The State of Manufacturing® 2018 - Complete Survey Book by Enterprise Minnesota

A COMPREHENSIVE SURVEY OF MINNESOTAâ&#x20AC;&#x2122;S MANUFACTURERS

HAZARD AHEAD?

Do booming sales distract manufacturers from the looming workforce crisis?

2018

2018 A Comprehensive Survey of Minnesotaâ&#x20AC;&#x2122;s Manufacturers

The State of Manufacturing 2018

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A comprehensive survey of Minnesotaâ&#x20AC;&#x2122;s manufacturers Rob Autry, Pollster Tom Mason, Strategic Consultant Lynn Shelton, Director Scott Buchschacher, Creative Director Catrin Thorman, Copy Editor All rights reserved. Except for brief quotations in critical articles and reviews, no part of this book may be reproduced in any manner without prior permission of the publishers. Special thanks to all of the sponsoring organizations and executives who participated in the focus groups.

Enterprise Minnesota, 2100 Summer St NE, Suite 150 Minneapolis, Minnesota 55413

CONTENTS

Introduction ......................................................................................... 4 Pollsterâ&#x20AC;&#x2122;s Analysis.............................................................................. 9 Poll Summary.................................................................................... 16 Focus Groups (location) Litchfield (Custom Products of Litchfield, Inc.)......................................... 31 Bemidji (Northwest Technical College)...................................................... 40 Owatonna (Southern Minnesota Initiative Foundation).............................. 46 Minneapolis (Dunwoody College of Technology)...................................... 54 Roseville (MINNCOR Industries).............................................................. 64 Lakeville (Lakeville Area Chamber of Commerce).................................... 72 Luverne (Take 16 Brewery)........................................................................ 82 Mankato (South Central College)............................................................... 90 Pine City (Pine Technical & Community College)................................... 104 Grand Rapids (Itasca Community College)...............................................114 Brainerd (Brainerd High School).............................................................. 122 Morris (Superior Industries)...................................................................... 135 Roseville (Olsen Thielen)......................................................................... 144 St. Cloud (Gray Plant Mooty)................................................................... 153

Selected Cross Tabulations.......................................................... 162

INTRODUCTION

Questions, Not Answers Public opinion surveys sometimes prove their value by triggering important questions. This 10th anniversary version of the State of Manufacturing® is one of them. By Bob Kill, president & CEO, Enterprise Minnesota

hen we first hooked up with pollster Rob Autry to write questions for this 10th anniversary version of the State of Manufacturing® (SOM) survey, we assumed the data would again reveal that Minnesota’s manufacturers feel sky-high levels of optimism about their company’s financial prospects in 2018, just as they did for 2017, when an astonishing 94 percent of them declared enthusiasm about their company. No one is saying that manufacturers are sitting around lighting their cigars with twenty-dollar bills—it’s still a competitive industry—but neither do many refute that times are pretty good. We also knew that merely calling attention to that optimism, even though it’s accurate, would provide few insights about manufacturing in Minnesota 4

to the people who care about (and benefit from) their success. Manufacturers, suppliers, community supporters, policymakers and educators look to the SOM to help understand the manufacturing marketplace, employment issues, and cultural challenges that manufacturers face. So, for 2018 we took a deeper dive into the worker shortage, an issue that lurks beneath the surface of that optimism, and whose urgency may be diluted by terrific sales numbers. We all know a worker crisis is making its approach, we just don’t know its dimensions. Katherine Kersten, the

Bob Kill

scholar and writer from Center of the American Experiment who closely follows the worker issue, recently reported that the number of unfilled jobs in Minnesota’s economy could rise from 60,000 to as many as 280,000 by the end of 2022. We know why. Boomers are retiring in record numbers, about 8,000 more workers leave Minnesota than relocate here every year, and the younger generations just don’t have the numbers (or interest) to make up the difference. All told, she says, the worker shortage could end up decreasing Minnesota’s GDP some $33 billion in five years, with manufacturers’ ravenous need for skilled workers causing it to absorb much of the brunt. 5

To describe the challenge of the worker shortage, let’s go back to our very first SOM. We conducted our first survey and focus groups 10 years ago, just as the American economy had slipped into the abyss of the Great Recession with an abrupt intensity that left most small and midsized manufacturers in a state of flatfooted disbelief. Not knowing what to expect in the focus groups, we were amazed at the calm resolve with which most participants described how they would get their bearings. Two phrases popped up in most sessions: “We’ve been through this before; we’ll get through it again” and “a recession is a terrible thing to waste.” In other words, they’d do their best to mitigate the damage in a way that might create opportunities when the economy recovered. They’d secure their banking relationships and endure occasionally opportunistic demands from OEMs. They’d lean up their operations. They’d look to expand product lines or even investigate new ones. They’d roust their sales people back out on the road with instructions to improve customer relationships. And the strongest among them scouted out potential acquisitions. Ultimately, they knew, their success would be measured by how well their reaction to the crisis would enable the speed and depth of their company’s recovery. Fast forward to today. Against the backdrop of almost surreally high short-term optimism, this SOM survey also foreshadows how manufacturers need to prepare for the potential damage from escalating worker shortage. And I need to emphasize that this challenge is much different than the Great Recession. It is not how we react to it, but how we prepare. This is a prospective crisis. Manufacturers all know it’s coming and that there are things we can do to prepare, but our urgency may be temporarily tempered by booming sales. The key is that we haven’t been through this before. Keep this in mind as you read Rob’s analysis. My conclusion, for what it’s worth, is that savvy manufacturers can use some of the proceeds of today’s booming economy to prepare to compete in new circumstances under different terms. We aren’t suddenly going to find more people. The winners will work from a formal strategy. The company that approaches this worker-stricken market with one-off tactics and an overall approach that’s kept in the owner’s head, will find itself falling behind companies that prepare. An overall strategy must integrate marketing with productive processes and people. Automation and technology will play an essential role, but successful manufacturers will always need to recruit, train, and retain employees to operate those machines. And community collaboration will reach unprecedented importance. Employers, policymakers and educators (at every level) must plot out an 6

urgent strategy that works to anticipate this rapidly changing marketplace. I readily accept that these are not new concepts, but Minnesota’s manufacturers have never faced greater urgency to make them part of their strategic arsenal. * * * And now we have some people to thank for making this State of Manufacturing® project such a success. I say this every year because it is always true. The State of Manufacturing® would not succeed without the selfless collaboration of so many organizations and individuals. As always, we’re all grateful to our sponsors, whose financial backing helps us defray the considerable costs of the event and whose insights and ideas always contribute to a meaningful questionnaire and whose individual networks always plug us into a new set of thought leaders. Pollster Rob Autry has conducted the survey in each of the 10 years. Rob, the founder of Meeting Street Research, is one of America’s premier pollsters. We draw credibility from his creativity, patience, and keen analytic skills. And Tom Mason, our long-time consultant, has also been with us from the beginning. He has now added another 14 focus groups to the long list he’s done over 10 years. Tom, whose company produces Enterprise Minnesota magazine, also publishes the State of Manufacturing® book, along with creative director Scott Buchschacher. A special thanks goes to Lynn Shelton, vice president of marketing at Enterprise Minnesota, who has managed the State of Manufacturing® project since it was nothing more than a concept. It is impossible to overestimate the amount of effort that she and her staff—Lynet DaPra, Constance Fantin, and Chris Morse—devote to quietly completing the detail-laden schedule of tasks that comprise the various elements of this project. Finally, I want to again extend sincere thanks to the manufacturers who take time out of their busy days to talk to our pollster, the many people who participate (often year after year) in our focus groups, and those who will attend the regional events in which we present and discuss the results.

Thank you to our 2018 sponsors! PLATINUM – STATEWIDE SPONSORS • Bremer Bank • Granite Equity Partners • Gray Plant Mooty • King Solutions • Marsh & McLennan Agency • Minnesota Department of Employment and Economic Development (DEED) • RSM GOLD – REGIONAL SPONSORS • Blandin Foundation • Widseth Smith Nolting SILVER – EXECUTIVE FOCUS GROUP SPONSORS • Gray Plant Mooty • MINNCOR Industries • Olsen Thielen • Pine Technical & Community College • South Central College • Southern Minnesota Initiative Foundation • Southwest Initiative Foundation • Tri-State Manufacturers’ Association (TSMA) • West Central Initiative

FOCUS GROUP SPONSORS • Blandin Foundation • Clow Stamping Company • Dunwoody College of Technology • Lakeville Area Chamber of Commerce • Northwest Minnesota Foundation • Pequot Tool & Manufacturing • The Idea Circle BRONZE – MANUFACTURING SPONSORS • Absolute Quality Manufacturing, Inc. • CARDSource • Central Package & Display • FAST Global Solutions • Gauthier Industries Inc. • L&M Radiator Inc. • Mactech, Inc. • Mars Supply • North Central Door Company • Productivity Inc • Tolerance Masters • Von Ruden Manufacturing, Inc. RECEPTION BEER SPONSOR • Summit Brewing Company

SILVER – STUDENT AND PARENT

POLLSTER’S ANALYSIS

Hazard Ahead? Do booming sales distract manufacturers from the looming workforce crisis? By Rob Autry

Taken on its surface, the 10th State of Manufacturing

survey indicates again in 2018 that Minnesota’s manufacturing executives exhibit almost surreally high levels of optimism—all across the state— about their companies’ financial prospects for 2018. But the data also reveal some ominous workforce challenges on the horizon. My company, Meeting Street Research, interviewed 400 manufacturing executives between March 7-28, 2018. We added a 123-person oversample to enable us to provide regional analysis, as well. My overall analysis consists of four themes. • Manufacturers base their optimism on even stronger underpinnings ®

About the pollster

Rob Autry, founder of Meeting Street Research, is one of the nation’s leading pollsters and research strategists. He has conducted all ten State of Manufacturing® surveys. 9

about the economy than last year’s report. They expect record revenues, record profitability, to invest in their company at a record level, and to increase wages. • The workforce shortage—for skilled and unskilled employees— looms large as a likely impediment to future growth to manufacturers across the board. • Despite acknowledging workforce challenges, an unexpectedly small number of manufacturers are preparing their operations with leadership training, productivity efforts, and overall strategic planning. After last year’s all-time high, financial confidence remains near record high levels. “From a financial perspective, how do you feel right now about the future for your company?”

• Notably, large and urban companies for the first time are indicating accelerating urgency about workforce issues, possibly signifying employers in Greater Minnesota will face even more intense levels of competition for employees.

OVERVIEW

Manufacturers remain remarkably upbeat about the prospects for their companies, with 93 percent in this year’s poll saying they were “confident” about the futures of their companies, just a point lower than last year’s 94 percent. That confidence is bolstered this year by surging perceptions about the overall economy. The number of manufacturers who anticipate economic expansion is at 64 percent, exactly twice what it was just two years ago, and a record high number in the history of the State of Manufacturing® project. The data are remarkably consistent 10

across the state, among urban, suburban and Greater Minnesota. More than half (54 percent) say the business climate is better than it was five years ago. This optimism also yielded several other record-high predictions for 2018: • Sixty percent predict higher gross revenues; 36 percent predict those revenues to be at least 10 percent better than last year. • Forty-seven percent predict high-profit margins; 27 percent predict profits will exceed 10 percent. • Thirty-two percent expect to make capital expenditures; 22 percent predict the amount will exceed last year by 10 percent.

KEY ISSUES

We can’t overlook how the escalating costs of providing employeerelated health care impact manufacturers. Health care tops the list of issues that concern manufacturers for the tenth time in the 10 years we’ve been conducting the poll, this year topping out at 60 percent, beating “attracting qualified workers” by 13 percent. The slow rise in

And, manufacturing executives expecting an economic expansion this year is at an all-time high. “Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession?”

intensity can be attributed to uncertainty, as manufacturers face the uncertainty of what’s going to happen in Congress to the Affordable Care Act. Republicans haven’t shown how they plan to replace it, or what impact it will have. My takeaway on health care is, well, still this uncertainty about what’s happening. I diagnose the uptick as uncertainty about how Republicans plan to deal with it. 11

When asked to name the challenges that might negatively impact future growth, “attracting and retaining a qualified workforce” jumped 12 points to 48 percent, making it the top concern for the first time. Most telling, the workforce issue has captured the attention of larger manufacturers: • Companies over $5 million in revenue name it 79 percent, while companies with less than $1 million name it at 26 percent. • Companies over 50 employees state it at 87 percent, whereas companies with fewer than 50 employees call it at 38 percent. • Metro firms have nearly doubled their nervousness about the problem, while Greater Minnesota manufacturers remain the same as last year.

More than ever, these executives expect increases in gross revenue and profitability this year, though some expect increases in their capital expenditures. Percent Expecting Increases That Year

WORKFORCE

Manufacturers statewide are more concerned about finding entrylevel employees (33 percent) than employees with formal technical training (27 percent). What’s interesting is that bigger firms, those with more revenue, those with more employees, are for the first time more concerned about attracting qualified workers than they are about health care costs. Just 19 percent of manufacturers “have a structured leadership development program for employees.” Again, larger companies lead the way. Thirty-two percent of companies with more than 50 employees more than doubled the number of companies with fewer than 50 (15 percent). 12

A majority (55 percent) of manufacturers would like local educational institutions to enroll more students in manufacturing programs; 53 percent are looking for them to “develop intern programs with local manufacturers.”

STRATEGY

Just 53 percent of manufacturers are responding to the worker shortage by using a formal strategic planning process, with large and metrobased companies showing the most interest. Seventy-three percent of companies with more than $5 million in revenue use strategic planning, in contrast to 39 percent for companies with less than $1 million. Similarly, 76 percent of companies with more than 50 employees use formal planning, as opposed to just 46 percent for companies with fewer than 50 employees. Twenty-eight percent of companies said “strategy is strictly the role of the CEO,” while 27 percent said they had “a 1 to 3 year written plan and all staff know their roles and actions to achieve the plan.”

The impact of an unqualified workforce is more difficult among larger companies. “What is the impact of your inability to attract qualified candidates having on your company growth?”

Most companies intend to derive growth through the acquisition of new customers (60 percent), but intriguingly: • Fifty-four percent of companies with revenue between $1-$5 million expect to find growth by maximizing productivity. By contrast, about a third of companies under $1 million (33 percent) and over $5 million (37 percent) consider productivity as a driver for growth. 13

â&#x20AC;˘ Forty-one percent of companies over $5 million said that future growth would be driven by â&#x20AC;&#x153;developing company managers and leaders.â&#x20AC;? Only 34 percent of companies said they planned to invest in employee development and leadership training to retain qualified employees. Once again, large companies led the way. Sixty-three percent of companies with more than 50 employees utilize training, more than twice the number of companies with fewer than 50 employees (30 percent).

WAGES

Led by large companies, more than half (52 percent) of the executives interviewed said their companies expect to increase wages in 2018. Ten percent said the increases would exceed 10 percent; 14 percent of them said hikes would be between five and 10 percent; while 27 percent indicated they would be below five percent. Sixty-eight percent of

The gap between the Twin Cities and Greater Minnesota in concern over attracting and retaining qualified workers has shrunk. Concern Over the Ability to Attract and Retain Qualified Workers (% Concern 8-10)

companies over $5 million said they would increase wages.

TAX REFORM

Manufacturers displayed strong across-the-board support (67 percent) for the recently enacted Federal Tax Cuts and Jobs Act. The support is strongest among companies with more than $5 million in revenue (74 percent), and among companies with more than 50 employees (71 percent). At the same time, they are not yet ready to declare whether the tax cut has benefited their companies. Statewide they are split: 45 percent 14

say it has helped, 42 percent say it has had no impact, and six percent say it has hurt their companies. Large companies are most upbeat about its impact: 55 percent of companies with revenues greater than $5 million have realized benefits, as have 50 percent of companies with more than 50 employees.

POLL SUMMARY

2018 State of Manufacturing® Survey Field Dates: March 7—March 28, 2018 Sample Size: N=400 Manufacturing Executives N=123 Oversample outside MSP Margin of error for the main 400 sample is +/-4.9%

* Denotes result less than 0.5%. NOTE: Due to rounding, some figures may be higher or lower by less than one-half of one percent.

Question 1 From a financial perspective, how do you feel right now about the future for your company... 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 79% 78% 83% 82% 82% 84% 89% 90% 94% 93% TOTAL CONFIDENT 21% 21% 16% 17% 17% 15% 11% 9% 6% 6% TOTAL NOT CONFIDENT 28% 30% 35% 28% 28% 36% 40% 51% 49% 49% 54% 54% 49% 48% 15% 16% 13% 13% 12% 13% 7% 5% 5% 4% 4% 5% 2% 3% * 1% 1% * * 1% 1% -- -- -- * * -- --

43% 47% 5% 4% 1% --

57% 51% VERY CONFIDENT 37% 41% SOMEWHAT CONFIDENT 5% 5% NOT VERY CONFIDENT 1% 1% NOT AT ALL CONFIDENT -- 1% DON’T KNOW/UNSURE -- -- REFUSED

Question 2 Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession? 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 8% 26% 40% 32% 34% 37% 42% 32% 58% 64% 34% 53% 49% 55% 46% 54% 42% 48% 32% 28% 56% 19% 9% 10% 15% 7% 13% 15% 4% 4% 2% 2% 3% 2% 5% 3% 3% 5% 5% 4% -- -- -- 1% 1% -- -- * -- --

ECONOMIC EXPANSION A FLAT ECONOMY A RECESSION DON’T KNOW/ UNSURE REFUSED

Question 3 Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same? 3/17 41% 18% 39% 3% --

3/18 54% 14% 32% 1% --

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME DON’T KNOW REFUSED

Question 4 As you look to 2018, do you project your company’s gross revenues to... (ROTATE) increase or decrease compared to 2017, or will they probably stay the same? (IF INCREASE/DECREASE:) Do you expect your gross revenues to (increase/ decrease) by more than 10% or less than 10%? 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 23% 44% 51% 47% 41% 45% 45% 44% 55% 60% TOTAL INCREASE 32% 15% 6% 8% 9% 7% 7% 12% 7% 5% TOTAL DECREASE 11% 29% 30% 25% 25% 23% 25% 25% 35% 36% 12% 15% 21% 22% 16% 21% 19% 19% 20% 24% 10% 5% 2% 2% 4% 2% 2% 5% 2% 2% 22% 10% 5% 6% 6% 5% 4% 7% 5% 3% 44% 40% 41% 44% 48% 47% 47% 43% 36% 33% 1% 1% 2% 1% 1% 2% 1% 1% 2% 1% * * 1% -- 1% 1% * -- -- --

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/ DON’T KNOW REFUSED

Question 5 And, as you look to 2018, do you project your company’s profitability to (ROTATE) increase or decrease compared to 2017, or will it probably stay the same? (IF INCREASE/DECREASE:) Do you expect your profitability to (increase/decrease) by more than 10% or less than 10%? 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 17% 36% 39% 31% 32% 35% 30% 37% 44% 47% TOTAL INCREASE 34% 17% 11% 13% 17% 17% 9% 12% 7% 7% TOTAL DECREASE 9% 21% 21% 17% 16% 18% 14% 20% 27% 27% 8% 15% 18% 14% 16% 17% 16% 16% 17% 19% 13% 8% 6% 7% 9% 10% 4% 6% 2% 3% 21% 10% 5% 6% 8% 7% 5% 6% 5% 4% 48% 45% 48% 55% 49% 47% 60% 51% 46% 44% 1% 1% 2% * 2% 1% * * 2% 1% -- * 1% 1% 1% * * -- 1% 1%

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/ DON’T KNOW REFUSED

Question 6 And, as you look to 2018, do you project your company’s capital expenditures to (ROTATE) increase or decrease compared to 2017, or will they probably stay the same? (IF INCREASE/DECREASE:) Do you expect your capital expenditures to (increase/ decrease) by more than 10% or less than 10%? 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 19% 24% 32% 27% 28% 27% 27% 25% 23% 32% TOTAL INCREASE 37% 24% 14% 24% 20% 19% 17% 19% 12% 11% TOTAL DECREASE 9% 16% 20% 15% 17% 17% 14% 17% 15% 22% 10% 8% 13% 12% 11% 10% 13% 8% 8% 10% 12% 9% 6% 11% 6% 4% 6% 8% 4% 5% 25% 15% 8% 13% 14% 15% 11% 12% 8% 5% 43% 51% 53% 47% 50% 53% 55% 54% 63% 56% 2% 1% 1% 1% 1% 1% * 2% 2% 1% * -- * * 1% 1% * * -- --

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/ DON’T KNOW REFUSED

Questions 7-15 Now, I would like to read you a list of factors that some companies are concerned about. For each one, please rate how concerned your company is about that particular factor using a scale from 1 to 10, where one means that your company is NOT AT ALL CONCERNED about it and where ten means your company is VERY CONCERNED about it. You can choose any number between one and ten depending on how strongly you feel about it. 10 8-10 5-7 (7) Competition from foreign sources 3/18 7% 13% 29% 3/17 5% 12% 24% 2/16 6% 17% 20% 3/15 8% 15% 25% 3/14 6% 16% 23% 3/13 7% 17% 26% 1/12 7% 21% 23% 1/11 11% 20% 30% 1/10 12% 27% 24% 12/08 8% 18% 27%

1-4

Mean

58% 64% 62% 60% 61% 56% 55% 49% 48% 54%

4.0 3.6 3.8 3.9 4.0 4.1 4.4 4.5 4.8 4.2

(8) Government policies and regulations 3/18 17% 40% 38% 3/17 18% 32% 39% 2/16 24% 41% 33% 3/15 28% 46% 30% 3/14 30% 55% 29% 3/13 32% 58% 24% 1/12 33% 56% 29% 1/11 31% 61% 26% 1/10 38% 57% 25%

23% 28% 25% 23% 17% 18% 15% 12% 16%

6.3 5.9 6.3 6.7 7.1 7.2 7.3 7.6 7.3

(9) The costs of health care coverage 3/18 31% 60% 25% 3/17 35% 59% 23% 2/16 30% 51% 26% 3/15 34% 56% 24% 3/14 36% 59% 20% 3/13 44% 67% 17% 1/12 36% 68% 17% 1/11 43% 71% 17% 1/10 42% 68% 17% 12/08 36% 64% 21%

14% 17% 22% 20% 20% 14% 13% 8% 13% 13%

7.4 7.3 6.8 7.0 7.2 7.7 7.7 8.2 7.8 7.7

10 8-10 5-7 1-4 Mean (10) Costs of employee salaries and benefits 3/18 9% 27% 46% 26% 5.7 3/17 7% 20% 42% 37% 5.0 2/16 6% 19% 41% 39% 4.8 3/15 8% 18% 44% 36% 5.0 3/14 4% 18% 46% 37% 5.0 3/13 7% 19% 45% 34% 5.1 1/12 3% 13% 47% 37% 4.9 1/11 5% 15% 49% 33% 5.0 1/10 6% 16% 46% 34% 5.0 12/08 7% 18% 49% 32% 5.3 *Changed from 2017: Costs of employee salaries and benefits, not including health insurance (11) Attracting qualified workers 3/18 19% 47% 30% 22% 6.5 3/17 12% 31% 36% 31% 5.7 2/16 10% 32% 33% 34% 5.5 3/15 12% 33% 36% 30% 5.7 3/14 10% 34% 35% 30% 5.8 3/13 9% 30% 32% 35% 5.4 1/12 11% 31% 32% 37% 5.5 1/11 4% 14% 37% 45% 4.6 1/10 8% 19% 27% 51% 4.4 12/08 8% 22% 31% 45% 4.8 *Changed from 2017: Attracting and retaining qualified workers (12) Retaining qualified workers 3/18 15% 36% 33%

30%

5.7

(13) Economic and global uncertainty 3/18 6% 20% 45% 3/17 7% 17% 42% 2/16 11% 29% 38% 3/15 12% 29% 43% 3/14 11% 31% 46%

35% 40% 32% 28% 24%

5.1 4.8 5.6 5.8 6.0

(14) Getting your products to market 3/18 6% 15% 30% 54% 4.2 3/17 5% 12% 26% 62% 3.8 2/16 3% 12% 19% 68% 3.4 3/15 5% 14% 27% 58% 4.0 *Changed from 2017: The shipping and logistics of getting your products to market (15) Developing future leaders 3/18 8% 25% 40% 34% 3/17 12% 26% 38% 35% *Changed from 2017: Current and future leaders

5.2 5.3

Question 16 What would you say are the one or two biggest challenges your company is facing that might negatively impact future growth? Is it… (RANDOMIZE AND ACCEPT UP TO TWO OPTIONS) 3/14 3/15 2/16 3/17 3/18 21% 29% 26% 34% 48% 31% 41% 34% 36% 36% 29% 20% 15% 18% 34% 48% 43% 40% 38% 17% 31% 23% 32% 22% 17% 3% 4% 3% 3% 6% * 1% 1% 1% * * * * -- --

Attracting and retaining a qualified workforce Cost of health care insurance Increasing costs of energy and materials for your products Unfavorable business climate Lower sales for your products OTHER DON’T KNOW/NOT SURE REFUSED

*Changed from 2017: Rising health care and insurance costs; Rising costs of energy and materials for your products; Unfavorable business climate, such as taxes, regulations and policy uncertainties; Weak economy and lower sales for your products Question 17 Thinking ahead…what would you say are the two or three most important drivers of your company’s future growth? Is it… (RANDOMIZE AND ACCEPT UP TO THREE OPTIONS) 3/15 75% -- 40% -- 25% 19% -- 6% 1% *

2/16 3/17 82% 74% -- -- 51% 41% -- -- 26% 24% 22% 19% -- 10% 6% 6% 5% 3% * --

3/18 60% 38% 35% 27% 22% -- -- 2% 1% *

New customers Maximizing productivity New products Better strategic planning and implementation Developing company managers and leaders Enhancing supply chain relationships Achieving or upgrading to new ISO 9001:2015 standards OTHER DON’T KNOW/NOT SURE REFUSED

Question X1 (ASKED OF N=336) Looking ahead to 2018, do you plan to increase investment in any of the following areas? (RANDOMIZE AND ACCEPT MULTIPLE RESPONSES) 68% 66% 36% 35% 33% 12% 11% 1% 9% 1%

Growing revenue and profitability Maximize productivity Systems and technology Expanding within the United States Staff development and culture Expanding globally ISO business management systems OTHER (SPECIFY:___) (DO NOT READ) None of the above (DO NOT READ) Don’t Know/Refused (DO NOT READ)

Question 18 Have or will wages for your employees increase for 2018, or will they decrease or stay about the same? 3/17 3/18 46% 52% INCREASE 1% 1% DECREASE 49% 45% STAY ABOUT THE SAME 3% 1% DON’T KNOW 1% * REFUSED Question 19 (ASKED IF WAGES WILL INCREASE, N=208) And, what percentage do you expect wages at your company to increase for 2018? 3/17 53% 26% 14% 7%

3/18 51% 26% 20% 3%

UNDER FIVE PERCENT FIVE PERCENT TO LESS THAN TEN PERCENT TEN PERCENT OR MORE DON’T KNOW/NOT SURE

Question 20 Are you currently investing in employee development and leadership training to retain employees? 2/16 3/17 3/18 32% 34% 36% YES 67% 65% 63% NO 1% 1% * NOT SURE -- * * REFUSED *Changed from 2017: Are you currently investing in employee development or leadership training in order to attract and retain qualified employees and managers? Question 21 Does your company have a structured leadership development program for employees at all levels at your company? 3/15 2/16 3/17 3/18 20% 20% 17% 19% YES 80% 79% 82% 81% NO * 1% 1% 1% DON’T KNOW/UNSURE * -- -- * REFUSED *Changed from 2016: Does your company have a formal structured leadership development program for supervisors and managers?

Question 22 When your company uses automation do you do so because of: (READ AND RANDOMIZE:1-4. READ :5-6 LAST) (ALLOW MULTIPLE RESPONSES :1-4) 61% Productivity 52% Quality of the product 45% Safety of the workforce 39% Enhancing the work environment 4% Don’t use automation, but am considering it 22% Don’t use automation, and am NOT considering it 1% DON’T KNOW/UNSURE (DO NOT READ) * REFUSED (DO NOT READ) Question 23 I am going to read you a few different roles within manufacturing and I would like to know how well you feel your company is prepared to handle the departure of someone in that role. What impact, if any, would the departure of ________ have on your firm? Would you say a significant impact, some impact, not much of an impact or no impact at all? TOTAL SIGNIF SOME NOT MUCH IMPACT IMPACT IMPACT IMPACT

NO DK REF IMPACT ---- DNR ----

(A) The CEO/owner 84% 71%

(B) A member of your management team 78% 47% 31% 11%

12%

10%

(D) A skilled worker 81% 44%

13%

37%

12% 9%

Question 24 What is the impact of your inability to attract qualified candidates having on your company growth? Would you say it makes things... (ROTATE) 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 55% 40% 45% 58% 60% 67% 71% 66% 68% 70% TOTAL DIFFICULT 43% 55% 50% 39% 36% 32% 27% 29% 29% 28% TOTAL NOT DIFFICULT 18% 14% 17% 22% 22% 29% 27% 26% 26% 24% VERY DIFFICULT 36% 26% 28% 37% 38% 38% 44% 41% 42% 46% SOMEWHAT DIFFICULT 22% 24% 25% 26% 19% 19% 13% 17% 15% 15% NOT TOO DIFFICULT 21% 31% 26% 13% 17% 12% 14% 12% 14% 13% NOT DIFFICULT AT ALL 1% 1% 2% 1% 3% 1% 2% 4% 3% 2% DON’T KNOW 1% 4% 3% 2% 1% * 1% 1% -- * REFUSED *Changed from 2017: How difficult is it to attract qualified candidates for your firm’s vacancies? Question 25 For what reasons have job candidates not taken a job or followed through with an interview? (RANDOMIZE: 1-6) (ACCEPT MULTIPLE RESPONSES) 3/15 2/16 3/17 3/18 52% 44% 51% 52% The skills required for the job didn’t match the candidate’s 27% 25% 26% 24% Compensation is not competitive 18% 14% 19% 19% Long commuting time or distance 16% 10% 16% 18% Work schedules not flexible enough or don’t fit the applicant’s desire 23% 16% 14% 17% The perceived lack of upward job mobility -- -- -- 8% Lack of child care options 17% 11% 9% 15% OTHER 6% 16% 12% 9% DON’T KNOW 1% 2% 2% 1% REFUSED *Some answer choices worded differently in previous surveys

Question 26 When looking to hire new employees, where is your need greatest? (ROTATE) 3/13 3/14 3/15 2/16 3/17 3/18 20% 22% 25% 30% 28% 33% Entry-level employees 19% 21% 23% 21% 25% 27% Employees with formal technical training 49% 47% 39% 38% 36% 30% Employees with on the job experience 6% 6% 6% 4% 4% 4% Employees with four-year college degrees -- 1% -- -- -- -- ALL OF THE ABOVE 4% 1% 4% 4% 3% 4% OTHER 1% -- 1% * 2% * DEPENDS 1% 1% 1% 3% 2% 1% DON’T KNOW 1% 1% * * -- * REFUSED *Changed from 2017: Employees with technical training, Employees with technical training and experience Question 27 What types of manufacturing jobs or positions are in most demand at your company? 3/15 2/16 3/17 3/18 29% 32% 38% 41% Machine operator 23% 25% 20% 24% Assembler 9% 9% 9% 8% Welder -- -- 7% 5% Front office or administrative help 10% 7% 6% 5% Engineer 4% 4% 2% 2% Supervisor -- -- 1% 1% Senior Leadership Position 22% 17% 14% 12% OTHER 2% 6% 3% 2% DON’T KNOW 1% 1% * * REFUSED Question 28 What are some of the things you are doing to navigate around the worker shortage challenges? Are you…? (RANDOMIZE AND ACCEPT MULTIPLE RESPONSES) 61% Maximizing productivity 49% Continuing to look for new workers through job postings, ads 32% Training interns to become employees 24% Working directly with area tech colleges 9% Other (SPECIFY: ______) (DO NOT READ) 4% DON’T KNOW (DO NOT READ) 1% REFUSED (DO NOT READ)

Question 29 What could local educational institutions do to attract more students into programs? (RANDOMIZE AND ACCEPT MULTIPLE RESPONSES) 3/17 3/18 -- 55% Enroll more students into manufacturing programs 32% 53% Develop intern programs with local manufacturers 17% 48% Provide in-house/company-specific training 25% 44% Develop better trained graduates 10% 42% Provide equipment-specific training 8% 7% Other (SPECIFY: ______) (DO NOT READ) 9% 6% DON’T KNOW (DO NOT READ) * 1% REFUSED (DO NOT READ) Question 30 A recent study projects that over the next five years, the number of unfilled jobs across Minnesota will increase from 60,000 to 280,000 and that hardest to fill jobs will be skilled technical positions. After hearing this, which one of the following views is closest to your own? (ROTATE) 39% TOTAL WORSE THAN EXPECTED 8% TOTAL BETTER THAN EXPECTED 52% ABOUT WHAT YOU EXPECTED 19% That the shortage of filled jobs is A LOT WORSE than you expected 20% Is A LITTLE WORSE than you expected 52% Is about what you expected 5% Is A LITTLE BETTER than you expected 3% That the shortage of filled jobs is A LOT BETTER than you expected 2% NOT SURE (DO NOT READ) -- REFUSED (DO NOT READ) Question 31 Thinking about this same issue…do you think this problem can be fixed, or not? (ASK IF YES: Would you say yes, this absolutely can be fixed, or more that it can probably be fixed if the right steps are taken?) 74% TOTAL YES 23% TOTAL NO 23% Yes, absolutely 50% Yes, probably 3% Maybe 18% No, probably not 6% Not really sure * REFUSED (DO NOT READ)

Question 32 As you may know, Congress recently passed and the President signed into law comprehensive federal tax reform called the Tax Cuts and Jobs Act. Do you support or oppose the federal tax reform recently passed? IF SUPPORT/OPPOSE ASK: And do you STRONGLY (support/oppose) or just SOMEWHAT (support/oppose) the federal tax reform law? 67% TOTAL SUPPORT 16% TOTAL OPPOSE 41% STRONGLY SUPPORT 26% SOMEWHAT SUPPORT 5% SOMEWHAT OPPOSE 11% STRONGLY OPPOSE 16% NOT SURE/DON’T KNOW (DO NOT READ) 1% REFUSED (DO NOT READ) Question 33 And, thinking some more about this new federal tax reform…based on the things that you have seen, read, or heard, do you think that this tax reform plan will (ROTATE FIRST TWO OPTIONS)… help your firm or hurt your firm…or do you think it won’t have any impact on your firm at all? 45% HELP 6% HURT 42% NO IMPACT 7% NOT SURE/DON’T KNOW (DO NOT READ) * REFUSED (DO NOT READ) Question 34 In what part of the world do you see greatest increase in prospective business? (READ AND RANDOMIZE: 1-6) 1/12 3/13 3/14 3/15 2/16 3/18 22% 19% 12% 13% 7% 21% CHINA 20% 22% 17% 19% 18% 10% CANADA 10% 9% 13% 8% 10% 8% EUROPE -- -- 7% 6% 5% 8% MEXICO 10% 13% 5% 4% 3% 4% SOUTH AMERICA 6% 4% 2% 3% 3% 6% INDIA -- -- 4% -- 7% -- UNITED STATES 1% -- 10% 8% 9% -- ASIA 1% 2% 1% 10% 4% 19% Some other place (SPECIFY: _______) 14% 19% 17% 21% 28% 10% NONE OF THE ABOVE 10% 10% 12% 9% 6% 13% DON’T KNOW/NOT SURE 2% 1% 1% 1% 1% * REFUSED

Question 35 On a different topic, does your company have a formal strategic plan for profitable growth? 3/15 2/16 3/17 3/18 39% 38% 54% 53% YES 59% 60% 45% 47% NO 1% 1% 1% -- DON’T KNOW/NOT SURE * * * * REFUSED *Changed from 2016: Does your firm have a formal strategic growth plan? Question 36 How does your company plan to grow? I’ll read you a few options below and please tell me which comes closest to your current strategy? (ROTATE) 27% We have a 1 to 3 year written plan and all staff know their roles and actions to achieve the plan. 18% We have a plan, but that needs to be further communicated with staff 20% Our company has some ideas, but has not yet worked through what our primary focus is, and is not. 28% The strategy is strictly the role of the CEO. 4% OTHER (SPECIFY: _____) 3% DON’T KNOW/NOT SURE (DO NOT READ) -- REFUSED (DO NOT READ) Now, I have just a few more questions for statistical purposes only... Question 37 How many people does your company employ in all its facilities in Minnesota? (READ LIST IN ORDER) 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 86% 89% 83% 86% 85% 80% 79% 80% 80% 80% UNDER 50 7% 7% 9% 9% 7% 11% 10% 9% 15% 15% 51-150 6% 4% 8% 4% 6% 8% 6% 3% 4% 5% OVER 150 86% 89% 83% 60% 61% 47% 55% 56% 58% 53% UNDER 10 -- -- -- 15% 13% 21% 14% 15% 14% 18% 11-25 -- -- -- 11% 11% 12% 9% 9% 8% 10% 26-50 7% 7% 9% 5% 5% 8% 5% 7% 10% 12% 51-100 -- -- -- 4% 2% 3% 5% 2% 5% 3% 101-150 2% 2% 2% 1% 3% 3% 2% 2% 1% 2% 151 TO 250 4% 2% 6% 3% 4% 5% 4% 2% 3% 3% MORE THAN 250 1% -- -- -- * 1% 1% 6% * -- DON’T KNOW/ NOT SURE * -- * 1% 1% * 5% 2% 1% * REFUSED

Question 38 What are your annual business revenues? Just stop me when I get to the category that includes your company’s total annual revenues. (READ LIST IN ORDER) 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 47% 56% 46% 50% 50% 38% 42% 47% 44% 45% UNDER $1 MILLION 49% 39% 48% 42% 40% 55% 44% 43% 43% 47% OVER $1 MILLION 31% 23% 25% 6% 6% 7% 5% 5% 6% 7% 6% 11% 5% 5% 7%

22% 7% 5% 8% 8%

22% 5% 3% 10% 9%

26% 12% 7% 10% 6%

23% 6% 5% 10% 14%

24% 23% 24% MORE THAN $1M TO $5M 9% 6% 7% MORE THAN $5M TO $10M 5% 6% 6% MORE THAN $10M TO $20M 5% 7% 9% MORE THAN $20M 9% 13% 8% DON’T KNOW/REFUSED

Question 39 Which one of the following best describes your company’s primary business? Is it... (READ LIST AND RANDOMIZE) 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 13% 16% 15% 13% 14% 17% 20% 17% 20% 15% METAL FABRICATION 16% 14% 16% 30% 13% 13% 14% 19% 14% 15% PROCESS MANUFACTURING 37% 29% 22% 17% 26% 25% 18% 26% 12% 14% PRECISION MANUFACTURING 12% 15% 13% 10% 12% 30% 14% 18% 11% 11% AN ORIGINAL EQUIPMENT MANUFACTURER, OEM 4% 5% 7% 6% 4% 5% 5% 4% 5% 7% PLASTICS 4% 3% 6% 5% 1% 5% 3% 4% 3% 3% ELECTRONICS COMPONENTS 3% 2% 3% 2% -- 2% 1% 2% 2% 1% INFORMATION TECHNOLOGY, IT -- -- -- -- -- -- 3% -- -- 17% OTHER MANUFACTURING -- 1% 3% 3% 7% 4% 17% 8% 31% 18% SOMETHING ELSE 1% -- * -- 1% -- * 1% -- -- DON’T KNOW * 1% * 1% 1% * 4% 1% * -- REFUSED Question 40 How many years has your company been in operation? 12/08 1/10 1/11 1/12 -- * -- * 1% 3% 5% 2% 1% 3% 8% 6% 5% 10% 13% 11% 12% 13% 13% 9% 11% 71% 60% 71% 69% -- -- * * * -- -- *

3/13 * 1% 4% 10% 14% 70% -- 1%

3/14 * 2% 1% 6% 10% 81% * --

3/15 1% 1% 4% 5% 12% 74% * 4%

2/16 3/17 3/18 * -- LESS THAN 1 YEAR 5% 3% 3% 1-3 YEARS 6% 7% 6% 4-6 YEARS 7% 9% 7% 7-10 YEARS 11% 8% 10% 11-15 YEARS 69% 73% 73% 16 YEARS OR MORE -- -- -- DON’T KNOW 1% -- * REFUSED

Question 41 And, in what year were you born? 12/08 1/10 1/11 5% 3% 3% 13% 15% 11% 37% 37% 35% 28% 29% 32% 14% 15% 17% 2% 2% 3%

1/12 4% 9% 30% 35% 22% 1%

3/13 3% 10% 30% 35% 20% 2%

3/14 1% 7% 29% 40% 22% 1%

3/15 3% 7% 26% 37% 19% 8%

2/16 3/17 3/18 5% 8% 6% 18 - 34 11% 10% 12% 35 - 44 23% 21% 22% 45 - 54 36% 36% 37% 55 - 64 18% 17% 20% 65 AND ABOVE 6% 8% 3% REFUSED

Question 42 GENDER 12/08 1/10 1/11 1/12 3/13 3/14 3/15 2/16 3/17 3/18 76% 83% 86% 84% 84% 86% 81% 80% 76% 76% MALE 24% 17% 14% 16% 16% 14% 19% 20% 24% 24% FEMALE

FOCUS GROUPS

Litchfield Custom Products of Litchfield, Inc.

