Enterprise Minnesota’s latest State of Manufacturing® (SOM) survey contains the most consequential data in the 16-year history of the poll. Since its inception in 2009, manufacturers have endured the Great Recession, the global COVID pandemic, and a supply chain shock for the ages. During each of those potentially catastrophic events, manufacturers’ response to our pollster was twofold: We’ve faced tough times before, and let’s look for the opportunity in this crisis.
That can-do, seize-the-moment attitude was notably absent in the most recent survey. Respondents feel beaten down, particularly by recently passed unfunded mandates concerning paid sick and safe leave, which offer no flexibility for smaller manufacturers. Pessimism runs high among manufacturers. Many stated outright during the SOM focus groups that they have no plans to expand in Minnesota.
What follows are some lessons based on my 40-plus years in manufacturing, particularly the last 18 I’ve spent as president and CEO at Enterprise Minnesota.
1) Manufacturing is essential to Minnesota’s economy and communities.
More than 8,600 Minnesota manufacturers employ roughly 325,000 workers. In terms of compensation, manufacturing punches above its weight, accounting for 11% of jobs but 14% of wages. There’s a huge and positive ripple effect as well: More than one million total jobs in Minnesota depend on manufacturing, either directly or indirectly.
In Greater Minnesota, the presence of a strong manufacturer or two means a small town can survive and thrive. Manufacturers outside the metro area often employ –– at higher-than-average wages –– a significant portion of the area while anchoring the community with charitable donations and volunteer efforts.
While 84% of manufacturers employ fewer than 50 people and 60% have less than 10 employees, they consistently position themselves for growth. They prioritize training and development for their employees, they invest in advanced equipment, and they strategize to expand into new markets, often worldwide. Because of their focus on growth, their future is bright. In our experience, a manufacturer with 25 employees in 2025 has good odds of becoming a 75- or 100-employee company in the coming years.
2) Tell and sell the story of manufacturing.
Manufacturers are a humble group. Often working in anonymous-looking buildings on the outskirts of town, they focus on operations. They don’t take time to appreciate — much less share! –– their considerable entrepreneurial accomplishments.
That’s understandable. Owners and leaders seem to be scrambling constantly –– either to survive or to keep up with skyrocketing demand. They focus on business, not public outreach. But as we saw from the 2023 Minnesota legislative session, not sharing the story of manufacturing can have devastating consequences for business.
Our SOM pollster surveys manufacturers in other states around the country. He says Minnesota’s manufacturers expressed far more concern about the business climate and far less confidence about the future than manufacturers in other states he’s surveyed, a direct result of the legislature’s unfunded mandates concerning leave requirements that apply equally to multi-national corporations and small start-up companies.
To prevent a repeat of similarly misguided mandates, manufacturers should open their doors and share what’s happening inside their plants. Over the past 20 years, Enterprise Minnesota has orchestrated almost 700 tours in which manufacturing executives show their operations to legislators and community leaders. Tours supplement statistics with real people and real stories.
Looking inside a manufacturing company is an eye-opening experience for all. Some still expect to find bored employees completing monotonous tasks for low wages in a dirty, and even dangerous, environment. Legislators are always surprised and impressed when they see a manufacturing business that’s clean, organized, and humming with engaged, well-compensated employees who enjoy enriching careers. But they can’t be surprised unless they are invited inside.
Manufacturers need to take the initiative and invite elected officials (and other community leaders) to tour their facilities. They’ll want to do it. I can’t think of a single policymaker who has declined a tour. (Not for nothing, the staff of Sen. Amy Klobuchar always tries to join in when schedules align.) Think of it: The November election brought in 22 new members of Minnesota’s House of Representatives (give or take!). Building personal relationships with these leaders can pay considerable dividends to manufacturers who want to be heard when the legislature is considering proposals that directly affect their business.
3) Share the promise of manufacturing careers with the next generation.
Manufacturing offers outstanding careers for tomorrow’s workforce, but future employees must grow up understanding the potential in manufacturing. Unfortunately, there are still educators, parents, and school counselors telling students that manufacturing jobs are a fallback for those who aren’t quite cut out for college.
One of the reasons parents and teachers have historically resisted encouraging students to pursue technical education as a path into manufacturing is their lack of understanding about the future upsides in manufacturing careers.
We work every day with executives who started their careers on the manufacturing floor as welders or CNC operators and now run thriving companies that employ large numbers of well-paid workers.
