The issue: Recent manufacturing survey shows workforce shortage looming.
Local impact: Statewide data confirmed by local employers.
“Manufacturing is the cornerstone of Minnesota’s economy.”
That statement offered by Enterprise Minnesota, an ISO 9001:2008 certified consulting firm, is at the heart of its work and can be corroborated statistically.
According to the Minnesota Department of Employment and Economic Development (DEED), manufacturing was the largest private sector contributor to Minnesota’s gross domestic product (GDP) in 2016.
The GDP is the monetary value of all of the finished goods and services produced within the borders of an area for a specific time period. In Minnesota, manufacturing had a $48.2 billion GDP in 2016.
Statistics from DEED also indicate in 2016 manufacturing accounted, directly or indirectly, for 1,020,500 jobs or 36 percent of all jobs in the state during that year. That number is supposed to increase steadily over the next decade. The problem is that supply is already not keeping up with the demand.
When it comes to the future of manufacturing those in the industry are confident their companies can grow. The problem is finding the people to fill the jobs that can allow that growth to occur.
According to Bob Kill, president and CEO of Enterprise Minnesota, recent statistics offered by Katherine Karsten, a senior policy fellow at the Center of the American Experiment, there is currently a workforce shortage of 60,000 people in Minnesota. By 2022 that number will increase to nearly 280,000.
So, is there a concern among those in manufacturing?
According to the annual survey known as “The State of Manufacturing,” those in the industry are very concerned about the labor shortage heading into the future. The State of Manufacturing is a comprehensive survey conducted each year for the past decade that compiles data from 500 plus manufacturers representing all of Minnesota and its varied manufacturing products.
Kill presented the data from the most recently released survey in Redwood Falls May 22, and will continue to present the data at meetings across the state in the coming weeks, with a stop in each of the state’s regions.
Kill said the survey continued to show there is confidence in manufacturing in terms of finances, as 93 percent of those surveyed indicated they felt confident about their financial future.
Rob Autry of Meeting Street Research, which has conducted the survey since it was first initiated, reported in The State of Manufacturing 2018 that 64 percent of manufacturers across the state expect some form of economic expansion.
Kill added the survey shows 54 percent of the state’s manufacturers believe the business climate in Minnesota has gotten better. He added that number does vary in different regions of the state, especially in rural areas.
In southwest Minnesota, 52 percent of manufacturers say Minnesota has a better business climate today than it did five years ago, but in the west central region that number is 40 percent.
Much of the concern in more rural areas of the state has to do with that looming lack of work force. Kill indicated the survey showed those in manufacturing have a need for employees across the board from those at the entry level to those with on the job experience, and it is in those most technical jobs that the demand is going to be the highest.
“The demand for machine operators continues to rise,” said Kill.
It is in those trade jobs where the gap is the largest, and to fill that demand a paradigm shift needs to take place across the state.
In addition to surveying those in the industry, students, and for the first time parents, were also surveyed as part of The State of Manufacturing 2018, and Kill said there continues to be a perception that students need to go on to earn a four-year degree to be successful.
Kill said there is a need for more of the next generation of the work force to enter those trade skills jobs, like machine operators, to meet the demand. The increased demand for new people to fill manufacturing jobs is not new.
Data from DEED shows between 2010 and 2016 manufacturing industries saw a 9 percent increase in the number of new jobs.
In fact, according to DEED, one out of every eight jobs in Minnesota is tied to manufacturing. As more and more of the Baby Boomer generation opts to retire, the demand will only increase.
After years of offering the mantra that a four-year degree is the best option, the pendulum appears to be swinging back toward those skilled jobs, as students learn there are jobs available that pay a good wage.
The State Manufacturing 2018 survey showed that 52 percent of the companies in manufacturing actually are planning to increase worker wages this year, which is an increase over 2017 when 46 percent of those in manufacturing said they planned to increase wages.
The reality is that manufacturers are realizing they not only need to make jobs attractive for the next generation, but they also need to make sure their current employees stay.
“Attract and invest and you will retain,” said Kill.
There remains a strong sense of enthusiasm for the future of manufacturing in the state, but, as Autry reported, “the sobering counterweight to this enthusiasm is the overwhelming anticipated work force shortage. The challenges of attracting and retaining both skilled and unskilled workers loom large and will impede the growth of the industry.”
Information presented in the annual report was also confirmed locally, as both Sue Steinke, Schult Homes of Redwood Falls general manager, and Tom Quackenbush, Daktronics of Redwood Falls general manager, stated there is a need right now for people to fill job openings, and as time goes on that need is only going to rise.
Yes, said Steinke, Schult Homes is looking for full-time people, adding, however, the good news is during the summer months an influx of college students returning to the community to work helps in the short term.
There are also some openings at Daktronics, but for Quackenbush the bigger picture is what is going to happen in the long term as more and more of the Baby Boomer generation moves into retirement.
Quackenbush said at times what is happening in communities like Redwood Falls is people are just moving from one job to another.
Both Quackenbush and Steinke said one of the biggest challenges for them in terms of recruitment is also one that is facing communities across the state and the nation – the lack of childcare.
Steinke said people are being forced to quit working when they have a child simply because there are no available spots for them, especially as it relates to infants.
For Quackenbush a concerted effort is being made consistently to keep the people who are already working, adding there is also a more creative approach being taken to help fill jobs by encouraging those who are of retirement age to stay on and work a little longer.
At times that can be done with part-time positions, which allow those employees to work less hours and have more flexibility to do things they want to do. That way they are still earning money and local employers are able to fill open positions with people who have been trained and have work experience.
Steinke and Quackenbush also complimented the dedicated work force that is currently working at their site.
Steinke said more than 50 percent of the people at Schult have been working there more than 10 years.
Anne Johnson, Redwood Area Chamber and Tourism executive director, said the stories she has heard from regional employers, including those in the manufacturing industry are also similar, adding for some the crisis is happening now and is likely going to get worse without changes.
The good thing, added Johnson, is that Redwood Falls has demonstrated a resilience and “can-do” mentality.
That attitude has allowed the economy to remain strong and for growth to continue in the community. Johnson, who also teaches in the local school district, said she has the opportunity to open the eyes of students, as they are able to see the types of jobs that are available in their community.
“We want people to move here,” Johnson said, adding there are great jobs, great schools and great healthcare all available in this community. “I feel good about what we have to offer. Of course, we can always do more.”
Did you know?
• Minnesota has close to 8,000 manufacturers making a wide range of products.
• Employment in the manufacturing industry has risen nearly 9 percent since 2010.
• Manufacturing in Minnesota represents approximately 16 percent of the state’s gross domestic product (GDP).
• Each manufacturing job supports 1.9 jobs in other sectors of the economy.
• There are more than 6,500 open manufacturing jobs in Minnesota
• The annual manufacturing employment in southwest Minnesota is 31,390.
• The average annual manufacturing wage in southwest Minnesota is $47,369.
– Source Minnesota Department of Employment and Economic Development (DEED)