March 12, 2018

There is a local research group that projects the number of unfilled jobs in Minnesota is going to explode from the current 60,000 to as many as 280,000. That could be devastating. Does that surprise you? Does it make you nervous? • I’m not completely surprised. It is definitely a scary thought. Think about the legacy of the companies around. • It is something that enters into our strategy, in terms of continuing with improving our lean culture and trying to minimize labor in the non-value added tasks. It’s something we’re all dealing with. It points to the need to stay focused on it and accelerate any plans looking forward. • I think you’re absolutely right. It’s primarily replacement of retiring labor, and that doesn’t even get to any growth jobs. • We’re having to struggle right now. I wouldn’t say it’s specifically skilled positions either. It’s across the board, and we’re trying to grow and it’s hard to hire. We have 10 open positions. Sponsor: Southwest Initiative Foundation

How many of those will be technical? • I think three out of the 10. So, 30 percent are technical positions, and the rest are general operator and inspector types of roles that you can train people into. • I was just wondering if those stats are just replacement of the jobs that exist today or how much the robotics, artificial intelligence shift has been factored into that. So, what do we do about it? I read something the other day that says it’s time to hit reset on vocational education in Minnesota. • It’s brought out more focus locally, regionally, nationwide. My generation came through vocational at its peak. After that, the push was to merge vocational into the four-year institutions and then everywhere you went, your children or your families were told you cannot survive without a four-year education. • It seems that there are more career-minded decisions being made. The biggest challenge is probably getting the staff in the schools to go with you on that. It’s baby steps right now. You are seeing high schools that are spending mega dollars to bring in technical classes and whatnot and they are going to see those filled up to the brim. Are we still facing school counselors, schoolteachers, school administrators and parents saying that, vocational education is a fall back, and that the real ticket to success in society is a four-year degree? Is that still a stumbling block? • That’s what I told my kids. Shame on you! • We were just at a meeting at St. Cloud Tech a couple of weeks ago. A teacher said we were doing a great job as a whole with schools and counselors, but his takeaway was the parents. It’s really a big step for the parents to take that path. Do you agree? • We’ve introduced a welding camp to kids ages 12 to 18. We’re trying again, with that middle school age, because once they get to be juniors and 32

seniors, it’s almost too late. We offer it for free. So, they are coming into our facility. They see what’s there, and it just maybe sparks an interest. They might not know anybody that welds, or does any of the other various career options that they have there. But that might be the light for them, if you will, to go back to mom and dad and say, or to the counselor and say, “I want this class in my schedule. How can we make it work?” We have a class right now for seniors to come on site and do that. It’s a welding class, there’s a kid working, it’s his second year, and he has students now that are signing up for the welding course at school. We seem to have these same conversations every year. Are you seeing enough progress? • So the parents have to be brought into the mix. Your kid is probably not going to be a doctor or a lawyer. So, they can move on to something else that’s real. I’ve seen kids moving more to a realistic point of view, but their parents still have the dream. Just like the hockey kids that, the scout hasn’t talked to them and they’re seniors, but their parents are still paying $25,000 for them to play in every hockey division. It’s not going to happen for them. So, focus needs to be on parents, and education, realizing that here’s probably where your kids are going to go, accept reality, help them be the best they can be, and let them make the best choices they can. • Manufacturing had a cloud over it for years, as a dirty, filthy environment, hard labor, and rotten working conditions. You don’t see that anymore. The fact is our jobs are more technical based, even though you still need that education base, but I think it has to go back to, like you say the parents, and the counselors who have to get to a level where they are identifying the aptitudes of the students. We’re not all built the same. Some of us may have genius qualities, and some of us may have far less of it. Helping direct them, into that pathway, it’s critical. • Maybe some of the other manufacturing sectors run into this too, like metal fabricators who cut and bend metal okay, your typical sheet metal people. That is not trained anywhere, anymore, because everybody relies on it being simplified by a machine. There is a certain amount of craftsmanship or personal hands-on that has to be there. You can find welding training. You can find mechanical training. You can find electrical, whatever, but not the old sheet metal, fabricator type thing. Who should solve this? • Grass roots always supersedes large organizations. 33

• I agree, especially with the comments coming from the parents and at home. It really is a matter of driving that confidence and encouraging people within their families to promote it versus trying to do some sort of advertising campaign. • I think it’s a combination of the two. I think we really need the grass roots thing happening, but also parents talking to their kids for sure. I think there needs to be messaging out there to help parents have that conversation, as well. Is it time to start planning for smaller workforces? • We are looking at robotics. We’re looking at a lot of different technologies because the people are just not there. • You can’t wait. • One big factor is that we’re having smaller families. We don’t have the sheer numbers. • Sheer numbers alone aren’t contributing. How’s business? All things being equal, I get the sense that it’s pretty good. • We’re seeing orders from our customers and optimism that they have additional programs, and the struggles with finding labor, that would factor into that. Even finding raw materials in certain cases is a challenge, and the price of some of that is rising just due to the strength of the economy right now. • We work with some global customers, and of course we’re only supplying in the U.S. We’ve been bringing more production within our border, and I think that happened some time ago, but I think one thing that would accelerate that is the change in the tax law, and the repatriation of the overseas earnings, at a lesser rate. Is the business climate improving? Are things better at the federal level? • The mold has been broken. Good, bad, or however you make it, we cannot deny progress has occurred by deregulation, by calling out the bureaucratic narratives that have been out there. It’s still a fight, but results 34

are right in front of us every day. Is it good? Is it bad? Probably not perfect, but it’s definitely more friendly than it has been in the last 10 years, 20 years. • I would just say our customers, you can sense confidence in them. You are seeing more inquiries about where we are going to do an expansion, where we’re going to look for purchasing additional equipment, whatever it may be. Those conversations are happening more and more. Five years ago, I would say absolutely the conversation tone is much different. • We’re definitely seeing our manufacturing base investing in technology and in automation, and maybe a little bit of a challenge for banks is they’ve got more cash to be able to do that. • I talk to a lot of companies. I think there are two things going on. One, there’s optimism obviously, with regulation, differences in taxation, but also what I hear is that the sky didn’t fall. So, we went through the recession, weathered that storm, went through Obamacare. Over and over and over, people kept saying the sky is going to fall, the sky is going to fall. • Nowadays it’s kind of pent up. Now they’re saying finally we get some relief on taxes and regulations. The sky hasn’t fallen. It’s not going to fall. I’m going to start moving in this direction. If I’m going to beat my competitors, I’m going to stay in the market place, even though the market’s tight. When we first did this project 10 years ago, the market had just fallen apart, but manufacturers dug in and looked for opportunities. It was impressive. What are the opportunities or challenges of prosperity? • You can never lose focus of your core value. If you do, you will go backwards. To your point of how do you sustain it or how do you grow it? You have to probably work even harder than you did when things were down. To stay in that focus don’t get complacent. Don’t get fat and sassy. That’s a culture. If you can achieve that culture within any company, you will be successful in the end. So, I think that’s what we do internally. Not that it’s perfect. But we stay the course. Focus on that. Always looking for other opportunities. But the fact of the matter is, people still buy from people. If you can create that relationship, your company will be successful. • One noteworthy thing that I’ve seen in the last couple of years is organizations wanting to capitalize on the inability to find personnel. 35

Creating opportunities for out-sourcing so maybe I don’t need to hire full-time permanent employees. Maybe I can take this machine that not everybody needs and I can go out and I can do all of this type of work for this industry. That’s one area of maybe thinking around a crisis, because I think the crisis is the shortage of personnel, in a unique way. • You always have to prepare in the back of your mind, in any business. You have to otherwise you’re screwed, so you have the safety of a plan. Whether it’s in the back of your mind or on paper. • I think for those who lived through an experience like that, you are a lot smarter going forward, and you obviously got to share that information. There was a lot that failed out there. I have no idea what they’re doing now for themselves. Where does automation, robotics, fit into this? • We recently researched a big automation project, and it’s hard to find custom automation houses that aren’t backlogged six months. The time frame to get something done is growing. That’s a great career field to get into. How does this affect your three-year or five-year plans? • We have both three and five-year plans that we’re working on now. You keep that in the back of your mind a little bit, but generally you’re focused on growth and for us, a big part of growth was efficiency and just growing cost from our process itself. That goes hand in hand with growth, and also protects us if things were to drop off, knowing that we’ll be getting those excess costs from those processes. • We’re focused on creating that culture of empowerment, from the front line personnel all the way through management. • It does help morale, if people come to work and know that they have an opportunity to fix something that they struggle with, that they’re frustrated with. Knowing that they could speak up and bring ideas to the table, and if we follow through on those, I think people are more encouraged to participate. Anyone else using people-based lean strategies as a way to develop his or her workforce?

• It’s learning to see the future workforce through a different lens, and taking your own biases off the table, and putting on some new ones. It’s an education process. It’s all about, how do you take your current workforce and add a few along the way? But as Tom said, it’s at least for the ones you currently have, it’s what are you doing to continuously improve your company through your current workforce. We used to say lean is all about process, today lean is all about people. • I don’t know what you exactly can do. We try to make sure that everybody is informed, and can plan for time off accordingly, but people are kind of good at doing what they’re going to do. You know, it’s Minnesota and after six months of winter, 68 degrees, you can count on absenteeism. • We’ve adopted some cultural thinking amongst those of us that are the older generation. To open up communication lines is probably the biggest challenge that was brought forward to us a few years back, and again it is not a perfect science, but we do get these people involved and if they don’t ... Invested. Is listening as big a part as talking in those communication lines? • Bigger than talking. Bigger than taking the patience, and like you say, teaching them the skill and here’s why you have to do it, and it’s okay to not enjoy your job every day, but look at the bigger picture. Absenteeism comes; there are consequences, obviously. If there’s too many consequences, they are no longer employed, and you move on to the next one. Maybe two out of 10, one out of 10, you keep. Are temporary employees still popular? • Not so much anymore. We found more success by bringing people right into the facility. Whether it’s for job fair type activities or whatnot. Not that those agencies aren’t a good thing to have. It’s another tool in the tool box, but we’ve had more success from in-house referral and we show them the way. • With the temporary, the temp agencies, you’re not necessarily getting the strongest candidates anymore. A lot of those people aren’t good, and so the retention that we see tends to be other people who are coming in actively on their own versus through a temp agency. • We identified five initiatives about a year and a half ago. The focus 37

of that team has been much more on the management, where we need to focus, if you want people to feel good about work. That whole “how are we doing?” with them is probably the biggest issue. How about capital expenditures? Growing? • No. Right now we have five, six machines in our factory. We can run one of them. Not because we don’t have business, but because we don’t have the people. Automation for us is having a real opportunity, with the size and frequency of the parts that we run. • We just have the front-end problem. They come in, they pass a drug test, pretty soon they’re not showing up to work, and we’re off running. We’ve hired eight employees in the last two weeks. We have one left. The others just stop showing up. That’s what we’ve seen now for the last year and a half. Where do they go? • Back to sitting at home I imagine. • Back to bed. Yeah. • It’s the people that we see that have high school diplomas with no further education, if they’re doing a manufacturing job, they stop showing up, for any number of reasons. Those that have a two-year degree, or a four-year degree, they keep coming back to work. For the same job. We also see a big difference in those that have children. They tend to show up to work. Children they claim. Absentee fathers aren’t real concerned about that. Is lack of available child care a factor? • We think it’s the fastest growing economic development issue in southeast Minnesota. We hear it from a number of companies that child care has significantly impacted their ability to attract and retain labor. We’re hearing it from chambers and economic development folks. We’re hearing it from people that want to either stay in the region, or high school grads thinking about moving back. I’m extremely interested in the manufacturers in here. Have you had issues with employee retention or attraction related to child care? • We just had an employee who went from day shift, Monday through Thursday, to working a weekend shift because he and his wife just had a baby. She works a day job, and child care is an issue. So, he’s working the 38

weekend shifts so that she can stay home on weekends with the baby, and he can stay home during the week. • We had to go to employees that were missing a lot of work because of sick children. It wasn’t so much an issue with their primary daycare, but it was a sick child and they couldn’t bring them to regular daycare. We’ve seen a lot of that. We asked our employees that were having these issues, we would pull six or seven of them in, if they could try and rotate, at least with their spouse if their spouse was employed. We know most of their families, they come up here, and they’ve started that process. We’ve just had to be more flexible, along with their spouses’ employer being more flexible in rotating in and out when they’ve got sick children. It’s helped the attendance, but child care is an issue. • I think regulation has contributed to that to some degree. There’s less and less private care givers that are going to step into that market. We can blame our government. We can blame whatever. I guess it doesn’t really matter, but it’s a fact. Like you said with the sick child care, that’s a critical one. Nobody wants to take them in. • There are pockets of daycare issues. It’s not as big of a deal as some other areas. I would say people are finding daycare providers over time, but it’s not always immediate. Whereas in other companies and throughout the Swift area, there are areas in which people are driving 30, 40 miles one way with each kid. So, they are spending an hour a day, two hours a day, on the road dropping off kids. How much of an issue is transportation—getting your goods to market for you these days? • We’re seeing price increases because of the recent trucking law changes. We have a truck every week that goes back and forth to Kansas, or twice a week sometimes, and the cost of the truck has gone up to about $600. That’s a 50 percent increase. • Plus a shortage of drivers and timely pick up. • Definitely it’s going to get worse, 2018 is going to get worse. Transportation right now, there is a shortage of drivers, naturally. Capacity is really heavy right now because of the manufacturing growth. Truckers are getting more independent right now and deciding who they are going to haul for, even what directions they are going to take their trucks to.

STUDENTS

FOCUS GROUPS

Bemidji Northwest Technical College

March 13, 2018

All of you are headed here to get a technical degree at some point. Why? Is it because of the prospects for high paying jobs, or because it is what you want to do? • I’ve always been a hands-on guy, so I can’t see myself working inside an office or anything, so I’ve always been kind of technical, thinking about stuff, and planning it out in my head. Mechanical stuff. I’ve always been tinkering with stuff. • I like working on cars and building stuff. I have for my whole life. I never really wanted to be part of an office; I like to be outside if I can be. I just kind of enjoy building things. • I also just like building stuff and being outside and working with my hands. • I have two friends in engineering, and I like the programs at the high school and that is just kind of what I want to go into.

Sponsors: Northwest Minnesota Foundation, The Idea Circle

Do you participate in the robotics program at the high school? Does it make you more enthusiastic about pursuing a technical degree? • Yeah, yeah. • Yeah, yeah. You have to do more than nod at the tape recorder! • Well, it’s an engineering class. So, it is a weighted class, and you get college credit and, it takes you to engineering, it kind of brings you into it. Let’s go back to middle school. Were teachers or counselors and people like that encouraging you to do the things you’re doing? • Mostly they’d talk about colleges, engineering degrees and stuff like that. • This past weekend we went to UTI and they had a statistic that if you take their two-year or one-year program there, you will be out and working and making money more than the average four-year degree. Who organized the tour? • It was a tour for just my family. Is there a good shop at the local high school? • There is mechanical and there is the auto shop, and then there’s the welding shop. There is also the wood shop, and there is like the home electronics shop where you can do stuff like make lights, figure out stuff like basic electronics, things like that. So, there is a pretty good feel for it all. Are those teachers good resources for you? • Well, if you have an interest and say, “Hey I’m kinda looking at this,” they can then say, “Well, I think you’d be a good fit here.” Kind of stuff like that. They give you pointers, and they would be a good reference for you. How many teachers are there? • Five or six.

• At our school we have a class level like we had at the first robotics level, and the class works on a totally different platform of robotics, and there are three sections of 30 kids this year. • And then our team, where we did the first robotics competition, had 32 kids on it. • North Dakota draws a lot of students from the North West, they must have a very good program. The Brainerd Group that I did last year had maybe 16 people in it, 13 of them were going to UND, and they were very, very excited about that. Are you thinking you’ll stay here after school, or will you follow the money? • I think I’ll be traveling around. But if I wasn’t working around here, I would rather be traveling around. • It depends. I think I like it here, and I’m sure I’ll stay, as long as I am making decent money. Where do you get career advice? Counselors? Teachers? Parents? • There aren’t enough counselors to get any one-on-one time. • I don’t really talk to them. • You have a question about your schedule and that’s when you see them. • Yeah, right, that is when I see them. • My mom, I think, wants me to go to Northern but my dad probably doesn’t care whether I go to a four-year school or a two-year school. How about friends, who you know are being pushed to go to a fouryear school? Who probably would do a lot better enrolling here and getting a good job, and a good well-paying career over time. Do you see that in school over time? • Sometimes. • Not really, but I think they would be better off at a tech school.

• Not really, but I mean, there are a lot of people you see who are going to a four-year college that you would ... it’s almost like they are expected to from their parents, so they just do it anyways. I think a lot of people would benefit from a two-year college. • Well, I will get the training I need and go out and work. I don’t know, I’d like to be my own boss. You’d like to start your own company some day? Anyone else in that boat, thinking about doing your own thing? • Yeah, I’m in that boat. I’m going to be an electrician and then come back and also get a business degree possibly, so that I can maybe open my own business. I have family friends that are in business, so I’ve kind of grown up around it. I followed it and got influenced by it. • For the summer I’m planning on working at ______. It’s an OSB... but on my off time, because they only give you 1,000 hours, but once I’m done, I have a couple job offers to work for a couple of electricians, so. • I work at an auto body shop, so that’s what I’m going to do this summer, and then fall semester starts late August so then, at Brainerd I think it’s a 10-month program so, I’ll do that. • I’m a carpenter, I’m going to work with a local contractor. • I’ll find a job somewhere. How important are internships these days? • Very important because I think it requires what you need to study up on at school or tells you what you need to go into to learn from that. Say you have an internship that welds, they kind of help you out with the computing side of that, and tell you what you need to go into a little bit more. Have you ever heard of “soft skills?” I call them “alarm clock issues,” you know, people that don’t show up, they can’t show up on time, or they say, “Oh, it’s really nice out there today, I quit.” What’s your sense of that? Do you see that among your friends? • I see it a lot. I’ve worked with a few people that have just, they don’t care necessarily whether they have a job or not because they’ve been evading one their whole life or they just don’t have a sense of, I don’t know, 43

but they won’t acknowledge that it’s a job that they have to do, you know. • If an employee doesn’t want to show up, or doesn’t show an interest in being a good employee or in the job, then they are not really a usable asset. • I feel the same way, yeah. If they don’t really want to show interest or feel like they want to show up on time, I would have fired them. • I feel like there is that problem in this generation than earlier generations. It is probably because in this day and age it seems there is a sense that you can survive even if you don’t have a job, so you don’t have as much of a desire to get one. If they don’t start getting better there is no use to them being there. Knowing what you know, what things would you advise other students to study, if they want to get a job in tech industries? • I take a lot of industrial-type classes. I think other than just that classroom setting, you’ve got to be a little more hands-on, like the industrialtype area I would recommend for sure, because you just got to be able to... instead of seeing things on paper you have got to be able to be pretty handson, I think. • It’s hard. But I enjoy math. How about reading and writing? • It’s probably one of my least favorites. But I know I’ll need it somewhere. What do you like about the tech classes? • You can do more stuff and actually understand everything. • Well you do like online learning, like learning about different hydraulic systems and how everything works and then you actually go into the lab and put it together. • Just one-on-one. • I mean, if you work on something with someone else, they may figure out part of it and you figure out the other part of it, and you really don’t get the sense of how the whole thing works. 44

• You have to figure it out, the instructor usually won’t help you. They make you figure it out yourself. They will give you pointers if you just can’t do it. But he won’t tell you, “You can change this and you get this result.” It isn’t like he just won’t talk to you, he’ll give you pointers to get through it, but he just isn’t going to give you the answer. • They try to teach you critical thinking. • And problem-solving. One of the college presidents told us that he estimates about half of high school seniors have no idea what they are going to do after they graduate, for school or for working. Does that surprise you? • I mean people won’t go out and get jobs as soon as they used to. • I don’t think people used to just go and get jobs earlier, and they will start figuring out what they want to do sooner or later. Do you get anything out of job fairs? • I have heard about them, but I have never been to one. • Because most of the people interested in those kinds of stuff usually don’t go to career fairs. • But usually it’s after school and if you’re already going to school or working, you miss it. And if you have a job after school you miss that training after school.

FOCUS GROUPS

Owatonna Southern Minnesota Initiative Foundation

March 15, 2018

Most manufacturers are experiencing some levels of prosperity in this economy. What are the strategic opportunities in prosperity? • We’re taking the opportunity to strengthen ourselves through ISO certification. The general answer is to strengthen for growth because even though it might be prosperous now, it won’t be always. We got certified in ‘17 and that process doesn’t stop. It forced us to think more about strategic planning. • Knock on wood, we still have more work than we have people to do it. We’re looking at how to be more involved in the pipeline program, apprenticeship programs, and ensuring the development of the workforce. That’s our biggest constraint. • Last year was huge for us. We made almost a couple million dollars in capital investments, both in equipment and systems, that have put us back on the leading edge, so we better serve our customers. What keeps me up is I’m our management team and our succession plan. We need to be training our replacements. Sponsor: Southern Minnesota Initiative Foundation

Does the combination of the worker shortage and the great economy make you reconsider your less profitable customers? • That’s hard because we’re a job shop. We like to say yes to everything. Our owner has said, don’t fall in love with any parts or customers, because you start making irrational decisions. We do have one customer that we talked to and that wasn’t easy. They don’t like to hear it, but the feedback we got was that they liked that we were frank and open and honest. We told them, we’re not making money and here’s why. If we don’t fix it, we can’t continue. We’re not a charitable organization. The problem is we love that customer and they love us. How about planning? Did long-term planning make a comeback? • Yes. We made some huge investments in the last couple of years. Now, in short-term, we’ve had a little headwind but the last two years, we’ve kind of reinvested in our plant here. There’s a trend (in our industry) for larger products. So, all of our equipment needed to be super-sized. We’ve invested probably close to $100 million to do it. That’s a big bet on the future. • Huge. You know, part of what gives me gray hairs is I got to have the people for that. The last thing our parent companies want to hear is that we need $100 million, but we can’t find people. We have close to 80 people, probably more that are technical to maintain some of that equipment. In the old days, you have somebody with a tool belt who could maybe maintain it, and it’s completely different now. This is very sophisticated, automated equipment, so we’re working hard to bring people in who have some of those skills that can help us in the future. Of those 80 people, about 50 percent of them will be gone in the next seven or eight years. That’s a huge issue for us. We might as well go there. There is an organization that projects the number of unfilled jobs in Minnesota to grow from 60,000 to as many as 280,000, not just in manufacturing but across all sectors. The Boomers are retiring and there is insufficient population in the young generations to make up the difference. Is that a heartburn issue for you? • Every day. You can find people but it’s trying to find good people. We use temp agencies to help see if they have what it takes to be part of our 47

company. We also tap into the drug court program in Waseca, in Steele County. I probably got three people out of 35 who are full time. They have so many people that have run afoul of the law that they don’t have enough room, and they give these people an opportunity to come clean. In general, are you less profitable today than you could be if you had access to more people? • Yes. • I have the luxury of being fully staffed for the first time, in probably two years. How did that happen? • New union contracts. We basically threw a dollar on the starting wage and a dollar on the base wage, but that doesn’t tell the entire story. We have also aggressively recruited people from the Karen population out of the Minneapolis and St. Paul area. The Karen are Southeast Asians, Burmese. Political refugees. • We have a really solid base, and we’re seeing those people moving to Albert Lea. People are buying houses. If you go to Clark’s Grove, Minnesota, that’s where they are targeted to live, so it’s really interesting and they are a very good group of people. Some of it is a learning curve on our part, where it might be one of the first jobs that they have ever had in their life, so there was a lot of training and education involved in that. Another thing is that they work three to four months and then take some time off, or swap time with someone else. Their husband will work for three to four months, then their wife will come in, start work, and the husband will take off. There is a lot of learning on our part, and on their part, but I really feel that this is probably one of the best investments that we’ve done. We’ve got 471 employees and now we’ve been able to take on some other projects from our customers for their international markets. Now, we can staff those positions so they can sell their products overseas. How did you find that pipeline into the Karen community? • I think Marshall and Worthington started to recruit them. The Karen like to be with their family, so they were going back to the cities every weekend. Albert Lea is a little closer, so they kind of migrated to us. It’s been fantastic. The people are great.

Anyone else leaving business on the table because you can’t find people? • We’re always looking for people. Now, we’ve got somewhere between 105 and 110 people and we’ve got 12 open positions at all times, from somebody just starting out on the paint line to somebody running a CNC. We’ve had to train people to run a CNC because you can’t find anybody. You know, it’s been that way since we put in our first machine. The Baby Boomers are retiring and the Mayo Clinic, it’s sucking up everybody that it can, all the way from Northern Iowa down to Houston. Plus, our population keeps going down. The only thing that we can do is automate and try to train people ourselves. • We have a lot of systems within our organization that depend on the tribal knowledge of a lot of these Baby Boomers. Last week, we had over 100 years of experience retire. That’s why we’ve really focused on continuous improvement, dissecting and evaluating and documenting processes from start to finish, so that when these people retire, someone else can walk right into those positions and they know what to do. Lean has evolved from just being process-oriented to being peopleoriented. Is that right? • It’s really transformed a lot of our operations. We’ve broken up a production line into individual components. It’s really documented, both with words and pictures: “This is what you do. This is how you clean it. This is what it should look like.” • A lot of that is just through lean and continuous improvement, getting people involved, breaking it down and realizing these are all the components that need to happen for us to run efficiently and costeffectively. Somebody has suggested that it’s time to hit reset on vocational technical education and find ways it can better serve the end users, the manufacturers. Is that your sense? • I can speak for both of us. Our connection is with (NAME OF SCHOOL) ... Anybody here been to their lab lately? It’s nice. The problem is, they can’t get people to go into it. Why? My frustration is literally at the high school level. What are they teaching the kids? What’s the message? Four years of school. They’re only preparing those kids for that. I’d love nothing more than to have our booth at parent-teacher conferences so I can 49

explain to them how much their kid can make and the fact that they won’t have to pay a dime to get him up to speed. How do they respond? • They ignored us. • Fewer than one in five jobs in the American economy require a fouryear degree. • We need two chiefs and twenty Indians. • I think the parents are the problem, too. This generation of parents, and I include myself, we just think everyone needs to be a doctor, a lawyer. • Right. Where 50 years ago you tell your kid, “Hey, if you can get a job at that plant, stay there and you’re good for life.” So, it’s a different dynamic. • Anybody who hasn’t worked in manufacturing is clueless about it. Our plant is spotless. If I dropped a sandwich on the floor, I’d pick it up. It’s that clean. Every person that walks into the place, notices that everyone is on a computer. The technology is everywhere. Kids could understand that the video games they play could carry over into that. We just need to get them exposed to it, but we can’t. • Someone mentioned automation, which sounds great, but we need to consider who is going to work on that equipment. We need to have kids come along that have that aptitude that can work on this stuff. It’s just unbelievable that we have a hard time finding maintenance guys. What we’ve been doing lately is raising our own pups. Finding somebody that’s got some mechanical aptitude. “Hey, we’ll send you anywhere you need to go. We’ll foot the bill for you.” We’ve had good luck with that. But are those people that we’ve taken on the gang going to be that E-Tech or that electrician someday? The jury’s still out. Somebody told us you have to wait eight months just to find someone to program your robots. • We have bright people and institutions in this state but I don’t think we’re always focused in the right area. So, I like your idea of maybe pushing the reset button or encouraging some of that partnering with business and industry to make this more prosperous. 50

• I’ll get on my soap box. We send a lot of bright kids to Mankato State. I am critical because has Mankato State visited anybody’s company? Have you ever been contacted by a professor that says, “Hey, I have got a couple of kids who need a project. We have this computer system here that can help you,” or whatever it is. Iowa State does that a lot with material science. They’ll come and for no cost they’ll do virtual factories and help you with flow and stuff. There are states doing that and they are more proactive. Minnesota, I think, we’re just fat and happy but are going to wake up and find out we’ve been left behind. When you go to Mankato, what are you told? • They want to do it. They say all the right things. I graduated from Mankato. I can tell you that the curriculum looks very similar to what it did 30 years ago. One of the things I hear is there are union issues. I think we have some union contracts that keep us with one foot in the old. • It is all about good money. It took a long time but we sponsored in Mankato State an engineering program, $20,000 a year. We are doing it up in Duluth in their engineering program and also at Iowa State, but as long as you fork out the money, they will let you come in and help them write a curriculum to teach design. • Correct me if I am wrong but most of us in this room are taxpayers. The fact of the matter is the schools work for us. We shouldn’t have to go pay them to do what needs to be done. If I ran my company the way schools run their businesses and states run their businesses, I’d be out of business. Customer focus is one of the main things. We have got to take care of our people. Why aren’t they out talking to us? And that goes back to whatever you want to call it. It is not even legacy. I refer to it as dinosaurs. If they don’t change, they are going to be extinct. • They won’t because they have our tax money. • And they have all of that baggage that they are carrying. If you throw the money out there ... We have thrown enough money at it. • Wisconsin has done a better job too, I think, of identifying institutions that will say, “Hey, you are going to focus on this. You are going to focus on that.” It seems like we tried to do all things to all people at Winona, at St. Cloud and at Mankato. There is a lot of duplication. 51

• I very distinctly remember back when the Ventura administration said this is no longer a priority for us, and we will cut that funding. It is just one small example but I think it resonates down. What does our government do to encourage this development and growth? • They get in the way. That is all I am going to say. • They are going to do one thing. They are going to pay off the student debt. Looking at a system that is broke you have one simple equation. I am an MSU grad, back when it was cheap. You graduated, you could pay off your student loan or you had already paid it off because you were working. You look at the debt that has been mounted on graduates of college and they can’t pay their bills because 80 percent of them can’t get out of school and get a job for more than $36,000 or $34,000 a year or whatever the number is now. And you pay $40,000 a year? • If anybody in this room thinks that our education system is correct at the higher end level, you are drunk. You haven’t looked at ROI in the last decade or two. My kids both went to school at $27,000 a year and I thought that was asinine but what did you have to do to get out of the school? You pulled out a pen. You signed a federal document that basically attached your ass to their performance and their ability to pay. I wouldn’t do that if I could right now. There is no way in hell. • I know how the system works. I’ve listened to too many people over at MSU that are no longer associated. What did the profs get for wages? They don’t work. They have grad students teaching their class. Give me a break. Not to get out the soap box but our problem is that you take a person that is retiring right now, check out how many hours they work on the average a week if they are a salary person. You find me another salary person that graduated from college in the last year on the average that will do the same thing? It is a miracle. You don’t have the same mentality. So, you’ve got this dichotomy that shifts in every direction. A whole bunch of people retiring, worked their assess off, they never complained about overtime as long as they kept their job. All that sort of stuff. Now you have got this side. Let’s move to another issue. When you can attract a new generation of employees, some say they are lacking in the soft skills. • They don’t exist. Say thank you. Say please. Open a door. You’ll find them everywhere, even in our own houses, don’t get me wrong. 52

• Especially at an entry level. Essential skills. Interpersonal skills. Work ethic. • We’ve been only marginally successful at being able to assess that or maybe we dropped the bar down a little bit for too many people. • For those that do drug tests, the amount of people that fail a drug test is disturbing and it’s been suggested to me that we no longer do them. We no longer test for marijuana. Quit testing for marijuana because it stays in your system for a long time, so why are you testing for it. It’s a slippery slope I think, but you do what you have to do. • I agree. Right now, we don’t test for marijuana. • Right now, we probably run a 35 to 45 percent failure on drug tests.

STUDENTS

FOCUS GROUPS

Minneapolis Dunwoody College of Technology

March 20, 2018

Why Dunwoody? • I googled careers in robotics and Dunwoody was the first thing that came up. • I actually used to do battle bots, so I came here every month to compete when I was in high school. • I like working with my hands and this is a place that allowed me to do that. • My grandpa told me about it. His brother went here back in the ‘50s. He kept talking about it and eventually I just got excited about it—and he offered to pay for most of it. • I’ve always been mechanically inclined. I was looking for a way out of dead-end grocery industry jobs. Dunwoody seemed like a good route.

Sponsor: Dunwoody College of Technology

• I kind of stumbled onto Dunwoody. I was looking for a career change. I’m on about my 11th career. Used to be a white-collar guy, real estate broker. I’ve always liked working with my hands, I’ve done a little bit of welding in the past, and I wanted to find something that would be for my brain, as well as my hands, a good combination. I looked into machining and found out that Dunwoody was where I wanted to be. Machine tools technology was the program that suited me best. • When I got out of the army I had no idea what I wanted to study, so I studied gunsmithing on the GI Bill, and that’s where I got my first taste of machining. I decided I wanted to study that further, primarily for job security. My theory was that, if I studied machining I could find a job in any big city in the U.S., and so I Googled machine tool technology and Dunwoody came up, and they were advertising 100 percent placement. I talked to some of the instructors here, found out about the demand for manufacturers in the Twin Cities. I was living in New Mexico at the time, so I picked up roots, moved here, and got my first job a month into the program. That didn’t fit my schedule, so I quit that one and got my next job three months later and a scholarship from that employer. I’m going to be working for them until I retire, as soon as I graduate. • I had previously started an engineering program at one of the major state universities, and I ended up getting out of that. I was looking to come back to school after working in shipping for a long time. I did not want to deal with the byzantine structure of most of the universities. I took a tour of Dunwoody, and I loved it. • The placement rates, everything. • I graduated high school and went right to Mankato. I just kind of spun my wheels, got my generals done but didn’t really know what I wanted to do. So, I moved up to the Cities and said I’d take some time to figure it out. I heard a radio ad for Dunwoody, so I checked it out. It was everything I probably should have done right out of high school. • I accidentally stumbled on this place. I received a scholarship, determined my liking for welding and three years later, I’m still here. Working on another degree, so it must mean it’s a good place. • I had a buddy that was going here, and he was telling me all about the cool stuff that they do and their project based things and I thought, that sounds pretty interesting to me. So, I checked it out, looked at some of the different courses and found one that I liked and went from there. 55

Dunwoody isn’t cheap. Was price a factor in your decision? • I’m sponsored, which means basically I’ve never had to pay the bill myself, so I’m out of this conversation. • I think it goes back to your job rate too, like the job placement rate. When you look at 20 something plus a year, for a school, but you know you’re probably going to learn everything you need to know and walk into a job and they’re in here fighting for you, like halfway through your program, it makes that number seem a lot smaller. And just knowing about your repayment options and everything, it’s going to be a lot easier to do when you’re placed into a job or should be able to get that kind of job. • With the job I just got offered, I’ll be able to pay off my student loans within three years. So, it’s paying for itself now. We keep hearing about the worker shortage in manufacturing, and especially the skills gap. Did that motivate you to come to Dunwoody? • That is a huge relative factor because pretty much every department in this school, or I guess the manufacturing side of it, will have an influx of open jobs in the next five, ten years. Most companies may already be feeling it because of the Baby Boomers. • The more specific thing was our program, we heard a lot about worker shortage but then how many of those open jobs could be cleared by automation? My brother is in lasers, industrial lasers, so he was kind of the impetus to push for this, and what he said specifically was automation. Machine vision. Anything to do with what could possibly replace quality control tech. There’s a person looking at it. If you can get a machine to do that, you don’t have to pay health care for a machine. • Robotics and vision. Robotics and machine vision. Machine vision is like a camera but not just a camera though, it’s the software analyzing it, like every part. Are you looking for a color, a shape, missing pieces or just analyzing how it came out? There are a lot of different things you can do with vision. • The way COMPANY got me was they do scholarships. They gave me a $2,000 scholarship out of the blue. They were also here for Focus Friday and then, as it also happened, they were looking for machinists. They already made an investment in me, and I got to meet them upfront, talk to 56

them and after talking to them I threw my hat into the ring. • Duncan, how many interviews have you been on in the last two weeks? • Two weeks, I’ve had seven. I’ve had 12 in the past month. It’s a sellers’ market for you in a very real way. Advise the manufacturers who might be reading this: What’s the best way to connect with a student who has manufacturing skills? • Apprenticeships or an apprenticeship style job. When I first got here, one of the first things I started doing was look for full time jobs, and I struggled a little bit because many of the places wanted one or two years of experience. Wanting you to be able to run this and that and the other compared to having a job where they’re willing to pay you a small amount but give you experience and mold you into the employee they want and give you that experience that you can take with you. Are these union-affiliated apprenticeships or more like really highquality internships? • I suppose the term intern or apprenticeship depends on what employer you’re working for and the legal details of each, but essentially taking someone you know is not yet qualified and making them qualified through experience is what I’d define an internship as or an apprenticeship. By and large what do your parents think of a two-year tech education? • If I would have listened to my parents or my teachers or advisors in high school, I would have made a different decision. I was never once told about Dunwoody. Is it because they didn’t know? • I’m assuming it’s because they didn’t know. My parents never talked to me about it, but after I was here for a year, then my mum goes, well your grandpa went to Dunwoody. • I think it is a matter of public image where what’s preached is you have to pursue a long and lengthy and arduous education to get a job. But it’s not true. If you have a solid work ethic, in the Twin Cities, you can find a job or in manufacturing in general, you can find a job. It’s just not preached.

