are excited as she takes on a larger role in the strategic direction of PMMI as our first female chair,” Jim Pittas, president and CEO of PMMI, said in a press release. “Her more than 20 years of packaging industry experience coupled with her ability to inspire others to work together and think creatively to solve problems makes her an incredible asset to the association.” Beyond her work with PMMI, Andersen has kept busy with an array of industry-related endeavors including: serving on the Hennepin Technical College Foundation Board of Directors, and serving on advisory councils for Central Lakes College Robotics/Automated Systems Technology, St. Paul College Electromechanical Systems, and Northwood Technical College Automated Packaging Systems. Andersen says that, during her time with the Packaging & Processing Women’s Leadership Network, it held an event in Las Vegas that attracted more than 800 women from around the country. “It was great. Most of those who came, came on their own,” she says. Andersen says she gave tours of the event to student groups, including groups of female engineering students from California Polytechnic State University. She says it was gratifying to
“The packaging and processing industry is like a lot of manufacturing industries. It has been predominantly male.”
twincities.ascm.org info@twincities.ascm.org (763) 413-2513
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Workforce Development Committee. She took over leadership of that committee in 2015. She served as a member and chair of the Employee Development Committee from 2012-2019, was vice chair and chair of the Strategic Planning Committee from 2020-2023, and was a founding member of the Packaging & Processing Women’s Leadership Network, serving on its executive council since 2016. She’s been a PMMI board member since 2017 and joined the Executive Committee as vice
be able to show them how some sectors of manufacturing are becoming increasingly less male dominated. Dale Andersen, president and CEO of Delkor, says his wife’s accomplishments are creating real change in the industry. Even at Delkor change is happening. Just a few years ago, there were no women among their engineering ranks. Today, there are four. He attributes that to Patty Andersen’s leadership. “The packaging and processing industry is like a lot of manufacturing industries. It has been predominantly male,” he says. “We’re seeing an emerging trend which we’d strongly endorse. And, I think what Patty says is true: The time was right for a shift to having women more involved in all of our companies.” Andersen says that, when it comes to changing demographics in the workplace, her mind isn’t solely focused on men vs. women. She’d like to make the industry feel welcome and inviting to anyone who doesn’t fit into the leadership stereotype of the older white male. Addressing those changes, she says, requires a comprehensive shift in how
manufacturers think when it comes to hiring, retention, leadership and everything else. “It’s thinking about the content for meetings, it’s thinking about the activities that you’re offering,” she says. “In the past it would be primarily 18 holes of golf. Well, maybe not so much anymore. Maybe you need to think about that a little bit differently. And you also need to
think differently about the spouses. The assumption was made that the spouse was always a female. That’s not true anymore. And so you have to think about that. “As I told the leadership team at PMMI, it’s not that anything’s broken,” she says. “You’re trying to modernize, and modernization means that you have to think a little bit differently and be more creative about it.”
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Partnerships
PEERLESS
MDI’s Todd Witherill has no doubt that meeting AMGS’s Jason Wobbema in a peer council last year yielded a positive outcome. “He helped us avoid pitfalls based on his years of automation experience.”
Collaboration Execs at MDI and AMGS use their peer council relationship to shore up their operations.
