The unparalleled pessimism voiced by manufacturers in this year’s State of Manufacturing® (SOM) survey provides a fitting opportunity to consider the next steps for Minnesota manufacturing.
The 2024 poll — the 16th we’ve conducted — was dominated by angsty concerns about the economic landscape and the health of Minnesota’s business climate. The angst surrounding the economy makes sense given continuing inflation and layoffs at major manufacturers — often the customers of our manufacturing base.
Rob Autry and his team at Meeting Street Insights have conducted every SOM survey since its inception. Their research has revealed similar worries in other surveys around the country, but he says Minnesota manufacturers expressed far more concern about the business climate and far less confidence about the future than those elsewhere.
Pessimism about Minnesota’s business climate has been growing steadily for the last few years. A record-high 56% of respondents note that it’s worse this year, up from 50% last year and 15% five years ago. At the root of this angst is the legislature’s 2023 adoption of expanded paid leave requirements that apply equally to all manufacturers, from those with a handful of employees to multinational corporations.
New hiring has ground to a halt for small employers. If you’re not hiring, it’s very difficult to grow. If you don’t think you can grow because you face additional expenses that don’t increase productivity or boost growth, you’re not going to hire. It’s a vicious cycle.
Moving forward, both Enterprise Minnesota and the manufacturers we serve have work to do. We will continue to connect manufacturers with lawmakers so they can fully understand the consequences of critical policy decisions.
We will also keep working to help manufacturers thrive in the current climate, especially the smaller ones. Small companies face big risks if they are too closely tied to a single industry, but we can help them diversify. While some areas of manufacturing are slowing down, the defense and aerospace industries are booming, and we can work with companies to earn the certification required to supply those markets. The generator and food processing markets are thriving, and we can show manufacturers how to use their existing technology, skill, and will to move into those markets.
I can think of a handful of our clients who 20 years ago were quite small but today have 150 employees or more because they identified opportunities in economic downturns. They focused on their specific challenges and met them head-on. Smaller companies can follow that lead.
Every State of Manufacturing survey leaves me with a deeper appreciation for Minnesota manufacturers and their resolve when faced with a problem: They wring their hands for a moment, then quickly pivot to tackle the challenge. While that typical resilience has taken a hit, we hope to see a return to Minnesota optimism in next year’s survey.
Return to the Winter 2024 issue of Enterprise Minnesota® magazine.