• When I got out of high school a bazillion years ago, I never knew that trade schools were a thing. We were led to believe that was a route for dummies. I went to a four-year college. Now that I’ve been at Dunwoody, I see the value of tech schools and getting a two-year degree. Some of the degrees are four years but you can power through two years and get a fantastic career. Manufacturing, it’s blowing up and you mentioned earlier that a lot of these Baby Boomers are retiring soon and these companies are going to be feeling a big hit unless they start hiring hardcore. They can’t hire fast enough. • I’d say 70 percent of the employees at my machine shop are over 60. You can see why the executives are nervous about all of this. What’s your advice to people who are deciding where to go to school? • Talk more about it in high school. Technical college was always lightly touched on but you hear a lot about universities. • I say talk more about it because I didn’t know anything about welding until I actually, we got here and stumbled across the program. • I was going to say, put your hands into work. Go work with your hands and see if you like it or not. That’s the first thing you should do. From a young age. Start changing your parents’ tires in seventh grade. Do whatever. Help out with your hands and you’ll realize, maybe I don’t need to be in a bucket all day. Did any of your parents push back at your decision to come here? • My mom was very hesitant on me getting a two-year associate’s degree because she thought you couldn’t get a job unless you had a four-year degree. So, she did push back a good amount, but she let me go anyways. What’s the hardest thing about Dunwoody? • Attendance. Most of the teachers here treat you like you’re an employee. You show up on time, you show up and do your work, otherwise you’re not getting paid for it. • It’s difficult in a good way, I think, because a lot of people aren’t really used to that. Making sure you are here on time or you’re going to get busted for it.

• There’s no one breathing down your neck and it goes into how you learn. • I walked in and the first day they’re just like, wire it up, and I’m like, you want me to do what? I had no idea but it’s that intuitive nature. They give you the materials and say, go figure out how to do this. We’ll teach you some of the basics but a lot of this is kind of intuitive so you have to learn how to do it because when you get put in front of a problem at work, there’s not someone there holding your hand all the time. You’ve got to be able to put the first effort towards it and then start with the questions if you don’t get it. A college president told us a few years ago, that 40 percent of new students need remedial work in math and reading. Whose fault is that? • I’ve got a 30-year gap between the last time I attended any kind of school, and I panicked about the math classes but I managed to pull off a B+ and then a B- in machine math, that’s trig, algebra and geometry, and I was a D student my whole life in mathematics. • I think that if you realize the coursework ties into your career field, you take it more seriously. Algebra and trigonometry are used pretty frequently in machining and if not, it’s at least fallen back to as a reference if you can’t get an automated answer from your thread generator that’s on your computer. • And, like you said, I am terrified of calculus because I just don’t have the motivation because it’s too abstract for me. I don’t know how it applies to my job, and I thank my lucky stars I don’t have to study it but I’m very glad that I understand trigonometry because I use it frequently and it applies to what I do. I see it’s practicality and therefore I’m willing to invest my time and effort into it. • I would say if I’d seen something like a machine math book, if I’d seen something more like that in high school, where it was just a bunch of numbers on a piece of paper, but it was tied into something real, something that I could see myself doing in the future, that would have made it a lot easier to get through those classes. • I never really had a problem with math but that would have made me motivated to learn it.

How many people went to a high school that had a manufacturing lab or something that would make it relevant? • I had a small engine class, does that count? • We had a metal shop and a wood shop and that was about the most. • In high school we had a tech class. I don’t remember doing it, but I actually used a CNC lathe, a CNC mill in that class. Did soldering. • My junior high school had a technical class. It was one trimester of one year and it was random little modular areas where you’d do building for one month. Like radio. That was the most. But then after that it just got pulled out of the whole course and then was probably dust since then. • Going back to what you said earlier to the perception of it, the people who were focused on shop, they were kind of the burnouts a little bit. They weren’t going to go far. They weren’t going to go for a four-year college, they were like, who cares? • They were just kind of that crew. That general perception of it. So, anything related to actually working with your hands was, well wasn’t worth it. • That was outright rejected in my school, and in my high school it was either four-year college or military. Anything new was just unheard of and it was a pain getting any new programs in there, as well. What is your message to high school educators? • More STEM electives. • Allow people to work with their hands. • One size doesn’t fit all. The four-year degree plan may fit someone else or perhaps something such as philosophy or theory is good for someone else but at least enlighten them about the other options. Do people get Dunwoody? Do they understand what a high level it is? • Not at first. I guess there’s an older perception that Dunwoody used to kind of be a burnout school.

• I would say it’s the complete opposite. I’ve had more conversations than not where people ask me where I’m going to school and I say Dunwoody and they’re immediately like, “Oh my gosh, can I offer you a job? ‘Cause I want you right now.” • I was talking about older people, that perception from back in the day and I mean it’s, I don’t think they knew anything that went on in here. It was just that building that was right next to 394 and it was just on the curve, just on the freeway over there. So, people didn’t know what was happening. • I agree more or less that people are like, oh my uncle went there or an older sibling or some relative of someone who has gone to this school and they hadn’t heard anything about the burnout situation but more or less that it’s a very old, well-known school is all I’ve gotten from them. Manufacturing executives like to talk about soft skills in the focus groups. Things like getting to work on time, or getting to work at all. What’s your sense of those issues? • I do make it to my 7:30 class on time but my girlfriend sleeps through her alarm constantly and that’s just who she is as a person, she just constantly sleeps. I mean if you can’t get out of bed on time then how are you going to do anything right at your job? I always thought that being on time was really important ‘cause when I worked at fast food it was really annoying when I had to stay five, ten, 30 minutes after when people didn’t show up for their job on time. Do those people exist here? • You can see it. You’ll see kids in your class day one and they’re not there semester two or semester three and it’s because a lot of times those kids were not showing up to class, they weren’t staying long enough or they didn’t show up on time, or not doing the work. • This class started with 15, we’re down to 11. • We lost five at least. • In the robotics program we have it so that if you miss nine days you’re automatically withdrawn from the program, no question. • It’s enforced. Yeah, we lost two people this semester. We’re in our 61

fourth semester, at the very end, halfway through, about to graduate, and they just stopped showing up and they got kicked out. • I don’t know if it’s ever too early to start teaching soft skills. I think that starts from parenthood. Or parents teaching their kids to be on time. But it also has to be enforced throughout high school, college, and by employers. If an employer is willing to put up with someone showing up late, I guess that’s how they run their business, but it got knocked out of me real quick when I was young, that’s when I learned to be on time. That’s where I was conditioned. You don’t show up, there are going to be consequences. Manufacturers say they have to contend with other things like iPhones, or that people don’t stay around very long. • As you stated before, it’s a sellers’ market. I think employees can get away with a little bit more here than in other areas. In other parts of the world, if someone says, I’ve been here two months, I want a raise, the employer gets to say, tough, you get to work at what we’re paying you. • I was going to say, I haven’t experienced that here at school but I have in the workforce before I came to Dunwoody. I worked in an unskilled labor sort of job and just looking around and seeing that sort of behavior, people not showing up, people on their cell phones, texting, I realized that I could get stuck doing dumb, dumb work forever if I didn’t get an education. These people are not committed to their jobs, they’re not ... I dunno, I didn’t like it. It’s a participation trophy generation. These were all younger, under-30 people. What would you change about Dunwoody? • Fewer electives. Let’s see, I understand I have to take them for an associate’s degree in occupational studies but I still struggle to understand how world religion makes me a better machinist. And I studied the first semester. I’d rather be making parts. • Then, at the opposite end of the spectrum, I never thought I’d need to know environmental sciences but a lot of it applies to what I do at work. How we recycle. How employers have historically screwed up in handling waste, how companies have profited by finding ways to eliminate waste and reuse their own products. We probably spent two or three days just studying the Ford manufacturing plant and how they restructured their business to essentially filtrate their own sewage with plants and mushrooms and they’re able to ... the water is cleaner coming back in than when 62

they originally had it. And I never would have imagined I need to know environmental sciences, but it applies to what I do, and I didn’t know it. So, I guess there’s a balance when it comes to electives courses. • Something like that actually ... when it’s like a focused elective, like logic. We took a formal logic class at the same time and that was fantastic. We were learning a lot of sentence structure logic but the mathematics structure of it still applies.

FOCUS GROUPS

Roseville MINNCOR Industries

March 20, 2018

How optimistic are you about the prospects for your company and manufacturing in general? • I’m a generalist; I pretty much handle manufacturers, distributors, and contractors. For the most part, they’re happy. The grain industry, maybe not as much with some of the technology changes that are happening there. But in general, it’s the adage: If you’re not making money now, when are you going to make money? • Ag is hurting and prices are at a pretty high level right now. We’re hoping the crop prices settle. Some of those other things happened that firmed things up for these farmers. But if you had a lot of debt that you were carrying coming into this a couple of years ago, those are the ones that are struggling right now because the crop prices just aren’t there. • We just came off our best year ever. It’s crazy busy. Even after our best year ever, we’ll probably have 24 percent by the end of this month and for this quarter. For us, the clouds on the horizon are steel prices. We’ve seen about a 15 percent increase since the first of the year. And we anticipate Sponsor: MINNCOR Industries

probably another 6 percent before that levels down and then starts to go back down again, hopefully, by mid-summer. That’s a huge bump on the road. Then, as you mentioned, with the labor market, it is just very difficult to find the people to come in and do this work right now, so it’s really pushing our people pretty hard. With such accelerated growth, alongside the people issues, do you start to analyze who are my most profitable customers and who are the ones I can do without? • I just turned down about an $80,000 order from GSA, government, because it’s not as profitable as other work I can do. • We’re going to be rationalizing our customer base for that same reason, exactly like he said. Which ones, revenue or profit? And the other ones, we might have to say at some point, “Come and get your tool.” I mean we’d work with them, make an inventory, so we’re not just leaving them high and dry. And the shortage is on the employee side. It isn’t the work. It’s something we’ve talked about for 10 years now, the availability of people. Right now, there are 60,000 unfilled jobs in the Minnesota economy in less than five years, and one study projects it could grow to as many as 280,000. How do you cope with that? • We have 130 people. My philosophy has always been that if I’ve got someone who’s a marginal employee but I know what motivates him, I know what makes him tick, I know his weaknesses, I know his strengths, I really go out of my way to try to help bring that person along. So, I’d rather work with what I know even if there are some deficiencies than try to start cold from the outside and not know who or what you’re going to get. I’m not a generational basher. I’ll get that out there right now. But I do find that millennials, they do want that flexibility, and I can’t give it to them. You have to be here at a certain time, and you have to stay until a certain time, and you can’t work from home and all of those things. So, I really do try to work with what I have, and pulling the trigger is not my first thought anymore. • We work within the Department of Corrections. Certainly, for someone who has been incarcerated and is getting released, I think there’s definite opportunity. While they’re incarcerated, they’ve got all kinds of different educational opportunities; there are different treatment programs for them to take advantage of and cognitive thinking programs. There’s a specific program in Minnesota called Thinking for a Change. Offenders have the 65

opportunity to participate in those kinds of things so that they come out a better person than when they went in. We find that a lot of what employers are looking for is someone to show up with a good attitude, show up every day on time, and they can teach them the rest. • I know some of the people here at this table hire ex-offenders; that’s awesome, and we applaud you. But when other employers say they can’t find good people, we can say, here’s this whole population of people that have very good skills and are looking for another shot. I try to connect the dots. We’re not a placement service or anything like that. I’m just trying to match up. But then on the flipside of that, a lot of our people go into manufacturing jobs, construction jobs, skilled trade jobs. But we’re almost starting to see a trend now where people are going more into retail and food service and things like that, which is interesting. • So, we’re seeing a trend where people are starting to shift out of those skilled positions solely based on the fact that they can’t maintain a livable wage. And we talk with them all the time like, “Hey. You’re coming right out of prison, so this is the biggest raise you’re ever going to get in your life, going from two bucks, three bucks an hour to eleven bucks an hour.” So, we have those conversations, and we keep things relevant and real. But at the same time, I think outside of just our population, in general, people coming out of tech schools and trade schools and stuff like that might be seeing that same hurdle. • We are actually like a lot of manufacturers. We are at the point where we’re trying to maximize what we do. And as far as capacity, we are nearly out of the number of offenders that are available to us because of other education and treatment programs and whatnot, and floor space. So, we are pretty much nearing our capacity as far as what we can do. In fact, we’ve been having to do some shifting in defining what we do and what is the best fit for us. Unfortunately, we’ve had to help some of our legacy customers, who we’ve worked with for a long time, to figure out another strategy. • People approach us because they don’t have the space or the bodies to perform the work. A couple of weeks ago, I was out at a company where supervisors and managers were doing the labeling. That’s where we come in. We partner and grow with companies where they’re able to utilize people that they hire to do what they were hired to do. That’s our niche. But even that’s getting a little bit tough now because, like everybody else, we’re running out of space and running out of bodies.

Transportation is also a growing concern for a lot of folks because logistics companies can’t find drivers. • Electronic logs are pushing older drivers out because they don’t want to use electronics. They know how to run a log, but they don’t want new electronic logs. And you have the younger generation coming up, and it’s like, “Why would I want to drive a truck?” Even though starting out, you can make sixty, seventy thousand dollars a year. The trucking industry is not, in general, I’ll say, recruiting or having a program in place to get younger drivers interested. So, what do you do about it? • Well, you hit the college fairs. The open market for truckload right now, you have anywhere from seven to nine loads per one driver. What that does is it shoots the cost up. That driver isn’t going to take that normal load you had for two, three hundred bucks. He is going to go after that $500 one and that one’s going to sit there until that cost rises more than that four or five hundred. So, you’re paid double out there in the open market right now for truckload rates in certain areas of the country. One solution to the worker shortage is probably automation, robotics. • It’s there in the forefront. It’s got to come from technology and automation. We can lean up a little bit to utilize our labor better. But in the end, it’s got to be a little bit about automation. • But even there, you’re challenged by labor. You can buy a robot tomorrow, but it might take eight months to find someone to program it. • I mean we could go a lot further if we had the capital to do that or if we wished to spend the capital on anything like that. We’ve invested in tooling. So instead of making a component with maybe three operations or four operations, it comes out in one. • As far as people are concerned, we think it’s training. We’re working on more engagement with them, surveys and really trying to understand what makes them tick and how to not only bring people on but retain them. Well, we’re learning that we have to at least build our foundation. We’ve got to have a half way decent salary because you’re competing with the ALDIs and Walmarts and so on, and people aren’t just clamoring to go into manufacturing. But we’re pretty far north of the city, so we also look at our radius and who our competitors are. 67

Is it working? • Slowly. I think we’ve improved retention, but we’ve got to improve even more. We’re also looking at automation. We now have robots on every single one of our machines to pull the parts out of the press, but then it goes on a conveyor. • So, for the individual, there are other things we do to trim the part, package it and things of that nature. It’s not that we can’t do it. That part, we’ve struggled with a little bit. But we are reducing the paperwork. We went from what we call a picture packet when you run a part to we now have tablets at the machine where they can see it and see a video and do it all there. But there’s a lot of talk about soft skills being a problem. • It really is. We can try to be a little more flexible. If you’re dropping your children off at daycare, okay. If 6:00 won’t work, 6:30. But we still have to set the expectation that this is the time you need to be there. But it is difficult and, as I said, they know it. They often know times that we need them more than they need us. • We’ve seen a lot of improvement and turnover like some of the things that you have mentioned, trying to motivate them, trying to offer a fund, trying to make it a place that they want to be. But one thing that has really worked with us along the lean side is getting them involved in the kaizen events; we see the duplication of efforts and one department is like, “Well, why are you doing that? We’re already doing that.” And then the employees can offer their suggestions, and that’s been big for us because I feel like they’ve been selected for this committee. We need that information more than the ones doing the task. But it’s a challenge. What about leadership training? • It speaks to the issue. People are already using robotics to a certain degree. But I think every one of you would agree that you’re trying to be leaner. You’re trying to attract and retain and invest in the employee base that you have from an educational standpoint. But today, your pain points are really reflected in, “This is where we’re busy,” and it’s across the board in the sectors that we serve. Let’s talk about some things we have historically referred to 68

as “heartburn” issues, things that seem to always challenge manufacturers. Do you worry about competition from foreign sources anymore? • I think it’s going to become an issue because of steel. They can pay a lot less for steel than we can, and a lot less for labor. And we’ve fortified it over the years, but it’s getting a little more difficult. • We see just the opposite. We’re seeing parts that were made overseas coming back. I’ll give you a case in point. We ended up getting these flower pots. If you go to the greenhouse or whatever and you see the hanging plants or whatever, well, Walmart’s a huge customer to this other customer that we sent to, and they said, “Not made in China. It’s got to be made in the U.S. It’s got to be stamped in the U.S.” • I mean that came back right in our lap, and logistics too. That’s the other reason why they want it more locally is a lot of our customers, I mean if you’re out of a 500-mile radius, they’ll move the work. I mean, it’s got to be close because it should be. • We saw a lot of things come back too. It’s, I think, the steel situation. What about government policies and regulations? • The tax bill is a big one. And it’s firmer out there. Further, it’s not on a year to year basis. Instead, it was meant to help. I think just things like that have really improved. Regulations? • I haven’t seen a lot of change in regulations but maybe in the enforcement of regulations. But even that, I haven’t seen a change. I mean plant inspectors are coming in the same way they always did before and are still looking for the same things. We’ve always been good, and we’ve never had a problem, so I don’t anticipate having a problem. • Health care is a big concern. • Well, you’re punched in the nose every year. But we’ve been working hard, we’re self-insured, and we’ve been working hard on who our partners are. We had an improved overall benefits package this year at the same cost as the prior year, but it was a lot of work finding those right partners.

• We have been communicating with employees. We do quarterly communication reviews, and we just did that. We had 12 of them last week. But that was right up there. We listed all the givebacks because before I got there, everybody kept saying, “Oh, they’re taking away, taking away, taking away,” and we just listed everything, and we’re going to keep putting that in front of them. Are you optimistic that government will solve this issue or is it just going to be something that the market’s going to wrestle with? • I don’t know. That’s way larger than I am. But it would take years and years, I think, because of the prescription regulations and things of that nature. I’m not saying that we get the pendulum to swing to Canada and socialism or anything of that nature. But there are some things, I think, we could do. The doctors, what they’re paying for their premiums for insurance, is crazy. • And there are only two countries in the world that you can advertise for medicine, things of that nature, and I think that advertising drives up the cost. I think there are a few things we can do, but it will take a while. It’s a big piece. • Honestly, there’s loyalty to your particular benefits broker. You ask everyone to come in; you ask everyone to look. The employees, bless their hearts; I think everyone automatically thought Obamacare was gone, so communication is a big piece. We were able to make some progress last year with a wellness program. My owner is a marathoner. He would have everyone out running from here to Minnetonka, but that doesn’t work for everyone. So, it’s a challenge. But what we’ve been able to do is if we do have to have an increase, we have to move their split. Then maybe we can find a vendor that will offer vision coverage now. It’s a little bit of a feelgood trade-off, but I can’t see that it’s going to stop any time soon. Was wellness a success for you? • We did a partnership with Life Time Fitness, and we were very excited because the one in Roseville is a women-only club. And then some of the guys are like, “Well, why can’t we go?” But basically, we’ll contribute $40 for nine visits a month and Life Time will contribute $20. So, in some instances, a single membership is free if you go nine times. • And then with our Medica, if you go 12 times, those that go to a higherend club get another 20. People did really appreciate that. I mean they 70

came in, they were great, they gave out tote bags. And then they’ll offer the first month free every once in a while, so the lesson is for everyone. We haven’t been able to gauge the success yet. But my guess is we’re going to see it. • We’ve offered a smoking cessation program. • We just are telling people, “Go out and find out what works for you and bring your receipt. I’ll buy what you need.” We can do that. We’re small. Do you think growth will come from products, customers, or what? • Product. Probably improving what we have. I mean interior flooring is very much like fashion. You have to stay in front of what the newest trend is. • I would say you missed the big one: employees. I know we talked about it before, but it’s one of them. So, out of these four, I would say leaders because, in addition to looking for operators and, basically, hourly staff, we are really struggling. And I think part of it is we’re so far out of the cities that it’s difficult to get the salaried folks to come up. • I’d say for years, we’ve worked on productivity for the most part, and I’d say the last two years, it’s gone more to improving current designs or adding new product to our offering. That’s been our growth. A college president told us a couple of years ago that there would be no worker shortage if manufacturers would pay skilled employees what they’re worth. I think he may be trying to provoke conversation, but what do you think? • I think it’s true. I mean for years, you could be an electrician or a plumber and make more than a machinist. And a machinist, in my opinion, has to know a hell of a lot more than either one of those two guys. I blame a lot of it on the small mom-and-pop shops, too. I mean, I’m one of them. But my guys, most of them, make $28 to $30 an hour. They don’t have 15 years of experience, and they’re making that kind of money.

PARENTS

FOCUS GROUPS

Lakeville Lakeville Area Chamber of Commerce

March 20, 2018

Small and medium-sized manufacturers are all fairly tense about where they are going to find the next generation of employees to operate their increasingly sophisticated operations. Some blame teachers and counselors for not telling students about the opportunities in tech fields. Others blame parents for all wanting to push their kids into getting four-year degrees. What do you say to that? • I’ve said for a long time that the average percentage of the population with a college degree is about 25 percent, it may be a little higher in Minnesota. Yet, high schools send darn near 100 percent of their kids on to college. That tells you what? That 75 percent quit. I think it’s a huge problem. I think the high schools don’t track kids; they don’t even offer information about options other than college because they want to say 98 percent of our kids go on to college. • We actually hired an outside company to do our own assessments for a career path for NAME versus relying on the assessments at school.

Sponsor: Lakeville Area Chamber of Commerce

• I have a daughter who did well in high school and goes to an allwomen’s liberal college in Boston. I also have a son who would come home and say the schools wanted him to take a four-year path. He heard someone from DCTC (Dakota County Technical College) talk about some other career paths and was super charged up about that. We then heard about Iowa Central, and some pretty phenomenal programs. It is a two-year campus, but it has a four-year feel. He can live on a campus. I don’t blame the high school. Sometimes you just also have to listen to your children. • My husband went to a two-year school, so he’s been pushing my son to consider that route. But he wants to go to a four-year college. And he’s going to be just fine. Is there a sense among some parents that going after a two-year degree is somehow “settling?” • Yes. • Absolutely. • I always thought it would be great for me to have gone to a two-year school, take some business classes and then get trained on top of that. So, I’d have the business acumen along with running a small business, that type of thing. But a lot of times that combination isn’t there, and a person with a small business or a manufacturing business just can’t run it right. • Some of it is messaging. I’ve got a unique perspective in that I do about 100 senior interviews at Lakeville South every year, asking things like, “What do you plan to do after you graduate?” And, “Where do you see yourself in five to 10 years?” I only have about 10 to 12 minutes to give feedback. You can see right away whether there’s a good connection between the courses they’ve taken and where they’re heading. You can see if they haven’t spent much time on the career piece. You can see that some don’t have a plan for next year, and they’re not going to be successful. From the perspective of manufacturers, do students have much exposure to a manufacturing lab, or something we used to call shop class? • Our Rotary Club has a STRIVE program, which stands for Students Taking Renewed Interest in the Value of Education, which basically means that about once a month I help mentor some students who don’t know what they’re going to do next year. And my job is to help provide them some 73

direction in these monthly-type meetings. I have a student in particular who talks all the time about his welding class. It totally caught his interest. One of his college visits is DCTC. The light bulbs went on. I have another student who is really into graphic art. She also visited DCTC and said, “Oh my gosh, I could actually see myself going there.” • One of the issues with high schools and trades classes is these classes are electives, and the way the hours work out, there are only so many electives to go around. I think students can choose two electives per semester, and among them are gym, band, you know some of the fun things. And so, sometimes those electives get chosen over the welding elective, and I think that’s the problem. • I want to go back to the last question really quick. You know, March Madness is going around, right? In Wisconsin, you go to a grad party and somebody says, “I’m going to Wisconsin [University of Wisconsin].” And you’re like, “Oh, yeah, you have to go check out this place, and you have to go do this, and it’s all about the experience.” And then somebody else says, “Well I’m going to be a diesel mechanic and by the time I’m 19 I’m going to make $40 an hour.” And you say, “Well, good luck with that.” • Well, and that’s what we talked about. A lot of us that have fouryear degrees, we remember those friendships, living on your own, independence, learning about yourself, and we don’t want our kids to miss out on that. I don’t want them to have to be full adults right away, you know? I want them to keep learning and do what they love, before the time comes when you’re going to be working the rest of your life. • Another benefit of having a manufacturing lab at a high school is that the teachers themselves are advocates for those kinds of jobs. There is a study out there that concludes that the number of unfilled jobs in Minnesota is going to jump from 60,000 to as much as 280,000 in the next five years. That’s going to create a lot of job opportunities in manufacturing. • Sign me up. • Sign us up. • You asked earlier about the status of a four-year degree. I look around this table and it is likely that everybody has at least one college degree, probably some of us have more than one, and we’re having a conversation 74

about career paths for all kids, not just kids like ours. I think about some of the kids in my husband’s class who don’t even have homes. They don’t know where their next meal is coming from. And where’s their guidance coming from? A big challenge for high schools is their guidance counselors have 700 children apiece that they’re supposed to provide guidance to. And, of course, their frame of reference is a four-year college. Their teachers’ frame of reference is a four-year college. Everybody who influences them talks about a four-year college. And how do you get those people to think differently? How do you provide them with resources to advise kids to think about something other than going to college? Even a two-year college is out of reach for many kids. And they have to go into the workforce. • And this high school doesn’t want to lose the funding for the student. So they don’t even tell the kids that these opportunities are available to them, when there are hands-on opportunities out there. • Any kind of resource that can be provided to high school guidance counselors, something they can hand out when they’re meeting with 400 students at a time, would be helpful. Here are some career opportunities. I think it would be great if districts offered Career 101 when kids got into middle school, Career 102 when they were freshmen, and Career 103 when they got to be sophomores. And I think it’s a shift in everybody’s mindset because all of this is being decided by people who have four-year degrees or more. • Burnsville High School has done some phenomenal things with partnerships with the business communities. They have an auto dealer who actually has a garage and works with the kids. They have a credit union that has a location in the school. They have a fab lab, they have lots of business partnerships. It was so eye-opening to me. Every student should try these opportunities. • Students develop an interest and passion in things they’re good it. I think if we looked at it from the kids’ perspective, we might look at it differently. Just providing information is one thing, but the coaching and the counseling, saying, “What do you like to do? What are you good at?” Sometimes, it’s the things outside of school where I see kids’ passions, in things that aren’t offered in school. • There are a lot who have fallen between the cracks. I think that’s where we’re failing as parents and schools, if we’re not getting them to a different place as a collective whole, as a village. 75

• One small tweak could be done fairly easily. Lakeville South seniors are required to do a job shadow. But it’s required during their senior year and they have a deadline of March 1st. I’m thinking that is so late in their life to be considering a job shadow. If my son would have had that as an eighth grader or a ninth grader, he would already have had opportunities to see a couple different things and be more invested. A school administrator told us that he thinks up to 50 percent of graduating seniors in his area have no idea what they are going to do after graduation. Who is responsible for this? • Students and parents spend a lot of time planning visits to college campuses. Why not make it an opportunity to visit a manufacturing company and see what kinds of opportunities are there? • One other thing might be for students to get jobs when they’re sophomores in high school, help them start on their career pathways while learning? • They don’t work because of activities and the demands of extracurricular activities. • My son started a landscaping business last summer on his own. But we got a note from his golf coach, because he started golf yesterday, and it said, “You kids work out your work schedules, because golf comes first.” It’s a challenge. But you said you’re going to work, so you need to have that experience of working for somebody else or working for yourself. • I think high school kids aren’t aware of the opportunities out there. We need career fairs at high schools and private investment in programs at high schools. I know when Farmington built their new high school, they significantly downsized the hands-on programs. The shop doesn’t even have a single welding station in it. It has one table saw and it’s so inadequate. • It’s a challenge for schools because those classes are expensive. They take up lots of space, lots of equipment, and equipment changes all the time. I think that anything the private sector can do to educate high school students or middle school students is going to help them make decisions about their future that might not include a four-year track. In Alexandria and Fergus Falls, the local manufacturing community 76

donated equipment for those manufacturing labs. And they supplied people to teach, not just to teach students but to teach the teachers. Do you sense there is room for collaboration like that between education and manufacturers? Manufacturers would do just about anything right now, I think. • Absolutely. • I think there needs to be structural change. The senior interview, the job shadowing, and the career jamboree haven’t been successful. Kids are just filling out pieces of paper and copying off each other to get done. It’s not structural change, it’s a one-day event. And how many kids change their mind or get exposed to what they want to do? I’m guessing the latter is a really small number. So what kind of information motivates students when they’re thinking about their career choices? Is it the fun factor? Is it money? • Do they have a clue? • I think it’s, again, connecting what they’re good at and their passions with a job, looking at what that translates into. If you kept talking to kids long enough, you’d find out what they do outside of school that they like to do. Maybe they don’t do extra-curricular activities, or they don’t do sports at all. But there’s something out there. There’s something out there that you can see they are passionate about. Or maybe it’s graphics ... or maybe it is gaming. So, it’s graphics or game design, there’s something that’s out there for them. There was a study earlier this year that showed how two-year degrees can be more lucrative than a four-year college degree, sometimes remarkably so, if you factor in the cost of a four-year degree. • I don’t think a lot of parents know that. • In the last 15 years, we’ve seen this unbelievable amount of debt. Because that’s what you’re supposed to do, go to a four-year college and get a four-year degree in a field that isn’t hiring like history or philosophy, whatever. They end up with this tremendous amount of debt, and no real skills behind it. My wife and I both have four-year degrees, but just because we did it doesn’t mean my kids should. I think it’d be wonderful to hear about these hands-on experiences for half the price and for double the pay, that when you graduate, you can go do this. I’d be like, “I didn’t know 77

you could do that.” • I don’t think it’s being communicated, either. • My daughter’s a sixth grader and industrial tech is an offering for an elective next year. So, I said to her, “Why don’t you pick that?” “I don’t want to do that.” I asked, “Did they talk to you about what it is?” “Well, no. I just don’t want to do that.” It’s hands-on experience, though. • Yeah, just go see it in action. You might say, “That’s amazing,” or you might say, “I don’t think so.” • We do that with our kids for sports and food, right? You have to try it once and if you don’t like it, then we’ll talk. • That way, you know what you like and also what you don’t like. • It would be interesting to have this kind of a conversation with kids in their 20s who are struggling to find their path. And you could ask them some of these questions that you’re asking us because I think of my son, my youngest one and his buddies, all of whom have floundered, and wonder what would have helped them when they were in high school? They’re close enough to it that they could probably remember and tell you. I don’t know. I don’t have those answers. • But they would have those answers. • Because they all went to college but if they had other information, then maybe they wouldn’t have chosen that path. • Right. What would have influenced them to make a different decision? I don’t know. That’s a question for those kids. • And they need to think about how much college costs. Parents are terrible at math. When it comes to, “Here’s your $1,200 a month student loan repayment for the next 20 years, have a nice day.” But they have a degree that pays them 12 bucks an hour. Wait a minute. Who did the math on this one? • I went to Mankato because ... I have no idea why I picked it. And I picked human resource management because a business degree was the easiest and I thought, if I learn to lead people, that’s what you want to do in business. I wish my parents would have sat down and asked, “OK, what 78

are your goals? What kind of house do you want to live in? Where do you want to live, what do you want to do?” I think that’s the only answer. • I think more so than teachers. I think they have enough trouble just teaching right now. • They do. • To a large class. I don’t know that it would be successful if you put it on the schools. Focus more on the parents. Is it because that’s the life experience of those counselors? • Probably. Mm-hmm (affirmative). • There aren’t a lot of counselors that have manufacturing experience. • Or they’re being pushed. Are they being pushed by those schools? Do the schools want a high percentage of their graduating students going to a four-year college? Does it look better? Do they get more money? • Bragging rights. • And then you have schools saying, “You can go to a four-year college. You can make big money.” And you said only 25 percent are actually getting a job in what they went to college for. • Look at the kids they’re interviewing. I would say 30 percent or more don’t have an engaged parent or parents. • So, when you say put it back on the parents, there is no parent to put it back on. They are overcoming their family situation every day. There are some amazing stories that some of the deans know about. I don’t think we can just say the parents are the answer, either. We’ve got a more diverse population, more diverse than in this room, less engaged parents than in this room, so it does take a village. Actually, if that’s the group you turn as a percentage, then I think those jobs will be filled. • It’s a diverse population because there is either single or no parent involvement. OK? Where are they going to get the exposure? And some are amazing and they’re probably going to get scholarships because somebody spent enough time with them to reach out to some school or some person to make a connection that is going to change their life. They 79

are the first one in their family to get more schooling, whether it’s college or a two-year school, and be successful. I don’t think we can just say the parents have to do something different or the schools alone have to do something different. People have different needs and capacities, as do the businesses. • I get about one student a year as an “intern” for me from a business academy. So, they have an interest in business, and they have to come work in my office for like, 30 hours, doing something similar to job shadowing, but that is not the right word. So, that’s their mini-internship. While I have them do certain tasks, a couple of times throughout that mini-internship I kind of give them the, “Hey, welcome to the business world. This is what I do. I come to an office every single day.” I say, “Fortunately, you’re 16 or 17 years old and you get to experience what it’s like inside an office.” I didn’t experience the inside of an office until I graduated college with my degree. Pretty stupid. Maybe you’re going to really like being in an office, maybe you’re going to hate it. And I don’t really care either way. I want to give you a good experience while you’re here. Manufacturing executives also like to talk about what they describe as a lack of soft skills in younger workers. Alarm clock issues. Common courtesy. Do you see that among your kids and your kids’ friends? • I’m an HR person. It’s crazy. First thing out of their mouth is: “How much paid time off do I get?” I’m like, “What?” It’s crazy. The thing that I think manufacturers have been working hard on is trying to adapt to the millennials (Generation Y) by having them work vampire hours that go later in the day, into the evening. Especially the kids that just cannot get up. I’ve got a vampire engineer. He comes to work at 11 o’clock and he’s there till 8 o’clock at night. There’s not a lot of staff when he’s there but the people are on the production floor. Kids today, they march to their own drum. It is difficult, I have to admit. • You are looking for people you can count on to show up or be respectful to each other, or that wouldn’t ask, “Where’s my promotion?” after the first three weeks. • I have a farmer that I’ve had for 38 years and he’s still there 38 years later. • What are they going to all do if they’re all like that and all the Baby Boomers are gone?

• Eventually their parents will kick them out of the house, you would think. ‘Cause part of it is these kids are still living with their parents. • Their mom’s still doing their laundry. I see it every day. I’ve got a guy that’s 32 years old, his girlfriend and his baby are living in his mom and dad’s house, and the mom is still doing his laundry. It’s insane. • I heard a generational speech that went through how each generation has caused the issues of the next generation. It basically blamed the millennials on the latchkey kids. We were left home, our parents went out and partied on Friday night, and we stayed home alone in the dark and had to fend for ourselves. The latchkey kids, as parents, don’t want their kids to go through that. The speech said every generation has caused the issues of the next generation, which makes sense. • I think manufacturing has a public image problem. The four-year institutions have worked long and hard at selling themselves and at propping up their public image and talking about how people with fouryear college degrees earn so much more over their lifetimes, and we’ve all bought into it. And they’ve spent a lot of years doing that. So, I suspect that the manufacturing industry has some work to do on its public image, and there are ways to accomplish that: by talking to kids and talking to them through the kinds of media that they consume when they consume it. And it takes people a lot younger than us to figure that out. • But I think educating them doesn’t have to happen just in the classroom or in the home. I think it can happen in the media where they are. You have to meet them where they’re at. For a lot of them, it’s online at 2 o’clock in the morning. You have to meet them where they’re at.

FOCUS GROUPS

Luverne Take 16 Brewery

March 21, 2018

Let’s talk about what it means to be a manufacturer in southwest Minnesota, the opportunities and challenges. • I think the biggest strength itself that Minnesota has is the quality of life. And I don’t care where you travel, nobody can travel five minutes to get across town and have a quality of life at a reasonable expense level to raise a family. And the challenge is getting people to come here. Is there an advantage to being close to Sioux Falls here? • We use it as an advantage. I mean, you could spend an hour traveling in Minneapolis and go nowhere, or one hour and go to any restaurant you want, or any retailers. I use it as a plus with transportation, certainly. • Is it quality of life in Sioux Falls to catch a plane or do something like that? And quality of life to see high level, minor league sports, and things like that? Jobs. People like to live here and drive to Sioux Falls for your job, but you still get the quality of life.