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By PETER PASSI
E
nterprise Minnesota oversees 10 regional peer councils across Minnesota that enable manufacturing executives to exchange ideas and nurture new connections in a confidential setting. Ally Johnston, a business growth consultant who facilitates two regional peer councils for Enterprise Minnesota, including one in Hibbing, says they offer an opportunity for manufacturing leaders to exchange ideas. “Essentially, the main goal of a peer council is for them to bring something that they’re challenged with at their current organization,” she says. Often the results can be tangible. Enter Todd Witherill and Jason Wobbema, central figures at MDI and AMGS, respectively, who met at the Hibbing peer council. Their companies may contrast with one
another in many respects, yet both have achieved mutual advances through the relationship they’ve forged since being introduced. MDI — short for Minnesota Diversified Industries — got its start in 1964, as a St. Paul-based enterprise dedicated to helping people with disabilities find jobs. Today, the organization employs about 450 people statewide, with three of its four operations in Northeast Minnesota, including facilities in Hibbing, Grand Rapids, and Cohasset. MDI’s annual sales exceeded $30 million last year, and Witherill, the organization’s director of operations, says he expects to surpass that mark in 2023. On the other hand, AMGS — short for Advanced Machine Guarding Solutions — is a young Hibbing startup that Wobbema founded during the pandemic. After a career
SO, WHAT IS A PEER COUNCIL ANYWAY? Ally Johnston, a business growth consultant for Enterprise Minnesota, says that often the in-person discussions at peer councils involve delicate matters that would be difficult for manufacturing executives to broach internally. Building a sense of trust is important to the success of the group, says Jim Schottmuller, director of business development for Enterprise Minnesota. He also manages the northeastern Minnesota sales territory. “These groups are designed for the high-level management manufacturing leaders who maybe have no peers in their companies,” Schottmuller says. “They may want to talk about an idea that could freak out their organization and hear about the good and the bad to consider in advance.” Schottmuller also says personnel situations may be freely discussed. “They have those discussions in sort of a ‘cone of silence.’ What you say in your peer group stays in your peer group. That’s one of the rules,” Schottmuller says. He says that violating that highly valued confidence is clear grounds for expulsion. “What’s nice about it is it’s a diverse group,” says Jason Wobbema, founder and CEO of AMGS (Advanced Machine Guarding Solutions) of Hibbing. “I think it’s great that you can bounce ideas off of people with different backgrounds and from different industries.” “It is definitely a great way to connect with other manufacturers in your region. You really never know what is going to come out of that — good or bad,” Wobbema says with a laugh.
Enterprise Minnesota staff let the conversation go where it will. “You know, Jim and Ally are just there to facilitate, and it’s more about what’s on people’s minds, about what they’re dealing with,” Wobbema says, noting that members rely mostly on one another for advice. It’s also helpful that peer council members arrange to take a first-hand look at one another’s operations, says Todd Witherill, director of operations for Minnesota Diversified Industries (MDI). “So, when you finally see what they’re going through, the condition of their building or whatever, it’s easier to give feedback based on what one or all of us have experienced in our past lives,” he says. Johnston says she doesn’t want to get in the way as a facilitator but does want to make sure participants are getting something out of the experience, and so she strives to address topics of regional concern. “We have a standing meeting every month of all the peer council facilitators, and one of our agenda items is making sure that we are getting ROI from organizing all these meetings, because we want to make sure the members who attend are finding value,” she says. Ultimately, however, Schottmuller says much of the peer groups’ success relies on the participants and their engagement, plus their willingness to help one another. “Enterprise Minnesota leads them. But they really become whatever the members what them to be.”
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installing robotic automation internationally, Wobbema moved back home to the Iron Range to launch his own business, dedicated to keeping machines and people safely distanced. His fast-growing enterprise now employs eight — twice as many people as it did at the start of the year. Witherill says he and Wobbema met at a time when MDI was struggling to find workers and looking for ways to automate some of its operations. Witherill admits it was a tricky idea to introduce more automation to an organization that strives to create jobs, but the decision to automate was never about reducing MDI’s workforce. Rather, he says, it was seeking to ensure MDI’s continued competitive success in the marketplace and to relieve repositioned staff from some of the more repetitive work in the plant. A pair of new industrial robots in Cohasset now quickly and efficiently lift, weld, and stack the plastic totes that remain the bread-and-butter of MDI’s business.
Wobbema advised MDI as the organization worked to identify and piece together the most efficient and economical robots for the work at hand. AMGS also supplied all the guarding systems needed to ensure humans and machinery would never unintentionally intermix. Witherill says people with disabilities comprise roughly half of MDI’s work force at present. MDI is a nonprofit, social enterprise that derives more than 95% of its revenue from operations. In addition to paying its workers an hourly wage, MDI also provides employees profit- and missionbased bonuses.
“We’re definitely an employee-first company. It’s one of our core values,” Witherill says. MDI has customized two robots to its specific needs with the help of a consultant recommended by Wobbema, cutting the organization’s capital costs about in half by making the necessary modifications in-house. Johnston agrees MDI occupies an unusual space. “They really want to have jobs, and so the more competitive they can be and the more product lines they can offer, the more jobs they can offer to people. It’s a unique model,” she says. She notes that targeted robotics could potentially open new doors to MDI. “Increasing automation allows them to grow their capacity. I mean we know the pool of workers in the labor market is not very big. So, adding in more automation, allows them to get more product out the door, reduce lead times, improve quality, and reduce costs,” Johnston says.
