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Minnesota manufacturers optimistic for 2022 despite the ongoing pandemic; supply chain, hiring are concerns

2021 State of Manufacturing poll finds 87% of manufacturing executives surveyed expect their firms to do well this year.

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Ryan Ulmer works at an advanced door machine station at D&M Industries in Moorhead on Friday, Jan. 28, 2022.
David Samson/The Forum
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MOORHEAD - Minnesota manufacturers are more optimistic about their prospects for 2022, despite the challenges presented by the COVID-19 pandemic, according to the results of a 2021 survey presented by Enterprise Minnesota.

The 13th annual State of Manufacturing Survey found optimism on the rebound, with 87% of manufacturers expecting their companies would continue to do well in 2022. In addition, 51% of Minnesota’s manufacturers expect to see their gross revenues to rise this year, a big jump from the 21% in the previous survey.

Bob Kill, president and CEO of Enterprise Minnesota, presented the survey results as part of the group’s 2022 State of Manufacturing stop at Moorhead’s RiverHaven Events Center on Thursday, Jan. 27.

“It’s undeniable that the COVID-19 pandemic has had a big impact on manufacturers in Minnesota,” Kill told about 40 people attending the event.

The Meeting Streets Insight survey was conducted with a random sample of 400 Minnesota manufacturing executives from Sept. 8 to Oct. 7, 2021.

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Supply chain issues were the top concern for 67% of manufacturers in the latest poll.

Other concerns included:

  • Attracting qualified workers at 61% (up 25% since 2020).
  • The costs of health care coverage, 50%.
  • Retaining qualified workers, 49% (up 13%).
  • Costs of employee salaries and benefits, 46%, (up 22%).
  • Economic and global uncertainty, 40% (up 1%).
  • Federal government programs resulting from the pandemic 35% (up 12%).

About 27% of the manufacturers surveyed said they were taking measures because of the Delta variant of COVID-19, including requiring masks or vaccines for employees, following CDC guidelines, increasing cleaning measures, social distancing and limiting contact.
But that left a whopping 69% of executives polled reporting that their companies are not instituting or planning additional safety measures or changes in production practices because of COVID-19. In fact, firms with revenues less than $1 million are less likely to take added safety measures (78%)

Nonetheless, Kill said it appears manufacturers are turning their focus to “people over profits” to keep and attract new workers.

The top attribute that businesses polled wanted to be known by was as having a great work environment (69%). That is followed closely by competitive salary (61%), a good work-life balance (58%), and valuing employee safety (57%).

Other attributes companies saw as having value were flexible shifts (47%), career growth opportunities and great benefits (both at 45%), and being an industry leader (42%).

Getting back to full production capacity is still a concern for six out of 10 executives polled.

The top issue cited was workforce problems (36%), followed by issues with suppliers and materials (33%), shipping and logistics (11%), customer issues (4%) and equipment and production issues (3%).

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Half of those polled said hiring new employees will be the top driver for growth.

In fact, most (62%) said they had unfilled positions at their firms, with 87% saying that attracting qualified candidates was somewhat or very difficult.

The competitive environment means the days of not poaching talented workers “from the guy down the street are probably over,” Kill said.

Daniel Otto is the CFO of D&M Industries, which has plants in Moorhead and Wisconsin.

He told attendees at the event that like other firms, material and transport lead times have become a challenge for D&M, which machines and assembles pre-hung doors, packages door hardware, and supplies windows and other services for the commercial and residential markets.

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Skyler Stroh and Jacob Rahe work on door frame assembly at D&M Industries in Moorhead on Friday, Jan. 28, 2022.
David Samson/The Forum

D&M, like other manufacturers, has had to get creative in finding ways to meet their customers’ needs, but “manufacturers by nature are problem solvers,” Otto said.

D&M increased its inventory levels and stays in communication with customers and suppliers on lead times, Otto said in a follow-up interview Friday, Jan. 28.

“It takes creativity and sometimes patience,” Otto said.

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As far as finding employees, Otto said it’s important to make it clear that manufacturing is a viable career path.

D&M has about 170 employees between its plants in Moorhead and Wisconsin, with about 130 of them in Moorhead. He said the employee-owned company has plenty of jobs available, even as it automates more of its production lines to meet demand.

“I think to get through another year like this, I’m expecting the supply chain to continue to be stretched,” Otto said. “I think it’s going to take continued creativity and ability to react to changes as they come.”

Among other survey findings:

  • Fears of a recession are ebbing. Last year’s survey reported 36% of manufacturers worried about the prospects of a recession. That’s halved to 18% in this year’s survey.
  • Forty-four percent of respondents predict a flat economy in 2022, with 35% anticipating expansion.
  • Nearly all of the executives surveyed, 94%, said COVID-19 had an impact on the state’s economy and business climate, slightly up from the year before (92%).
  • A plurality of those surveyed, 46%, believe Minnesota’s business climate has worsened. That number had been 15% in 2019, and had risen to 35% of those polled in 2020.

The full results of the poll, including edited transcripts of focus groups, are available at enterpriseminnesota.org .

Related Topics: MANUFACTURING
Helmut Schmidt is a reporter for The Forum of Fargo-Moorhead's business news team. Readers can reach him by email at hschmidt@forumcomm.com, or by calling (701) 241-5583.
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