Sponsor: Southwest Initiative Foundation

• And there’s also a little bit of competition there, as well, just on the business front on a couple of different aspects. • Like? • Be it worker’s comp and one of the other things we were kind of talking about this morning, the lower taxes, all the way across the board, especially with no state income tax. It’s hard, I think, sometimes for competing for business and workers and being a border town to a low tax state. • It is. I would say that’s a big disadvantage for the work pool that’s in Sioux Falls, and trying to draw them here. • I think another positive though in this part of the country is the quality of the people that we have available to us. Because I think the workforce, even though there’s a workforce shortage, I do believe that the quality of the people that we find in Southwestern Minnesota is exceptional. • Population is an issue. I’m in Edgerton. We sat 1,100 people for the last 30 years. Edgerton is too stubborn to change, but it’s also too stubborn it’s not going to fail. It sits right at 1,100. But if you look at the data coming out of the state, it shows people are moving back, but not to the same level of the young people leaving for other opportunities, other jobs, and so forth. And I realize we’re included in that area. We’re including Marshall, and I think that all the changes that Schwan’s has had, that’s a pretty significant number when you look at what’s needed in Southwestern Minnesota. • Worthington would be, I think, safe to say a town of 5,000 to 6,000 people if not for cultural diversity. We are a town of about 13,000, now. Or close to it. When I was a kid, Worthington was always a town of 10,000 people, 99.9 percent Caucasian. Today, it’s very much the opposite. But we’ve grown because of cultural diversity. I think it’s a good thing. What’s the challenge of being down here? • Communication. We have 58 different languages spoken in our community. The other side of that is we have people that are multi-lingual, but they can only speak the language. They can’t read and write it in their language. Communication is probably one of our biggest challenges. • It’s a big enough challenge that within our three-year plan, we’re going to be moving part of our operation to South Dakota or Texas. We need to 83

expand, but we don’t feel we can find enough people. And a big part of that is taxes. • And that’s where we find difficulty in our workforce is that we need manufacturers who are skilled. Most of our jobs are, they need to understand and comprehend what’s happening and have an ability to do it. • And typically, you’re just stealing from somebody else in that regard. Are you getting sufficient candidates out of tech schools? • They have a mechatronics program. • And there are welding degrees, as well. But it’s kind of that, we find ourselves in kind of a little niche side of it if we’re doing assembly, but we’re not necessarily big enough that we can hire unskilled workers for that. It’s more of a craftsman type level assembly. That’s a little bit of the struggle is there’s not a big enough market for that style of work, it seems like, down in this area to support our workforce needs. What about the quality of new employees? • We’ve had pretty good luck. The majority of our employees are dedicated and have a good sense. • I take a little bit different direction on it. It surprises me how many people, no matter what age group, just quit showing up for work. The concept of a two-week notice is extremely rare. We have two people that are leaving us here this week. They gave us one week. We were delighted we got one week. What’s changed? • It’s the breakdown of the family. The absence of a father and a mother that are engaged in the child’s development and so forth. I’ve heard things that most of us knew when we came out of high school at 18, nowadays, they don’t know until either 25, maybe even as far as 29, which is amazing to me. Some of it is just common decency, or this is how we do things. I’m with [inaudible 00:13:00] before. I’m so glad we’re in Minnesota, and this is the Midwest, because it’s better than what it is on the coast. • We’re seeing a definite shift to less, I’d say responsibility, or just less, they’re doing the right thing so to speak. We have a whole initiative we’re 84

working through right now, dealing with our values and one of the things is stewardship, and what does that mean? That means show them that you care. We’re trying to do it with everybody. Every week, we’re meeting groups of 15 people, going through the values of how did you play this out in your life? And for us, it’s not just what you’re doing at work, but it’s also, how you’re impacting the world around us. We changed our company purpose here this last year to brighten the world through our actions. • It’s a combination of a lot of different things. I mean, when you’re looking from what we’re hiring for in production versus management, it’s very different. And we don’t have a whole lot of turnover in management. We have higher turnover through production. But there’s still a huge focus and an emphasis on our culture and our values, and continuing on with leadership training for our leaders. We’re doing this thing called People First. We have a great program that kind of grows our own, so we’re looking for supervisors from within our organization. But they don’t have those soft skills, or the additional education that might prepare them for really dealing with the day to day as a supervisor. Putting forth the effort to put people first, to let them know what is acceptable, what is not acceptable. I’ve been with the company for eight years, and I can say in the last eight years, I’ve seen a huge change from the old school method of “this is a packing house you’re going to do as I say when I say it,” yelling at somebody to, actually taking the time to listen to your people. There’s a report out that projects the number of unfilled jobs in Minnesota will quadruple in the next four years. Does that surprise you? Does it alarm you? • It doesn’t surprise me. We’re going to see the same thing with housing. There’s going to be hundreds of thousands just left open because there’s nobody to take them. You’ve got all these, in this area, I don’t know how other places are, but you’ve got nursing home facilities, and those types of things going up every day and just filling, and yeah. And there’s just, there’s a lot of them out there and not a lot of us. I mean, yeah. • Well, scary perspective to know where we are today with workforce and workforce development and the inability to attract people sometimes, or a lot of times. And to think that it’s going to grow by five times is scary. I’m so glad I’m going to be retired. • Is automation the answer? • Not for us. But I just laughed when you said automation because I tried 85

to order a meal at McDonald’s the other day, and I almost couldn’t do it. I know I like a number three value meal, but I got to design the hamburger contracting thing. And automation is, so when you’re interacting with people, and orders, and manufacturing different options, or picking an order, or filling an order, shipping a warehouse type operation, you need attitude and aptitude. • We bought a robot this last year, so we’re going to have proof of concept of how that gets used. Right now, we’re researching the AIB technology, so the unit goes and picks up product, delivers product, whatever it is, just to, it’s not a value-added task when we’re moving inventory around. • Robotics and automation are great, but it’s like the old saying, “Technology is great when it works.” And it’s only applicable to our company in certain areas, and beyond that we still need qualified people. We need people that are dedicated to showing up for work and dedicated to doing their jobs. It’s a little combination. For us, it’s a combination of both. But probably heavier, for us, in the future, on the workplace, on the workforce, issue than it is on automation. Because you can only go so far. Why don’t more kids choose a tech school route? • The lobbying system inside higher education has become a really good job in the last five decades. That’s why everybody has school debt that they can’t pay back. Because they wanted everybody to go to college and spend the money on the college. And then, they don’t know whether they have a job when they get out or not. I think the message is clear that, “Yes, really think this through.” But I think there’s still, higher education still has this massive marketing and lobbying effort going on that says, “No, everybody has got to go to college if you want to get ahead.” • It also reflects well on the parents if all their kids have four-year degrees or something. And whether they had big debt, or job prospects doesn’t really mean much. It’s getting that degree and having that respect. • I think the marketing piece is like the National Association of Manufacturers doing videos and things that show that manufacturing has changed, that these aren’t the dark smelting pot jobs that people had 50, 60 years ago. These are pretty good places to work. They’re clean. They’re culturally driven. They have a balance and a quality of life. • I think it’s more life skills than technical skills myself. We keep going 86

back to that other question if it’s manufacturing related realize there’s not enough people doing landscape. There are not enough people doing concrete and so forth so that the college president said that it’s kind of like a narrow focus. But anyway, back to your question, for us, it’s life skills. • I think there is a disconnect with what kids are being taught. I mean, they’re not accountable. A lot of people aren’t accountable for anything anymore. I mean, if I didn’t show up for work today, oh, they’re going to give me a bye because I wasn’t here. Because what are we going to do. We can’t just go out and hire somebody, and then, you’ve got kids, my experience was I did go to tech school. My first two years were at a tech school. I got my degree, and I went and worked while I went and got my four-year degree. I had the work experience on top of the college education. You don’t get that now. You have a four-year degree that wants to come in, and they think they know how to do the job. And they want to be paid for that. But they’ve never actually worked a day in their life in that capacity. • Or in any capacity. • Is it time to look at your customer base and sort of cut back on the less profitable customers, the ones that are the squeaky wheels and give you less profitability? Are those the kinds of things that you do, or am I overthinking this? • Point is if you’re making money right now, you can sell fun innovation and technology growth and expand your product line of the knowledge you’re generating versus having borrowed and paying interest. • And I think there’s a real opportunity. For me, I’m in a weird spot because I’m looking for my next acquisition. And there are a lot of Baby Boomers who own small businesses in manufacturing and other places that are looking to transition out, and that’s kind of an allocation to capital to say, “Are there some of these other industries that bolt on to what we do?” I think there’s a lot of back discussion going on, as well. • And if we have, two of our companies are very much in the startup mode. One that’s just going into the fourth year, one that’s going into the second year. And both of them are growing at a rapid pace. It’s hiring people. It’s investing in process. It’s investing in capital. Something that’s very dynamic. And that model is a little different than a company that’s very stable, long-term, always been doing the same thing, and then, growing. These are going back into markets. 87

• I think it’s a very good time to be in manufacturing, but I don’t think it’s the best time. I think that those days have passed. You’re seeing more competition. Some of the stuff we see is what’s Amazon going to do next, and how is that going to disrupt the channel that we’re in, and so forth. We did four acquisitions over the last eight years, and we feel we have a pretty rich offering of capabilities. We’re trying to ask where can we take that and go into different channels, different markets. That’s part of our growth strategy. • We’re always looking to make things more efficient. There are standards out there. Corporate wants you to eliminate X amount of positions every year, which you could do. Say, “Hey. We’ll just get rid of this person here, this person there, but how is that benefiting our company? How is it benefiting our people? How is it benefiting our end product to our customers?” The biggest thing, I know that our focus is if we are eliminating a position, how are we making it easier? How are we making your job easier by taking away one person instead of just going for numbers? • Is leadership training becoming part, an essential part of your HR practices? I mean, is there a stickiness when somebody feels like I have an opportunity to be a leader, and I see a pathway to do that? Is that a strategy tactic for retention as well as skills enhancement? • It has made a huge difference in the terms of the leadership roles that people have in the company, and there are many people that have been there for 10, 20, I don’t know, 30 years. • I think a lot of leaders are sort of born. You can develop leaders, but it goes back to your comment that I think a lot of it comes down to the family issues today. A lot of kids are not being developed to be leaders by their parents, or by single parents, or whatever. We find that we can develop leaders, but it’s great if they have that inside of them before they come to the workforce. And that’s a hard thing to find. And some people just don’t want to be leaders, and that’s fine. We need those kinds of people, too. What about strategic planning? • It always surprises me in this poll to discover the number of, especially entrepreneurial manufacturers that don’t operate from a structured strategic plan. It’s like, it’s all up here. I don’t need to write 88

it out. I donâ&#x20AC;&#x2122;t need to follow it. Is it true? I mean, do you see, I mean, I know you have a good strategic process in what you do. Do you interface with a lot of people who donâ&#x20AC;&#x2122;t?

FOCUS GROUPS

Mankato South Central College

March 22, 2018

Somebody said in one of these focus groups, “If a manufacturer can’t succeed in this economy, they should rethink their career choice.” Do you agree? • There are lots of sales opportunities in this economy, but good sales hide a lot of evils in our companies, a lot of demons that are out there that we’re able to hide because of increased sales. • Sales are only half of it. You still have get the product out the door. So in the same environment, you need to have the workforce behind it to be able to ship product. So you need to start challenging yourself to think how you’re going to attract people to your business a little bit differently than standard practices. Being in a small community over in Sleepy Eye, where we don’t have a very large population to draw from, we’ve challenged ourselves from the top all the way down to figure out how we can attract and maintain employees, even if we can’t offer the best wages. • I think it’s a good time if you made the investments in technology and improving your business flow and your work force. If you made those Sponsor: South Central College

investments, you’re poised to take advantage of what appears to be a good time. But it also appears to be quite volatile and I think, at least for me, it’s pretty nerve-wracking when you’re talking about things like how the tariffs on steel are going to affect us directly. Markets move quickly. Things are up, things are down very quickly now compared to even 10 years ago. The trend could be very short, things could change politically, and things could change on the global economy very quickly. • For us right now, it’s time to really dig in our heels and really work. We’re succeeding because we’re not afraid to adapt to new technologies, to customize based on customers’ needs. We want to win the sale, and we’re going to do what it takes to get it. So the more we can offer our customers, the more likely we are that we’re going to win for product. It’s a lot of hard work for everybody from the sales team, right down to the guys that are doing the final inspect before our units roll out the door. What about ag? • I’m in agriculture, too, but they’ve got a safety net. None of us have a safety net. We can’t buy crop insurance, we don’t have guaranteed prices, we’re out there and if our product isn’t there, equipment sits there. So we don’t have that safety net, agriculture has that. And so the volatility you talked about, you bet. It’s, you know, you have to make hay while the sun shines and if it’s not shining, you better cut things down until it does shine. • We’re all dependent on consumers buying things and if they quit, we’re shut down. We don’t have the volume to go out there. And the people, yeah, it’s a big factor because everybody’s part of the sales team in manufacturing. You’re a member of the sales team, I don’t care if you’re sweeping a room out there, if you’re putting screws in a sash, you have to be there. We’re gambling every day when we go to work. Let’s talk some more about how great sales can mask some of the demons that might be lurking within the other parts of the business. • We’ve got plenty of them. I think just inefficiency is sometimes being covered up. We tend to complain about everybody else getting fat in organizations and sometimes we can, too. We’re not as efficient as we should be even though the bottom line still looks pretty good and our sales bills are still up there, so I think a lot of it is inefficiencies we have in there. When things slow down, we get a lot better; when things are going, we have a tendency to go for it and not think it out so well. 91

• The same thing’s true for the potential for inflation. It’s not there yet but it’s certainly more potential for inflation now than there was a year or two ago, and when prices are running up on materials and supplies, a lot of times your margin’s going to go the other way because you don’t keep up with that quick enough and whatnot. Sometimes the business can get masked by not making as much margin both because of efficiency and price run up. • And competition. Everybody’s hungry. It’s been a tough couple of years for a lot of manufacturers in southern Minnesota, so people are hungry and competition is ugly in some instances. What are the challenges or even the burdens of a prosperous economy? • Money. When you’re pursuing significant growth, money is always a challenge, I think. Especially after you’ve come out of tougher years, for sure. • The big challenge from our chair is how quickly rates are going to rise. There’s talk that the Fed could raise interest rates three to four times this year. What’s too much? I don’t think anybody knows. We won’t know until it’s too late. If people are making decisions today based upon current rates but that whole process is out 12 months, 18 months, the whole rate is going to change dramatically. So, have you done the analysis based on higher rates, more inflation, versus income today? Does a prosperous economy make banking more competitive? • Absolutely. Good times hide a lot of issues, so people get looser on structure, people are more aggressive. In the face of rising sales, have you been tempted to let go of less profitable customers? • We just got fired by one of our suppliers. They have proprietary product, and we just got a letter the other day saying that everything they’re doing now is focused on their own product. So, they’re terminating their agreements with us and it’s like, wow. We just got fired. • We just did a round, obviously we did catalog offerings, and basically weeded the garden on low performers, low GP, just discontinued those 92

products. • I don’t think we’ve said no to any customers or fired them per se, but I think over time we’ve prioritized our customers as far as lead times go. Being able to ship the product in a timely manner means we’ll have better lead times potentially for some of our larger customers. What about OEM relationships? One of the things that came out of 2008 was that OEMs became more demanding. • Our experience is that the large corporations are every bit as demanding today. They’re struggling to get suppliers and so they’ll put together major supplier events, but when you go and listen, they really haven’t changed their underpinnings. Are you willing to do 90 days, are you willing to do 20 things that are the things that cause them to not be able to get suppliers? They’ll try and rev up. • I just spent two days with COMPANY. They had to spend half a million dollars on putting on a supplier event to try to back suppliers in. And you heard the message that says, “We’re going to value total value, we’re not piece price anymore.” But the detail behind it was still the same old, same old. I don’t think that they can turn themselves around fast enough. • We’re working with some OEMs that are requiring 120 days. That should be illegal in my opinion. • That’s what banks are for. • And that’s what they’re doing, so they’re using JP Morgan to bridge the gap because they know that their supply chain can’t in reality deal with that. So, all they’re saying really is they don’t want to deal with the finance end at all. But I think that’s an interesting situation, when you’re talking 120 days and you’re talking maybe 6 weeks of lead-time on top of that. You’re almost looking at half a year. • There are a lot of OEMs out there that try to use their supply chain as their finance arm as well, and that’s the one area that we’re using as a qualifier to prioritize. We’re not willing to finance their operation. • We do, as well. That’s a showstopper for us.

Where are you looking for increased profitability? More customers? New products? • Investing in automation for sure. Automation that assists the workforce. It’s more efficient to increase capacity with what you’ve got. And the underlying thing is, you know, the work force challenge. • And to make the jobs more appealing. • For sure. We also are investing a lot in career ladders so that when we meet with younger work force candidates, we have good, clear career ladders that they can see. That’s very important to some of the younger generations. Let’s talk about the work force. We’ve recently seen a study that projects the number of unfilled jobs in Minnesota to quadruple over the next four years. • It might be understated. • It’s certainly not unique to Minnesota, but I’m involved in a lot of national industry type associations, and the most common thing I hear from other foundries is that their production and their selling is limited by their, in most cases, it’s their grinding room employees, which is their bottom line. So, they sell whatever they can get through that and then they stop selling. • We actually do pretty well on staffing for employees. We struggle with some of the mechatronics areas, and we tend to promote from within for machining mechatronics type things. Is anyone here less profitable than they might be if they were at full employment? • We are. We quit new customers in April last year because we couldn’t get enough employees. But we have other plants, so that’s what we’re doing. We’re locating other plants around the country with better labor, and taxes are better. • We would be able to get more sales if we had higher capacity in our welding area, specifically. If we had five, ten more welders, our lead times would be down and we’d be getting more business. We’re not firing customers, but they could be going elsewhere and we might not 94

even know it because of our lead times. Our lead times are partially longer than what our industry standard might expect it to be, but part of that is the quality of work that we do. We spend the time to make sure it’s done right before it goes out the door. So, if we have some lower-skilled employees coming in to our positions where we’re willing to train or help to close that gap, it would cost us more to get it out to our customers than what it probably should. • I suspect that their margin percentage profitability is strong, but could they have more dollars for cash flow if they could sell more? Yes, it sounds like almost everybody at this table is wishing they had some more staffing. Some have automated to capitalize, I guess, on what you have. Make the job more appealing to new employees and existing employees and leverage the strength of automation as well. I sense that we’re not looking to reduce the number of employees we have because of automation, we’re looking to capitalize on that investment to get a bigger return on that investment. What do we do to get more young people interested in manufacturing careers? • I think it really starts early. I was glad to hear you met this week with some parents. I think it’s all about getting the younger generation excited. For some reason people assume manufacturing is all dirty and grimy and doesn’t pay well, and I don’t think really any of those are true anymore. It’s probably where a lot of the jobs are right now and some of the highpaying jobs, but most of the students are thinking they need to go to a four-year college, they need to get that degree, and sometimes those degrees they get at the four-year school don’t translate into where the jobs are, at least the living wage jobs that pay well, like in manufacturing. • That’s what I experienced with my kids. It’s counselors. And kids will come up with other ideas and the counselors are like, “You need to go to college.” And I think somebody here that’s in education might be able to tell me, if the high schools have statistics on what percentage go on to college or something that motivates them to do that, but I certainly experienced that with my own kids. • We’ve met with the counselors and principals before, and they basically tell you that they’re 300 to 1, right, 300 kids to a counselor. Once a kid says, because of the influence of STEM and some other things, once a kid says that they’re not interested in a four-year degree basically, that’s the last contact on continuing education that they’re 95

going to have with that counselor. That’s just the facts. And that’s what they told us, the counselors. So I think between the emphasis on STEM and four and six-year degrees that go along with how we emphasized STEM for so long, between that and forgetting for a long time that for every engineer, you need maybe a handful of people who are going to make things. • I think the schools do probably what they can, and they follow the lanes that they’re directed down, so yes, there’s a huge disconnect probably with the schools and the kids and what’s needed in the economy, but I’m not sure it’s intentional, really. I think it was just a swing and a miss. It wasn’t quite perfect so now we have to continue to get in there ourselves, too, and work with them. We do a lot with the Children’s Museum as a great example of making sure that kids have those experiences as early as possible. Those hands-on experiences that, let’s face it, we say parenting isn’t part of it but parenting is part of it because parenting has changed. Kids don’t play outside anymore like they used to because often times their parents aren’t there until later, and so that’s just not a safe option for a lot of parents. Or maybe just not an option at all. So it’s just changed. Do you have strong tech shops in the high schools around here? • Not that fancy. • I think West Metro, north of Delano, I think they’ve got a pretty strong one. I think down in Fairmont you’ve got really strong ones. So, you not only learn how to make things, you learn how to sell things, you know, how do you generate a profit, how do you provide customer service, so they have all those trainings. • Rochester has built on a tech component. The community invested to build it onto the community college and the high schoolers come. It’s almost like what happened back in the day when I was in high school, when the students come to that center and they work, they do a little training, they get high school and college credit right on the campus. • I do see the schools around here putting forth effort. We opened up our doors doing a touring of manufacturing for two days and had close to 600 students come through. They didn’t realize how many technical based machines we have on the shop floor. There is no separation anymore between engineering and the manufacturing floor. It’s all merged together, and you could kind of see the light bulb switch on when 96

they realized, wow, I use more of the computer to produce versus the old way of thinking of getting your hands dirty. And there are a lot of kids that are like, this is neat. This is neat to see. • I think another part is education, and I’m interested to hear from others. We see a lot of people not really understanding the benefits that are offered, not understanding ESOPs, not understanding employee ownership, even right down to the 401(k)s. Do kids really realize that when they’re looking for jobs, they should also be understanding those things and then they can compare and likely see that manufacturing offers a decent amount of those types of things, as well? • And it’s not just kids who don’t understand. • I rarely see a help wanted sign out there, and they have high quality young people. It’s an ESOP. It’s a model we should probably look at. It’s very interesting that you said that. • We like to talk about income to young people, but then we’re told that the younger generation just isn’t that motivated by money. • I think maybe for a first job, second job, they might be looking at the cool factor, but third, fourth job maybe, they’re really talking dollars. • To the point of the benefits, you could talk benefits for an hour, but they want to know how much their rate of pay is going to be. That seems to have a higher value to some people. Not to everybody. • What trumps rate of pay is flexibility and variety. They want their free time. If they want to go fishing in the middle of the day, they want to go fishing in the middle of the day, and sometimes manufacturing has a hard time adjusting for the level ofDo you try to adjust? • Not to going fishing in the middle of the day, but yes. Yes, we do. • That might work. • If you compare us to 10 years ago, we’re much more likely if we need to run overtime, rather than saying, “Okay, everybody has 10 hour shifts,” we’re much more likely to go out and say, “Okay, we need to get some extra overtime, when would you like yours?” And piece them all 97

together and give them some choice. • You know, we don’t have so much trouble with that. Second shift more because that interferes with social, third shift not so much because they can work, go home, sleep whatever portion they want to sleep and whatever. • It’s going to be more and more challenging as the Baby Boomers retire. We came back from Vietnam and we were hungry, we had three years stolen from our lives and we were ready to get back to work. Another big thing is entitlement. You know, “What’s in it for me?” • And two working people in a couple. It’s like, well my wife makes enough, I don’t need to. • It is very different but we have to remember, too, at that time when you were 18 or when you were coming back from military service like that, you generally didn’t go back to your parents. I have friends with 25 or 30-year-old kids living at home. Well, money’s important maybe to them but not from the standpoint of, “Jeez, if I don’t make a paycheck, I don’t have a roof,” right? It’s just different and flexibility is number one. Career ladder, how do I get from A to B like you were talking about, is number two. Pay is number three. Once they get to be 25 to 30, maybe get married, pay starts to take a little bit more, starts to be a little bit more important. • And I’m telling you, when they have a guaranteed roof over their head, $60,000, $80,000, eh. We have a great pair of welding apprentices out of high school right now and one of them really seems to have a lot of potential and really seems to love it but it’s like every single day we’re trying to sell him on the, hey, if you come here right after high school, we’re going to get you into the pipeline program, we’re going to send you to SCT, you’re going to work, you’re going to go to school, it’s going to be paid for. But we have to sell them, like over and over. Look, listen, this is one heck of an opportunity. No school debt, making big bucks, buying a really nice truck. I mean seriously, you know, because you probably have a place to live for a while. • That is a key part of it that’s going to really help with the transition, is all the school debt that these students have that is going to the four-year schools. So on top of the good jobs or the high paying jobs, the debt that these, their friends are having will probably help us paint the story about why this is good. 98

• Yeah, and Mr. Trump’s move to make that debt more difficult to deal with as a criminal as it may seem, it may be brilliant, too, in terms of driving people into areas where they don’t incur such debt. • There was a study I looked at and I can’t remember if it was an electrician or plumber, but the point being that the trades person was ahead of the doctor until probably age 50, 55, because that doctor had so much debt. • I talked to a company recently at a convention that, employees have to have, I think it was like six plumbers total that work in their operation, and they all work independent so they’re 1099 contractors and they all work for $150 an hour or more. Another issue that comes up about younger workers is soft skills, alarm clock issues. Is that an ongoing problem? • Yep, just getting people to show up on time, getting people to come back after break, just getting people that want to do something other than stare at their phone. I deal with it both in industry and at home. • I have a 19 year old that was pushed by his high school to go to college; he was not college material. He admitted he wasn’t, wasted money, quit school, plus just to get him to realize, hey, you need to go to work, you need to shower, you need to be part of society, discuss things with people, put the phone down. • You try to implement rules that hey, phones are only available at break time. You know, next step is you have to leave them in your car. • We went through that same thing. They’re always texting. They go to the bathroom, they’re there for 15 minutes. So, now we’ve got them so they’ve got to put them in a separate area so that at break time, they can grab them but we found that doesn’t work. Does somebody have where you keep them in your car, they can’t come in your building? We might do that. • We do. But they can get them at break time. • We’re building a new building and we’re actually looking at ways of how to block Wi-Fi and cell signal in the bathroom.

• We don’t give them our Wi-Fi. • It’s funny because you can be out on the production floor and suddenly somebody has to go to the bathroom and the first thing they do, they leave the tools sitting out on the machine where they’re operating but they walk over to their toolbox and grab their cellphone and start walking to the bathrooms. So, I wish we knew how to stop that. • Keep it in the car is one way to do it, huh? Don’t bring it in the building. • You can probably block the cell signal. • Right, but unfortunately, I’m out on the floor. I have a cell phone in my pocket, I’m on call, I need the cell signal, so it’s like how do you block it? • Go to your old beeper; get your beeper out. Let’s go to some other issues: Is healthcare still a challenge? Is that issue just with us for life? • I hope not. • The cost continues to increase so you have to find ways to pay for that and sometimes it’s passed along to the employee, and a lot of times the employers are trying to still find ways to make it a really good health plan. • To the extent that they have to pay a higher deductible and higher out-of-pocket cost, they’re more aware. When they had a low deductible, they probably like you say, just had no idea. • Right now you see a lot of job jumpers based on what your benefit package is. It’s not always the wage that’s driving people out, it’s, “Can I get into a company that offers more than just medical? Do I get 401K, do I get short-term, long-term pension?” Stuff like that. I see a lot of people leave our company because of that. We offer health insurance; we pay for the employee in full. • Some of the younger people, they don’t realize it, but some of the more veteran employees that we have are looking at it and they’re realizing that to go out there right now and to get Blue Cross or whatever 100

out of pocket is just huge. It’s terrible. So, I can speak for myself, what I pay monthly to cover my wife and two kids is less than what it would be for me out of pocket just to cover myself with Blue Cross as an individual plan. • I don’t think that people still put dollars with their wage to the value of their benefits. I still don’t think we’re there yet. You know, having a benefits package is advantageous, no doubt, if you’re hiring somebody else’s employee or somebody who’s changing careers mid-life. But when you’re talking to the 20-30 year olds, that benefits package, they’re not saying, “Well, my wage is this but I actually get this because of the benefits that are...” • And they’re banking on that. • Yeah, absolutely. • They’re expecting it. • It was a big deal in my sister’s family last year because both of their kids were going off of their plan. It was a big deal. Come to find out that the son works for a big corporation out in California who offers an amazing plan at a really small price to the employee, and he hadn’t even put that together, and he’d been working there for three years. • Because he didn’t have to. • And his parents were paying big bucks to keep him on their plan. • And most people are healthy so they don’t really see the cost that way. • Actually, I wish that was something that would be taught, both at a high school level and a college level that, hey, this is what’s coming to you in a benefits package. This is what it’s going to mean to you. Right now, most people don’t even think about it. Like everybody said, “Hey, I got a roof over my head, mom and dad are taking care of it, I don’t care.” But, you know, you get into a large corporation, we’ll pick on 3M. They’re a national corporation, they’re all over the place, they have a lot better benefits package you can get into than what the so called momand-pop shops around here have. And realistically, that’s huge right now. • One big advantage of the most recent changes is that associations 101

are able to look at offering health to their members. So one of the associations that I’m on the board of, a national association, we’re looking at that as an option, which would be a game changer for small employers. So, you know, if you think about the dollars that we shell out now for the benefits that we provide already, just think how much further that could go. We wouldn’t necessarily say we’re going to reduce what we’re willing to provide, but now in addition to a good health plan, we can do this. So that would be a huge advantage. • So that’s what we’re faced with. Age of entitlement. But look at school, you flunk a test, you can take it again. Take it again until you get a passing grade. It isn’t that way in our businesses, you get one shot, you better get it right. You know, 2+2=5. I don’t want you to feel bad about that. And that’s the people we’re getting because, oh, you know, give me a shot. Give me a chance. • Everyone gets a medal. • Participation medal. Another issue: How are you affected by foreign competition? Is it on the decline? • There’s some back and forth but for everyone that’s re-shoring, we hear somebody else that’s offshoring. It moves around a little bit. You know, Brazil was big for a while, not now. So, it moves around but it’s not gone away at least in our industry, part of it is because they’ve used it enough to drive some of the capacity out and so they’d need to make a long-term commitment to build the U.S. capacity back up. So, this pendulum that happens doesn’t do much of that. How about getting your products to customers? I know the trucking industry has huge labor issues of its own. • Huge labor issues and it’s extremely volatile. I mean over the past year it’s been a serious challenge. People used to ship all their product via truckload instead of partial because it was so cheap and now people are having to dig in and find all of these alternatives to get their product out there at the best possible rate while still getting the service. It’s been an absolute crazy year for the logistics industry. The costs are skyrocketing lately and there’s no knowing when it’s going to go down. It just keeps climbing every day and the volatility even day to day can make a huge difference in the spot market. 102

• We’ve had an issue with the eight hours that you mentioned. A driver would be sitting without a load for eight hours when it could be here in a day, and it’s taken a day and a half to two. So, we’ve been impacted by that a little bit. • We have struggles. Trying to get product shipped out to our customers, it’s, like you said, it’s volatile. You could make a phone call at 10:00 in the morning and if you can’t confirm within half an hour, your spot on that load is gone. • Yeah, 15 minutes is about all they’ll wait around for anything.

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FOCUS GROUPS

Pine City Pine Technical & Community College

March 23, 2018

Someone said the other day that if manufacturers can’t succeed in this economy, you should reconsider your career choice. What did he mean by that? • First off, I can’t believe somebody would say that because, while I think the economy is looking better than it has in the past, this is a difficult business to be in right now. There is a lot of competition globally; there are a lot of consolidations going on which sometimes have a positive and sometimes a negative impact on manufacturers. I think the challenges that we have long been experiencing with workforce are getting worse. To me, if you’re able to grow and survive in this environment, you’re actually doing an awesome job because it’s not easy. • I agree. We struggle constantly to get people. Back when there was the recession we had people knocking down the door trying to get in to get a job. But now, in a plant of 150, we’re 20 people down already. We’re going into our busy season, so that’s very concerning. • It’s a very strong environment, I think, but even with this strong Sponsor: Pine Technical & Community College

104

of an environment, the business is there for us to lose. But, in that, it also brings its own challenges, and if you don’t meet and beat those challenges, you’re not going to do well. So, the feedback on that, to be successful in a high run environment, is what you do in a normal job. • And I think that what we potentially face with the new steel and aluminum tariffs could change what we’re thinking the future holds for us very quickly, because, many of our customers that have the opportunity to manufacture overseas, may decide to do more of that to avoid having to manufacture at a higher cost. In terms of supply chain, it’s going to add a huge amount of work on the part of many small employers, I think, to try to figure out how to charge your customers for these increases because the market is going to be so volatile. That’s going to add a wrinkle that two months ago we weren’t expecting. Two weeks ago we weren’t expecting that. Do increased sales mask some shortcomings within the business? • I will tell you that the more revenue that we have, the less we focus on smaller problems that can turn into bigger problems. Or that are really underlying structural issues that need to be dealt with because it’s way easier to make money. I would say we don’t fret about it, and we don’t initiate as many improvement projects. That’s not to say you’re not doing anything, but you’re not as aggressive about it as you are when sales are at a lower level. • Good sales cure many ills. • They give you some revenue to work with on projects that you can afford. What’s the essence of the worker shortage? Is it more about people with skills, or just people? • You can always find somebody to fill the spot. It’s the quality of the worker. And finding one that is willing to stay that they’ve invested all the training in. • Many of us haven’t caught up to the fact that employees today change jobs more frequently than they did in the past. And so we keep running our businesses and thinking about our employees back in the days when they stayed for 20 years, and they stayed for 30 and 40, and we need to get up with current reality. That may not be the case anymore. The data 105

clearly shows people change jobs frequently, and that is what’s going to happen. And us sitting in our plant, thinking they’re not going to, is not going to change that. Are there things you do to adapt to the changing attitudes, especially of the younger people? Like flexible work hours or work days? • This is the first year that we actually have offered a true, flex-work environment. We’ve a handful of employees, or team members, that take advantage of that. The majority of them are our younger team members with families, or those just starting their careers where they need the balance. They need to make sure their schedules are lined up for child care, and those sort of things. The other thing we’ve really seen is the newer generations of team members like to see where their career path is. So, really laying it out for them where they can see their growth. What are the opportunities? Is there going to be education required for part of it or not? Can I get those skills at work? What are the programs? And then, understanding what the promotion is. So even, from the manufacturing level with machinists, maintenance team members, assemblers, and material handlers, we see that. Has it worked? Do you have better retention levels? • The more we promote from within the more we see retention from our full-time, permanent team members. Yeah, so for our team members to know that they have a chance, they’re going to be at our company long-term. And then there are opportunities to grow, both from a skillset in the type of work they do, and a pay level. Is this a trend? • I’ve seen a combination of the younger generation that goes to technical school and makes it happen, and they basically get a running start. It’s about 50/50. We also get team members that come in literally as temporary employees, and we’ll do internal promotions and they’ll move on. How are you dealing with the demands of the younger generation of workers? • Part of it is they don’t actually want to work. That’s huge. They want the money but they don’t want to work for it. We haven’t figured that out yet. 106

• We haven’t figured it out, either. It’s just, like you said, they don’t want to come to work. I feel maybe a lot of it is we’re helping them too much. Some of these employees, they have too many options from other opportunities; maybe their family’s always helping them. I don’t know. • We grew up in a time where you had to work every day. And you grow tired of it. When we meet new people, I tell them all they have to do is come into work every day, work hard, and be nice. You’ll be successful in this company; it’s very easy. There are six-figure paying jobs at this company, and you can get there from this career path. • We’re doing the same thing. Building a career path will make them visually see, when they come in to our company, there’s opportunity for them to grow. And they can do just about any job they want in this company. • The big thing for us right now is recruitment and then also, trying to figure out that retention. How do we get people to want to stay here and make a career? What about “being nice?” Is that a factor? Common courtesy? • That’s truly a factor, and not even for just new employees. They feel like they’re in a manufacturing facility where they’re not respected or not treated well. • We’re trying to focus our retention around that. What does that mean? What does that look like? Where’s it coming from? • People are talking about people not having the right soft skills. People have to often times communicate about difficult stuff, quality problems, efficiency issues, whatever. The go-to place for most people in the work place, I think, is that you have to be mad when you communicate about that. I have to be mad or crabby, and I’m talking very sternly or whatever. The truth is, we can converse about that just like we’re all sitting here talking right now. Nobody has to be mad. But that’s a skill deficiency that we see a lot of people have. • If we’re going to talk about something that people won’t want to hear, we have to be angry when we do it. That’s just not true. We try to talk about it but from the soft skills standpoint, it’s a real problem.

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• You mentioned demographics, that’s a huge problem for us. Just geographically, our location in this area, it’s very tough to get a certain level of employees. We literally have, at any given time, 15 high-level positions open because we just can’t find anyone to fill them. We’ve been hearing about a projection that the number of unfilled jobs in Minnesota’s economy may increase from 60,000 to maybe as many as 280,000 over the next five years. • Something like 80 percent of the people in these counties around us migrate past us to work in the metro. We have to get them to stop here. It is costing them a lot of money to drive. There are plenty of people here; we just have to convince them that it’s worth staying. Why aren’t more young people seeing the value of a two-year technical education, especially when skilled jobs are starting to pay so well? • We’re obviously still trying to figure that out. And every region’s different. I spent a lot of my career in the metro area. One of the challenges that we see specific to this region is there’s just a lot of firstgeneration college kids. So, the first thing that we talk about is just getting them to pick something after high school. About a third of the high school graduates around here don’t do any higher ed. They’re working. About 110 kids graduate from Pine City High School, 40 of them are undecided the day they graduate. • Higher ed, at some level, has done itself a disservice when we keep talking about how expensive college is now. Seventy percent of the students at Pine Tech are Pell eligible, which means they pay $1,200 a year for a full credit load. So, that’s generally not expensive for most people. If they don’t get any financial aid, they pay about $5,000 a year to go to school. As a state, a lot of people testify before the legislature using stories about student debt, some of which are true, but most of the cases aren’t applied to schools like Pine and public two-year schools. • I think our schools are strapped and challenged with that so we have to come at it with a different approach. A local think tank commissioned a study late last year that found median lifetime earnings for certain two-year degrees are 11 to 61 percent higher than the four-year degree equivalents, if you factor in cost of education, too. 108

• That’s a startling number that I think almost no one outside of this room, or manufacturers or educators, really knows. • As a career progresses, they get raises. This is what that two-year technical degree will range from. This shocks the four-year students. No one tells them this. Some parents have told us that high school students may not be motivated by the potential of career earning potential. They’re too young. They’re maybe more attracted by the “cool” factors. What do you think? • We see that money does matter to people, but at the end of the day, most human beings want to do something that makes a difference in this world. So I don’t think it’s their generation, I think it’s my generation, as well. We like to know that we’re doing something in the world that matters. One of the things that we do is we try to tell the stories of our customers. What are our customers doing that makes a difference in the world and how do we contribute to that? And that’s something that people care about. We see that with women in manufacturing that work for us, they know they’re contributing to changing the face of manufacturing as we currently see it, and it matters to them. Too many people think that two-year technical degrees are for people who don’t like to read a book, or write a paper, or take a test. That’s just not true. We have to stop that messaging because it’s just not true. I’ve heard that only 22 or 23 percent of all jobs in the U.S. economy require a four-year degree. Has anyone else heard that? • The number we use is 7-2-1. Seven out of every 10 jobs require a two-year degree or less, two require a bachelor’s degree, one requires a post-bachelor’s degree, to become a lawyer, doctor, whatever. Those numbers came from Harvard or MIT, and the ratio hasn’t changed since the ‘50s. And it will be the same in 2030. • Our state has career pathways that can take you from a certificate to an associate’s degree, and on to a four-year degree if you wish. We haven’t effectively communicated that. I have two young daughters who are attending four-year colleges right now, but I would never have wanted somebody to tell me they were going to be limited with a twoyear degree. We all want to know that there’s forward motion possible for us. And it exists in Minnesota.

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We’ve been told that many high school seniors don’t have any career game plan when they leave school. • These people wander for a few years, and then all of a sudden they realize, “Wow. I gotta make a living.” They just weren’t ready to decide; they didn’t care. You could tell them anything that you wanted about a four-year, a two-year, they just, they weren’t listening. And sometimes, they really put themselves in a bad spot. Is that the fault of schools? A college president once told us that 40 percent of students entering a two-year school were not prepared academically. They need remedial help. • The statistic I’ve seen is that about a third of the higher education operating budgets go toward remedial or preparatory coursework. • I think it’s really about how you redefine the high school education. It used to be that a high school degree meant work readiness. Many decades ago, it was thought that you were ready to start a manufacturing career when you graduated. We assumed you could read and write at a proficient level. I don’t know if that’s as recognizable anymore. • The governor kind of changed this, but they were going to refer every high school senior to take an ACT test. An ACT test is very transparent. You know where it kind of puts you in college readiness. I don’t know that we could say that about the high school diploma anymore. We see that by trying to get them ready just to go to school, we’re doing kind of the thirteenth grade now in some cases ... • Minnesota has adult basic education there, and it is a heavily used service. When I first started at COMPANY, there weren’t written procedures for people, nobody had to read machine manuals. We would have communicated all of that stuff verbally. I recently heard that there are a lot of people in the workforce system that read at like a fifth grade level. I actually have no idea what the reading level of the people on my shop floor is. So, it’s likely I’m giving them information and expecting them to be able to handle it, but they don’t actually have the reading proficiency to do it. Do you have policies related to the use of smartphones? • Yeah, no cell phones allowed on the production floor. That’s our cell phone policy. 110

• Even in their pockets, or anything, they just ... they just leave them in the car. • Yeah, or in their locker. How did that go over? • It’s still not going over very well. • It is something we talked about in our management meeting yesterday. Well, how many people walk around with wristwatches? You see an employee using a cell phone on the floor, the immediate response from the manager is, “You’re wasting time, get off your phone.” But what if they’re using it as a calculator? Or what if they’re using it to track their production rate? • We took that out of the equation and we put calculators at each press. So, now what’s your excuse? They are just like, “Oh, I’m just checking the time.” But there’s a big clock. You have to take the excuses away from them. • And you still have the sneaky ones. • We’re doing exactly the opposite. We’re actually allowing them to listen to books or audio, as an engagement tool to get them happier in the day. Has it affected productivity? • We’re just starting a trial on that, so we’re just on it. There’s some safety issues and concerns with some of that, so we have some protocols about how they can do that. We’re just trying to always make the employee happier. But the cell phone usage and stuff like that, yeah, data surfing or texting, and that type of stuff obviously is not allowed. Trying to give them some tools. • I have one to add. At a CEO peer council, NAME told us use of these devices is so important to young people, that they will quit a job and go someplace else if they’re not allowed to use it. It’s not worth losing employees over. I own the company, so I can use my cell phone whenever I want. But if somebody told me I couldn’t use this thing, I’m going to quit.