“If you’re leading a business, Enterprise Minnesota Peer Councils are an invaluable tool to create a network of help.” Joe Plunger President & CEO Midwest Metal Products, Inc. Winona, MN
Exclusive to Minnesota manufacturing executives. Effective advice from your peers. Essential strategies to grow your business. Visit our website to learn more | EnterpriseMinnesota.org
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purchase all sorts of great equipment, but if you don’t have the people trained to support it, it will never work, because things can get really complicated.” Witherill has no doubt that meeting Wobbema in the peer council last year yielded a positive outcome. “He helped us avoid pitfalls based on his years of automation experience,” he says. Wobbema says the benefits flowed both ways. Almost all of MDI’s wire“Essentially, the main goal of cutting and bending operations a peer council is for them to occur at its Hibbing facility, not far from AMGS. And the bring something that they’re nonprofit possesses considerable challenged with at their current buying power. “We buy wire by the semi-load,” organization,” says Enterprise Witherill says. It comes on large spools that staff then unwind, run Minnesota’s Ally Johnston. through a straightener, and cut to length. Wobbema also advised MDI to send a Wobbema was duly impressed by couple of employees to Ohio for intensive the Hibbing operation and its economies of training on robot programming and scale, touching off further discussion. maintenance. AMGS purchases a slightly different “That’s a huge journey for any gauge wire that it welds into fencing for manufacturer,” Wobbema says. “You can its safety enclosures. But there’s enough
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similarity in the companies’ supply chains that they continue to explore the possibility of MDI purchasing wire to meet AMGS’s needs and delivering it a couple miles down the road on an as-needed basis. AMGS has often had to purchase wire in larger-than-ideal quantities, tying up capital that sits on the floor until it can be turned into product. “Whereas, if he buys from us, I can invoice him every 30 days for just what he needs,” Witherill says. While the drive to automate has preoccupied MDI, AMGS has been working to ramp up production to meet growing demand with an anticipated 15,000-square-foot expansion, nearly tripling the size of its current shop floor. As a result, both Witherill and Wobbema have been so busy that it has been tough to find time to iron out a collaborative plan. In the meantime, however, AMGS already is reaping some of the benefits of their discussions. Wobbema referred a new more competitively priced wire supplier to MDI. That vendor reciprocated by selling discounted wire to AMGS in smaller quantities.
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Innovation
Site Director Kristen Berg
TALE of theTape By Peter Passi
Alexandria’s LGC Biosearch Technologies is innovating life science technology from seed genomics to pandemic response.
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PHOTOGRAPHS BY ROBERT LODGE
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ew might suspect that Alexandria serves as a wellspring for innovation in the agrigenomics, pharmaceutical, medical testing, and biotechnology industries. But this quiet Minnesota city of fewer than 15,000 people has gained recognition as a hotbed for the development of hightech laboratory automation. So much so that in 2016, LGC, a much larger international life science tools company located in Teddington, UK, bought a startup in the Midwestern town and has continued to grow it as a linchpin of its organization. Recently, the team in Alexandria also played a key role in providing critical pieces of the equipment required to mass test for COVID-19 and help bring the pandemic in check around the world.
expensive chemistry needed for testing, slashing chemistry costs by 90%. Another valuable benefit of Array Tape is that it came on rolls that could be threaded through machines running tests much faster than was previously possible, resulting in a 10-fold increase in throughput. The agrigenomics industry was quick to recognize the value of this new instrumentation to identify useful traits more rapidly in plants as well as develop
An odd proposition
In the early 2000s, an Eden Prairie entrepreneur approached the Alexandria based manufacturing company, Douglas Machine, with an unusual yet compelling idea. The entrepreneur had developed and patented a polymer tape containing tiny pockets that he believed could be used to deliver minute samples of biological matter for genetic testing. He knew Douglas Machine as a master of automation and posed the question: Couldn’t you build labtesting machines around this medium? Although a significant departure from the company’s usual line of work, the idea intrigued Douglas Machine’s leadership. From 2004 to 2008 the team worked on this new R&D project in a small corner of their facility. The result? An automated dispensing system that could inject precisely sized genetic samples — less than half the size of a ballpoint pen — into the tape’s tiny plastic receptacles. With that, Array Tape™ was born. The group began reaching out to some of the world’s leading agricultural biochemistry companies. Operational Advancement, Training and Safety Manager Patrick Kalina recalls them saying “we think you’ve got something.” As the project gained steam, the company, started in the corner of Douglas Machine, morphed into Douglas Scientific. Miniaturizing the samples greatly reduced the quantity of extremely
Column Packing Technician Connie Lawrie assembles columns — a key consumable used in Oligo Synthesis.
