Manufacturing stabilizes, but workers are scarce
Minneapolis / St. Paul Business Journal - by Elizabeth Millard Contributing writer
The good news is that the manufacturing sector in Minnesota has finally stabilized and is actually poised to grow. The bad news? Some believe there might not be enough skilled employees to kickstart that growth.
During the past decade, manufacturing has gone through a great deal of contraction in both the durable- and nondurable-goods arenas, said Bob Isaacson, director of analysis and evaluation for the Minnesota Department of Employment and Economic Development (DEED). However, it seems many of the dark clouds are in the rearview mirror. Both types of goods manufacturing are showing growth, and the sector is nicely diversified.
Expansion is expected in areas such as medical products, fabricated metals and machinery, printing, plastics and rubber, and electronic products. Transportation has emerged as a more robust sector than in the past, with Polaris Industries Inc. and Arctic Cat Inc. leading the way.
Typically, more jobs come with additional orders and a rosier bottom line, but unlike other industries, changes in the manufacturing sector in the past five years have made the situation a sticky one.
As companies worked to stabilize, many stopped hiring and concentrated instead on increasing productivity with the employees already in place.
At Medina-based Polaris, for example, extensive productivity plans were created, allowing the company to keep its headcount at the same number for the past two years, yet increase production.
"At this point, we have to compete not just on a regional or a national basis, but on a global scale," said Jeff Bjorkman, Polaris vice president of operations. "Competition is the fiercest we've seen it; and to succeed, we have to focus more on productivity than on adding employees."
Other companies seem to have followed suit. The state's manufacturers experienced strong growth in sales and orders in 2005, but didn't report new jobs or bigger profits as a result, according to a survey by DEED and the Federal Reserve Bank of Minneapolis. In fact, the 2006 Minnesota Manufacturers Register reported there was a slight decrease in manufacturing jobs in 2005, with the state losing 4,405 manufacturing jobs and 262 plants.
While companies have been working to streamline operations to keep headcount at the same level or lower than in the past, the increasing use of automation and outsourcing of low-end tasks has created numerous job openings for highly skilled workers, but not enough employees to fill them.
"This has become an even more high-wage industry than before," Isaacson said. "This was less of a problem even a few years ago, since someone could take a quick certification program and be qualified. But now, to be competitive, manufacturers need people of a certain skill level, and they're just not there."
Because of computerized systems and highly technical equipment, employees have to be conversant with cutting-edge technology. Even those running molding equipment often must have some expertise with computer programming.
So, even though there is job growth indicating a positive direction for the industry, some companies still go wanting.
"We're not losing jobs like a few years ago," Isaacson said. "But now we have new challenges."
The outlook for manufacturing jobs isn't exactly bleak, but it's not a view that's welcome, either.
The state is fighting a battle to get high school students to seriously consider education in engineering or technical fields, said Charles Arnold, executive director of the Minnesota Precision Manufacturing Association.
The situation could get increasingly serious as older workers retire and can't be replaced.
"Just about every shop could hire somebody, and most of them are looking," Arnold said. "For many, their growth is stunted because they can't take just anybody."
Arnold estimates there are 15 job openings for every student that graduates from an engineering program or a two-year technical college. Although the association has been trying to convey the need to high schools, it's still frustrated by a lack of interest in relevant local programs.
In general, however, if highly skilled employees can't be wooed to the state, and there aren't enough high school grads willing to enter technical colleges, Minnesota manufacturers could find it easier to open plants in areas where there are more workers. That means Minnesota companies would add headcount, but the state wouldn't get the benefit of highly skilled residents and expansion within the state's borders.
The difficulty is because of the skill level necessary. With automated systems, jobs once considered entry level have been eliminated, and now these type of systems are getting smarter, faster and more affordable, replacing many mid-level jobs, as well.
The automated systems have not been put in place to curtail hiring, though, Arnold said. Rather, the systems are being employed to make up for the breadth of openings.
"Automation is not replacing the workers we need," Arnold said. "It's replacing the workers we'll never get."
Elizabeth Millard is based in Minneapolis.
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