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Workers in short supply as manufacturers try to grow

Minnesota’s manufacturers are as enthusiastic about their growth prospects as they’ve been since the recession but a worker shortage is keeping growth in check.

Nearly 90 percent of the 400 Minnesota-based manufacturing executives said they’re confident about their companies’ futures, according to a survey released Wednesday by industry consultant Enterprise Minnesota. That’s an all-time high mark since the group launched the annual report seven years ago.

But against the backdrop of brimming post-recession optimism, the worker shortage looming for years is beginning to sting as baby boomers retire and the pipeline of new workers undershoots demand.

The shortage is the clearest barometer for the sector’s future prospects, kneecapping the industry even as it continues to pick up steam post-recession, Enterprise Minnesota President and CEO Bob Kill said in an interview.

“It would be growing faster if we had the workforce,” he said, “but we don’t.”

One-third of the 400 Minnesota-based manufacturing executives surveyed identified attracting and retaining qualified workers as a “serious concern.” Seventy-one percent said it is “difficult” to attract new workers — the highest rate since the survey started, marking an especially steep uptick over the past half-decade.

A plurality of the executives surveyed said they need workers with technical training and experience. Machine operators and assemblers are in the highest demand, according to the report.

The trend, overall, is nothing new. But in one notable deviation, the issue is becoming more pressing for manufacturers in the seven-county metro area. This year, for the first time, 70 percent of Twin Cities executives surveyed expressed concerns, bridging the gap with their outstate counterparts who have hovered around that mark for years.

By extension, the marketplace for manufacturing workers – particularly ones with deep industry experience – is sizzling, and increasingly cutthroat. Wages are going up, according to the survey, and employees are reluctant to leave their posts unless a new job is an obvious upgrade.

“Luring a really experienced person from one firm to another is becoming really difficult and very costly,” Kill said. “There’s been a shift there, and I think that’s just the reality of trying to recruit and find enough workers.”

To plug those personnel holes, more companies than ever have cozied up to partnerships with state agencies, and especially schools, to flesh out the pool of available workers and provide training to expanding existing employees’ skill sets.

There are tens of millions of dollars from federal grants and state institutions to support those programs, said Joe Mulford, system director for education industry partnerships for the Minnesota State Colleges and Universities system – a primary player in the manufacturing education landscape.

“It’s about filling the pipeline and ‘upskilling’ those incumbent workers that you’ve got,” he told manufacturing executives at an Enterprise Minnesota event on Wednesday evening.

Such efforts have picked up steam over the last half-decade or so, the survey showed, in tandem with a slow-but-steady push to reshape the industry’s reputation to draw in young people and convince their parents that manufacturing isn’t what it used to be.

Now, the sector is approaching a tipping point in its push to make that case, Kill said, primarily by touting today’s advanced manufacturing jobs as well-paying upgrades over the kind of gritty work that dominated the sector, and shaped its reputation, decades ago.

Still, just 36 percent of manufacturing executives reported that their companies had collaborative relationships with a higher education institution. But increasingly, Kill said, school-sponsored job-training initiatives yield visible gains for employers and communities.

Earlier this week, St. Cloud Mayor Dave Kleis singled out a pair of local higher education institutions – St. Cloud Technical & Community College and St. Cloud State University – as reasons Arctic Cat announced an expansion to its manufacturing plant there.

Larger companies like Plymouth-based Arctic Cat, classified in the survey as ones that generate $5 million or more in annual revenue, are significantly more likely to cash in on partnerships and other higher education programming.

Those companies are also the ones facing the greatest retirement drain, according to the survey.

But workforce isn’t the only thing on executives’ minds.

Health insurance costs remain a top concern among 56 percent of them, though that’s a sharp drop from the 71 percent that flagged the issue in 2011, before the federal Affordable Care Act passed.

In addition, the survey showed worries about ambiguous government rules and oversight was the second-most prominent concern, pinpointed by 46 percent of survey takers. But that’s also down from previous years – similar worries plagued 55 percent of manufacturing executives last year and 58 percent the year before that.

Still, employee retention is the standout issue – and will be for the foreseeable future.

“Attracting and retaining qualified workers is the elephant in the room that’s going to be with us,” Kill said. “That’s the topic du jour for companies.”

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