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• Not to mention the fact that our machine tool suppliers and other organizations provide apps that we find to be useful on the shop floor for people. We encourage people to text somebody rather than walking all over plant trying to find them, you know? Because that creates its own waste of time. • Rather than fighting it, we’re trying to find ways to make that technology work, including giving team leads iPads on the shop floor. We have Wi-Fi in the plant. So, we’re not going to fight it, we’re going to find a way to make it work. • Our facility is quite large; I went back to using a two-way radio. There needs to be contact with people. We’re back to using mobile twoway radios, and that’s the most effective tool that I’ve seen over the years. Phones and iPads are costly, and they get damaged or lost, but ... So, the communication in the office setting is cell phones, everybody’s texting each other, that type of thing, but on the manufacturing floor, it’s just the two-way radios. Let’s talk about leadership training, planning. NAME, you talked about trying to get your leaders to be more communicative. How many here are actually doing things regarding getting their leaders more formally trained or getting better communicators in your operations? • We spent a lot of time in the last year or two working on, you know, everybody doing these performance reviews. In our business we don’t even like to do reviews annually. What we are trying to do right now is develop our employees. Personal development and professional development. So when we meet with them, we don’t want to talk about how they did last year and if they’re not getting a raise, they don’t care anyways. What we want to do is find out, “What do you want to do?” “What’s going on?” “What [inaudible 00:46:50] better, professionally and personally?” • So, we spend a lot of our time with our leadership and talk about softskill training, which a lot of our leaders are really having trouble with. • Is it a retention tool? • It’s a retention tool, as well. But it’s also trying to build up our leadership where some of them don’t have a four-year or two-year degree, but, you know, we promoted them beyond their capabilities and 112

we expected them to do well. And then we complain when they donâ&#x20AC;&#x2122;t. We take it as our responsibility to develop our employees as much as it is their own.

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Grand Rapids Itasca Community College

March 23, 2018

Let’s first talk about the reasons you decided to attend Itasca. • I like to work hands-on and be actually doing something, not just sitting behind a desk or writing stuff. This is a good opportunity where all it takes is two years and I can be working right away and doing what I want to do. I always took technical classes in high school. I took auto mechanics. I took welding. I took basic electricity and all that kind of stuff. I knew I wanted to be doing something with my hands when I was working. The counselors said, “Here is a new program that’s right up your alley.” • My counselor directed me here for the engineering program and then after a year I looked at what else they had. I started out in the engineering program here at ICC and, it was pretty difficult. I probably didn’t have the best experience and I thought, well, I kind of like the field of engineering and relating it to manufacturing and working in facilities and stuff, and I also like the hands-on approach, so I figure I’ll look and see what else ICC has to offer for curriculum. • We heard of a place today that has 150 employee positions and it has 20 Sponsor: Blandin Foundation

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or 30 openings right this second. • My decision was kind of different because of my age, but I used to work in the mines, and we got laid off. The government offered a program to pay for our schooling if we went back to school. I wasn’t a big fan of school work when I was in school and after not being in it for 20 years, I wanted more of a hands-on course; this just seemed like the thing that would be able to keep me interested. What’s different about this program at Itasca? • It started a couple years ago, and morphed from having two very specific programs, one based in pulp and paper and one based in power generation. We pulled industry folks from all over northern Minnesota together to help develop this program and what they wanted. Manufacturers are the ones who actually designed what the program was about. This whole program is not based on industry specifics, those in the program are learning how to operate a process on the simulated software that we have here. They’re learning about different pumps and valves. They are more hands-on. The second-year students now are working on a project for Minnesota Power’s Rapids Energy Center, so they’re doing a project based in industry. They get that hands-on experience of going out and looking at what the costs are to actually purchase the equipment and see how much it costs to install and then they’ll present that to the industry to see if that’s something they might want to do. The program is a two-year program but they can ultimately finish all of their core curriculum within a year and a half. How many people are in the program? • The second-year students started off with 18 and now there are two left. The rest of them are working. The other group started with eight, now there are five left. A couple were younger kids and dropped out. Didn’t really understand. Weren’t quite ready. • One of them was a PSEO (post-secondary enrollment option) student who just was not ready for college. Minnesota Power is still consolidating from when they shut down the location up on the north shore. They will be hiring again coming soon, it’s just that they’re still consolidating and rearranging their structure and stuff like that. To get students from this area to come into a program like this is difficult if they want to stay in this area. If they want to go outside the 100 miles to Bemidji or to Duluth or whatever, Superior, there are tons of opportunities.

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• We had students from the PowerGen program, which is very similar. There’s a lot of overlapping core competencies between that program and this program. We’ve had people from down south calling up here asking for students in the past. There are so many job opportunities in technical fields, and soon to be many more. Why aren’t more students headed in this direction? • I just don’t think they really know about the program or what you can do once you graduate from it. They don’t understand that you can go get a job right away and you can make good money. And I just don’t think they know about it. • I’m not really sure why, either. I couldn’t really pinpoint it. Do some parents still think there is a stigma related to two-year degrees? • I think it might be that. I also just think it might be the media, the way it is in general now too, favoring four-year degrees over two-year degrees. I think it’s the media more than anything. I don’t think parents are really the issue. Personally, from what I’ve experienced, it’s the media. Do you have friends, any of you, that should be in this program or in a program like this, that aren’t, for whatever reason? • I can think of two off the top of my head already. I’ve tried to sway them this direction, but studying and them are oil and water. They’re completely separate and I tell them, it’s really going to benefit you in the end. • Right now the high schools in the area are trying to find ways to get students into CTE type courses. Three of the high schools have a grant right now from IRRRB to develop those career pathways and see how it can work. It’s kind of like STEP (Secondary Technical Education Program) down at Anoka. We’re trying to figure out career pathways and figure out, okay, who can offer what and how can scheduling work, then they’ll branch off to the other seven schools. Through one of those grants, we’re working on a marketing campaign to Facebook and Twitter and different types of networking avenues for students, brochures are sent out to high schools and stuff like that. So, we’re working on a marketing campaign for the program to try to get that out there and students interested. Do more with less. • You speak to all these manufacturers, is there one that’s always five days 116

a week type of manufacturing? No. So, most manufacturing you work four days and then have four days off or whatever. You work different types of shifts, so that you have more time to actually play. That’s one of the challenges that they talk a lot about, because the face of work has changed so much. What do you think when you hear manufacturers or educators talk about soft skills—like alarm clock issues? • My attitude is, “If you’re not 15 minutes early, you’re late.” Just go to work every day, and for me, the longer the hours the better. I realize all the young kids don’t want to work as many hours. • I don’t see any problem with that, really. I’ve missed an extended period of days this semester, mainly because I was sick and stuff. • They don’t seem to be bothered by it. They don’t really seem bothered because, at least from my experience, other kids that have that attitude, don’t really care to show up, even if they miss a certain amount of days. I tell them about it and it doesn’t seem to impact them, doesn’t bother them. • Industry has changed so much that back in the day, it used to be that you got a job and you stuck with it for 30 some years because at the end of it you had a pension. Now that everything is divvied up into 401K accounts, it doesn’t phase, and correct me if I’m wrong, but I don’t think it phases people as much because they think, “Okay, they’re not going to take my retirement. I’m not really going to lose anything if after five years I pick up and leave.” Industry, I know it’s expensive and all that stuff, but in a way, that’s where the trend started to change. The fact is I’m not stuck here, per se, because I can pick up and leave and my 401K follows me wherever I go. What about the attachment to iPhones in the classroom or on the manufacturing floor? • From our standpoint, they’re useful tools and we can use them a lot, but I completely understand why the industry doesn’t want them. I can see people hiding out on their phone and just not paying attention to their job. • People play with their phone. It’s a distraction. • It’s a distraction. • Maybe if you have your lunch break, you can have your phone back, 117

for a half hour, hour, whatever you get for your lunch break and then give it back. I don’t know, just so that they can use it for a little bit so they don’t feel so far away from it, you know what I mean? So, you can still check and make sure nothing’s going on and then go right back to work. • Yeah, I think break times are probably a reasonable time to use it, but as soon as you punch back in off your break, I don’t think you need it then. Once you’re on your break, I have no problem with it, but out on the floor, no. How difficult is the curriculum here? Are students prepared for it when they get out of high school? • Probably like a six out of ten. Six or seven. • I came right out of high school, so it was really easy for me to jump right back in. I already had my math skills and my reading skills. I knew how to work computers, but I can see where the older guys come in and they haven’t been here for 20 years and it’s a lot harder for them to remember how to use the computer if they haven’t been using one a lot. I used to use mine every day in high school. Now they have iPads there. You’re always on technology and you’re always using your math skills and stuff like that. • I knew I would be on a computer. I knew we would have to use it a lot more when we were in college, so I actually came in before the class started and took a summer computer class to help myself. Math was kind of just like he said. I had trouble remembering. I really haven’t had to use much math over the past 20 years, and when I did it I’d do it in my head, I didn’t write down equations. Then when you get to college, they kind of expect you to do it a certain way, when you’re writing out your work and stuff. • That’s another nice thing with your phones. If you don’t remember an equation for figuring something out, you can look it up in three seconds. You can figure out the whole equation. There’s usually calculator support right online where you can just type in your numbers and you got the right answer right there. • Or just ask Siri. • Yup.

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How many see yourself working for a company, or maybe going out on your own? • I’m leaning more towards working for a company. I want to do the power industry or something along those lines. • Yeah, I think the same thing for me. Yup. • I enjoy working for people. What will be the impact when they open the mines? • Definitely boost the economy, that’s for sure. • A lot more jobs. People moving back. • No offense to the city folks, but I think there’s a lot of people that look to this area to come and live because it is a slower pace. It is a beautiful area. There are good paying jobs. One of the students that was in the program that left not too long ago, got a job in the mine and starting, he was $24, $25 an hour. And within a couple of years, you’re making over $30 an hour. • With good benefits some of the mines up here are offering ... talk about showing up. Each quarter is like $2,000 a quarter if you show up on time for your scheduled work and if you don’t call in sick, you get a bonus. On top of that, there’s another $8,000 you could make in just a year, just for showing up to do what you’re supposed to do in the first place. • One company is looking at changing their scheduling because the mines are so generous as far as long days, but then you’re off so many days. • Minnesota Power does that too. I think every four weeks they get a week off. It’s crazy, whereas Blandin is two days, two nights, four off. Two days, two nights, four off. They’re all different but again, I don’t understand. • People don’t understand what is actually in a manufacturing facility, how technical it is. People, younger generations, like to use computers and technology. They don’t realize how technologically advanced the industries are.

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Are young people, high school students, motivated by money? Or is it too soon? • Yes and no. The money is definitely a good benefit and the benefits that you get from the job are great. For me, I just want to do something with my hands. Making good money and only having a two-year degree, you can’t beat it. Why not? • Less debt. • I know some people that are going to Mankato State and they’re going for four years and they’re $70,000 in debt and when they get out they’re only making $30,000 a year starting, so it’s going to take them a long time to pay off. • It’s harder for somebody with a four-year degree to find a job in their profession than it is for somebody with a two-year degree. What’s the one single piece of advice you can give manufacturers when it comes to finding the employees they need? • One thing that would definitely help is more internships. It is very difficult to find internships for people in operator-type positions. • Liability issues. Out on the floors and stuff like that. They don’t do it. • COMPANY, 20 some years ago, used to have student workers but now they don’t. COMPANY used to have summer internships but now they’ve cut back a lot, so it’s definitely cut down. But back to scholarships, internships and jobs. • Apprenticeships used to be up here, there used to be more... It wasn’t based on the operators per se, it was more in the lines of pipefitters, millwrights, electricians, things in that order. • I’d basically say just advertise it. Show them actually what they’ll be doing and show them that it’s not that bad of a job. And show them that you can do well in life if you stick with it. How much more valuable would it be, like Blaze, if you went? You’re finished now and you get your job, you went back to Grand Rapids High School versus some old guy in manufacturing. Is that going to speak better to students, do you think? 120

• When I look at the industry, I figured it would be a bunch of old guys. But then when I started to get into it, more people my age are starting to move up into those positions. It would have definitely helped a lot, too, if I would have known in high school, “Hey, it’s not that bad.” If somebody my age would’ve come talked to me and said, “Hey, try it out.” I would have looked into it more. I still found it and I’m glad that I found it. It might help a lot if you had younger kids talking to them. • I agree on the advertising part. Probably a younger person coming in to speak to high school students, advertising online, social media, stuff like that. That really draws the attention of the younger generation. • Probably aim it at the kids that are enrolled in those, the tech classes. But I mean a lot of schools don’t really have classes like that so that’s going to be pretty difficult because that’s where I got pushed into this, into going this way. I started working in the tech wing and then I realized, “Hey, this is what I want to do.” I didn’t really like doing homework a lot and all that kind of stuff, but I liked being in tech wing working on cars. Doing anything with my hands. • They helped push me in the right direction. That’s where I found out there are a lot of jobs. When I came here I was just going to do my two-year generals and then figure out where I was going to end up, because I didn’t really care too much about college, I guess. I wasn’t big into books and studying and all that. And when I found this, I was like, “Let’s go. Might as well.” • And that’s the thing I like about it, too. We don’t have to take a bunch of classes that ... If I were going to go do my two-year generals, you have to take all these classes where you don’t really know where you’re going to end up using them until you move on. But here, they set you up perfectly and we have economics and chemistry, physics, all that kind of stuff. I would have looked at that at first and I’d have been like, “What am I going to do with physics? Or what am I going to do with chemistry?” And then after taking this program, working side by side with it, you actually see how you need it. • That’s the best part about it. They show you why you’re going to be using it and what it’s used for instead of just, “Write down this equation, save it in your brain because you’re going to use it on a test.” No, you’re going to be using it here and this is what you’re going to do with it.

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Brainerd Brainerd High School

March 27, 2018

We are joined today by a half-dozen students in the welding program at Central Lake Community College and a half-dozen students from Brainerd High School. Let’s start with the welding students, right? What influenced you to enter that program? • NAME, last year’s welding teacher. I had a couple of classes with him throughout my high school career and he definitely swayed my opinion towards manufacturing. He taught me the basics, this is how you keep an arc going, this is how you keep travel speed and what not. It really got me interested. • Same thing with me. I was basically the only girl in welding. He always sat and helped me throughout my entire high school career, because I was in welding since my sophomore year. I was kind of nervous, being the only girl going into the class. I got a welding certificate and a welding award for it. I actually didn’t plan on going to Brainerd at first. I planned on going to either Mesabi or moving to Oklahoma for college, but looking back, I’m glad I chose CLC, just for the pure fact that I’m close to my family and Oklahoma would have pushed me away, I guess. Sponsors: Clow Stamping Company, Pequot Tool & Manufacturing, Inc.

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What did you think about in terms of a career? Do you know people that do welding professionally? • My senior year, I was pretty nervous about college and getting everything done. One of my dad’s best friends actually is a pipeliner. I met up with him and he kind of really peaked my interest in that. I went to Ohio with my dad to visit the pipeline that was going through there, and I sat there and watched what the welders were doing and the welders’ helpers and it just clicked and that’s what I want to do now. • I’ve been around welding my whole life. My dad’s a welder and stuff and he ... I kind of liked doing it in the garage all the time. I took class this year in Brainerd for welding. Then basically, I just liked it a lot, so kept going through it. I’m not exactly sure what I want to do after my career yet. • Well, my welding teacher in high school really peaked my interest in it. I took his classes probably, I don’t know, three or four times every semester. He taught me everything about welding, besides what I learned in college now. He really pushed me to go for what I wanted to achieve in life, like careers and what not in the welding field. I guess, that’s just what peaked my interest. I’ve been around welding throughout my whole life. What do you like about it? • I don’t know. It’s just kind of a cool factor, that you’re building things with your hands and you know, making things that can help people in the manufacturing world. • For me, I needed a career change. I was in construction for the past 25 years and I was just getting burned out with that stuff and I’ve always been interested in welding. I liked the smaller campus up here in Brainerd, so that’s why I decided to come here. I liked working with my hands anyways and then to be able to build stuff, that’s what I enjoy. Seeing the finished product when you get done. Alright. High school guys. Anybody thinking about going to Central Lakes or somewhere else? Have you decided where you want to go yet after high school? • CLC in Staples. Robotics. They have a really good program there, my friend’s in it and they also have robotic welding, too. If you’re doing our course, you can go over there, get some credits over there and you can get a 123

robotic welding degree, too. • I’m thinking of going to NDSU for mechanical engineering. • Twin Cities. Microbiology. • I actually want to pursue medicine, but I do like welding. I have a welder at home, and I do that on the side for fun. • I’m either looking into UMD for mechanical engineering or for sign language interpreting. People are saying that the worker shortage is going to hit a crisis level within five years. Did that impact your decision? • I looked into it. The job growth expectancy rate was pretty high, compared to other fields, so that’s definitely a factor that influenced my decision. • There is definitely a higher percentage of people getting a job out of school for welding than all the other construction trades. Basically, when you’re done with college, you can get a job very easily, in the field that you want to do. Manufacturers sometimes say that parents, school counselors and teachers dissuade students from wanting to pursue anything other than a four-year degree. True? • Ever since I was 10, my mom kept telling me, “You’re going to a fouryear college.” She got kind of pissed off at me when I told her I wanted to go to CLC instead. • Show her your first paycheck. • My brother went to Alexandria Tech for a two-year degree, and I feel like his job that he has now is a good career for him and sometimes, if you go to a four-year degree and get a good job, it’s the same. • They don’t really tell you about how a lot of manufacturing jobs pay better. They want you to go more into the professional office jobs, rather than the hands-on jobs. Probably around the time they were in college, those were the high-paying jobs. A lot of them don’t think about how often the change is 124

• It was the same with my school but during my junior and senior year, they actually focused more on the manufacturing jobs because we actually had construction in our schooling. We had welding, we had woodworking, we had robotics and electronics and we had outdoor classes for people who were interested in fisheries or DNR stuff. • I did not meet with my school counselor throughout my entire high school career, maybe one time. They are just not that important to me. • I’ve talked to them only to get my schedule changed, when they gave me the wrong classes. That’s the extent of what I’ve done with them. • That’s the thing. • To get myself back in the shop classes that they switched on me. • Yeah. Me, too. That was basically the only reason. • When I didn’t get the shop class I wanted to take for college, I had to go in there and have it changed. They weren’t very willing. They were willing to work with you but they didn’t like that I wanted to change back. • It seems like the counselors are just more focused on the kids who are having behavioral issues or really struggling in school, which is important and all. I didn’t even know who my counselor was until this year because I just had to ask a question about credits for my senior year. • It’s like, I feel like they just kind of push ... Like, “Oh, you’re doing okay in school, I don’t need to really worry about you,” which kind of defeats the purpose of having a counselor to help you make decisions. • They are there just to help the school really. I don’t really go to them for life advice or career advice, just more school advice. • My mom is actually one of the school counselors. There’s so few counselors. They just laid off two more counselors. I think there’s one counselor per, I think, 500 students. • I had my engineering and design class knocked for a required health wellness fitness course and a foods course. Oh yes, because I need to cook a cake, instead of engineering.

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• Some are your close teachers. I thought when I graduated last year, my shop teacher was actually my biggest influence and everything. If I needed help with something, I’d go to him or the woodworking teacher. I just connected with those people better. I did have some good teachers in other classes that I talked to, as well. • I never had anybody try talking me out of (welding). They never tried to push me towards anything else. From the technical side of the school or whatever, the tech outside, I’ve never had them push me towards doing a two-year or anything. How about your parents? Are they the most important influencers? • Big time. My dad pushed me towards a lot of manufacturing stuff. He kind of knew that I wouldn’t be able to handle sitting behind a desk. He always pushed me towards doing something with my hands and stuff. I got pushed into welding. I thought I was going to hate it at first. I absolutely dreaded going to welding. Then the first week, I just fell in love with it. It’s just the fact that I was the only girl, and I was proving everybody wrong because there were so many doubters, and just making my dad happy was a big influence on me, too. How hard is the schoolwork at Central Lakes? • As long as you apply yourself, you should be able to do it. If you come out of high school with a bad work ethic and you’re just like, “Oh, I’m just going to do what I did my senior year, slide by,” that won’t work. • You have to actually do the work and apply yourself daily. I wouldn’t say it’s hard. • You have to push yourself and you have to pay attention. • If you work, it will help you through it. There were a few kids that did not apply themselves and they just ... I mean, they failed every class. • Or they dropped out. • They dropped out because they didn’t like the teacher because the teacher wouldn’t give them what they wanted. Well they didn’t work, they were always leaving class.

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How about in high school? • I take a bunch of AP classes, Advanced Placement, which are basically college level courses anyway, so I just always try and work really hard, so that way college won’t be a huge leap for me, once I go there. You’re wearing a robotics team shirt. Does that help? • He stole that shirt. • We won 6 and and lost 3. Made it to the playoffs and got crushed. It’s always fun. • Robotics isn’t very well advertised in school. • They’d show it off at a pep rally for five minutes but that was it. • Pretty much the only people that join robotics are people who know people who are already in robotics. Let’s talk about soft skills. Do you know what I’m talking about? Manufacturers mention that it is sometimes difficult to motivate younger people on the job, or to even show up. Why is that? • (At school) attendance is mandatory, so if you don’t show up, you’re going to fail. • Yeah. We have to clock in. • Biometric scanner. • We have a hand scanner that we have to clock in with every day. • It’s supposed to simulate work. Obviously, I don’t have a job, but if you miss one or two days unexcused, that’s not going to fly, so they’re trying to simulate that, in a sense. • I also remember one of our instructors told us that they had some employers say that soft skills are one of the most important things they’re looking for. Even above skill. If you’re a good welder, okay. If you don’t have soft skills, they don’t really want you. • Another thing is, after almost all of our semesters, we always get our 127

paper back of our logins and log outs, when we clock in and clock out. It will highlight every time that we are late, every time that we’re gone. He’ll ask us why. • Another thing our instructor said too was, that after we graduate, if our employer decides to call them, they will tell them how many days we missed and the reasons, and if we are a good candidate for attendance and such. Can you get bounced out of the program, by missing too much? • No, but your grade will suffer, very much so because of it, and that could cause you to in turn, leave. • Drop out. • Only a handful, like two or three students from last semester. They didn’t come back this semester. They push you pretty hard in the first semester, a lot of homework, and you’ll see the people who don’t like to do their homework, don’t like to take in after school hours. They won’t be here. • You see people drop real quick. • If you’re not willing to work and put extra time into it, then you’re not going to succeed through. • When I was in high school or whatever, it was pretty much everybody had a job going through high school and it seems like now the kids don’t really have jobs. We were in construction and manufacturing when we were in high school. I did on-the-job training, so I’d get out half a day every day and go to work. We did the first focus group with parents. They said young people don’t value work situations because they’ve never had a job. Is there value in having a job while you’re growing up? • Yeah. Well, you get experience and training and all. Maybe employers wanted to hear you have a schedule, like going in there every day, and you get money after a while, so it’s nice. • Dealing with stupid people is also a very valuable skill.

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• That’s always very fun. • Change your whole outlook on fast food restaurants, pull up there and just deal with some interesting characters. What advice would you give to manufacturers about how to deal with their younger employees? • Keep a level eye with your employees. • Be a little less condescending, keep a level eye with them. A little more understanding of how they’re going through the work. Pay attention to how hard they’re working and if they’re not working hard enough, let them know. Instead of, “Hey, you need to work harder.” Just be like, “Hey, You know what? You’re lacking a little bit today. Would you mind picking up the pace a little bit?” • I feel like that’s kind of important. It’s become a generational thing where, so many older adults just feel like, all kids are lazy. Yeah, there are some but not all of us are lazy. • Just give them a chance, see if they’re going to work and then deal accordingly. If they prove they’re not going to work hard, then yeah, you have to do different things. Don’t just expect them to be lazy and not do any work, unless you force them to. • Well, all the jobs I’ve had, have been hands on like concrete construction, welding, and moving furniture. I’ve always put in 100 percent right away. They’d notice that I do hard work. I just know it’s my job to get it done, so I need to do that. What’s your sense of job loyalty. Do you see yourself working somewhere for, say, 30 years? • I don’t agree with going job to job. I think you should try finding a career, stay in that career. I know a lot of people probably get bored with it. Our generation is used to new things all the time. • Some people don’t last days. They don’t like it so they quit. • I’ve seen that happen. • I’ve seen it happen. 129

• I’ve seen it happen. • I have, too. • I work at COMPANY here in town and a guy started two weeks ago. He worked for three days. He came in at lunch time and said, “I quit. This is too much work for me.” He worked for three days. I think at least you should put in a two-week notice or at least finish the week. It was a Wednesday, he left us hanging with a lot of projects to do. My boss said, “Are you going to finish the day?” He just left at lunch. • I work at a lot of kitchens. I am a line cook at RESTAURANT and I’m also the kitchen manager at COMPANY. I’ve dealt with a lot of people that would rather complain about a large workload rather than do it. You get a lot of people that will quit and just not give any effort whatsoever. • Irritating. • They don’t understand that it’s not just their problem, it’s everyone’s problem. Why do people behave like that? • They’re selfish, I think. They don’t understand that it’s not just you. It’s everyone. In order for this to work, we all have to work together, and communication is key and just being on the same page. It’s hard for a lot of people to do that, to just focus on the job at hand because there’s a lot of stress going on, like a busy environment, a lot of yelling. That’s where your soft skills come in hand, definitely. • I feel like a lot of the whole work ethic and complaining about it being hard comes down to a bunch of kids that I know, who don’t have to grow up. Their parents do everything for them. They’ve always been able to cry about it and then there’s a little lifeline of, “Oh, my parents will solve all my problems for me.” Rather than them having to do things themselves and having to learn. • I mean, if you start at the home or you want to give people structure and put them on the right path, you still need to let them make their own decisions. If you do that growing up, then they’ll still be able to apply that same concept in the work environment later in life. Especially with employers.

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• If you don’t give them enough structure, maybe they’ll just be like, “I’m just going to go home.” Some young workers really don’t like traditional work hours. • Also, I noticed if they’re not on a schedule, they don’t want to come in and cover a shift. Like, “Oh, I’m not scheduled Saturday.” • “It’s my day off, I don’t want to come in.” • Even though they’re not doing anything, they’re like, “No, I don’t think it’s going to happen. I can’t do it.” If they don’t know that they’re working, they’re not really motivated to pick up an extra shift here and there, I suppose, is where I was trying to go with that. Smartphones bring another issue that some manufacturers have to deal with. Younger workers don’t want to part with them. What would you tell them? • You just have to know when it’s appropriate. In the kitchen, if we’re at rush time, you don’t look at it, you don’t touch it but if we’re right before an opener or whatever, if we’re prepping and you get a text or a call, yeah, you can obviously go check it or if you want to play some music on the speaker, go for it. When the time comes, you got to put it down. It’s just all knowing what’s appropriate and at what time. How about at school? Are you allowed to have your phones with you? • We can have them on us. They kind of frown upon us using them a lot but it’s our choice to be there, we pay to go there, they don’t tell us that we can’t be on them. A lot of kids do go on them quite often. • That’s kind of what I said earlier about incentives. If you treat them terrible or not terrible, just not poorly, then obviously they’re going to go find somewhere else to work. You got to treat them well, be on the same level, be on the same page. • In our workplace, I’d say it’s kind of safe to have your phone off. You’re running saws and you’re working with very hot stuff. If you’re on your phone or you’re using a grinder and you got headphones in and it gets wrapped up or your headphones get caught in the saw, that can hurt you. In our shop, there are no headphones. We have the music in the shop, off a 131

radio that we can hear. • Actually, I think last year or a couple of years ago, they had a fire drill over at the college and a kid had his earphones in the booth and never left his welding booth. Somebody come through to check the shop and there he was, working away. Had his headphones in, didn’t hear it. In that way, it can be very unsafe, I guess. Usually, they point us towards putting our phones in the toolboxes. • When I’m at work, I don’t touch my phone from 7:45 to 6:30, when I get off, with the exception of lunch. • I work at CHILDCARE over the summer. We need to have our phones on us, in case an accident happens. In general, it’s just an expectation that you’re not going to be on your phone, especially because you’re watching kids. I had a coworker, where we would take the kids up to go to the pool and she would just be sitting there on her phone the whole time, not even looking at the kids. I can’t even try and count how many times I tried to tell her, “You can’t do that. That is not safe.” She just would never listen to me. I feel like again, it kind of goes back to the whole loyalty thing and people just don’t care. To them it’s just, “Oh, I can get another job.” To me, it’s like, you need to be loyal because you decided to make a commitment, so if you’re not actually going to put in the work and the effort then do not look at your phone because your phone is not that important. • There’s nothing on there that won’t be on there later. I feel like in so many ways, it’s just some people are so obsessed with it and then other people understand that it’s not the most important thing in the world. It’s more important to be loyal to your job and do your work safely and not cause harm to you or anybody else. Let’s do something different. Let’s go around the room. Tell me what you see yourself doing in 10 years. • I’ve always wanted to be a teacher but then, my brother has been pushing me into engineering. I like the engineering side a lot. I don’t like any sort of biology or anything like that, and I’m not going into the medical field. I like mechanical engineering and architecture and stuff like that. I like doing that. • I’ll probably still be in school for medicine but I don’t know. I think that definitely welding could be something I can do on the side as a job, to help pay for school. I don’t know. Just school and having some fun, at 132

least, with welding at home. • I’m still unsure. Either engineering or something with interpreting. I want to do something that will help people, so I’m trying to decide what way will be best. • Welding. I’m not sure exactly what kind of welding I want to do yet. • I don’t really know. I feel like if I enjoy going out on the line, that’s probably where I’ll stay but for the first couple of years, because you actually have to be a welder’s helper. You can’t go straight on the line and be a welder. You have to go on the 798 Welders Union, well that’s a good union to be in, so that’s a union that you want to start out in and depending on the line that you go into, you have to be in some sort of union. That’s probably where I’ll end up. • I’m still kind of torn too. I was debating doing the underwater welding, going to the diving school here in town, getting my certificate. Or maybe some heavy industry stuff, like shipyards. I like to travel the sites and what not, I want to do some traveling, something like that. I don’t really want to work on a line in an industry, pumping out the same line every day. • In 10 years I hope to own my own fab shop. • I have a few different ideas but pipeline is a big thing going on right now, so I want to get on that and hopefully within three to four years, I can become a certified professional pipe welder. Then, you get paid more if you have your own welding rig. In 10 years, I’d hope to have my own welding rig and be subcontracted to different places, so I can get paid. Traveling a lot of places. I’m actually looking at a pipe-lining company in Montana right now. You go on the internet, you browse through. You find what you like. I mean, there’s a lot of places that you can go weld for. • In 10 years, hopefully I’ll be starting up my own robotics manufacturing business. I’m planning on starting at Delta Electronics. I have a couple of family friends that work there. • I’m not entirely sure yet, but like I’d like to work at some sort of engineering firm in aerospace or power supports or agriculture or something like that. • Overall, just the CDC. In 7th grade, we did a lot of stuff there. Big report on viruses. Saw a lot of videos, it looked really interesting. I really 133

like bio too. How important is income to that decision?

• Depending on what type of rules they have there, what’s the workplace

environment like, co-workers is also a big thing. It just kind of comes down to, if you want them to behave like adults you treat them like adults, you can’t give them nothing. “Just go do your job but you can’t be too hands on. You eat now, this is what you go and do, this is when you do it. This is how you breathe correctly, this is what you do here.” • You can’t do everything for them, but you can’t do nothing for them. Sure, I would probably stay at a job that paid less, but if I liked the people I worked with and everyone was relaxed there, it would be fine. • Give them structure but at the same time, let your workers have some decisions, on how they go about their job, as long as they get the job done. • I’d say the work environment has a lot to do with it, whether it’s clean, dirty, the style of work that you’re doing, safe. I know if I was working over at Brian’s and I didn’t get paid what I got paid now, I probably wouldn’t work there because it’s dirty and it’s hard work.

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FOCUS GROUPS

Morris Superior Industries

March 27, 2018

So, let’s start with a simple question. Let me just start by asking what kind of year is it going to be? • Busy. In a good way. • I feel like this year’s picking up, already the first quarter’s looking really good. Our customers are getting more orders. They were flat last year and some of our big customers were kind of slow, but now they’re really picking up. You can tell it’s a good future. • We anticipate a good year. We’re a capacity-driven organization, so we can pretty much sell to our capacity. There’s quite a bit of demand in our industry right now. I think the tax changes have promoted that. • We currently have the biggest backlog that we’ve ever had. This year is looking to be very successful. Our only gripe was the steel tariff. With such a large backlog, we had to do some damage control. As soon as it was announced–two weeks before it was even technically implemented– all of the steel prices went up 25 percent overnight. Initially, the price Sponsors: Tri-State Manufacturers’ Association, West Central Initiative

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increases were pretty much driven by speculation, as people tried to get ahead of things, so supply shortages were also driving up prices. • We’re very blessed with a very strong backlog. If we added up our first quarter backlog between 2011 and 2017, it was probably $165 million. Just this year alone, we are just shy of $200 million. • We’re excited. Steel is a concern on our end, too, because customers want to know how we’re going to pass those charges through. We’re trying to pre-buy as much as we can. • We’re coming off quite a few years of growth for the company. We entered this year with the biggest backlog we’ve ever had. It’s not just the level but it’s a good backlog. I would say there’s some uncertainty for growth for this year, however, ‘19 looks good. • Right now our lead time is 16 weeks and we’re running three shifts, six days a week. The steel prices are not affecting us. The primary reason we use steal is for making the molds and the dyes and because we buy ingot, not anything finished. We’ve seen no changes in our base price for the aluminum ingot or zinc ingot. The ingot prices seem to be driven by the output of the mines and right now, everything we’re reading says that 2018 zinc prices should come down slightly; aluminum will most likely be flat for the ingot because it’s not affected by the tariffs. How is the demand for workers affecting your outlook? There are reports that the worker shortage is going to get worse—a lot worse. • Automation. Robots. It’s not the total answer; you’ve got to find an employee to do it, but I mean, the machine sales right now are growing like crazy. • Our business is custom in that we don’t produce anything without a customer P.O. And that requires that you have to have bodies to handle the equipment, and we’re scrambling to find help because we know that we’ll lose a fourth of our workers to retirement in the next seven years. • We’re attempting to appeal to high school students. It’s encouraging to see school districts have decided to reinvigorate their industrial arts, which had gone by the wayside not that long ago. • We’re hiring less-skilled people and having to train them. We’re having mixed results. The challenge is finding the right people. 136

Which is the bigger challenge: finding skilled workers or finding any workers? • Finding workers that pass a drug test. A very big problem. • We do it for safety reasons and because you’re going to get applicants that are not even going to show up but they know they have to go for a drug test, so. • We’ve never had that issue. Everybody’s always passed. I don’t know if that matters but it just seems weird that they’d mention that one. • It’s strongly recommended by our work comp crew. How do you respond to the challenges of the next generation employees, the ones that are coming in that you’re trying to replace the retiring baby boomers? • I think you need to try to understand your work force population all the way from the boomers through the millennials. They all require something a little different to be content and to stick around. You need to try to understand everybody. Turnover and retention is going to be a continuous challenge. It will continue to be an employee-driven market. • It’s definitely a real problem. Nobody really wants to settle in one spot as far as the younger generation goes. We’re more rural with Fergus Falls and Dalton. People want to go to Fargo or, you know, towards the Cities, places with more of a nightlife or more excitement in general. They’re not quite ready to settle down with the family. We just try to take it as it is. I try to a get a feel for that during the interview process. You just have to hope that your company is strong enough and it’s a good place to work and you have a good culture that they want to stick around for. So, we try to get them in the door and get them to stay, but there’s only so much you can do sometimes. • The younger folks want a lot more flexibility in the workday, they want more vacation. • I’ve added three new types of shifts just this year because of that flexibility. Some want to get kids out to school, they can’t come in at 6 a.m. or 7 a.m. to start. So we now have a flex-shift, the 8:30 to 3 shift, so get your kids to school and get them home. I’ve had to get creative 137

with how we’re going to fill positions. We’ve pulled in a lot of people with just a lot of options. We have people that don’t have kids—I’ll go back to stereotyping just a little bit—but we have individuals who don’t care about the overtime. They ask, do I have to? Am I forced to? We’ve worked hard to change our mindset, especially in the production area. • We’re creating more options and it’s pulled more people. Since we’ve started that, I’m getting probably 40-50 applicants a week in the last two months. There are five other HR team members on my team and I took the youngest one and said, “Give it a facelift, give it a new look, give, you know, how we traditionally advertise, just what would attract you? I gave him full reins. It’s all social media, a little bit paper, Facebook and YouTube and I mean, he’s coming from places I would have never thought of personally. He’s created these little 7-second ads that pop up before you watch whatever you were going to watch. I am blown away at the amount of traffic we are getting. What about child care as an impediment for that generation? Is there sufficient child care here in the west? • No. We lost two employees to child care. They’re tired of signing their paychecks over to the daycare provider. • Five years ago, there were 40 daycare providers in Stevens county. Now there’s 26. It’s definitely emerging as a problem for us. • Most of them can only take one or two babies. Infants. So when I had my kid, I called down the entire list of daycare providers eight months in advance and pretty much all I got was, “Oh, honey.” because it was, it’s just that short. Any temptation to launch a company-related child care facility? • We’ve talked about it. As far as going through all the paper, licensing and all that, I will share the same sentiments, there’s no way we’ll do a daycare center. It’s too much. We’re looking at the possibility of purchasing some homes and then letting individuals run daycare out of them. • We looked into it a couple years ago, but there are requirements like putting a kitchen in. If you have a commercial or a daycare center, you need a commercial-grade kitchen. It’s like $250,000 to put a kitchen in.

