NS. CLOUD, Minn. – Two of the most pressing concerns for Minnesota manufacturers will not surprise you: supply chains and attracting a skilled workforce. You’ve probably heard about it on the news, at dinner, and pretty much anywhere.
The results of the 2021 Manufacturing Health Survey were released this month and include detailed insights into how manufacturers are recovering amid the pandemic, how manufacturing executives think of the economy, and what keeps them up at night.
Polling firm Meeting Street Insights conducts the survey annually for Enterprise Minnesota, and this is the 13th year the survey has been conducted.
That in itself was its own challenge, as manufacturers seemed busier than ever this year, said Meeting Street Insights founder Rob Autry when the survey was published. For the past 12 years, most interviews were conducted during the business day. In the past year, interviewers spoke to production managers three times outside of business hours.
This year, 1/3 of the interviews were conducted outside of business hours, such as evenings or weekends, Autry said.
He said the survey results showed the impact of COVID-19 on manufacturers was as significant – if not more significant – than it was last year, the St. Cloud Times reported.
Supply chains and skilled labor attraction, currently national buzzwords as employers grapple with labor shortages and store supplies in shipping containers outside of crowded U.S. ports, were high on manufacturers’ concerns, Autry said.
This is the first year manufacturers surveyed Minnesota’s manufacturers about their supply chain concerns, Autry said, and 67% of manufacturers rated them between 8 and 10 on a scale of 1 to 10 (with 10 being the highest concern) .
Just behind, 61% of the manufacturers also rated the recruitment of qualified workers as a major concern. That’s an increase of 25 points from last year’s poll, Autry said.
Robots and employees will work together in the rotochopper production on Tuesday, April 13, 2021 in St. Martin.
According to the survey, 62% of these manufacturers are currently hiring for vacancies. Of the vacancies, 87% said it was either a little difficult or very difficult to attract qualified candidates for manufacturers like themselves. And 50% of manufacturers cited hiring new employees as one of the two or three most important drivers of future growth for their business, just ahead of soaring material costs for products.
These workforce challenges are more noticeable at larger companies, Autry said. According to Autry, 84% of manufacturers with 50+ employees said they were hiring and it was difficult to find the workforce they needed. 67% said it was very difficult. Autry said this was “pretty dramatic”.
Conversely, smaller manufacturers are the ones to be hit even harder by the effects of COVID-19 this year, Autry said.
More manufacturers than ever, 46%, believe that the business climate in Minnesota has deteriorated in the past five years. COVID-19 clearly influenced that opinion, he said.
“In the five years we have interviewed this survey, this is by far the highest value we have ever seen,” said Autry. “That was 11 points more than a year ago.”
That year, 94% of manufacturers believed COVID-19 had a modest or major impact on Minnesota’s economy and business climate. (That’s 2% more than last year.) The other answer options were minor impact or no impact.
While there isn’t a huge difference in manufacturers’ opinion on this point regionally, 78% of smaller manufacturers – those with less than $ 1 million in sales – believed that COVID-19 was having a major impact on the economy and the business climate of the state has. That’s a year-over-year increase, compared with companies with sales above $ 5 million who were less concerned than last year (61% said the pandemic was having a major impact on the economy and business climate in the State).
“Now you have this huge gap between those who make less than a million and those who make more than $ 5 million,” said Autry.
Nonetheless, manufacturers replied that they are financially confident about the future of their companies. That confidence has not recovered to pre-COVID-19 levels, but 87% of manufacturers surveyed said they are confident about the future of their company from a financial perspective.
“These are still very high numbers in terms of confidence,” said Autry.
But again, smaller Minnesota manufacturers showed less confidence recovery than larger companies.
In terms of key business metrics, the manufacturers surveyed said expectations for gross sales, profitability, and capital expenditures will recover for the year.
In 2019, 59% of manufacturers expected gross sales to increase this year. This fell to 21% in 2020, but has recovered to 51%. 41% of manufacturers expect higher profitability in 2021 (plus 17 points compared to last year’s survey).
However, 44% of manufacturers said they expect capital spending to increase.
Historically, “we’ve never gotten to this level in the past 12 years,” said Autry.