MN manufacturers report worker shortage hinders growth

The inability to attract qualified labor is impeding manufacturing companies’ ability to grow, according to results of an annual survey by Enterprise Minnesota.

Minnesota manufacturers are maneuvering their way through a current worker shortage that is expected to explode over the next several years to around 250,000. Finding the right workers is proving to be a hard job, and larger revenue and employee-sized companies are especially worried about it, the survey found.

Minnesota manufacturers continue to thrive in a strong economy, but a severe worker shortage overshadows their growth and profitability. According to the 11th annual State of Manufacturing, a comprehensive survey project sponsored by Enterprise Minnesota and its partners, manufacturers have retained their near-record levels of optimism since 2018 while also taking steps to alleviate the negative impacts of the ongoing worker shortage.

“Despite economic uncertainty, Minnesota manufacturers are thriving and feeling confident about the futures of their companies. But the biggest factor casting a shadow on that enthusiasm is the ongoing worker shortage, which has no end in sight. The organizations that can weather the shortage and continue their strong growth will be the ones that have leveraged the appropriate combination of automation, productivity strategies, effective leadership, team development and strategic planning,” said Bob Kill, president and CEO of Enterprise Minnesota.

Enterprise Minnesota released its survey results Tuesday and will continue to present its findings at a series of regional events throughout the state. The Star Tribune covered the first event Tuesday and highlighted additional findings of the survey.

More than 80% of surveyed companies with annual revenue of more than $5 million reported problems stemming from severe labor woes. Separately, many said they are concerned about the growing cost of providing health care for workers, an issue that has consistently risen for the last 11 years of Enterprise Minnesota’s survey.

The costs of health care coverage emerged as a top concern for the majority of companies surveyed. The costs were also reported as the second biggest challenge companies are facing that might negatively impact future growth, although the concern was down six percentage points from last year. When segmented by company size, companies with $1 million to $5 million in revenue voiced the highest percentage of concern within the health care costs category.

To address the shortage, companies are most commonly working on developing their current employees, but only 23 percent have a formal leadership development program in place for those employees.

Complete survey results can be found here.