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• About five or six years ago, our child care center in town here was struggling, and the community came together and determined that if they went out of business, there wouldn’t be enough daycares in the community. Bremer came to the table and basically funded them for two years, until they could get administrative staff in place to make sure that they could become profitable. I think they can take 12 babies and then probably 24-30 toddlers and then probably another 30 on the upper age. But if the community wouldn’t have come together, we would have lost that and we would have been in big trouble. This is another workforce topic that has emerged on its own. What’s your smartphone policy? • We let the lead people have them in case they need to communicate with each other or me. The people on the floor, we make them put them in their toolboxes when they show up to work. We had trouble at first. There were a lot of people who would wander over to their toolboxes, and we would see them messing with their phones but after a while, they adjusted. • We did the same thing. Put them in the toolbox. If you need to use it, talk to your supervisor and tell them, “I need to make a call at this time” and if they do see them with it, it gets documented. We had some quality concerns, so I brought all the machinists together and asked them, “What is it? What’s causing the quality thing?” And I grabbed my phone, I said, “Is this maybe it?” And one senior machinist said, “I agree.” I’ll say that actually everybody but one person raised his or her hand. • It is very much a generational thing. Anybody under 25 just grew up with it. • Taking away their cell phone is like violating their basic rights. • We allow the punch press operators if they have their earphones in, they can be listening to whatever, but if you’re running a CNC or one of our die-casting machines, absolutely not. It’s all about safety. • One ear bud in, that’s all. • We don’t allow them to use it. We have a radio in the shop, and no one ever really uses it.

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Why aren’t more young people seeing opportunities with tech careers? • Well there’s been such a big push for four-year colleges. I mean, that’s what everybody had ingrained in their minds, that you need to go to a four-year college. That’s what’s good for you and that’s where you’re going to make your money, but I think that kind of push for people to go into four-year colleges has really shorted the technical side of things, of vocational schools. Now there’s such a shortage of pools to draw from, whether that be for health or manufacturing, and we’re seeing that we just have to adapt by going more towards automation and doing in-house training for people that didn’t go to school at all or went to a four-year school and found that nothing was out there for them, so now they’re finding other alternatives. • There’s a dearth of career counselors in high school. How many fouryear degrees can you have out here with social workers and philosophy degrees? You’re not going to find it. • Fergus has an awesome STEM program, yeah. That’s one thing that we have been trying to partner with Fergus on, as well as high schools. We give them tours, they’ve done videos on our robotics, and interviewed my employees. We give them scrap materials so that they can mill, and weld, and whatever, in their STEM program. They have some fun things they do at the Brainerd Raceway. We’ll help them with whatever they need, whether that be drafting services or funding. • The issue isn’t with the tech school programs, it’s that they don’t generate enough students. • Alexandria Technical College, they graduate 30 to 35 machinists a year. And they’re all snapped up. • Just the local manufacturing companies in the area could hire two or three times that. Of those 35, probably half stay local. The instructors at the tech college are telling these kids, “Go to the Cities. You can make $80,000 a year right out of tech school.” They drive them out of the area, quite honestly, and the state doesn’t recognize that they need to expand certain programs. We would hire 20 welders a year if they could get them out of there. • I think the market will work, it’s just how long is it going to take before it does? I agree with you, I think they need to expand. Every tech 140

college in the state should expand their technical programs. • People go to school when the economy is poor and people can’t find jobs. When unemployment’s 2.3 percent, or whatever it is, the tech schools are even having a hard time recruiting students into those programs. Every single graduate, especially like machine tool and mechatronics and those, they have four or five job offers, every single one of them. • That’s one of the challenges of tech schools is they lose their students before they’re done with the program because they get snarfed up. • Enrollment is down at Alex Tech, right? They’re blaming the high schools because they’re teaching the high school kids, in Alexandria especially, that they think they’re machinists when they graduate high school. Then there are companies that are hiring them and training them on because they need them so bad. • Probably 10 years ago, I really recruited hard from Wahpeton, Willmar and Alex Tech for welders. We donated to all three programs, and we get access to the class and stuff. The most I’ve ever hired in one year from all three schools combined, was five. We actually celebrated that. A lot were going up to pipelines and oils. Just starting to creep up just before the big boom, but they were still going up there. Our model now is that we train them, we get them certified, and out on the floor. I think we just went over 1,300 or 1,400 certifications. One person could have three, four, five different certifications. We have 3-400 people that went through our welding school. The workforce shortage is a matter of demographics as much as anything. There just aren’t enough people. • Build a wall to keep people in? • Robotics is part of it, automation is part of it. • Immigration is an issue. Immigration policy could be one of the solutions. Where else are the people going to come from? It takes a long time to grow an adult. • Making your processes as efficient as possible to train has been key for us, as well. We’ve worked so hard on our job instructions and creating little manuals with pictures just to simplify and speed up the training 141

process, so somebody that’s learning something brand new we can hopefully have up–and they’re not going to be perfect or 100 percent— within 90 days. Can we have them at 80 percent efficient to where they don’t have to have somebody sit right next to them? • We know it’s coming, but we’re constantly balancing that between current realities and what we see happening in the very near future. To us, long range is two years, three years, and that’s the nature of our business. You hit it right, we need more immigration. The President of Pine Tech did an informal study a couple years ago and he found that just short of 50 percent of graduating seniors in his market area had no clue what they were going to do after graduation. Does that feel right for around here, too? • That’s what we find with the employees that we have. We have one that has now decided he’s going to commit, I hope, to full-time. That is his third time through the shop. In the meantime, he’s been a cook, he was working in retail, this is what he’s shared with us, for that very reason. We’re open to returning people if they had an okay performance. It doesn’t have to be good, it has to be okay. We’ll hire them back. Let’s talk about a few issues that always seem to challenge manufacturers. What about health care? • I think we’re all just used to it. • It’s not less painful, but you’re used to the pain. • It’s just the cost of doing business. • We changed this year from the four health care providers that are typically in the state to one that offers an open network nationwide. The biggest thing that I’ve had to overcome with employees is lack of trust because it’s new and different. It’s the same thing, but a different name. • It’s still increasing. Looking at the whole biometric screening, trying to build more focus on their own health care. Some are better consumers, but I think some will always just do what they want. What about government bureaucracy and regulations? • I don’t think it’s worse. 142

• It’s crickets. • Although, the tariffs came out of left field. • Environmental regulations can be a challenge for us sometimes. For us, we have pain points. Minnesota’s probably one of the toughest, honestly. Some states just do all federal and some states do their own stuff, too.

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Roseville Olsen Thielen

March 28, 2018

How’s business? • We were relatively flat. A little minor growth. Flatter than we thought it would be. • Our last year wasn’t as good as some years. We rely on government contracts, and they don’t have as much money as they used to. • It was probably one of the best years we’ve ever had. • We’re a little impacted by the weather. So, two years ago our customer base had a relatively big year, the last two have been a little bit more challenging. The worker shortage is with us, but we see new projections that say the number of unfilled jobs in Minnesota is going to grow from 60,000 to more than a quarter million. What are your reactions to that?

Sponsor: Olsen Thielen

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• We’re feeling it right now. We’ve got roughly 10 percent of our positions unfilled right now. There’s been some retirements and turn over. To find people and retain people the last year has been a huge challenge for us. • We’re seeing it a lot. We have a tough time retaining permanent people. At these temp agencies that we have, the quality of course is not that. We actually have ten people that’ll come a day or two and just walk away. I think it’s the quality level of the temporary people that are there. We’ve talked with agencies. They’re very clear about what is required of the people before they go and come into our company. It hasn’t really been a good scenario from that standpoint. We’re a provider of weaponry for the defense department. Our sales were down in ‘17 because defense spending was down. We’re excited now. We’re looking at a 20 percent increase this year and probably another 20 percent increase next year due to the additional defense spending. • We had trouble last year with people, and that’s a real concern for us. The next two years we’re going to need more employees. That’s our biggest problem. • I would echo that. We run into the same issue of finding people. I think from a growth opportunity, for us we can staff the shift, but if we wanted to go to two or three shifts, and we’re in the textile area, there’s not a lot of textile experienced folks in the country, let alone in the local area. Finding people, sometimes it’s just the soft skills, can they show up on time? Can they stay there all day? Can you stay off your damn cell phone, and work hard while you’re there? • I’ve been at COMPANY for 18 years and half of the people there have been there longer than I have. It’s because, well for one thing, we’re up in Isanti, but the wages that we pay are far and above what anyone else pays in that area, and probably equivalent or better than city wages even. We have good benefits. Our people stay. Most of them do a good job because we get the best people because we do that. • What’s tricky for us is our value of the product going out is shrinking. That’s making our margins very, very, very small. • We’re in the Cities; we don’t have a huge need. We only need one or two people. But if we grow in any substantial way, it gets a lot more exciting. It’s a little different because they’re almost all machinists. But we also see that for some of my employees. 145

• On the machinist side and maintenance side, we struggled for years. We just kind of decided to head down the path of tech schools and grow our own. If we get the culture right, we can build the technical skills. If we don’t get the culture right, and I used to work in IT, it’s a terrible business when you’re in that price war and you don’t have the right culture. It feels like you’re winning, but you’re losing. I just have looked at it saying, you’ve got to play the long run. So we would rather have too many people that we have to raise up, but now that puts us in a training onboarding and we’re not well suited. We’ve got to think about that. • The last thing we’ve talked about strategically is we’re never going to get the headcount we need, if we don’t hit our growth goals. That’s our challenge. • Are there things you can do to prepare for a worsening employee market? Or are you just too busy trying to keep up? • Looking at just overall efficiencies. We’re going through a process right now just to make our operation as efficient as we can from a manufacturing standpoint, in terms of the waste that’s generated, the parts we throw away in certain areas of our manufacturing process. We can’t do it in all, but there are some areas where we have incorporated it already, and some areas where we have very little that we could make improvements. • I’m 55 and my head of manufacturing is in his 60s, he just retired. I think about wherever I’ve worked, if I’m reasonably paid, and I have my boss and I’d like to agree with people I sit with, I’m probably going to stay. I’ve been looking at us saying, “Okay. What is our engagement employee survey saying at the micro level about everywhere in our factory?” Because if we bring them in and we train them, like I’m talking about, but they don’t feel like they fit in, we’re not going to hold onto them, despite the huge investment we’ve made in them. So, we’ve been trying to look at ourselves saying everyone wants the same people. What’s going to be different about working at our company in a year from now? We think about our culture and say maybe we need to seriously challenge our culture and ask how friendly do we really think we really are? Because if you have a lot of people around like we have, we’ve been together a long time. I don’t think we’re as willing to let people into our lunch group. I think that’s kind of most people. They want to be part of a group of people.

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• I used to work in IT years ago and I remember if you didn’t give someone a check mark regardless of wage increase, they walked out the door and went across the street. That was a very uncomfortable feeling of not being in control of your workforce. I’m thinking in the present and the future to ask are we really going to be what we’re going to be? Our relationship with people will be on a rolling 90-day basis of whether they want to stay. I’m trying to avoid that. Figuring out how to make them sticky. Maybe the right way. Like sticky customers, who want to keep employees, maybe that’s the right way to describe it. • Part of the longevity of our employees is our culture. Everyone is very friendly and willing to take new people in when we have them. • We’re all fighting for that same pool of people. This isn’t meant to be a political statement, but one thing that frustrates me is when I hear comments about the illegal immigration issues we have and that these people are coming to take the jobs that Americans don’t want. That really bothers me. There is a lot of textile experience overseas and finding people that actually want to do the job, we may have to look overseas, and we haven’t done so yet. We certainly are aware of a lot of people who would love to come to this country and work. • We tie everything back to values. It’s a constant conversation about values and trying to build in employee engagement. One of the other things that we’ve done in this last year is become completely transparent. Every employee sees our financials and where we sit, and how much income is coming in at the end of the day. They’re somehow really moved by that and how they impact that number. So, we’ve made a concerted effort to show them how they directly impact that number, whether it’s giving them all their costs, or whatever it is. Try to get a ground swell of people fixing problems instead of everybody at the top trying to say what the problems are and telling them what to do. Should we increase legal immigration? • We probably have 60 people that are Hmong or Hispanic working in our factory. We would not be making our product without them. We’ve had a tremendous experience over the last 15 years with the Hmong culture. It’s different; you’ve got to work through some issues on gender and stuff, like men working for women, and stuff like that. The language is challenging to me. Every time I hand out awards at the Christmas party, I can’t pronounce most the names, but we joke and laugh about it. I have the employees help me do it, so we have some fun with the 147

differential. • For us, we’re fortunate being on the east side, that we’ve had that for many, many years and had really good experiences with the employees in that space. We talked about lean. One evolution of lean is that today it is more about people. Are you taking advantage of that? • When we have conversations with various business partners, the thought process goes to, “We’re going to implement lean and get rid of people.” We tried to explain to them it’s not necessarily about that, it’s about being more efficient with the people that you have, and including them in that. I agree that a lean 2.0, where it’s focused on people rather than solely process, makes a lot of sense. I think people are willing to engage in that more. Let’s go back to skilled labor. Are you finding candidates from tech schools? • I would say, when we can find those folks, we get what we need. Seems to go a little deeper than that, all the way back to high school. There is this, seems like a mentality, that there’s college and there’s nothing else. • University and nothing else. • It’s university, and not technical college. University or nothing else. It doesn’t seem like it’s balanced the way that’s going to favor any of us around here. Because now you have a bunch of four-year college degree kids that we’re not going to get working at manufacturing. • When I went to high school, or junior high school, I took metal shop and wood shop. There was a gas engine class. There were things where you could actually go and put your hands on stuff and work with machines. I don’t know if that exists anymore. If it does, it’s in very few schools. I think that’s a shame because it exposes everybody to that. Not everybody is cut out to go to a four-year school. Why don’t more students pursue a two-year technical degree? • A few years ago, I went to a Minnesota guidance counselor conference and I spoke about technical programs. I was waiting for my 148

turn on stage, and I looked out and there were 250 people in the crowd. They all had master’s degrees in education or counseling. They don’t know anything about what you all do. People tend to actually counsel others on things they understand, right? So that’s where it comes from. I do a lot of work in high schools. I listen to the conversations when a student is talking to a counselor or a teacher. • Tech schools are closing shops all over. It’s a matter of finances. They’re very expensive programs to run. Even at our college level, I fight that. In an English class, I put a teacher in a room. That’s my cost for that teacher. And I can put 40 kids in there and teach that class. In a technical program, I need equipment, I need consumables, I need all this other stuff. The CFO looks at it and says, “Wow. This is really expensive compared to this little arts program,” and that’s where the resources go. • I think parents tend to want to push their kids towards a four-year degree, or graduate school. For whatever reason, the trade jobs, not that they’re not important, but they don’t want their kids doing that. I wonder who’s going to build stuff? Where are the electricians, the plumbers, the carpenters, who’s going to build the houses? Who’s going to build the roads and do that hard work? Those folks can make wonderful livings, but parents want to drive them to university. • I’m willing to say we’ve got to play the long ball because investing in robotics, I know those kids are probably going to Michigan, they’re getting into engineering. But if you’re invested in the robotics team, you’re invested in the high school, then maybe the kids in the high school that are not in that program, will have a teacher say, “You should go talk to these guys.” Then you go think about that school because maybe for your family, for your situation at the moment, you can’t afford it or maybe you don’t have the grades to get in to a university. Maybe this is a different path. So, we’re trying to figure out how to build relationships down at the high school level, and maybe say, engineering. Maybe they’ll come work for us in seven years because they enjoy that summer, and they remember us when they come out of school. • It’s a five-year play. It’s not how we’re going to fill jobs next year. • I talk to a parent and I say, “A diesel mechanic makes really good money and leaves the two-year college with no debt,” as an example. And they say, “That’s fantastic. We need people in those careers but my kid’s going to the University of Minnesota.” When you dig into that, there is a stigma there. 149

• It’s hard to put a future value on it. I have three kids in college right now. The push is always to go to college and it doesn’t cost you anything. It might cost mom and dad something, but you’re just going to take on a student loan and you’ll pay that off over time. So, the kid at 18, 19, 20 years old isn’t looking at the value necessarily, they’re looking at this is what everyone does. If we would turn it around and say [inaudible 00:39:54] and you looked at that over a lifetime because the tab shuts off with mom and dad in about six months. That would be a little different. We don’t do that. We’re always going to be there for them. But we just don’t do that. We’re guilty of it ourselves. We didn’t even look at a twoyear program. Maybe they would have fit in well, I don’t know. • Manufacturing is not glamorous, by any stretch. Kids today want work-life balance. They want to work from home, and they don’t want to be at work more than eight hours a day. • I hate to say it, when you’re scrambling to get people, you start to lower your standards. In the old days, you just assumed everyone came with soft skills, and now they don’t. You’re just thrilled to have someone that meets the soft skill standard, and then hope that they’ve got some aptitude for whatever it is you do. Every once in a while there are some great folks out there. But it’s hard to find them. No matter how much you talk about your culture and your values and the importance of these soft skills. it’s just a job to most people. • We have a lady at the mill who is 83 years old and has worked at that place for 63 years. That doesn’t happen. We have a number of 30, 40-year-old people. That doesn’t happen anymore. What accommodations are you having to make for the priorities of the younger folks? • They want more vacation time, they want different work hours. I’m drawing a stereotype here, but I think there’s some accuracy to it. They’re less loyal. They want to know the ladder at which they will be promoted. “What am I going to get back for this investment that I’m putting into this company?” What accommodations do you have to make for them? • We’ve been able to have somewhat of a flexible work schedule. Because we don’t have a lot of equipment, it’s a lot more labor intensive so we can flex people. The other thing is, what I’ve found anyway, is they want to feel like they’re making a difference. It kind of goes back 150

to opening the book and showing them exactly what we got going on. Because they then see that what they did is making a difference. • Sometimes it’s hard to find in what we do to say, “How does that impact the world?” I think that they want that, obviously, but also making an impact in the company and seeing that it’s successful. Then they feel successful about that, sometimes it’s a conversation, sometimes it’s we just do some more fun things or whatever. Getting them working on their own project where they feel they are making a difference, I think, is one of the biggest things we’ve been trying to do to retain people longer, instead of just, hey come to work, punch the clock, do your eight hours, go home. No. We want you to spend time working on the business, not just in the business. • I hear that, and that’s important but I think from my stand point, you’ve got to have the right culture. We did a business plan last year; we talked our private equity owners into a 5 percent salary increase, 33 percent increase in quarterly bonuses, and it was a tough sell, but we were able to sell that. I think they love working there but when we needed overtime, we asked for volunteers and hardly anybody volunteered. So to me, it gets back to a point of gratitude for what we’ve done for them. I think that’s the culture. I think we’ve got to work on the culture in our company. • We used to have our employees working 60 hours a week during our busy season. Then about six or seven years ago, we started just hiring temporaries to come in during the busy season. The same people come back every year as temporaries. The employees are happy about it. Do you have a cell phone policy? • No cells in a manufacturing plant. • We realized they could have radios on the floor and so everything is running through Pandora or Spotify or all these things now. Nobody has a radio anymore. We felt that one of the cultural pieces of it was respect your neighbor. You obviously have to have your cell phone to run your speaker, so you can have your cell phone but in your pocket. You can’t be on the phone. You can’t be texting or anything like that, but you can change your music and others obviously have to respect it. That’s one of our core values. • A lot of that has to do with confidentiality with a camera. There are 151

formulas you’re contracting for with various CPG companies, and it’s just something that you have to protect. • A lot of it is safety. • No earbuds. • We took ours away, and we just put a big Sonos system in. That was an amenity that kept coming up in employee meetings. Now all we’re doing is every day we have a different type of music rotated on a five-day basis. You got 60 people working together, and they like the enjoyment, and it creates energy. I’m willing to spend a lot of money because we’re going to do this in the long run.

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St. Cloud Gray Plant Mooty

March 30, 2018

Last year our pollster discovered that 94 percent of manufacturers were optimistic or very optimistic about their prospects. How was last year? • Best year ever. Our growth wasn’t great, but it was decent. For us it was profitability. All our plans for three to five years actually came together; everything just fell into place. Our growth was maybe six percent. But our profitability was literally 10 times what it has been in our best years. And we’re on pace for that same thing this year. • We’ve gone into the year looking for that kind of strength. We did an expansion last year, and we just opened it up so we were optimistic, we added on 85,000 square feet. • I don’t know if that’s a good thing or not then, but our year was good. We have two parts of the business. One being distribution of welding supplies, industrial supplies and gas products and then the other part being automation manufacturing, which is relatively new for us.

Sponsor: Gray Plant Mooty

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• I don’t know if I can pinpoint factors from when we were out talking to folks at the beginning of the year, but they felt really good and sometimes things happen during the year to derail that, but that didn’t happen. • So, yeah, our credits are strong, our customers are doing well, yeah, capital equipment purchases are up, people are planning expansions, whether it’s in a physical plant or equipment, or just stretching their boundaries. • No, we knew last year was going to be a good year. If we look back at our previous four or five years, the only real hiccup in the whole last eight years has been the last two presidential election cycles. The end of 2016 became really slow because everyone was waiting to see what happened. If it went the way it did, then we’ll be really optimistic, if it went the other way, then we’re going to be pessimistic. So, I think part of the end of 2016 and the beginning of 2017 for us was directly reflective of the optimism based on the new administration. • And part of that was, what are they going to do with taxes? You know, the current tax structure was unsustainable for business owners. • Tariffs have just caused a lot of pre-buying. A lot of customers just came in and bought a year’s supply, all the contracts that they’ve got out there. I think it was definitely knee-jerked to do it, because immediately they wanted to cover their positions. They wanted to cover the jobs they had, which caused a shortage, which caused allocations, which caused limitation in order books, which drove prices up, and up, and up. • As a distributor of steel, we’ve been seeing this center of market for three, four, five years, and we went out and did a lot of discussions with the customers and so, for the last three years we’ve been doing plans to do an expansion. And this expansion is strictly a parts manufacturing expansion. • We will dislocate our manufacturers supply chain by supplying them every part, and that’s all we do, is make parts. And so this whole plant does nothing but parts, and we have been very successful at growing out. The worker shortage is projected to get much worse. • What we’re kind of doing (I’m talking about from a business aspect and then what I would think our customers are viewing as different ways 154

to them) is we’re, A: investing in our own town right now. I would say, even though our growth on the top revenue side is growing, our bottom line is not necessarily, because we’re trying to bring in even some of that higher level talent with relation to engineering, to programming, to make sure that we can support the products we sell when it relates to automation. • But from a customer standpoint, the jobs out there and the people who want to do those jobs are going to continue to bring advantages to adding automation into manufacturing plants. Not just metal, not just steel, but all over the place, and not just robotics as it relates to automating a, how am I trying to say this, very repetitive process. • It’s also going to automate other manual processes within businesses that will bring productivity, if that makes any sense. So, I think if we can continue to invest and even trade ... robots are becoming easier to manipulate and use in the work force. It’s really training people up because there’s not enough people in general. You don’t need as many folks when you have automated equipment in your facilities, so the shortage doesn’t seem so real as long as you have people who are willing to learn automation. If that makes sense. • We’re taking a hard look at our organization, we’re bringing in people that help cover needs, and we actually hired our first plant manager ever this year, we’ve invested a lot in talent training, we’ve invested a lot in processes. What’s weak here, where do we want to go in the next few years, we’re trying to vision out. What do we need to do in the next four or five years? • Well, so, the major investment we made at the beginning of this year is we’re replacing 70 percent of our foremen capabilities with advanced foremen. It’s going to be computer aided foremen, it’s not robots yet, but the platforms we’re going towards more and more are, are in the future. We’re going to be ready to invest in automation when it fits. We have to look down the road five years and see what’s going to happen. We have to be ahead of our customers. We make a living out of OEM’s outsourcing and overflow work, and we’re seeing just a tremendous amount of OEMs calling us, saying, “Well, we have to talk. We have to figure out how to do this stuff different.” And you need a lot of these big OEMs. They’re doing a lot of processes the old-fashioned way because they don’t know how to do it any different. • So, I was at one the other day where they were literally hand cutting 155

wire, hand forming wire, thousands of pieces a year. Well, they don’t even know that there’s automation out there to do this, so they don’t even know that there are specialized companies that do this. So ... • Part of what we’re seeing is with the skill shortage; they’re focusing on taking what they view is their core and making sure they’re very well represented in that area and they’re looking at what maybe isn’t their core and they’re outsourcing it. Also, they’re going to invest more capital in what makes their core better and the stuff that they may have invested in with equipment they’re outsourcing because there’s not going to be enough people. Or their investment says, if we invest here in our core and strengthen that, we’re going to be a better company. And let’s outsource what isn’t our core to somebody who does it well and now we’ve got two strengths. • We’ve got an investment in machines that in each case have replaced a person. And it didn’t really need to replace a person, it was more out of necessity. So, we have leaned that way out of necessity from an inside administrative standpoint. We’ve started leveraging our ERP system to make sure that it does more, we used to have a master scheduler and now, the system, we’re using the system the way it was designed to be used to be able to eliminate the need for that position. Was your commitment to lean processes yours or was it inspired by looking down the horizon and not being able to find people? • A little of both. It was more of a, the lack of people hit us. It was not obvious that it was going to happen for us. Five years ago we would advertise a position and get 20 to 30 applicants for it. Now for each position, we’re lucky to get two. And are the two hireable? • Sometimes. For us, the biggest problem is engineering and what we’re trying to do. What we’ve started three years ago is we’ve got a scholarship at a local high school for a kid who shows interest in engineering, up to $5,000 a year, and a summer internship for all four years. We haven’t been in it long enough to provide them a full-time job at the end. This summer will be the third summer that our first intern is going to be working for us. So, our hope is that he will accept a position with us at the end of next year, but he always might want to move to the Twin Cities or Fargo.

156

• We’re approved for a fast program with the state of Minnesota so we actually can hire 16 and 17-year-old kids to run through pieces of equipment in our facility, as long as they’ve got the proper supervision. So, we’re trying to get down to that level, not only if we can hire them, but to introduce them to the industry. It’s based on working with the high school, setting up a program, the kids get paid, the kids get credits, it’s a wonderful deal for the students. If we have an employee that would show his interest in wanting to go to school beyond high school, we’ll put a program together with them at the tech school. We had one successfully go through that with us. The toughest thing is to get some of these young kids to think a few years out. • We’re doing internships, too. We also have, just this year we sponsored the local high school robotics team and we had two engineers working with them and they’re kind of recruiting. They started the recruiting process of trying to get these kids to go into engineering, to apply for a scholarship to come work for us during the summer. Well, we’ll see if it pays dividends or not. It was worthwhile anyway. The worker shortage is expected to get a lot worse. How do you plan for that? • I’m planning on not planning. • I’m shocked by the number. We’re trying to make sure we can get people. One of our struggles is that we’re in rural Minnesota and so it’s tough to get people. If they’re not from Dassel, or Cokato or Litchfield, it’s tough to get them to come out here. • The counselors for the high school every year have been screwing them up. And we’ve just now started a program at the high school level where we bring in a class of about 20 and they have to sign up for a class, limited opportunity. But it’s a manufacturing and trades class. And they will go into welding operations, they will go into metal working operations, they will go into CDL driving, they will go into TIG welding, all kinds of fab—so it’s sponsored by a cluster of manufacturers that are committed to providing in-plant training, internships the next summer and supporting the class, so that the class is part in school and the rest of it is taught by us. Do you find that high schools with tech labs tend be friendlier toward tech careers?

157

• For us it’s all on the engineering side. We’re not looking for welders or machinists or any of that, so. • See these kids, they’ll be taught CAD, they’ll be taught welding, they’ll be taught CDL driving, they have to take all of them. They’re exposed to all these trades areas in one class. • It started from the tech college trying to do it, but they couldn’t quite get it and so they brought in manufacturers to do it, and we just threw the money in and said yeah, we’re committed. Let’s go. We did this in about two years. • Vern Anderson from Douglas Machine gave Alexandria High School a whole bunch of money and said, “We want to partner with you so you teach the right courses and we want to have influence with these students and we’ll bring them in.” Vern Anderson is like the pied piper. • They’re the model for high schools for the future. • I have a question with that. So, I’m a parent of kids in their early 20s, and I’ve mingled with parents whose kids are coming through high school. Do you think that the results of your parent focus group are an indication of the progress that we’ve made? Because I think five to ten years ago, all the parents I knew were all huge advocates for a four-year degree. I think the recession hit, and I think college is a bubble that’s probably about to burst or is in the process of bursting. I think people are starting to see that. Is it partly because of cost? • These kids are coming out with a four-year degree, everybody’s got one and the jobs aren’t enough to pay back the student loans. So I think it took a little time, but I think there’s been a shift, and I think some of the work that we’re all doing has also made some progress. • And I think teachers do absolutely have an impact on kids, but I think more than teachers having an impact on kids, I think, is kids having an impact on kids. • And they said, what’s happening with the generation and what is happening with the work ethic? And they said you’ve got helicopter parents. When our friends get in trouble or they get a bad grade, they come in and swoop in. They were saying that probably only 25 percent 158

of their friends work. And when you think of us in high school, we were working, we were learning about capitalism. I find it interesting as my girls are coming out of college they’re like, gosh, I can’t believe that’s how much you have to pay in taxes. Don’t I get the Medicare back? I’m like, no you don’t, you really don’t. I don’t know what you think, but I thought that was very enlightening of the kids to say that if we’re going to fix that problem, you have to start way back and introduce them to work. • One thing that I don’t think we’re talking about. We try to bring as many parents, kids or any other people through a tour of our facility and number one, parents, in probably their forties or fifties, have no clue what manufacturing is. Because when they were 16 to 20 they were told it was all going overseas. Or they watched factories close and they watched towns die, so their view of manufacturing is really negative because of when they were their kids’ age. • At the same time, these parents, if you really talk to them, they probably bounced around to a lot of different jobs and one of their dreams would be to have something stable that they can grow in and work their way up. And then you get these young people that find out, you know what, manufacturing is a pretty dedicated industry, if you’re dedicated to it. It can provide a lifetime of rewards. And most of the parents don’t understand that because when they were young, everything was closing and going overseas. So that they don’t have it and then you get to people that have been in manufacturing, are in their mid-sixties or late fifties now, they do see it. So, we’ve lost out on 20 years’ worth of people to support manufacturing. We’ve got to catch up with the parents because we’ve lost the students because the parents don’t know anything, and their perception is negative based on when they were a kid. • Especially considering how advanced manufacturing is becoming. Our trucks and our people are in and out of all the different types of shops, but what’s really intriguing to me is that we’ve sold robots to ... actually, I just sold a robotic welding cell to a two-man shop and what they decided as their payback to that was, well, it’s the two of us, one dad, one kid. The kid was the one who had to do this repetitive work and the kid wasn’t wanting to do that anymore, so dad said well, either we have to hire someone else and I have to move my son to something, or we can buy this robot for $150,000 and that can do four different program parts for us. If the kid can program that, then they can become more efficient, the parts can be more repeatable, the quality is better, they have more opportunity to now market and now they can hire on people to 159

do different pieces and grow their business. • So, it’s cool to see even automation as it relates to the workforce growing business, and people’s view of manufacturing can become better as it gets more technologically advanced, I think. And if we just continue to push to open the doors of our manufacturing facility to the general public, to get them to see how advanced it’s become, how stable the jobs are, I mean, even a company like us, we don’t have as many technologically advanced positions as one would think. • Our manufacturing of automation equipment is a growing part of the business, but we hold people because they see different opportunities in technology and then we can help open doors to understand how an impact can be made to manufacturing. But it’s cool to see, and if people just understand that manufacturing is going to continue to get more advanced, quality is going to continue to be a major push, efficiency is going to be a major push, which then will create different types of positions and jobs, I don’t know, it should keep going. The poll shows that manufacturers are more concerned about attracting any employees, not just skilled ones. Is that your experience? • Even when you talk about talent in relation to advancing manufacturing, these things are trainable. And you don’t have to have a four-year college degree to run the equipment or even program pieces of equipment, because they’re becoming much more user friendly. We can take basically any good welder and put as the operator for a robotic piece of equipment. And that’s typically what happens when we sell something is we train someone within the current facility. How are you finding the work habits—the soft skills—of the newest generation of workers? • We started to have a conversation with a lot of our employees, that look, we need so much coverage in our facility from Sunday night through Saturday afternoon and the most important thing we have is coverage to get what we need to have done, done. And as long as you guys and your teams on the plant can cover what we need, you can control your work schedule, but if we start to run into problems, then we’ll control it again. • We have to remind them that this is a huge benefit that you guys can 160

set this, so we’ve got people that love taking that Monday off versus a Saturday because now we don’t pay for daycare on Monday. We’ve got some young guys that are working second shift because they can’t get out of bed in the morning. So we’re trying to be flexible in working with them and their lifestyle, but yet we need to be firm on, here’s what we need to do during the course of the week. And we need to fill these areas. • My husband oversees the FAB and welding production in assembly. They open the doors at 6 and they stay open until 6 and everybody just needs to get their hours in sometime between 6 and 6 Monday through Friday. And they have a lot of farmers who work for them, who during the harvest season they get their hours in when they can around harvest, and he claims that builds great loyalty and it helps them utilize the population in a rural area that they wouldn’t be able to otherwise. • We have a pretty big time constraint operation because orders are taken till 4:00 in the afternoon and they’re out the next day. How do you handle smartphones on the shop floor? • It’s in their lockers. And they can only access it on breaks and lunch. Well, it distracts but rather than them complaining and leaving or quitting because they can’t check their phone, they’re sticking around. So, they’ll look at it and put it away and get back to work. How do you balance that with safety? • There’s no way we’d let people have phones because our guys are handling 20 ton [crosstalk 00:53:04], crazy. • It hasn’t affected us yet. • OSHA says no earbuds. We’ve taken away headphones or the earbuds or whatever. • And it’s certainly not just the millennials. I sit in meetings all the time with people my age and older who for whatever reason, have to take a look at what’s going on with their phone during their meeting. Rarely do I find a meeting where everybody in the meeting is engaged through the whole entire thing. And that’s the shift, and it’s not just millennials.

