Minnesota manufacturers have rebounded from the Great Recession, but many executives are worried about health care costs and finding the qualified workers they need to grow their businesses.
Those are key findings in the 2012 State of Manufacturing survey released today by Enterprise Minnesota, a nonprofit that provides consulting services to manufacturing firms.
The survey showed that 29 percent of the companies plan to add workers in 2012, while 68 percent intend to maintain their workforce levels. Only 2 percent expect to shrink their ranks of employees.
Public Opinion Strategies, an Alexandria, Va., firm, conducted the survey of 400 Minnesota manufacturing executives in January. So the results give Minnesotans a comprehensive and current look at manufacturing conditions in Minnesota.
“Our manufacturing economy is very strong,” Bob Kill, Enterprise Minnesota president and CEO, said in a MinnPost interview. But, he cautioned, “We know of companies that have turned away business because they just can’t find the workers.”
Source: Enterprise Minnesota
The cost of health care coverage was the No. 1 concern among those surveyed. It was cited as a big issue by 68 percent of the executives. Health care has been the top issue among manufacturing executives in all four years that the survey has been conducted.
Gov. Mark Dayton and Minnesota legislators are working on creation of a health-care exchange, which is an outgrowth of the health-reform legislation championed by President Obama and passed by Congress. The controversial federal health law will be one of the central issues in the 2012 presidential campaign.
Republican candidates, who’ve dubbed the new law ObamaCare, have used this issue to raise campaign contributions and they view health care as a key area of political vulnerability for the president.
Concern over health care
The Minnesota manufacturing survey showed company executives are worried about how much they are paying for health care, but they also recognize that they need to offer good health care plans to attract the top talent they want.
Half of those surveyed cited “affordable health care” as the most important recruitment factor for hiring the employees they need. Only 22 percent said meeting salary and wage expectations was a key factor for recruiting employees.
When Kill assesses the results of the 2012 survey, he zeroes in on the finding that 31 percent of executives said they have a major concern over the “ability to attract and retain qualified workers.” In the 2011 survey, only 14 percent of executives expressed worries over finding and hiring the workers they need.
The fact that that concern more than doubled in the survey is further evidence for Kill that a skills gap exists in manufacturing.
About 300,000 people work in manufacturing in Minnesota, and many of the companies are parts manufacturers. Kill said some companies are having difficulty finding workers with two-year degrees fresh out of college, but others struggle with attracting experienced engineers and workers with four-year degrees.
Nearly six out of 10 executives — 58 percent — said in the survey that it is “difficult” to attract qualified candidates to fill vacancies. In 2011, 45 percent reported difficulty with getting the workers they needed.
A majority of manufacturing executives surveyed expect this year to be a replay of 2011. About one-third of those surveyed, 32 percent, expect to see an economic expansion this year, while 55 percent are predicting a “flat economy” in 2012.
Government policies remain a key issue for manufacturing executives.
The survey measured the intensity of manufacturers’ concerns when considering 11 business factors. While health care costs were rated as a big concern by about two-thirds of those surveyed, government policies and regulations came in second at 56 percent, and federal, state and local taxes, finished third with 55 percent. The fourth concern on this overall list was “the ability to attract and retain qualified workers.”
With the decline in Minnesota’s unemployment rate and the shortages of qualified workers for some manufacturing jobs, the survey shows that wages are rising to attract workers.
Fifty-four percent of those surveyed expect to increase their employee pay over the next two years, while 43 percent anticipate compensation will remain the same. Among the largest companies, those with more than $5 million in annual revenue, 79 percent plan to boost wages in the next two years.
Source: Enterprise Minnesota
Nearly half — 47 percent — expect their company gross revenues to increase during this year. But just one-third — 31 percent — anticipate their profitability will rise in 2012.
The survey continued to show dissatisfaction with Minnesota’s business climate. Regarding Minnesota’s ability to be a “competitive business location,” 40 percent responded that things in the state are going in the right direction, while 47 percent answered that conditions in Minnesota are off on the wrong track. The 47 percent wrong track assessment was identical to 2011.
The survey has a margin of error of plus or minus 4.9 percent.
Sen. Amy Klobuchar, D-Minn., will be talking about federal efforts to bolster the manufacturing sector during an Enterprise Minnesota event this afternoon at the Minneapolis Convention Center.
Klobuchar recently introduced legislation called the Innovate America Act, which includes increased funding for science, technology, engineering and math education. Klobuchar’s bill also is designed to remove barriers to exporting.
Despite some survey complaints about Minnesota’s business climate, Kill said that a lot of companies used the recession to invest in their people, work processes and equipment. So he explained they were poised to take advantage of opportunities when more orders surfaced as the economy got stronger.
The severe downturn in home construction has continued to hurt window and door makers, Kill said. But many other manufacturers have seen business improve and they are reaping the benefits of exporting their products. Kill said, “The manufacturing sector right now is very robust.”