new hybrid seeds. This same technology would later help the company enter additional markets where genotyping research was occurring. When asked what set the company apart from others in the laboratory testing industry, Kalina says it was the firm’s “ability to bring robotics to life to do automated testing.” “We are an engineering company that does science, versus a science company that tries to do engineering,” Kalina says. But the company faced early skeptics. “We introduced a radically different means of testing DNA in the market space,” recalls Kalina. By going from a human-intensive approach to an automated system, he says, “one person could produce hundreds of millions of results per year. It was completely unheard of in that sector.” This fact quickly differentiated the company from its predecessors and helped Douglas Scientific become a real player in the industry. “We had the skills and the WINTER 2023 ENTERPRISE MINNESOTA /
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ability to bring metal to life, to really get the end results that our customers wanted.” Amazing partnerships with established key customers powered the company to early success. “They helped us refine concepts and the instruments to really get them to the point where it was valuable not only for them but also for the rest of the market space.” This collaboration, along with a lot of gumption, enabled the young company to meet challenges as it forged its way. “We just kept saying, ‘Sure, we can do that.’”
Competitor to owner
Initial success for the company found leadership asking how they could partner with someone that could best position the business to reach the next level. Both Douglas Scientific and its originator Douglas Machine had a deep vested interest in the continued growth of the Alexandria community — making both companies a strong proponent to identify a strategic partner to push the young company to the center of the biotech market. With this goal in mind, they began talks with one of their marketplace competitors, LGC. As a well-established global life science tools company with more than 4,300 employees and a history dating back 180 years, LGC was the perfect fit to usher
Although LGC dwarfed the Alexandria-based company, it quickly recognized the value of the genomic work being done at the site. Douglas Scientific into the next phase of its biotech journey. The 2016 acquisition of Douglas Scientific strengthened LGC’s portfolio, namely bringing with it its strong ag-bio customer list along with cuttingedge technologies, skills and capabilities. “It really was a good symbiotic match,” Kalina says. Rebranded as LGC Biosearch Technologies in 2018, Alexandria Site Director Kristen Berg says that from day one the companies have interacted very well together. “Our separate company values very much aligned.” While the leadership of LGC and the team at Biosearch Technologies clearly share a common language, international 38
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Site Director Kristen Berg and Senior Instrument Lead Matt Robertson with a module of the Nexar liquid handler in Instrument Production.
communication can sometimes be challenging. “Following our acquisition, we actually had a document that we’d give to new hires, offering translations between American English and British English,” Kalina says. “It helped to bridge some of the key communication gaps that would come up in emails and during meetings.” Although LGC dwarfed the Alexandriabased company, it quickly recognized the value of the genomic work being done at the site. Berg says it was clear from the beginning LGC’s intentions were not to remove a competitor from the scene but to use the acquisition to further grow its own business, particularly given the valuable foothold that had been established by the Minnesota company in the ag-bio market. Aside from the market gains that they saw, “they didn’t want us to change anything. They loved our company culture, our people, our capabilities,” says Kalina on the admiration LGC showed for the site. “They wanted us to take what we had and really push it across to other Biosearch Technologies sites.”
People power
Berg says the reason for the Alexandria operation’s success as a tech company boils down to one factor: People. “We have a very strong leadership team and engaged employees,” she says. “But what’s unique to us, even with 130plus employees here in Alexandria, is that it still feels very much like a family environment.” “We take a lot of pride in our culture, our values, as well as our company purpose: Science for a safer world — to feed, cure and protect the planet,” Berg says. LGC understands the importance of staff chemistry, too. “At the end of the day, I think it really
comes down to our hiring processes. We definitely make sure that you’re a culture fit. You could be a brilliant scientist, but you need to be a team player, because it’s our culture that keeps people here,” Berg says, noting that staff members work hard but regularly celebrate their successes together. “When you get a lot of brilliant people with values that align and a high level of engagement, you can accomplish anything. So, it’s absolutely the people,” Berg says. Kalina says there’s a true sense of “intentional care” at Biosearch Technologies. “We care so much about each other, not just from a work standpoint but from a whole-person standpoint. It’s neat. We celebrate the births of kids, and we come alongside our team members when life happens and things are hard and it really makes for a family environment,” he says. “You spend the majority of the waking hours of your adult life at work. Why would you not want to spend that time at a place that you love?” Kalina asks. Berg says the Alexandria site hasn’t experienced nearly the struggle many other manufacturers have encountered with staffing in recent years. “We instantly jumped on the pandemic — we were really hiring a lot,” Berg says. “We already knew our company had made the decision to be a key player in both COVID testing and in supporting customers involved in vaccine development. We hired early on, and on the front end of the pandemic was when we really grew our staff. At the peak of when people were really struggling to hire workers, we already had our team.” “COVID really slowed life down for a lot of people and made them realize they could live somewhere outside a big metro area,” Berg says. Kalina says LGC offers staff an opportunity to have an international impact
Instrument Production Lead Austin Anderson makes adjustments to a Nexar liquid handling instrument as part of the instrument’s Factory Acceptance Test processes.