161

SELECTED CROSS TABULATIONS 2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 1-1 Summary of Key Firm Data BANNER 1

BASE=TOTAL SAMPLE FINANCIAL FUTURE (D/S) ---------------------TOTAL CONFIDENT

TOTAL NOT CONFIDENT GROSS REVENUES (D/S) -------------------INCREASE DECREASE STAY THE SAME PROFITABILITY (D/S) ------------------INCREASE

DECREASE STAY THE SAME CAPITAL EXPEND (D/S) -------------------INCREASE

DECREASE STAY THE SAME

400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

371 93%

130 93%

83 95%

45 94%

36 84%

77 94%

349 87% 23 6%

218 55%

121 86% 9 6%

79 56%

80 92% 3 3%

50 57%

42 88% 3 6%

29 61%

240 60%

86 62%

56 65%

30 63%

134 33%

43 31%

22 25%

187 47%

69 49%

44 51%

21 5%

159 40% 28 7%

177 44%

7 5%

61 44% 7 5%

63 45%

7 8%

38 44% 6 7%

30 34%

33 76% 4 8%

18 41%

73 89% 5 6%

14 6%

17 35%

16 38%

35 43%

21 44%

19 44%

34 42%

20 45%

43 53%

16 33%

6 12%

21 44%

14 34%

5 11%

Continued

MN BIZ CLIMATE (D/S) -------------------GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

BASE=TOTAL SAMPLE FINANCIAL FUTURE (D/S) ---------------------TOTAL CONFIDENT

TOTAL NOT CONFIDENT GROSS REVENUES (D/S) -------------------INCREASE

DECREASE STAY THE SAME PROFITABILITY (D/S) ------------------INCREASE

DECREASE STAY THE SAME CAPITAL EXPEND (D/S) -------------------INCREASE

DECREASE STAY THE SAME

Continued

173 43%

148 85% 159 92% 11 6%

90 52%

179 45%

96 24%

92 23%

160 89%

93 96%

91 98%

144 81% 15 9%

5 6%

69 40%

69 39%

113 50%

74 43%

93 41%

84 48%

5 6%

13 6%

15 8%

1 1%

14 8%

65 29%

60 35%

4 4%

69 75%

93 52%

100 44%

90 97%

53 55%

97 56% 7 4%

89 92%

79 44%

143 63%

30 36%

4 4%

19 6%

14 9%

67 61%

65 82%

35 58%

25 46%

36 62%

23 55%

69 65%

149 51%

58 39%

18 8%

4 3%

3 4%

4 7%

1 2%

4 8%

3 3%

18 6%

16 11%

52 56%

89 42%

52 48%

47 59%

33 55%

24 44%

30 51%

23 53%

58 55%

129 44%

61 41%

85 48%

47 48%

31 33%

101 48%

51 47%

25 32%

17 27%

26 48%

25 42%

16 38%

41 38%

135 46%

71 47%

44 48%

52 25%

15 9%

33 35%

49 53%

8 9%

3 4%

29 16%

14 14%

37 40%

14 8%

18 10%

14 15%

7 8%

98 57%

6 13%

86 41%

42 43%

43 25%

124 55%

135 90%

78 43%

29 13%

46 56%

270 92%

105 36%

43 19%

28 65%

100 94%

28 26%

6 7%

24 51%

36 83%

1 2%

150 37%

122 81%

12 28%

23 28%

45 51%

57 98%

2 3%

293 73%

252 86%

19 33%

3 6%

79 57%

53 97%

4 6%

106 27%

96 90%

22 41%

9 20%

222 56%

55 90%

43 11%

30 70%

20 34%

6 12%

57 33%

77 97%

5 4%

58 15%

56 97%

13 16%

12 25%

72 32%

104 96%

51 93%

35 32%

12 14%

28 35%

54 14%

51 85%

86 41%

17 19%

11 26%

61 15%

77 97%

21 23%

17 12%

18 37%

18 9%

80 20%

33 34%

27 19%

29 33%

189 90%

109 27%

100 92%

104 49%

43 11%

43 31%

211 53%

171 81%

69 75%

62 35%

58 60%

87 22%

129 32%

48 27% 111 62%

28 29% 53 55%

40 43%

69 33% 20 9%

70 65%

65 82%

45 42%

45 56%

6 6%

38 62%

27 45%

2 2%

6 10%

29 52%

19 36%

4 8%

37 64%

27 46% 3 5%

27 63%

20 47% 3 6%

72 68%

52 49% 6 6%

167 57%

107 37% 22 7%

4 23%

16 11%

1 1%

1 6%

15 25%

7 16%

28 26%

58 20%

27 18%

5 9%

5 11%

7 7%

35 12%

17 12%

36 45%

32 53%

26 48%

32 55%

25 59%

61 57%

161 55%

43 53%

9 17%

55 51%

45 30%

9 16%

131 62%

57 58%

1 6%

4 4%

34 34%

6 9%

93 32%

9 59%

2 2%

6 41%

17 28%

35 33%

59 73%

89 91%

22 27%

4 6%

12 27%

93 94%

58 39%

33 42%

20 34%

14 94%

60 61%

14 12%

18 33%

78 97%

9 59%

26 24%

23 38%

98 25%

59 73%

25 12%

38 47%

15 4%

13 87%

74 50%

27 13%

39 36%

81 20%

76 94%

44 54%

34 42%

19 23%

5 29%

8 52%

5 34%

3 3%

42 42%

47 48%

6 6%

43 44%

20 21%

44 30%

26 32%

6 41%

34 34%

84 56%

46 57%

8 53%

50 51%

7 9%

1 6%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

13 14%

PAGE 2

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= M E E T I N G S T R$1 E E T R E S E A R C H REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----160 40%

59 42%

32 37%

20 42%

19 43%

30 36%

92 40%

68 40%

72 40%

41 43%

34 37%

74 35%

43 40%

43 54%

31 50%

28 52%

33 57%

15 36%

42 40%

119 41%

215 54%

77 55%

45 52%

27 56%

24 56%

42 51%

122 54%

92 53%

94 53%

54 56%

47 51%

107 51%

58 54%

48 61%

37 61%

32 58%

37 64%

23 53%

58 54%

157 54%

127 32%

44 31%

28 32%

14 29%

14 32%

28 34%

72 32%

56 32%

58 33%

30 31%

33 35%

66 31%

35 32%

26 32%

17 28%

18 33%

16 28%

12 28%

30 28%

97 33%

54 14%

18 13%

13 15%

6 13%

5 13%

12 15%

30 13%

24 14%

23 13%

12 13%

13 14%

34 16%

15 14%

6 7%

6 10%

4 7%

4 8%

7 17%

16 15%

38 13%

46 31%

36 45%

73 49%

44 54%

48 32%

29 36%

26 18%

7 9%

6 41%

8 53%

2 12%

5 36%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 1-2 Summary of Key Firm Data BANNER 2

12 5%

2 2%

45 54%

5 11%

213 94%

129 57%

22 51%

1 2%

227 57%

201 89%

43 52%

Table 1-1 Summary of Key Firm Data BANNER 1

PAGE 1

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

45 46%

55 56%

10 10%

33 34%

PAGE 3

STAMN CAPITAL TUS FUTURE OF FIRM ECONOMY IN 2018 BUSINESS CLIMATE GROSS REVENUES PROFITABILITY EXPENDITURES QUO EMPLOYEE WAGES ======================= ================= ================== ================= ================= ================= ===== ================= TOTAL VERY SMWT TOTAL NOT EXPAN RECEINC- DECINC- DECINC- DECINC- DECTOTAL CONF CONF CONF CONF -SION FLAT SSION BETTER WORSE SAME REASE REASE SAME REASE REASE SAME REASE REASE SAME 3/3 REASE REASE SAME ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100% 349 87%

206 51%

206 100%

166 41%

166 100%

371 93%

23 6%

256 64%

113 28%

250 98%

97 86%

190 74%

371 -23 100% -100%

371 93%

206 100%

166 100%

371 100%

218 55%

147 71%

78 47%

225 61%

-10 -44%

10 3%

11 48%

23 6%

240 60%

149 72%

87 52%

235 63%

134 33%

52 25%

69 42%

121 33%

21 5%

159 40%

2 1%

117 57%

9 5%

47 28%

129 32%

88 43%

37 22%

126 34%

222 56%

103 50%

103 62%

206 56%

15 9%

22 13%

96 37%

2 8%

101 40%

13 56%

135 53%

8 36%

163 44%

12 6%

12 52%

-6 -28%

84 51%

76 37%

151 59%

34 9%

79 39%

43 11%

1 4%

91 25%

177 44% 87 22%

56 22%

9 40%

182 49%

15 9%

11 48%

19 5%

62 37%

4 2%

194 76%

-8 -36%

120 58%

3 1%

1 4%

164 44%

187 47% 28 7%

23 100%

248 97%

4 1%

145 57% 5 2%

82 32% 20 8%

17 4%

215 54%

10 62%

203 95%

17 15%

5 29%

16 14%

2 11%

83 74%

14 12%

33 29%

64 56%

4 24%

6 38%

54 14%

127 32%

240 60%

44 81%

121 95%

235 98%

143 67%

9 17%

65 51%

9 4%

10 18%

3 2%

196 91% 7 3%

7 40%

152 71%

8 49%

52 24%

35 65% 9 17%

19 34%

24 44%

115 90% 6 5%

21 5%

134 33%

187 47%

10 49%

121 90%

240 -21 100% -100%

235 98%

1 -

68 53%

240 100%

56 44%

-2%

11 51%

110 82% 11 8%

21 100% -

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

182 97%

19 67%

163 92%

126 97%

34 81%

206 93%

57 89%

204 98%

162 86%

-8 -29%

61 35%

100 77%

5 12%

110 49%

1 -

10 35%

181 97% 1 -

163 87%

134 100%

20 11%

10 34%

9 33%

65 58%

20 17%

19 17%

69 62%

4 22%

10 5%

10 62%

87 41%

3 19%

82 38%

-2%

4 22%

10 59%

59 28%

22 10%

110 51%

11 20%

7 5%

2 1%

10 46%

85 35%

-10 -47%

16 7%

11 51%

27 50%

60 47%

71 30%

9 17%

37 29%

101 42%

33 61%

78 61%

119 50%

-1 -1%

10 18%

26 20% 11 8%

162

M E E T I N G S T R E E T

10 46%

1 4%

10 45%

17 12%

95 71%

101 78%

17 59%

95 54%

27 21%

79 61%

177 100%

42 32%

11 8%

28 100%

67 36%

-3 -10%

11 6%

7 26%

27 20%

79 42%

89 67%

95 51%

16 12%

R E S E A R C H

2 1%

71 40%

12 7%

124 96%

2 6%

9 -1 104 5 51 161 -9 3 187 -28 8% -6% 48% 9% 40% 67% -41% 3% 100% -100% M E E T I N G S T R E E T R E S E A R C H 27 3 113 15 57 163 1 20 187 24% 16% 53% 28% 45% 68% 4% 15% 100% -

18 16%

152 86%

5 16%

14 52%

10 6% -

20 11%

1 1%

74 57%

5 4%

112 63%

8 19%

194 87% 13 6%

16 38%

119 54%

16 37%

50 79%

6 10%

5 1%

180 45%

1 18%

160 89%

148 71%

-3 -64%

73 41%

2 1%

4 82%

105 50%

-2 -31%

202 97% 2 1%

150 72%

89 40%

64 100%

55 26%

11 27%

95 43%

115 55%

22 51%

112 50%

64 100%

82 39%

80 39%

64 100%

109 52%

11 25%

4 10%

7 17%

129 -43 100% -100%

42 129 24% 100%

22 12%

26 61%

43 100% -

10 4%

81 36%

14 6% -

222 100%

10 5%

-3 -64% 4 82%

144 80% 16 9%

1 18%

88 49%

76 42%

14 8%

55 31%

1 18%

70 39%

2 33%

89 50%

1 18%

48 27%

3 49%

63 30%

-2 -31%

18 9%

3 49%

2 33%

15 8%

27 15%

21 12%

106 59%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 1-2 Summary of Key Firm Data BANNER 2

MN BIZ CLIMATE (D/S) -------------------GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----160 40%

215 54% 54 14%

127 32%

103 50%

56 34%

159 43%

17 8%

27 16%

44 12%

120 59% 67 33%

83 50% 54 32%

203 55% 121 33%

-2 -9%

STAMN CAPITAL TUS ECONOMY IN 2018 BUSINESS CLIMATE GROSS REVENUES PROFITABILITY EXPENDITURES QUO EMPLOYEE WAGES ================= ================== ================= ================= ================= ===== =================

EXPAN RECEINC- DECINC- DECINC- DECINC- DEC-SION FLAT SSION BETTER WORSE SAME REASE REASE SAME REASE REASE SAME REASE REASE SAME 3/3 REASE REASE SAME ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----133 52%

7 32%

156 61%

6 28%

78 30%

9 40%

22 9%

BASE=TOTAL SAMPLE FINANCIAL FUTURE (D/S) ---------------------TOTAL CONFIDENT

TOTAL NOT CONFIDENT GROSS REVENUES (D/S) -------------------INCREASE DECREASE STAY THE SAME PROFITABILITY (D/S) ------------------INCREASE DECREASE STAY THE SAME CAPITAL EXPEND (D/S) -------------------INCREASE DECREASE STAY THE SAME MN BIZ CLIMATE (D/S) -------------------GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

BASE=TOTAL SAMPLE FINANCIAL FUTURE (D/S) ---------------------TOTAL CONFIDENT

29 26%

36 32%

1 7%

215 -54 100% -100%

5 28%

215 100%

9 52%

3 21%

54 100%

127 100%

133 56%

152 63% 19 8%

68 28%

-1 -3% 9 42%

10 45%

3 13%

28 21%

98 52%

52 39%

113 61%

56 42%

57 31%

24 18%

15 8%

-1 -3%

10 35%

11 38%

7 23%

60 34%

73 56%

87 49%

82 63%

60 34%

37 28%

27 16%

9 7%

13 29%

22 52%

10 23% 11 25%

77 35%

110 50%

33 15% 78 35%

16 24%

25 40%

10 15% 29 45%

94 45%

117 56%

23 11% 65 31%

400 100%

145 36%

371 93%

142 98%

227 90%

218 55%

96 66%

121 48%

349 87%

23 6%

139 96%

3 2%

240 60%

102 71%

134 33%

34 24%

187 47%

78 54%

21 5%

159 40% 28 7%

177 44%

6 4%

73 50% 5 4%

57 39%

252 63%

207 82% 20 8%

135 54%

74 19%

71 95%

127 32%

148 95%

201 97%

174 96%

152 98%

134 74%

120 77%

21 6%

9 4%

6 3%

4 2%

174 44%

51 13%

124 31%

120 30%

150 37%

76 86%

266 93%

175 93%

171 95%

163 94%

50 98%

118 95%

114 95%

143 96%

23 26%

157 55%

103 55%

103 57%

98 56%

30 58%

78 63%

10 11%

14 5%

11 6%

163 90% 8 5%

154 88% 9 5%

99 39%

15 20%

118 37%

58 24%

49 24%

109 43%

49 66%

129 52%

107 100 89 34 128 84 79 77 52% 55% 57% 39% 45% 44% 44% 44% M E E T I N G S T R E E T R E S E A R C H 8 10 6 7 18 17 15 13 4% 5% 4% 8% 6% 9% 9% 7%

87 34% 23 9%

117 47% 66 26%

67 46%

153 61%

85 59%

128 51%

36 25%

91 36%

10 4%

48 64%

111 34%

114 46%

1 1%

27 8%

15 6%

138 43%

25 33%

150 46%

97 40%

30 41%

98 30%

36 49% 45 61%

97 39%

39 53%

30 12%

6 8%

22 30%

5 2%

99 48%

29 19%

180 45%

164 87%

154 74%

19 6%

36 20%

189 47%

253 88%

175 71%

2 2%

123 79%

285 71%

66 75%

182 56%

14 6%

140 77%

88 22%

57 76%

6 8%

23 16%

155 39%

169 93%

149 72%

28 11%

54 14%

181 45%

236 96%

15 10% 62 43%

196 94%

165 67%

43 11%

215 54%

208 52%

296 92%

25 33%

160 40%

226 92%

163 51%

2 2%

38 15%

222 56%

246 61%

55 74%

47 33%

62 43%

275 85%

72 98%

87 22%

129 32%

322 81%

5 3%

90 50%

3 2%

83 53%

32 37%

170 60%

112 59%

111 61%

106 61%

45 51%

98 34%

63 33%

61 34%

58 33%

10 11%

27 31%

13 4%

110 39%

9 5%

67 35%

7 4%

64 35%

8 5%

64 37%

49 96% 1 2%

31 62% 2 4%

18 35%

114 92% 4 3%

83 67% 5 4%

37 30%

112 93%

2 2%

71 59%

77 64%

5 5%

35 29%

140 94%

57 14%

42 74%

49 87%

83 21%

66 79%

74 89%

93 23%

69 74%

81 87%

3 2%

7 13%

8 10%

12 12%

98 66%

33 58%

43 52%

50 54%

95 64%

3 2%

48 32%

26 46%

7 12%

17 30%

35 42%

8 9%

32 39%

42 45%

23 40%

36 44%

38 41%

26 34%

5 9%

6 5%

7 6%

8 5%

5 10%

4 5%

5 6%

7 10%

51 34%

11 19%

26 50%

61 49%

63 41%

16 18%

92 32%

51 27%

52 29%

48 27%

18 35%

54 44%

55 45%

63 42%

17 31%

24 29%

23 24%

184 57%

126 51%

111 53%

99 55%

82 53%

60 68%

158 55%

108 57%

102 56%

98 56%

27 52%

58 47%

54 45%

75 50%

32 57%

52 63%

61 66%

167 52%

142 58%

118 57%

104 58%

96 62%

46 52%

166 58%

109 58%

108 60%

94 54%

24 46%

65 53%

58 48%

87 58%

20 35%

38 46%

45 49%

75 31%

68 33%

58 32%

39 25%

30 34%

77 27%

52 27%

50 28%

54 31%

21 41%

42 34%

43 36%

44 29%

29 52%

34 42%

34 36%

120 37%

48 15%

106 33%

114 47% 27 11%

97 47%

21 10%

11 6%

87 48%

17 10%

9 6%

77 50%

19 12%

11 12%

30 11%

35 39%

126 44%

11 13%

40 14%

M E E T I N G S T R E E T

26 14% 81 43% 28 15%

22 12% 87 48%

21 12%

24 14% 70 40%

24 14%

R E S E A R C H

5 11% 17 34%

6 13%

11 9%

49 40%

16 13%

43 36% 11 9%

40 33%

18 15%

11 7%

71 47%

16 11%

7 12%

13 23%

7 13%

37 45%

43 46%

69 38%

19 9%

43 35%

21 37%

40 49%

78 37%

22 9%

13 25%

61 41%

28 50%

97 40%

36 11%

24 14%

47 40%

76 51%

21 41%

30 16%

52 42%

63 53%

81 47%

25 13%

28 37%

68 46%

81 45%

61 21%

24 32%

34 46%

56 47%

85 45%

5 6%

11 15%

55 44%

134 47%

54 35%

19 23% 5 6%

28 34%

10 12%

44 47%

15 17% 7 8%

33 44%

34 45%

12 16%

19 25% 7 10%

48 64%

32 35%

18 24%

13 14%

13 18%

32 43%

29 39%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

PAGE 6

SHORTAGE ATTRACT EMPLOYEES CANDIDATE NOT TAKE JOB/FOLLOW THRU GREATEST EMPLOYEE NEED SKILLED JOBS ================= =================================== ======================= ================== TOTAL LOW JOB TECH/ TOTAL VERY TOTAL NOT SKILL COMP- LONG FLEX MOBIL CHILD NO TECH/ TOTAL EXPE- TOTAL TOTAL DIFF DIFF DIFF REQD ENS COMM SCHED -ITY CARE ENTRY EXP EXP COLL+ WORSE CTED BETTER ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----400 100% 349 87%

371 93%

23 6%

96 24%

279 70%

113 28%

209 52%

95 24%

75 19%

88 91%

265 95%

99 88%

200 95%

88 93%

70 93%

80 84%

7 8%

254 91%

11 4%

88 79%

11 10%

192 92%

7 3%

82 87%

6 7%

68 91%

2 2%

73 18%

64 87%

68 94%

5 6%

66 17%

57 85%

60 91% 4 6%

32 8%

133 33%

107 27%

121 30%

29 91%

125 94%

100 94%

113 93%

26 83%

3 9%

118 89%

6 5%

95 89%

6 5%

106 87%

7 6%

16 4%

155 39%

207 52%

13 82%

144 93%

190 92%

11 70%

2 12%

137 88%

7 5%

176 85%

15 7%

31 8%

29 94% 30 97%

1 3%

STRATEGIC TAX REFORM IMPACT GROWTH PLAN ================== =========== NO HELP HURT IMPACT YES NO ----- ----- ------ ----- ----181 45%

165 91% 171 95%

6 4%

24 6%

17 70% 20 85%

4 15%

168 42%

144 86% 155 92%

11 6%

210 53%

189 47%

200 95%

171 91% 68 36%

192 91% 8 4%

218 55%

55 57%

163 58%

55 48%

136 65%

56 59%

51 69%

50 68%

40 61%

22 69%

76 57%

60 56%

69 57%

6 37%

92 59%

109 52%

15 48%

120 67%

7 28%

75 45%

150 72%

21 5%

5 6%

14 5%

6 5%

6 3%

6 6%

3 4%

4 6%

3 8%

8 6%

5 4%

1 6%

7 5%

12 6%

2 5%

7 4%

4 15%

10 6%

5 2%

240 60%

60 63%

134 33%

30 31%

187 47%

40 41%

177 44%

176 63%

61 54%

142 68%

63 66%

54 72%

85 30%

46 41%

59 28%

26 28%

18 24%

128 46%

57 50%

107 51%

41 43%

44 59%

47 49%

124 44%

49 43%

84 40%

46 48%

27 36%

129 32%

40 42%

103 37%

25 22%

222 56%

38 40%

141 51%

75 67%

159 40% 28 7%

87 22%

43 11%

31 33% 8 9%

26 27%

15 15%

108 39% 20 7%

74 27%

29 10%

49 44% 7 6%

13 12%

12 11%

94 45% 13 6%

57 27%

34 36% 7 8%

15 16%

40 54% 4 5%

19 25%

11 17%

17 54%

7 22%

68 51% 7 5%

41 39%

46 38%

7 7%

13 11%

48 45%

55 41%

47 44%

33 24%

28 27%

59 49%

5 30%

6 37% 1 6%

48 31%

61 39%

71 46%

10 6%

121 58% 71 34%

87 42%

104 50%

16 8%

16 53%

12 38%

10 31% 10 34%

1 2%

128 71%

43 24%

95 52%

10 43%

10 42% 1 4%

101 56%

5 22%

6 4%

5 19%

85 50%

72 43%

51 30% 66 39%

15 9%

155 74%

85 45% 17 9%

48 23%

86 45%

126 60%

60 32%

119 57% 6 3%

39 21%

22 11%

50 41%

9 57%

69 45%

85 41%

19 61%

68 38%

14 59%

83 50%

73 35%

104 55%

26 21%

2 12%

33 21%

45 22%

10 33%

52 29%

-1 -4%

29 18%

69 33%

17 9%

39 36%

37 30%

4 23%

50 32%

66 32%

11 37%

71 39%

3 14%

45 27%

87 41%

41 22%

120 57%

52 54%

44 59%

39 54%

42 64%

19 61%

68 51%

57 54%

72 59%

10 60%

84 54%

119 58%

18 57%

91 50%

15 63%

103 62%

103 49%

119 63%

46 62%

43 58%

37 56%

17 52%

64 48%

62 58%

73 60%

7 42%

83 54%

109 52%

19 62%

109 61%

12 50%

78 47%

122 58%

92 49%

18 24%

21 29%

17 25%

9 28%

52 39%

30 29%

33 27%

5 34%

50 32%

67 32%

9 30%

41 23%

9 39%

66 39%

61 29%

16 8%

14 15%

6 8%

54 14%

16 17%

40 14%

13 11%

24 12%

11 12%

10 13%

39 35%

4 14%

61 45%

8 52%

99 64%

47 36%

37 49%

86 31%

5 8%

28 42%

10 32%

40 33%

7 42%

9 28%

35 37%

30 31%

25 34%

6 19%

33 50%

36 34%

74 61%

18 27%

102 49%

127 32%

6 8%

31 42%

28 42%

39 29%

65 61%

29 40%

48 43%

61 54%

37 50%

4 14%

84 63%

25 33%

110 40%

150 54%

31 43%

19 28%

25 78%

15 8%

29 31%

33 35%

49 52%

18 24%

44 66%

157 83%

73 35%

160 40%

215 54%

53 72%

126 60% 58 28%

46 49% 37 39%

5 6%

33 46%

9 13%

6 10%

24 36%

13 19%

2 6%

10 33%

6 20%

15 11%

46 35%

17 13%

M E E T I N G S T R E E T

163

10 10%

49 46%

13 12%

11 9%

58 48%

15 12%

2 11%

4 25%

3 17%

R E S E A R C H

60 33%

64 85%

21 41%

47 53%

58 32%

29 16%

74 19%

11 14%

59 38%

58 28%

53 71%

9 9%

34 37%

71 39%

75 30%

1 16%

62 34%

91 51%

NOT MUCH/ NO IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- -----

85 41%

62 19%

4 68%

5 84%

PAGE 5

CURRENT LEADERSHIP SIGNIF SOME EMP DEVLPMT DEVLP PROG USING AUTOMATION IMPACT OF DEPARTURE IMPACT OF DEPARTURE =========== =========== ============================== ======================= ======================= PRODNOT SKILL SKILL UCTI- QUALENHAN CONS CEO/ MGMT MGR/ -ED CEO/ MGMT MGR/ -ED TOTAL YES NO YES NO VITY ITY SAFETY -CING AUTO OWNER TEAM SPV WORK OWNER TEAM SPV WORK ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

Table 1-4 Summary of Key Firm Data BANNER 4

17 15%

46 41%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 1-3 Summary of Key Firm Data BANNER 3

PAGE 4

17 11% 62 40%

21 14%

21 10% 78 38%

30 15%

1 3%

17 54% 2 8%

19 10%

81 45%

28 16%

5 19%

9 39%

3 11%

16 9%

57 34%

22 13%

18 8%

96 46%

26 12%

25 13%

64 34%

28 15%

67 35%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 1-5 Summary of Key Firm Data BANNER 5

BASE=TOTAL SAMPLE FINANCIAL FUTURE (D/S) ----------------------

FUTURE CHALLENGES GROWTH DRIVERS GENDER AGE EMPLOYEES COMBINED INITIATIVE REGIONS ============================== ============================== =========== ======================= =========== ============================= ATTNORTH SW/ RACT UNFAV DEVE-LAND WEST WORK- RISING HLTH LOWER BIZ NEW MAX NEW STRTGY LOP UNDER IF /NW SOUTH CENT TOTAL ERS COSTS COSTS SALES CLIM CUST PROD PROD PLAN MGRS MEN WOMEN 18-44 45-54 55-64 65+ 50 51+ INIT MN MN INIT NONE ----- ----- ------ ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

TOTAL CONFIDENT

GROSS REVENUES (D/S) --------------------

130 90%

23 6%

6 3%

7 5%

21 5%

STAY THE SAME

134 33%

PROFITABILITY (D/S) -------------------

159 40%

INCREASE

187 47%

DECREASE

28 7%

STAY THE SAME

177 44%

CAPITAL EXPEND (D/S) --------------------

87 22%

INCREASE

129 32%

DECREASE

MN BIZ CLIMATE (D/S) -------------------GOTTEN WORSE

72 53%

138 95% 89 61%

136 71%

77 56%

93 64%

47 24%

55 40%

47 32%

6 3%

83 44%

93 48% 9 5%

84 44%

52 27%

4 3%

48 35%

62 46% 15 11%

59 43%

36 26%

31 45%

20 30%

30 44% 27 40% 7 10%

58 40%

33 49% 15 22%

5 7%

215 54%

109 57%

81 59%

84 58%

127 32%

53 28%

39 29%

49 33%

15 11%

12 8%

22 31%

BASE=TOTAL SAMPLE

8 12%

VERY/SMWT

NOT TOO/NOT AT ALL

29 27%

20 23%

97 40% 17 7%

47 19%

71 47% 79 52% 8 5%

63 41%

42 28%

4 3%

68 48% 9 6%

7 7%

54 38%

43 31%

25 24%

140 58%

81 53%

78 55%

35 52%

30 44%

127 53%

88 57%

71 50%

23 33%

23 34%

79 33%

27 39%

9 13%

15 21%

15 22%

94 39%

33 14%

15 9%

73 48%

15 10%

49 32%

9 6%

172 57%

46 47%

49 69%

50 57%

5 5%

2 3%

148 37%

81 20%

320 80%

80 20%

54 18%

53 18%

136 92%

74 91%

293 92%

77 97%

51 95%

50 95%

72 49%

42 52%

153 48%

65 82%

30 55%

35 65%

83 94%

127 86%

3 3%

9 6%

67 82% 7 9%

271 85% 23 7%

77 97%

49 90%

3 5%

51 17%

61 21%

48 90%

41 80%

55 90%

3 5%

4 7%

3 5%

44 87%

23 44%

30 49%

206 93% 12 5%

124 57%

191 63%

48 50%

51 71%

55 62%

79 53%

49 61%

174 54%

65 82%

31 58%

36 69%

91 30%

43 44%

16 22%

28 32%

61 41%

25 31%

121 38%

13 16%

21 39%

15 28%

21 38%

26 49%

23 45%

28 46%

110 50%

22 41%

24 46%

28 46%

90 41%

20 32%

67 31%

19 6%

3 3%

132 43%

28 28%

16 5%

12 12%

28 31%

131 43%

73 24%

2 3%

37 51%

40 41%

40 57% 4 5%

46 47%

27 38%

13 14%

21 29%

4 5%

37 42% 46 52% 8 9%

33 38%

24 27%

6 4%

53 36% 63 42% 10 7%

73 49%

23 15%

7 8%

31 39%

35 43% 3 4%

40 50%

16 19%

21 7%

114 36%

140 44%

26 8%

151 47%

53 17%

45 56%

47 59%

2 2%

25 32%

33 42%

1 3%

19 35%

2 3%

30 55%

16 29%

2 3%

20 39%

5 10% 17 31%

27 53%

58 95%

220 74%

194 88%

5 9%

19 38%

18 36%

5 9%

12 23%

31 50%

138 63%

29 48%

63 29%

1 2%

24 40%

4 6%

12 20%

14 6%

96 44%

14 6%

38 17%

107 35%

22 23%

25 36%

34 38%

42 28%

24 29%

91 29%

38 47%

22 40%

19 36%

14 28%

60 56%

44 50%

157 52%

65 67%

39 55%

44 50%

86 58%

48 60%

186 58%

36 45%

27 49%

31 58%

33 65%

73 68%

50 57%

157 52%

58 59%

43 60%

51 58%

73 49%

43 53%

166 52%

48 61%

30 55%

25 48%

27 53%

31 51%

118 53%

26 30%

98 33%

18 33%

19 37%

18 29%

70 32%

11 13%

38 43%

11 10%

46 33%

85 97%

147 49%

21 24%

62 58%

23 16%

67 94%

65 91%

33 37%

10 9%

49 34%

92 94%

48 54% 6 6%

58 54%

44 63%

26 11%

42 48%

42 39%

36 33%

7 11%

5 5%

35 32%

77 54%

53 37%

43 11%

82 20%

208 52%

80 57%

46 53%

27 56%

21 49%

35 42%

180 45%

167 42%

56 40%

74 53%

38 43%

20 42%

21 49%

45 55%

279 70%

105 75%

57 65%

28 58%

31 73%

5 1%

113 28%

78 56% 2 1%

31 22%

44 51% 2 2%

29 33%

28 32%

27 56% -

7 15%

20 42%

20 47% 1 2%

19 45%

12 27%

34 41% 1 1%

12 14%

22 20%

M E E T I N G S T R E E T

33 11%

113 37%

44 15%

9 9%

5 6%

47 49%

37 52%

10 10%

6 9%

29 30%

R E S E A R C H

20 29%

10 11%

43 49% 8 9%

28 32%

20 13%

51 35%

22 15%

52 35%

8 10%

30 37%

13 16% 25 31%

38 12%

117 37%

49 15%

102 32%

4 6%

43 54%

6 7%

26 32%

6 11%

24 44%

6 11% 18 34%

3 5%

16 30%

9 17%

3 5%

8 13%

21 42%

19 32%

5 11%

31 51%

12 19%

30 13%

121 55%

88 40%

29 13%

PAGE 8

227 57%

173 43%

179 45%

96 24%

92 23%

211 53%

109 27%

80 20%

61 15%

54 14%

58 15%

43 11%

106 27%

293 73%

150 37%

81 20%

126 55%

83 48%

62 35%

63 65%

63 68%

83 39%

74 68%

51 64%

33 54%

26 47%

32 56%

26 60%

51 48%

158 54%

59 40%

79 53%

122 54%

4 2%

81 47%

2 1%

58 33% 4 2%

62 64%

63 68%

1 1%

79 37% 5 2%

73 67%

51 64%

1 1%

32 52% 1 1%

26 47% -

31 54%

1 2%

25 58%

1 2%

51 48%

5 2%

5 3%

15 4%

98 25%

54 67%

6 41%

57 58%

27 33%

9 59%

41 42%

77 78%

54 67% -

6 41% -

38 46%

103 45%

107 60%

33 34%

30 32%

117 55%

34 31%

29 36%

27 45%

29 53%

23 40%

15 36% 22 51%

31 29%

135 46%

27 18%

46 57%

12 77%

59 72%

161 71%

118 68%

104 58%

72 74%

84 91%

126 60%

87 80%

66 83%

43 70%

37 69%

42 72%

32 74%

66 63%

212 72%

85 57%

63 78%

14 88%

22 26%

59 26%

54 31%

35 20%

68 38%

48 49%

75 81%

24 25%

9 9%

48 23%

77 37%

65 60%

53 67%

22 20%

13 17%

26 42%

17 28%

20 37%

17 31%

27 46%

15 26%

10 23%

36 34%

126 43%

55 37%

86 50% 64 37%

53 50%

152 52%

94 41%

76 26%

58 39%

17 21%

2 12%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 2-2 Summary of Key Workforce Data

STAY ABOUT THE SAME

41 29%

57 37%

48 12%

NOT TOO/NOT AT ALL

DIFFICULTY ATTRACTING CANDIDATES (D/S) ---------------------

50 32%

73 30%

10 15%

15 22%

87 22%

VERY/SMWT

DECREASE

91 38%

106 44%

140 35%

DIFFICULTY ATTRACTING CANDIDATES (D/S) ---------------------

INCREASE

60 69%

6 5%

279 92%

18 6%

75 70%

2 1%

88 22%

6 6%

93 65%

14 6%

71 18%

87 90%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

203 51%

STAY ABOUT THE SAME

BASE=TOTAL SAMPLE

56 64%

98 24%

261 86%

101 66%

34 50%

7 10%

99 65%

4 3%

302 76%

76 86%

135 56%

114 47%

400 100%

DECREASE

EMPLOYEE WAGES 2018 (D/S) -------------------------

121 50%

147 96%

97 90%

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

INCREASE

BANNER 2

223 92%

27 40%

Table 2-1 Summary of Key Workforce Data

EMPLOYEE WAGES 2018 (D/S) -------------------------

72 67%

39 57%

43 64%

29 15%

86 61%

29 42%

21 31%

20 30%

72 50%

81 93%

9 6%

80 56%

66 48%

101 94%

4 2%

76 56%

80 42%

129 91%

16 7%

58 85%

64 44%

12 8%

88 22%

7 11%

59 87%

97 51%

11 8%

108 27%

8 12%

41 28%

142 35%

120 84%

8 12%

9 6%

153 38%

144 94%

5 3%

73 51%

241 60%

207 86%

222 56%

21 11%

69 17%

51 74%

53 36%

54 14%

STAYED ABOUT THE SAME

129 67%

129 95%

51 75%

46 34%

160 40%

GOTTEN BETTER

181 95%

68 17%

73 38%

43 11%

STAY THE SAME

145 36%

121 89%

240 60%

DECREASE

136 34%

175 91%

218 55%

INCREASE

192 48%

349 87%

371 93%

TOTAL NOT CONFIDENT

BANNER 1

PAGE 7

203 51%

208 52% 5 1%

180 45%

206 51%

166 41%

127 62%

77 46%

126 61% 1 -

23 6%

256 64%

113 28%

2 8%

159 62%

43 38%

-3 -11%

1 -

4 20%

204 55%

157 61% 2 1%

40 35% 3 2%

17 4%

215 54%

54 14%

127 32%

240 60%

4 23%

117 55%

23 43%

65 51%

150 63%

3 18% 1 5%

113 53% 5 2%

23 41% 1 2%

65 51%

21 5%

134 33%

187 47%

2 8%

55 41%

149 62%

-3 -13%

1 -

4 21%

21 22%

55 41% -

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

115 61%

10 36%

82 46%

80 62%

18 42%

109 49%

23 36%

114 61% 1 1%

7 27%

3 10%

80 45% 2 1%

79 61% 1 1%

15 35% 3 6%

108 48% 2 1%

23 36%

EMPLOYEE WAGES =================

INC- DECREASE REASE SAME ----- ----- ----208 52%

5 1%

208 100%

208 -5 100% -100% -

5 100%

64 39%

166 45%

160 43%

16 72%

94 37%

M66 E E T12 I N G 91 S T R 29 E E T 60R E 88 S E A 14 R C H 76 58% 72% 42% 54% 47% 37% 67% 57% 49 43%

90 42%

27 50%

47 37%

116 48%

7 35%

39 29%

70 38%

15 54%

89 50%

48 37%

21 50%

106 48%

39 61% 14 23%

126 61%

1 18%

180 100%

279 70%

152 74%

113 68%

265 71%

11 48%

181 71%

80 71%

8 51%

150 70%

40 74%

86 68%

176 74%

14 63%

85 64%

128 68%

20 71%

124 70%

103 80%

29 68%

141 64%

39 61%

167 80%

3 51%

109 61%

49 29%

99 27%

11 48%

109 43%

72 28%

31 28%

8 49%

61 28%

13 23%

39 31%

M E E T I N G S T R E E T

164

61 25%

6 28%

46 34%

R E S E A R C H

71 38%

57 30%

13 45%

7 26%

75 43%

49 28%

78 60%

25 20%

17 40%

12 28%

66 30%

75 34%

24 38%

180 45%

102 49%

51 25%

86 52%

371 93%

203 55%

56 57%

167 42%

113 28%

75 36%

77 46%

PAGE 9

STAMN CAPITAL TUS FUTURE OF FIRM ECONOMY IN 2018 BUSINESS CLIMATE GROSS REVENUES PROFITABILITY EXPENDITURES QUO ======================= ================= ================== ================= ================= ================= ===== TOTAL VERY SMWT TOTAL NOT EXPAN RECEINC- DECINC- DECINC- DECTOTAL CONF CONF CONF CONF -SION FLAT SSION BETTER WORSE SAME REASE REASE SAME REASE REASE SAME REASE REASE SAME 3/3 ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

57 58%

41 19%

2 33%

40 23%

68 38%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 2-3 Summary of Key Workforce Data BANNER 3

BASE=TOTAL SAMPLE EMPLOYEE WAGES 2018 (D/S) -------------------------

PAGE 10

145 36%

252 63%

74 19%

322 81%

208 52%

95 65%

113 45%

40 55%

167 52%

180 45%

49 34%

130 51%

32 43%

203 51%

INCREASE DECREASE

5 1%

STAY ABOUT THE SAME

94 65%

1 1%

108 43% 4 2%

39 52% 2 3%

246 61%

208 52%

181 45%

155 39%

88 22%

113 63%

95 61%

32 36%

164 51%

147 60%

123 59%

111 61%

4 1%

3 1%

2 1%

125 60%

180 45%

174 44%

51 13%

124 31%

120 30%

150 37%

141 49%

99 53%

92 51%

96 55%

30 59%

76 61%

74 62%

3 3%

3 1%

98 52% 2 1%

91 51% 1 1%

94 54% 3 2%

29 58% 1 2%

75 60% 1 1%

74 61% 1 1%

57 14%

83 21%

93 23%

84 56%

32 57%

31 38%

40 43%

49 52%

84 56%

30 54%

2 3%

29 35%

3 3%

36 39%

4 4%

94 65%

73 29%

25 33%

142 44%

127 52%

107 52%

105 58%

66 36%

58 37%

49 56%

13 14%

116 41%

137 48%

85 45%

85 47%

72 41%

20 39%

47 38%

45 37%

65 44%

77 51%

22 39%

13 22%

48 58% 6 7%

15 16%

NOT TOO/NOT AT ALL

279 70% 113 28%

120 82%

159 63%

49 67%

229 71%

185 75%

157 76%

143 79%

122 79%

47 54%

198 70%

142 75%

135 75%

132 76%

41 81%

94 76%

89 74%

113 76%

34 60%

43 51%

53 57%

85 34%

25 33%

87 27%

59 24%

BASE=TOTAL SAMPLE EMPLOYEE WAGES 2018 (D/S) -------------------------

400 100% 208 52%

46 48%

167 60%

41 36%

128 61%

57 61%

180 45%

46 48%

109 39%

68 61%

79 38%

36 38%

29 39%

32 44%

31 46%

17 54%

60 45%

44 41%

57 47%

167 80%

80 84%

59 79%

59 81%

55 83%

27 84%

94 71%

81 76%

86 71%

3 3%

3 1%

2 2%

96 100%

279 -113 100% -100%

NOT TOO/NOT AT ALL

113 28%

96 100%

279 100%

113 100%

126 60% 2 1%

126 60%

41 20%

93 53%

39 23%

32 63%

9 17%

64 52%

30 24%

58 48%

31 26%

36 24%

21 37%

37 44%

38 40%

3 4%

42 57%

-3 -4% 34 46%

37 50%

PAGE 11

75 19%

73 18%

66 17%

32 8%

133 33%

107 27%

121 30%

15 46%

72 54%

60 57%

60 50%

57 60%

45 61%

39 54%

36 54%

15 46%

1 1%

45 61%

64 68%

40 55%

36 54%

72 54%

60 56%

1 1%

16 4%

155 39%

207 52%

11 71%

90 58%

103 50%

13 43%

4 23%

61 39%

98 47%

9 54%

122 79%

136 65%

57 47%

10 65%

3 2%

1 6%

90 58%

1 1%

M43 E E T45 I N G43 S T R22 E E T56 R E57 S E A53 R C H 1 58% 62% 65% 68% 42% 53% 44% 8%

15 16%

16 21%

14 19%

12 17%

5 16%

38 28%

24 23%

33 27%

94 61%

7 46%

28 18%

31 8%

99 48% 5 2%

68 33%

24 6%

168 42%

116 64%

8 35%

76 45%

17 54%

62 34%

13 54%

19 61%

130 72%

15 64%

115 64%

1 1%

7 21%

68 33%

181 45%

13 43%

12 39%

83 46%

47 26%

7 27%

2 8%

8 32%

210 53%

189 47%

128 61%

80 42%

86 51%

79 38%

100 53%

113 67%

154 73%

125 66%

73 44%

126 60%

3 2%

2 1%

61 37%

52 31%

99 47%

55 26%

77 41% 4 2%

67 35%

58 31%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 2-5 Summary of Key Workforce Data

PAGE 12

192 48%

136 34%

145 36%

68 17%

69 17%

241 60%

153 38%

142 35%

108 27%

88 22%

302 76%

98 24%

71 18%

88 22%

148 37%

81 20%

208 52%

128 67%

60 44%

88 61%

23 34%

29 42%

119 49%

85 55%

68 48%

66 62%

55 63%

160 53%

49 50%

34 48%

49 56%

81 55%

38 47%

180 45%

62 32%

70 51%

54 37%

41 60% 6 9%

38 55%

14 20%

114 66 70 38 32 133 47 35 47% 43% 50% 36% 37% 44% 48% 50% M E E T I N G S T R E E T R E S E A R C H 95 74 42 48 59 114 53 24 39% 48% 30% 45% 68% 38% 54% 33%

36 41%

62 42%

42 51%

36 53%

40 58%

203 51%

5 1%

126 66%

2 1%

59 43% 2 1%

86 60% 2 1%

DIFFICULTY ATTRACTING CANDIDATES (D/S) ---------------------

167 42%

143 74%

43 31%

66 45%

NOT TOO/NOT AT ALL

279 70%

113 28%

167 87%

87 64%

105 72%

VERY/SMWT

44 24%

95 24%

39 35%

279 70%

STAY ABOUT THE SAME

45 24%

209 52%

164 59%

167 42%

VERY/SMWT

DECREASE

83 29%

113 28%

43 45%

DIFFICULTY ATTRACTING CANDIDATES (D/S) ---------------------

INCREASE

35 39%

279 70%

5 1%

STAY ABOUT THE SAME

EMPLOYEE WAGES 2018 (D/S) -------------------------

33 21%

91 50%

96 24%

203 51%

DECREASE

BASE=TOTAL SAMPLE

38 21%

97 51%

28 38%

SHORTAGE STRATEGIC ATTRACT EMPLOYEES CANDIDATE NOT TAKE JOB/FOLLOW THRU GREATEST EMPLOYEE NEED SKILLED JOBS TAX REFORM IMPACT GROWTH PLAN ================= =================================== ======================= ================== ================== =========== TOTAL LOW JOB TECH/ TOTAL VERY TOTAL NOT SKILL COMP- LONG FLEX MOBIL CHILD NO TECH/ TOTAL EXPE- TOTAL NO TOTAL DIFF DIFF DIFF REQD ENS COMM SCHED -ITY CARE ENTRY EXP EXP COLL+ WORSE CTED BETTER HELP HURT IMPACT YES NO ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ------ ----- -----

INCREASE

BANNER 5

50 24%

89 57%

74 19%

25 34%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 2-4 Summary of Key Workforce Data BANNER 4

81 39%

189 47%

138 48%

167 42%

25 18%

92 38%

2 1%

285 71%

29 33%

DIFFICULTY ATTRACTING CANDIDATES (D/S) --------------------VERY/SMWT

148 46%

150 61%

93 60%

NOT MUCH/ NO IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- -----

25 13%

45 33%

39 27%

22 33% 1 1%

30 44%

27 39% 2 3%

26 38%

115 48% 4 1%

165 68% 70 29%

83 54% 2 1%

113 74% 39 26%

65 46%

66 61%

3 2%

1 1%

91 64%

78 72%

49 35%

29 27%

55 63% -

73 83% 14 16%

154 51% 5 2%

205 68% 91 30%

49 50% -

74 76% 22 22%

33 46%

1 1%

47 66% 23 33%

48 54%

2 2%

51 58%

69 78% 18 20%

79 54%

2 1%

53 36%

99 67%

46 31%

38 47%

35 43%

57 70%

22 27%

320 80%

80 20%

54 18%

53 18%

157 49%

51 64%

27 51%

29 55%

151 47%

29 36%

25 46%

24 45%

26 51%

29 48%

91 41%

37 70%

35 69%

48 78%

159 72%

152 47%

5 2%

114 36%

213 66%

99 31%

51 64%

53 67%

66 83%

13 17%

27 51% -

8 16%

31 57%

22 42%

29 55%

21 39%

16 30%

51 17%

20 40%

22 43%

2 4%

21 40%

15 29%

61 21%

32 52%

37 60%

11 18%

220 74%

118 54%

122 55%

4 2%

104 47%

55 25%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 13 Table 3-1 QUESTION 1: From a financial perspective, how do you feel right now about the future for your company... very confident, somewhat confident, not very confident, or not at all confident? BANNER 1

BASE=TOTAL SAMPLE **D/S (CONFIDENT - NOT CONFIDENT) TOTAL CONFIDENT ---------------

TOTAL NOT CONFIDENT ------------------VERY CONFIDENT

SOMEWHAT CONFIDENT NOT VERY CONFIDENT NOT AT ALL CONFIDENT DON'T KNOW/UNSURE

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

140 35%

371 93%

130 93%

206 51%

79 57%

33 38%

28 59%

21 48%

44 54%

19 5%

8 6%

3 3%

3 6%

2 4%

4 4%

349 87%

23 6%

166 41%

4 1% 6 1%

87 22%

48 12%

43 11%

82 20%

227 57%

173 43%

179 45%

77 94%

213 94%

159 92%

160 89%

121 86%

80 92%

42 88%

33 76%

73 89%

9 6%

3 3%

3 6%

4 8%

5 6%

51 36%

1 1% 1 1%

83 95%

50 57%

2 2%

45 94%

17 35%

36 84%

15 36%

2 4% 3 7%

33 40%

1 1%

201 89%

148 85%

144 81%

96 24%

89 92%

92 23%

211 53%

109 27%

91 98%

189 90%

104 96%

171 81%

100 92%

80 20%

61 15%

54 14%

58 15%

43 11%

106 27%

293 73%

150 37%

81 20%

53 97%

57 98%

36 83%

100 94%

270 92%

135 90%

78 97%

30 49%

29 53%

31 53%

21 49%

57 54%

147 50%

63 42%

3 4%

2 3%

1 2%

5 11%

2 2%

17 6%

12 8%

77 97%

51 85%

51 93%

12 11 15 4 1 18 5 5% 6% 9% 4% 1% 9% 4% M 112 E E T I93 N G S67 T R E56 E T 63 R E S91 E A R62 C H 52 49% 54% 38% 58% 68% 43% 57% 66%

4 6%

2 3%

93 96%

90 97%

77 97%

100 44%

65 38%

92 52%

37 38%

28 30%

98 47%

42 39%

25 32%

1 -

3 2%

1 1%

3 1%

1 1%

11 5%

3 1%

8 5%

3 2%

14 8%

4 2%

3 3%

165

M E E T I N G S T R E E T

1 1%

15 7%

4 2%

4 3% -

R E S E A R C H

2 3%

55 90%

25 42%

1 1%

2 4%

24 44%

56 97% 1 2%

27 46%

30 70%

6 13%

15 34%

1 2%

2 4%

96 90% 4 4%

43 40%

2 2%

3 3%

252 86% 19 6%

123 42%

2 1%

3 1%

122 81% 14 9%

15 4%

98 25%

14 94%

93 94%

76 94%

13 87%

2 2%

1 6%

38 47%

7 47%

89 91% 4 4%

61 62%

73 49%

40 50%

7 47%

32 33%

2 1%

1 6%

1 1%

2 2%

1 1%

3 3%

2 2%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 14 Table 3-2 QUESTION 1: From a financial perspective, how do you feel right now about the future for your company... very confident, somewhat confident, not very confident, or not at all confident?