With ever-rising price tags associated with traditional four-year degrees, many young people are looking for career options that offer high wages and promising futures without requiring a large upfront investment. Manufacturers can nurture this interest and attract a new generation of workers by opening their doors to the community, sharing what they do and how their employees contribute to their ongoing success through the challenging and satisfying work they do each day.
4) Build relationships with community and technical colleges, an unbelievable asset for manufacturers.
There was a time when community and technical colleges operated without much input from the manufacturers who hired their graduates. Those times have changed for the better. Collaboration has become the common theme among local leaders, manufacturers, and college administrators. Local leaders recognize the value of manufacturing as the job-creating economic engine that drives their communities, and they understand that well-trained employees are vital to its survival and growth. Administrators realize that their curriculum finds relevance with input and support from manufacturers. And many manufacturers regularly reach out to these educational institutions, sharing their current and future workforce needs to help ensure that students develop the skills necessary to thrive in manufacturing.
Good training programs are costly to run, but manufacturers understand that their own success depends on a steady source of well-trained employees. Many companies have partnered with schools, offering financial assistance or contributing the equipment students need for training.
Manufacturers who haven’t connected with their local educational institutions are missing out on the workforce pipeline of the future. Getting involved can be as simple as offering student internships, serving on advisory boards, or contracting with schools for customized training needs.
Finally — and significantly –– community and technical colleges depend on state funding for their survival and growth. As manufacturers build relationships with elected officials, they should tell and sell their story as if it’s their own. Because it is.
5) Don’t confuse the “wind at your back” with good times lasting forever.
Our latest SOM survey shows many leaders are concerned about a potential drop in revenue in the coming year. Whether facing an economy-wide downturn or an industry-specific slowdown, one of the best ways for manufacturers to strengthen their companies and ensure future growth is to expand and diversify.
Successful manufacturers develop and execute effective strategic and operating plans; when business slows down, they look for opportunities to expand their product lines, reach new customers, train employees, and improve processes.
It is not too late to reach into new markets to attract new customers, but manufacturers need to do so before it actually is too late. Companies that have a written strategy find it easier to diversify. They understand their strengths and weaknesses, and they know their customers. They are better positioned to move into new markets that match their capabilities. They are also more likely to recognize the value of certifications such as ISO and prioritize the actions needed to earn those certifications.
These things all take time. Moving methodically toward those goals, during boom times and slowdowns, helps even out the cycles and leads to long-term success.
Even the smallest or most niche companies benefit from strategies that foster growth, improve productivity, and enhance employees’ skills. When business slows, take advantage of the extra time to embrace these opportunities.
Too many manufacturers adopt the posture that “we can’t do that” or “that doesn’t fit us.” Maybe they think their company is too small, or in the wrong type of manufacturing, to take advantage of certain solutions. This is particularly true of automation. Many small companies think automation won’t work for them, but we’ve seen companies with even a handful of employees use it very effectively to meet demand and expand their businesses.
6) Seek input from other manufacturers.
We created Enterprise Minnesota’s Peer Councils 21 years ago to give leaders a sounding board composed of fellow owners and leaders. We invited a group of non-competitive CEOs to meet in confidential monthly meetings to listen to relevant presentations and engage in open-ended conversations.
Facilitated by Enterprise Minnesota consultants, participants function as an advisory board for each other. Today, more than 58 manufacturing executives belong to our councils throughout Minnesota; we’ve expanded them to encompass operations and human resources. These groups often fill gaps and provide insight for smaller companies that might not have specific in-house expertise, from human resources to operations to cybersecurity.
Drawn together by a desire to learn from others and continue to improve their companies, some peer council members are earlier in their careers while others are veterans. They have become an invaluable resource for each other, and many call on fellow members and get together between meetings to discuss problems and share successes.
7) Foster and maintain a strong relationship with your banker.
Manufacturers should always keep in mind that nothing lasts forever –– the good times or the bad. Keeping your banker apprised of your financials is the key to a long-term, decent, and trusted relationship.
During the pandemic, when companies were nervous about the future and their companies, those that had a solid relationship with their banker felt pretty good. The same thing happened in 2008-09.
That relationship requires two parts: information and conversation. In most cases, bankers aren’t needed until you really need them, and that usually happens when business is slow. I suspect over the next year we’re going to hear some of our clients grumbling about their bankers. One reason is that there are fewer community banks and smaller banks, where those relationships are easier to maintain. Also, if you are a growing company and you get to a certain size, you have to move up to a regional bank, or maybe even a national bank.