from a small-town setting. “We’ve got people here in this nondescript beige building in Alexandria’s industrial park who are interacting with people around the world every single day and doing things that are pushing science beyond its current limits,” he says. “It’s amazing! In what other rural Minnesota town could you have this experience?”
Pandemic challenge
Berg describes the experience of responding to the pandemic as invigorating and daunting. “Everything was so unknown. How do you operate as a business, how do you keep your people safe, what do we have to do, what should we do? We were wading through it all, just like everyone else,” she recalls. “The exciting thing was that we grew so fast and there was so much focus. LGC’s philosophy was, ‘We’re going to have a role in this. We’re going to address this challenge, and hopefully help find solutions, with our technologies,’” Berg says. “They pulled the trigger very quickly and very early on a lot of things that enabled our rapid growth.” Biosearch Technologies collaborated with several large health care organizations to help quickly ramp up mass testing for COVID. But before they could put its instrumentation to work for that purpose, it needed to obtain an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration and the UK government, a multi-month process. Biosearch Technologies’ automated genetic testing equipment was already well-suited to the task of mass testing to detect the virus, but thorough vetting by governmental authorities was a necessary first step to use its machines and technology for human testing. Once EUAs were in place, the team saw amazing sales growth. “The growth of our
equipment sales was unprecedented. We significantly increased our sales revenue during the pandemic,” explains Berg. But that windfall didn’t come easy. For one, there was no rule book during COVID. Staff couldn’t travel to install laboratory equipment headed to all corners of the globe. Berg remembers the team trying to figure out how they were going to service all the new instruments in the field when they couldn’t even get into the countries they were being installed in. “It was challenging, but it was also amazing,” she says of her company’s problem-solving agility. “Do we make videos? Do we have overnight video calls? We were very agile.” “Trying to grow like that so quick, we didn’t have space. You couldn’t even walk through parts of the building at times when we were trying to get ahead of that,” Berg adds. Fortunately, LGC anticipated the surge in equipment demand the pandemic would create and stocked up on materials it would need early on, minimizing the supply-chain woes it would encounter as the crisis wore on, Berg says. Berg says during this uncharted time the Alexandria site was able to lean on its unique relationships with customers to rise up to the challenges. “If there was a problem, we were attacking it together. We were asking our customers all the time, ‘What can we do for you? How can we serve you?’” It was this constant collaboration that made the team and LGC as a whole, globally successful. Especially when it came to the UK government’s effort to set up the highest throughput mass testing in the world. “We had many different opportunities to get involved in the solutions for testing and curbing COVID. If we weren’t part of LGC, we would have never had the impact we did,” Kalina says. “The end result would have been nowhere near the same.” Berg says the pandemic underscored the value of being part of a larger international business, noting: “If we didn’t have a resource we needed in Alexandria, globally we had it.” Demand for testing equipment was so great during the pandemic that Berg says LGC made the unusual decision to employ a third-party manufacturer to help Biosearch Technologies keep up with demand. “We knew we didn’t have the room or the capacity to build equipment fast enough. We had to attack the pandemic and there weren’t enough hours in the day or enough space here in Alexandria. And we
knew we couldn’t open a second facility quick enough,” she says.
