A Tale of Two States

Ross Anderson grew up in a Minnesota manufacturing family and has worked in manufacturing, literally, around the world, throughout his career. He’s traveled extensively for business and lived in California, Idaho, and China. Since 2019, he’s been in Charleston, South Carolina, where he has served in roles including international business sales and EOS implementation. Feels like overkill.

Anderson’s experiences give him a diverse perspective on what makes an advantageous business climate for manufacturing. He was in Minnesota last fall and attended our annual State of Manufacturing® survey event. At the time, he shared his astonishment at the legislature’s sweeping changes to workplace laws that pose enormous challenges to manufacturers, including paid leave time and legalization of marijuana.

We followed up with Anderson recently to dig a little deeper into his thoughts. He says Minnesota could learn from South Carolina’s eager and scrappy approach to attracting and retaining manufacturers. Those efforts result in lower taxes and regulations, making it less challenging and costly to run a manufacturing company there than in Minnesota.

Here are a few highlights from our conversation:

South Carolina’s growth mindset leads to policies that minimize overreaching regulations while extending tax incentives to companies that locate or expand there, Anderson says. Minnesota’s advantages include an established and reliable infrastructure with good roads and energy sources. While South Carolina has invested heavily in the Port of Charleston, some companies find the less developed infrastructure and power supply a challenge, he says.

Minnesota’s new mandatory paid leave laws demonstrate how the high financial and cultural costs add to a business environment that is already high in regulations and taxes. “The cost to set up in Minnesota is on another level. It’s not even in the mix. If you just run the baseline economics of wages, cost of living, taxes, and mandatory benefits, it’s not going to make the list to look at unless there’s some special reason you need to be in Minnesota,” Anderson says.

Because of rapid growth in manufacturing, South Carolina employees have abundant opportunities, and leverage, in the job market. The state, along with local governments, has developed training programs to help workers acquire the skills needed for manufacturing jobs. South Carolina employees are not used to having all the benefits and protections required by Minnesota law, Anderson says, but competition for skilled workers is high in the rapid growth environment, and there are a lot of job hoppers who seek the best total compensation.

The legalization of marijuana in Minnesota, with no carve out for manufacturers to drug test employees, would concern South Carolina manufacturers, Anderson says. Marijuana is still illegal there, and he expects it will be one of the last states to legalize it, if it does.

Drug-free workplace insurance discounts are significant, Anderson says, and it’s unclear if Minnesota manufacturers can still obtain them. There are other costs to legalization. Minnesota manufacturers are uncertain exactly what actions they can take in the workplace with respect to marijuana use. “It’s a real conundrum because it’s hard to understand. You expect all these business owners to dive in and understand the details of it, but they don’t have the resources to validate what’s going on with their employees,” he says. “That’s terrible for a leader who cares about the safety and health of their employees, and who cares about their business and the efficiency of it.”

Finally, Anderson points out that South Carolina has certain natural advantages that make it easier to operate a company there. “The weather is great. There are both mountains and beaches. The cost of living is lower. All those things make it easier to recruit employees to relocate here,” he says. “For Minnesota to remain competitive as a place for manufacturers to locate or expand, it’s important for policies to take into consideration the overall cost of doing business.”

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