The requirements are different for these banks. You need to give them solid information along the way so when the challenges come, you have a good relationship with the bank and the banker. Hopefully that’s a long-lasting relationship. If your business has a normal cycle with good years and some that are not so good, you’re going to have a long-term relationship.
Community banks were under pressure for years, but the concept of a community bank has returned a little bit because of consolidation at the upper levels. They’re often driven by people well-known in a community. But you never know when a new owner will come in and buy into a bank. If you don’t have a sound relationship, not only with a banker but the bank, there might be trouble on the horizon.
8) Small steps create momentum.
For any company, often the biggest hurdle to improvement is getting started. Beginning with manageable improvements that result in meaningful and immediate growth can really get the ball rolling.
One example of the impact of steady, incremental change is our Leading Daily for Results process. Our consultants developed this successful approach that combines lean thinking with leadership development principles to reach every employee in a company.
Combining data and measurements about productivity and goals with practical training in leadership skills helps all employees add value to the process and drives their professional growth.
The results have been astounding. Improved productivity and boosted employee engagement lead to unmatched loyalty and enthusiasm.
Regular weekly meetings with executive leadership gives managers and leads an opportunity to share their progress, ask questions, and submit requests for additional support while promoting their professional growth. At the same time, executives develop a deeper awareness of the processes and issues in the production areas.
We’ve seen companies make huge improvements based on this model. Little changes really do add up.
9) Treat employees as your most valued customers – growing successfully depends on engaging them at all levels.
The task of attracting, developing, and retaining quality employees is here to stay. Automation and AI offer great promise, but manufacturers with a satisfied and loyal workforce will thrive in the long run.
Market conditions typically help determine compensation packages, meaning most companies have to offer a similar range of pay and benefits. Manufacturers need to understand what those standards are and meet or exceed them just to remain competitive in the market for labor.
What sets manufacturers apart with respect to employee loyalty is how well they engage their workforce. Companies that make it their mission to ensure their employees love working for them will win the workforce battle. In our SOM survey, companies consistently identify those aspects.
Manufacturers can enhance productivity and engage employees by adopting a leadership infrastructure that encourages those closest to the challenges to identify and try solutions. Companies that adopt this approach see satisfaction soar as employees become increasingly invested in the outcomes of their efforts.
Employers can also boost engagement and productivity by turning to technical and community colleges for skill-specific training for individuals or teams of employees. As employees acquire new skills and develop leadership traits that match a company’s needs, they should have the opportunity to change positions.
Many times, the best performers are kept in one position because they seem indispensable. What they really want to do is to learn and grow, and if they cannot do that with their current employer, they will look elsewhere.
10) Engage suppliers as key customers.
While it’s hard to imagine a return to the full-blown supply-chain chaos that accompanied the COVID pandemic, unpredictability and slowdowns will continue to affect supply chains. Wise manufacturers will build an infrastructure that minimizes the impact of inevitable future disruptions. Building a strong and loyal network of suppliers requires communicating with them and treating them with respect to ensure they can thrive.
Many manufacturers rely heavily on suppliers as they manufacture final products. Others supply larger companies. Some play both roles. The last few years hold lessons for all of them.
Manufacturers who have someone inside the company who follows day-to-day events and builds relationships with suppliers typically fare better during disruptions. My friend and supply chain expert Willy Shih, a professor at Harvard Business School, says those with connections can see trouble before it impacts them, and their relationships help them work through crises.
Manufacturers who bring supply chains closer to home will face decisions about costs, particularly related to labor. Automation may alleviate some bottlenecks caused by worker shortages and make reining in far flung supply chains more cost effective.
Shih also recommends cultivating more strategic partnerships with suppliers. That means sharing more information on volume requirements and providing a product roadmap so suppliers have a better understanding of what is needed from them. He says it’s always useful to view suppliers as partners, giving them flexibility when necessary, and giving them the kind of quality contracts that will sustain investment and help them thrive into the future.
In closing, despite today’s uncertain regulatory and business climate, I’m confident that Minnesota manufacturers can endure and thrive. Our manufacturers are bright, ambitious, and dedicated to their employees and communities. I know they will continue to seize the opportunities that allow them to grow profitably in the coming years.
Return to the Spring 2025 issue of Enterprise Minnesota® magazine.