Future-focused
As the pandemic eases, more than 80% of the laboratory equipment and supplies Biosearch Technologies produces in Alexandria now go to applied markets, including ag-bio and food safety analysis. “The other markets we’re in fluctuate,” Berg says. “Obviously, during COVID, the clinical and medical diagnosis market increased. But it’s now contracted a little. The rest is kind of split up between pharmaceutical, biotech and research, government, and universities.” She says LGC’s leadership during the pandemic helped uncover new opportunities for the Alexandria group. Biosearch Technologies also has
Biosearch Technologies collaborated with several large health care organizations to help quickly ramp up mass testing for COVID. recently carved out a name for itself in the production of synthetic DNA sequences called oligonucleotides, or oligos, that can be helpful for drug testing and validation, including the development of vaccines. Berg sees oligo synthesis as a key opportunity for Biosearch Technologies moving forward. “Being agile is necessary in the biotech industry. What’s here today is one thing, but everyone is looking for the next and greatest thing. It’s all about moving with our customers and helping them stay ahead.” She also notes today’s problems can be tomorrow’s opportunities. “You have to be innovative. We’re presented with new challenges every day. Global warming impacts how food is being grown. And obviously in the human diagnostic and vaccine markets, every day people are chasing after new cures for diseases.” Berg predicts that Biosearch Technologies will continue to partner with customers to find continued success. “That’s our job. We want to be a part of our customers’ work-flow processes. We want to get in at the beginning, we want them to use our instruments, and we want to enable their discoveries along the way.” WINTER 2023 ENTERPRISE MINNESOTA /
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Final Word
Making Connections Manufacturers need to show state lawmakers how they provide great jobs, boost economic growth, and strengthen communities.
T
here wasn’t much slack in the supply chain before the pandemic slammed the global marketplace; once COVID hit, we all know the chaos that quickly followed. With OEMs relying heavily on suppliers from across the globe, logistics tie-ups aggravated an already fragile situation. Remember when a ship ran aground in the Suez Canal, creating a logjam of at least 350 ships and stranding nearly $10 billion worth of goods for almost a week? We’re all grateful that supply chain dynamics have improved. But the system remains susceptible to disruption because OEMs still rely on suppliers from around the globe. We can hope we’ll avoid a repeat of 2020-21, but as our business consultants often say, hope isn’t a strategy. That’s why
Manufacturers that produce parts for OEMs comprise 70% of Enterprise Minnesota’s clients, and we’re eager to help them expand their businesses by reaching more customers. we’re working with our national partner, the Manufacturing Extension Partnership (MEP), to help address supply chain vulnerability by connecting OEMs to Minnesota’s manufacturers. Manufacturers that produce parts for OEMs comprise 70% of Enterprise Minnesota’s clients, and we’re eager to help them expand their businesses by reaching more customers. Matching OEMs with Minnesota manufacturers is a natural win-win. Enter our newest staff member Amanda 40
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Lynn Shelton is vice president of marketing and organizational development.
Baumgart, a research analyst. Hired through a grant we earned from MEP, Amanda offers a rare combination of skills: She’s an outstanding data analyst with marketing experience and an outgoing personality. She also speaks four languages. Amanda graduated from the University of St. Thomas and earned a master’s degree from Babson College by age 20. Amanda will be working closely with MEP’s Supply Chain Optimization and Intelligence Network (SCOIN), an organization with untapped potential to connect OEMs with Minnesota manufacturers. The way it operates now, requests from any manufacturer in the U.S. in need of a part, product, resource, or information are
sent through SCOIN to state-based MEP partners such as Enterprise Minnesota. But often there isn’t enough detail to match them to potential suppliers. It’s hardly surprising when vague requests such as “company seeks coconut fiber fabric for natural biodegradable erosion control to be used in habitat restoration projects” generate few or no responses from potential suppliers. Among Amanda’s first tasks is to incorporate the specific needs of OEMs — from product specifications and pricing to certifications and shipping methods — into a robust and relevant database. She’ll then use other databases and information sources to find Minnesota companies that meet those criteria. “In an ideal world, we could see the suppliers with capabilities on one side and the OEMs with the project needs on the other,” Amanda says. “At that point, I’m a matchmaker. We look at our data, we talk to our field staff, and very quickly we’re able to come back to the OEMs with a list of suppliers who meet their needs.” Our initiative is well-timed for Minnesota manufacturers who are seeing demand settle down to more normal levels and might soon have excess production capacity. Last year, 43% of State of Manufacturing® respondents said they weren’t having trouble keeping up with demand. This year it is 73%. You might recall a Q&A interview in the fall 2022 issue of Enterprise Minnesota® magazine entitled, “It’s All About Partnerships” in which supply chain expert and Harvard Business professor Willy Shih recommended building strategic connections among manufacturers to win the supply chain battle. Enterprise Minnesota is confident that we’re taking important steps through this project to help companies develop those critical ties. We couldn’t be more delighted to lend a hand, and we’re thrilled to have Amanda on board to help lead the way.
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