BANNER 2

BASE=TOTAL SAMPLE **D/S (CONFIDENT - NOT CONFIDENT)

TOTAL CONFIDENT ---------------

TOTAL NOT CONFIDENT ------------------VERY CONFIDENT

SOMEWHAT CONFIDENT NOT VERY CONFIDENT NOT AT ALL CONFIDENT DON'T KNOW/UNSURE

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----400 100% 349 87%

371 93% 23 6%

206 51%

206 100%

206 51%

206 100%

19 5%

166 41% 4 1%

6 1%

166 41%

166 100%

371 93%

23 6%

371 100%

166 45%

113 28%

250 98%

164 64%

23 100%

206 55%

166 100%

256 64%

371 -23 100% -100%

3 1%

86 34%

4 16%

19 84%

248 97%

17 4%

215 54%

54 14%

127 32%

240 60%

97 86%

10 62%

203 95%

44 81%

121 95%

31 28%

4 22%

120 56%

17 31%

67 53%

83 74%

14 12%

66 58%

3 1%

12 11%

3 1%

2 2%

4 24% 6 38%

196 91%

7 3%

7 40%

83 39%

2 11%

1 -

4 27% -

35 65%

9 17%

115 90%

6 5%

21 5%

134 33%

187 47%

235 98%

10 49%

121 90%

149 62%

2 8%

52 39%

235 98%

1 -

-2%

11 51%

110 82% 11 8%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

182 97%

19 67%

163 92%

126 97%

34 81%

206 93%

57 89%

204 98%

120 64%

4 13%

79 45%

88 68%

12 29%

103 46%

27 43%

6 15%

11 5%

5 8%

181 97% 1 -

10 34%

9 33%

152 86% 12 7%

124 96%

26 61%

2 1%

8 19%

27 50%

54 42%

87 36%

9 40%

69 52%

62 33%

15 54%

84 48%

37 29%

22 51%

2 3%

1 1%

2 8%

2 1%

2 7%

1 1%

2 4%

6 3%

7 14%

4 2%

1 2%

5 4%

1 -

3 1%

9 43% -

9 7%

2 1%

1 -

4 2%

7 26% -

11 6% 2 1%

2 1%

194 87% 13 6%

103 46% 2 1%

3 1%

50 79%

6 10%

29 46% 1 1%

1 1%

5 1%

180 45%

1 18%

160 89%

127 61%

1 18%

75 42%

2 1%

4 82%

13 7%

3 1%

202 97% 2 1%

77 37% -

-3 -64% 4 82%

144 80% 16 9%

86 48% 4 2%

3 2%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 15 Table 3-3 QUESTION 1: From a financial perspective, how do you feel right now about the future for your company... very confident, somewhat confident, not very confident, or not at all confident?

BANNER 3

BASE=TOTAL SAMPLE **D/S (CONFIDENT - NOT CONFIDENT) TOTAL CONFIDENT ---------------

TOTAL NOT CONFIDENT ------------------VERY CONFIDENT

SOMEWHAT CONFIDENT NOT VERY CONFIDENT NOT AT ALL CONFIDENT DON'T KNOW/UNSURE

145 36%

139 96%

252 63%

71 95%

20 8%

2 2%

142 98%

227 90%

206 51%

92 63%

19 5%

2 1%

23 6%

166 41%

4 1%

6 1%

3 2%

322 81%

275 85%

246 61%

226 92%

72 98%

296 92%

236 96%

113 45%

51 68%

154 48%

145 59%

17 7%

2 2%

17 5%

7 3%

50 34%

115 45%

1 1%

3 1%

1 1%

74 19%

207 82%

371 93%

5 2%

21 6%

22 29%

142 44%

4 1%

6 2%

9 4%

91 37% 2 1% 1 -

174 44%

51 13%

201 174 152 76 266 175 171 163 97% 96% 98% 86% 93% 93% 95% 94% M E E T I N G S T R E E T R E S E A R C H 6 6 4 10 14 11 8 9 3% 3% 2% 11% 5% 6% 5% 5%

208 52%

50 98%

118 95%

88 42%

27 52%

68 55%

196 94%

181 45%

169 93%

155 39%

148 95%

88 22%

66 75%

114 55%

102 56%

95 61%

32 37%

5 2%

6 3%

4 2%

8 9%

1 -

72 40% -

1 1%

56 36% -

285 71%

253 88%

180 45%

163 90%

150 52%

98 52%

91 50%

12 4%

8 4%

6 4%

44 50%

116 41%

2 2%

2 1%

2 3%

189 47%

164 87%

6 2%

78 41% 3 1% 3 1%

154 88%

84 48%

49 96% 1 2%

124 31%

120 30%

150 37%

114 92%

112 93%

140 94%

4 3%

2 2%

3 2%

114 95% 68 56%

143 96% 83 55%

81 45%

79 46%

23 46%

50 40%

47 39%

60 40%

2 1%

3 2%

1 -

6 4%

2 1%

1 2%

4 3%

2 2%

2 2% 4 3%

NOT MUCH/ NO IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- ----57 14%

42 74%

49 87%

83 21%

66 79%

74 89%

7 13%

8 10%

23 40%

35 42%

1 2%

1 1%

26 47%

3 2%

6 11%

4 3%

39 47%

93 23%

69 74%

81 87%

12 12%

45 48%

74 19%

53 71%

64 85% 11 15%

38 51%

36 38%

25 34%

1 1%

7 9%

11 12%

1 1%

10 13% -

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 16 Table 3-4 QUESTION 1: From a financial perspective, how do you feel right now about the future for your company... very confident, somewhat confident, not very confident, or not at all confident?

BANNER 4

BASE=TOTAL SAMPLE **D/S (CONFIDENT - NOT CONFIDENT)

TOTAL CONFIDENT ---------------

TOTAL NOT CONFIDENT ------------------VERY CONFIDENT

SOMEWHAT CONFIDENT NOT VERY CONFIDENT NOT AT ALL CONFIDENT DON'T KNOW/UNSURE

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

96 24%

349 87%

80 84%

23 6%

7 8%

371 93%

279 70%

88 79%

11 4%

11 10%

265 95%

206 51%

55 58%

152 54%

19 5%

5 5%

166 41% 4 1%

6 1%

209 52%

95 24%

75 19%

73 18%

66 17%

88 93%

70 93%

68 94%

60 91%

192 92%

82 87%

7 3%

6 7%

99 88%

200 95%

51 45%

114 54%

37 39%

7 3%

11 10%

6 3%

4 5%

4 1%

2 2%

33 34%

113 40%

3 3%

4 1%

1 1%

113 28%

254 91%

88 91%

SHORTAGE STRATEGIC CANDIDATE NOT TAKE JOB/FOLLOW THRU GREATEST EMPLOYEE NEED SKILLED JOBS TAX REFORM IMPACT GROWTH PLAN =================================== ======================= ================== ================== =========== LOW JOB TECH/ TOTAL SKILL COMP- LONG FLEX MOBIL CHILD NO TECH/ TOTAL EXPE- TOTAL NO REQD ENS COMM SCHED -ITY CARE ENTRY EXP EXP COLL+ WORSE CTED BETTER HELP HURT IMPACT YES NO ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ------ ----- -----

49 43% -

86 41% 2 1%

2 1%

52 54% 2 2% -

68 91%

64 87%

57 85%

32 8%

26 83%

133 33%

107 27%

125 94%

100 94%

118 89%

29 91%

121 30%

95 89%

106 87%

113 93%

16 4%

155 39%

11 70%

2 5 4 3 6 6 7 2 2% 6% 6% 9% 5% 5% 6% 12% M E E T I N G S T R E E T R E S E A R C H 32 39 31 17 74 57 57 9 43% 53% 47% 54% 56% 53% 47% 54% 38 50%

30 41%

29 44%

12 38%

50 38%

43 41%

56 46%

1 1%

3 2%

2 2%

3 4%

5 6%

4 6%

2 3%

3 9%

5 4%

2 2%

6 5%

1 1%

189 47%

200 95%

171 91%

5 23%

82 49%

134 64%

10 6%

5 3%

67 37%

15 62%

73 44%

1 1%

2 8%

1 1%

105 58%

5 3%

13 6%

1 3%

6 3%

84 41%

10 33%

2 1%

210 53%

155 92%

4 15%

20 64%

4 2%

168 42%

20 85%

6 4%

106 51%

15 7%

24 6%

1 3%

77 50%

7 5%

2 1%

1 6%

181 45%

165 91%

30 97%

1 1%

31 8%

29 94%

190 92%

67 43%

2 12%

176 85%

144 93%

4 28%

4 4%

207 52%

137 88%

13 82%

171 95%

3 2%

17 70%

2 8% -

144 86% 11 6%

2 1%

192 91% 8 4%

66 32% 3 1%

2 1%

157 83%

15 8%

72 38%

100 53%

14 7% 1 -

3 2%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 17 Table 3-5 QUESTION 1: From a financial perspective, how do you feel right now about the future for your company... very confident, somewhat confident, not very confident, or not at all confident?

BANNER 5

BASE=TOTAL SAMPLE **D/S (CONFIDENT - NOT CONFIDENT)

TOTAL CONFIDENT ---------------

TOTAL NOT CONFIDENT ------------------VERY CONFIDENT

SOMEWHAT CONFIDENT NOT VERY CONFIDENT NOT AT ALL CONFIDENT DON'T KNOW/UNSURE

192 48%

136 34%

145 36%

68 17%

69 17%

349 87%

175 91%

121 89%

130 90%

51 75%

51 74%

23 6%

6 3%

7 5%

8 12%

7 11%

371 93%

181 95%

206 51%

112 59%

19 5%

6 3%

166 41% 4 1%

6 1%

129 95%

73 54%

138 95%

78 54%

59 87%

16 23%

58 85%

28 41%

69 36%

56 41%

59 41%

43 64%

30 44%

1 -

2 1%

1 1%

2 3%

4 2%

5 4%

6 4%

6 9%

1 1%

7 11%

3 5%

241 60%

207 86%

223 92%

153 38%

144 94%

147 96%

142 35%

120 84%

129 91%

108 27%

88 22%

302 76%

98 24%

71 18%

88 22%

101 94%

81 93%

279 92%

92 94%

67 94%

85 97%

97 90%

76 86%

261 86%

87 90%

65 91%

16 4 9 4 6 18 5 2 7% 2% 6% 3% 6% 6% 5% 3% M E E T I N G S T R E E T R E S E A R C H 116 89 65 56 50 154 51 47 48% 58% 45% 52% 57% 51% 53% 66% 107 44%

59 38%

64 45%

45 42%

31 36%

125 41%

41 42%

19 27%

2 1%

1 1%

2 2%

1 -

3 3%

14 6%

2 1%

3 2%

2 1%

8 6%

4 3%

3 3%

166

4 4%

1 1%

17 6%

5 2%

2 2%

1 1%

2 3%

3 4%

148 37%

81 20%

136 92%

74 91%

83 94%

127 86%

3 3%

9 6%

3 3%

8 6%

5 7%

1 1%

2 2%

53 18%

51 95%

50 95%

23 7%

33 40%

54 18%

77 97%

7 9%

72 49% 64 44%

80 20%

293 92%

271 85%

49 55% 37 42%

320 80%

67 82%

49 90% 3 5%

55 90%

3 5%

4 7%

3 5%

30 56%

26 49%

19 6%

3 5%

2 2%

4 1%

25 32%

2 3%

21 39%

61 21%

41 80%

52 66%

140 44%

51 17%

48 90%

153 48%

41 51%

77 97%

44 87%

26 50%

58 95% 35 57%

24 46%

19 37%

23 38%

2 4%

1 2%

2 4%

3 6%

2 3% -

220 74%

194 88%

206 93% 12 5%

107 49%

99 45%

11 5% 1 -

3 1%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 4-1 Summary of Future of Firm Trend BANNER 1

BASE=TOTAL SAMPLE 2018 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2017 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2016 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2015 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

227 57%

173 43%

179 45%

96 24%

92 23%

371 93%

130 93%

83 95%

45 94%

36 84%

77 94%

213 94%

159 92%

160 89%

93 96%

91 98%

349 87%

23 6%

121 86%

9 6%

80 92%

3 3%

42 88%

3 6%

351 88%

118 84%

82 94%

44 92%

25 6%

11 8%

3 3%

2 4%

375 94%

129 92%

84 97%

33 76%

4 8%

41 96%

73 89%

5 6%

BASE=TOTAL SAMPLE 2018 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2017 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2016 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2015 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

BASE=TOTAL SAMPLE 2018 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2017 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2016 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2015 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

293 73%

150 37%

104 96%

77 97%

55 90%

53 97%

57 98%

36 83%

100 94%

270 92%

135 90%

1 1%

18 9%

5 4%

189 90%

4 6%

2 3%

1 2%

6 13%

96 90% 4 4%

252 86%

19 6%

81 20%

15 4%

122 81%

76 94%

13 87%

14 9%

2 2%

1 6%

78 97%

14 94%

39 84%

97 88%

254 87%

132 83%

75 87%

14 100%

8 10%

14 6%

11 6%

14 8%

2 2%

3 4%

18 8%

1 1%

6 8%

4 7%

2 4%

5 6%

4 8%

6 6%

18 6%

14 9%

6 6%

7 8%

8 17%

3 8%

9 11%

213 94%

198 87%

162 94%

129 74%

164 92%

73 95%

23 12%

7 7%

2 2%

150 86%

162 86%

187 82%

127 73%

119 70% 24 14%

314 78%

118 84%

69 80%

37 78%

36 83%

54 65%

42 11%

11 8%

8 10%

5 11%

4 8%

14 17%

68 83%

206 91% 19 8%

21 12%

150 87% 23 13%

76 96%

85 86%

212 93% 14 6%

90 98%

139 74%

72 88%

143 85%

92 93%

214 92%

87 99%

69 92%

52 93%

47 96%

103 94%

272 94%

88 89%

48 100%

55 72%

77 73%

56 84%

65 92%

106 88%

218 79%

25 11%

4 4%

10 13%

14 13%

5 8%

3 4%

7 6%

28 10%

195 88%

72 78%

74 89%

156 70%

79 84%

60 90%

50 89%

55 75%

10 11%

5 5%

32 15%

7 7%

3 5%

2 4%

9 12%

79 95%

42 92%

171 77%

75 98%

83 89%

77 94%

188 85%

92 94%

48 100%

85 92%

63 95%

65 85%

52 94%

91 86%

64 88%

61 92% 65 82%

72 91% 7 9%

68 96% 41 74%

48 86% 7 12%

113 94% 72 80%

80 90% 9 10%

146 91%

111 69%

81 94%

104 94%

14 100%

8 100%

98 25%

89 91%

93 94% 4 4%

78 98%

79 99%

1 1%

46 90%

246 89%

134 84%

107 97%

8 100%

48 95%

226 77%

111 69%

82 80%

7 65%

34 92%

24 15%

10 9%

2 17%

2 4%

259 88% 33 11%

24 15%

135 84%

4 3%

92 89%

9 83%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

3 5%

36 96%

PAGE 19

371 93%

23 6%

206 51%

206 100%

166 41%

166 100%

351 88%

228 100%

147 100%

25 6%

375 94%

228 100%

147 100%

327 82%

174 100%

187 100%

35 9%

362 90%

174 100%

187 100%

314 78%

162 100%

194 100%

42 11%

356 89%

162 100%

194 100%

371 93%

23 6%

256 64%

113 17 215 54 127 240 21 134 M E E T4% I N G54% S T R14% E E T32%R E60% S E A 5% R C H33% 28%

187 47%

371 100%

250 98%

97 86%

371 -23 100% -100% -

23 100%

375 -25 100% -100% 375 100%

25 100%

362 -35 100% -100% 362 100%

35 100%

356 100%

356 -42 100% -100% -

42 100%

248 97% 3 1%

227 98%

230 99%

83 74%

4 24%

14 12%

6 38%

99 77%

114 89%

3 1%

15 11%

126 99%

175 91%

125 97% 2 1%

158 82%

7 3%

9 17%

203 95%

6 37%

11 63%

27 45%

43 71%

35 69%

20 12%

35 65%

153 94%

146 87%

5 3%

196 91%

5 27%

16 26%

126 75%

162 97%

10 62%

17 9%

157 94%

44 81%

115 90%

121 95% 6 5%

56 76%

132 86%

5 3%

9 12%

11 7%

157 97%

65 88%

110 82%

181 97%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

10 34%

152 86%

124 96%

26 61%

126 97%

34 81%

206 93%

57 89%

204 98%

216 99%

9 32%

116 80%

163 93%

20 69%

158 85%

84 92%

31 65%

228 90%

65 80%

174 94%

1 -

9 34%

15 10%

6 4%

4 16%

14 7%

4 4%

8 17%

13 5%

8 10%

6 3%

94 95%

3 2%

15 32%

17 10%

2 1%

18 38%

15 7%

3 3%

17 22%

118 97%

23 64%

98 92%

54 78%

167 93%

16 31%

6 3%

173 97%

1 2%

144 76%

115 95%

13 49%

22 11%

3 3%

14 51%

166 87%

189 92%

88 96%

8 19%

174 85%

29 61%

171 93%

2 1%

11 23%

142 98%

24 84%

12 7%

140 96%

155 89%

170 96%

9 33%

137 79%

31 66%

131 90%

1 -

16 35%

172 98%

18 66%

11 8%

97 97%

10 29%

185 77%

91 85%

13 36%

26 11%

7 7%

211 88%

39 83%

43 55%

13 6%

241 95%

185 86%

6 10%

73 90%

67 81%

60 77%

198 92%

74 90%

38 56%

182 82%

75 83%

15 22%

19 9%

7 8%

14 6%

201 91%

7 9%

82 91%

145 36%

252 63%

74 19%

322 81%

246 61%

371 93%

142 98%

227 90%

72 98%

296 92%

236 96%

349 87%

23 6%

139 96%

3 2%

207 82%

20 8%

71 95%

2 2%

275 85%

21 6%

226 92%

9 4%

152 98%

6 3%

76 86%

266 93%

175 93%

171 95%

163 94%

4 2%

10 11%

14 5%

11 6%

8 5%

212 89%

7 44%

105 73%

224 94%

9 5%

51 13%

124 31%

120 30%

150 37%

57 14%

83 21%

93 23%

74 19%

50 98%

118 95%

114 95%

143 96%

49 87%

74 89%

81 87%

64 85%

49 96%

1 2%

4 3%

2 2%

42 74%

66 79%

69 74%

3 2%

7 13%

8 10%

12 12%

19 6%

287 90%

327 82%

115 90%

208 78%

35 9%

6 5%

29 11%

362 90%

314 78%

356 89% 42 11%

121 95%

237 88%

65 83%

71 90%

6 7%

258 81%

29 9%

7 8%

35 11%

M E E T I N G S T R E E T

167

247 77%

282 89%

64 82%

71 90%

11 15%

5 8%

53 71%

20 8%

140 94%

5 3%

112 93%

25 6%

114 92%

290 88%

309 94%

R E S E A R C H

11 72%

4 28%

57 84%

63 92%

1 24%

12 5%

218 85%

238 92%

16 9%

181 92%

126 93%

131 97%

165 83%

3 76%

351 88%

375 94%

174 96%

2 51%

144 80%

16 8%

124 86%

18 13%

PAGE 20

208 181 155 88 285 189 180 174 52% 45% 39% 22% 71% 47% 45% 44% M E E T I N G S T R E E T R E S E A R C H 196 169 148 66 253 164 163 154 94% 93% 95% 75% 88% 87% 90% 88% 201 97%

160 89%

180 97%

CURRENT LEADERSHIP SIGNIF SOME NOT MUCH/ EMP DEVLPMT DEVLP PROG USING AUTOMATION IMPACT OF DEPARTURE IMPACT OF DEPARTURE NO IMPACT OF DEPARTURE =========== =========== ============================== ======================= ======================= ======================= PRODNOT SKILL SKILL SKILL UCTI- QUALENHAN CONS CEO/ MGMT MGR/ -ED CEO/ MGMT MGR/ -ED CEO/ MGMT MGR/ -ED TOTAL YES NO YES NO VITY ITY SAFETY -CING AUTO OWNER TEAM SPV WORK OWNER TEAM SPV WORK OWNER TEAM SPV WORK ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

1 18%

4 82%

163 92%

11 51%

180 45%

2 1%

19 67%

1 -

5 1%

-3 -64%

182 97%

169 96%

208 52%

202 97%

121 90%

50 79%

10 49%

217 100%

194 87%

235 98%

20 38%

-2%

143 93%

235 98%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 4-3 Summary of Future of Firm Trend BANNER 3

106 27%

30 70%

72 89%

7 5%

39 92%

43 11%

56 97%

46 93%

35 9%

43 89%

58 15%

51 93%

48 86%

63 76%

78 89%

54 14%

51 85%

63 85%

36 83%

128 92%

61 15%

77 97%

86 98%

31 64%

356 89%

80 20%

100 92%

196 84%

74 90%

39 90%

109 27%

171 81%

74 93%

42 98%

39 81%

4 4%

211 53%

90 97%

88 96%

73 84%

80 92%

15 9%

89 92%

150 85%

125 89%

132 94%

11 6%

144 81%

151 87%

327 82%

362 90%

12 5%

148 85%

200 88%

46 96%

1 2%

201 89%

65 80%

Table 4-2 Summary of Future of Firm Trend BANNER 2

PAGE 18

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 4-4 Summary of Future of Firm Trend

BANNER 4

BASE=TOTAL SAMPLE 2018 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT 2017 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT 2016 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT 2015 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100% 349 87%

96 24%

80 84%

371 93%

88 91%

351 88%

87 84%

23 6%

7 8%

279 70%

113 28%

265 95%

99 88%

254 91% 11 4%

240 88%

88 79%

11 10%

101 88%

209 52%

192 92% 200 95% 7 3%

184 90%

95 24%

BASE=TOTAL SAMPLE 2018 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT 2017 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2016 ----

TOTAL CONFIDENT TOTAL NOT CONFIDENT

2015 ----

TOTAL CONFIDENT

TOTAL NOT CONFIDENT

73 18%

68 91%

64 87%

66 17%

70 93%

68 94%

60 91%

94 90%

63 85%

57 91%

49 90%

6 7%

2 2%

5 6%

255 94%

108 94%

194 95%

100 95%

69 93%

60 96%

52 95%

327 82%

80 76%

230 86%

89 77%

148 84%

80 81%

42 77%

38 96%

51 81%

362 90%

92 88%

247 93%

72 67%

227 80%

17 16%

27 10%

35 9%

12 12%

356 89%

88 83%

314 78% 42 11%

16 6%

17 7%

255 90%

7 6%

10 5%

101 88%

161 92%

81 75%

163 79%

14 13%

21 10%

13 11%

95 87%

5 5%

6 7%

90 90%

3 4%

48 89%

14 8%

10 10%

6 11%

184 89%

97 90%

62 88%

87 81%

39 98%

54 76%

10 10%

8 12%

58 91%

80 87%

5 9%

3 9%

107 27%

125 94%

100 94%

96 87%

89 87%

95 89%

6 5%

121 30%

16 4%

106 87%

176 85%

2 12%

7 5%

15 7%

13 82%

128 89%

15 90%

103 93%

95 94%

136 94%

16 95%

102 85%

67 82%

129 84%

11 69%

7 7%

112 92%

68 75%

12 13%

6 6%

9 8%

73 89%

141 92%

64 69%

128 82%

13 14%

14 9%

6 7%

81 80%

91 90%

77 83%

10 10%

8 6%

207 52%

137 88%

113 93%

7 6%

155 39%

11 70%

57 90%

6 10%

133 33%

118 89%

29 91%

3 5%

1 2%

53 83%

26 83%

4 6%

96 92% 8 8%

32 8%

57 85%

88 93%

144 93%

1 5%

14 84%

12 8%

3 16%

142 91%

24 98%

190 92%

31 8%

29 94%

30 97%

1 3% -

181 45%

165 91%

171 95%

6 4% -

24 6%

17 70%

20 85%

4 15%

1 2%

192 48%

136 34%

145 36%

68 17%

69 17%

138 95%

59 87%

58 85%

130 85%

349 87%

175 91%

121 89%

130 90%

23 6%

6 3%

7 5%

371 93%

181 95%

129 95%

51 75%

8 12%

351 88%

129 95%

72 98%

123 85%

64 73%

25 6%

4 3%

1 1%

11 8%

12 14%

375 94% 327 82%

132 97%

38 65%

1 1%

9 16%

111 96%

76 96%

105 99%

314 78%

107 92%

42 11%

4 3%

356 89%

72 99%

104 98%

362 90% 35 9%

200 95%

171 91%

8 4%

193 89%

157 83% 15 8%

153 86%

166 93%

138 91%

184 76%

12 5%

144 95%

13 7%

212 87%

6 4%

29 12%

147 95%

203 85%

139 89% 8 5%

170 72%

32 14%

PAGE 22

FUTURE CHALLENGES GROWTH DRIVERS GENDER AGE EMPLOYEES ============================== ============================== =========== ======================= =========== ATTRACT UNFAV DEVEWORK- RISING HLTH LOWER BIZ NEW MAX NEW STRTGY LOP UNDER TOTAL ERS COSTS COSTS SALES CLIM CUST PROD PROD PLAN MGRS MEN WOMEN 18-44 45-54 55-64 65+ 50 51+ ----- ----- ------ ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

189 47%

205 95%

210 53%

192 91%

11 6%

155 92%

23 96%

168 42%

144 86%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 4-5 Summary of Future of Firm Trend

BANNER 5

75 19%

82 87%

375 94% 25 6%

PAGE 21

134 92% 110 82%

51 74%

7 11%

241 153 142 108 88 302 98 71 60% 38% 35% 27% 22% 76% 24% 18% M E E T I N G S T R E E T R E S E A R C H 207 144 120 97 76 261 87 65 86% 94% 84% 90% 86% 86% 90% 91%

74 91%

293 92%

77 97%

92 94%

67 94%

259 88%

140 86%

84 89%

259 86%

92 95%

67 97%

73 85%

125 87%

65 94%

282 88%

11 7%

5 6%

22 7%

3 3%

1 1%

6 7%

9 6%

2 3%

19 6%

133 83%

266 81%

4 2%

18 6%

9 6%

4 3%

151 93%

6 6%

90 94%

18 6%

281 93%

5 5%

2 3%

95 97%

68 99%

170 83%

99 92%

264 83%

62 77%

62 100%

30 9%

15 8%

4 4%

26 8%

9 11%

271 91%

141 89%

284 88%

71 92%

116 90%

146 91%

296 90%

74 93%

120 73%

71 76%

108 63%

243 81%

2 3%

22 14%

11 12%

31 18%

28 9%

139 82%

136 92%

279 92%

103 80%

81 87%

85 97%

81 93%

121 91%

143 86%

80 20%

271 85%

101 94%

277 94%

13 8%

320 80%

67 82%

129 91%

142 92%

13 10%

81 20%

127 86%

147 96%

16 7%

47 81%

12 9%

148 37%

83 94%

223 92%

76 86%

12 8%

88 22%

185 91%

123 77%

103 96%

18 11%

85 86%

91 92%

6 6%

290 91%

248 77%

36 11%

71 89%

3 3%

79 93%

114 77%

7 8%

16 11%

85 92%

39 95%

73 72%

40 97%

6 8%

1 3%

134 94%

78 85%

62 100%

65 84%

9 6%

87 85%

14 13%

7 9%

67 97%

48 67%

23 7%

77 97%

63 85%

COMBINED INITIATIVE REGIONS ============================= NORTH SW/ -LAND WEST IF /NW SOUTH CENT INIT MN MN INIT NONE ----- ----- ----- ----- ----54 18%

53 18%

51 17%

61 21%

51 95%

50 95%

44 87%

58 95%

206 93%

35 95%

47 93%

26 64%

191 88%

49 90%

3 5%

52 96%

48 90%

3 5%

41 80% 4 7%

55 90% 3 5%

301 94%

69 92%

53 98%

36 98%

49 96%

33 82%

259 81%

48 100%

47 82%

16 48%

41 85%

33 78%

6 8%

1 2%

2 4%

7 18%

130 88%

60 83%

288 90%

48 100%

52 90%

25 74%

45 91%

37 88%

124 83%

52 68%

234 75%

60 90%

43 75%

28 82%

45 85%

20 50%

137 91% 13 9%

12 16%

64 83%

12 15%

29 9%

273 87% 39 12%

63 95% 3 5%

5 8%

50 87% 7 13%

9 26%

31 91%

3 9%

3 7%

49 92%

4 8%

4 10%

30 75% 10 25%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 5-1 QUESTION 2: Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession?

BANNER 1

BASE=TOTAL SAMPLE ECONOMIC EXPANSION A FLAT ECONOMY A RECESSION DON'T KNOW/UNSURE

12 5%

204 94%

14 6%

189 87% 203 93%

14 7%

178 82%

196 91% 18 8%

PAGE 23

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

113 28%

33 23%

25 28%

13 27%

13 30%

29 36%

15 4%

10 7%

2 2%

2 4%

1 1%

256 64% 17 4%

93 67% 4 3%

59 68% 2 2%

33 69% 2 4%

26 60% 3 6%

45 55% 7 8%

M 227 E E T 173 I N G 179 S T R E96 E T 92 R E 211 S E A 109 R C H 80 57% 43% 45% 24% 23% 53% 27% 20% 152 67%

104 60%

102 57%

5 2%

11 6%

10 6%

57 25%

12 5%

55 32%

3 2%

60 62%

74 80%

116 55%

3 3%

14 7%

59 33%

34 35%

14 15%

9 5%

2 2%

1 1%

72 66%

68 85%

61 15%

40 66%

54 14%

36 67%

58 15%

39 68%

43 11%

106 27%

293 73%

150 37%

81 20%

31 72%

68 64%

188 64%

87 58%

56 70%

15 4%

98 25%

8 53%

35 32%

8 10%

17 29%

15 28%

14 24%

10 23%

29 27%

82 28%

47 32%

20 25%

6 41%

25 26%

11 5%

2 2%

2 3%

4 7%

1 2%

6 6%

9 3%

7 5%

2 2%

1 6%

3 3%

2 3%

1 2%

3 3%

14 5%

8 5%

3 3%

256 64%

113 28% 17 4%

15 4%

206 51%

166 41%

31 15%

66 40%

7 3%

7 4%

164 80% 4 2%

86 52% 7 4%

371 93%

250 67% 97 26%

10 3%

14 4%

23 6%

3 12%

14 61%

6 28%

256 64%

113 28%

17 4%

215 54%

54 14%

127 32%

240 60%

113 100%

46 21%

29 53%

36 28%

9 4%

5 4%

256 100% -

17 100%

156 72% 5 2%

22 41% 3 6%

78 61% 9 7%

M E E T I N G S T R E E T

168

21 5%

134 33%

187 47%

33 14%

16 75%

64 48%

6 2%

5 4%

194 81% 7 3%

4 17% 2 8%

56 42%

R E S E A R C H

8 6%

3 3%

PAGE 24

67 68%

69 33%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 5-2 QUESTION 2: Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession? BANNER 2

220 74%

194 88%

28 7%

177 44%

129 32%

43 11%

222 56%

27 14%

18 64%

65 37%

20 15%

19 45%

69 31%

28 44%

7 4%

1 3%

6 4%

5 4%

8 4%

3 4%

151 81% 3 1%

5 20% 4 13%

96 54%

10 6%

101 79%

3 2%

20 46%

4 8%

135 61%

10 4%

64 16%

28 43%

5 8%

EMPLOYEE WAGES ================= INC- DECREASE REASE SAME ----- ----- ----208 52%

5 1%

180 45%

43 20%

3 49%

66 37%

4 2%

9 5%

159 76%

4 2%

2 34%

1 17%

94 52%

12 7%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 5-4 QUESTION 2: Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession? BANNER 4

BASE=TOTAL SAMPLE ECONOMIC EXPANSION

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

A FLAT ECONOMY

DON'T KNOW/UNSURE

279 70%

113 28%

80 29%

31 28%

10 4%

2 2%

56 59%

181 65%

17 4%

5 5%

8 3%

113 28%

A RECESSION

96 24%

256 64%

15 4%

28 29%

7 7%

CANDIDATE NOT TAKE JOB/FOLLOW THRU =================================== LOW JOB SKILL COMP- LONG FLEX MOBIL CHILD REQD ENS COMM SCHED -ITY CARE ----- ----- ----- ----- ----- ----209 52%

95 24%

75 19%

73 18%

66 17%

55 26%

27 28%

21 28%

14 19%

21 32%

2 1%

1 1%

72 64%

144 69%

8 7%

9 4%

60 63%

49 65%

7 8%

5 6%

58 79% 2 3%

32 8%

44 66%

SHORTAGE STRATEGIC GREATEST EMPLOYEE NEED SKILLED JOBS TAX REFORM IMPACT GROWTH PLAN ======================= ================== ================== =========== TECH/ TOTAL NO TECH/ TOTAL EXPE- TOTAL NO ENTRY EXP EXP COLL+ WORSE CTED BETTER HELP HURT IMPACT YES NO ----- ----- ----- ----- ----- ----- ------ ----- ----- ------ ----- ----133 33%

107 27%

121 30%

6 19%

37 28%

29 27%

30 25%

7 5%

3 3%

4 4%

25 78%

1 1%

PAGE 26

1 3%

86 65%

70 66%

3 2%

5 5%

16 4%

80 66%

207 52%

31 8%

181 45%

63 30%

8 26%

29 16%

6 3%

3 10%

4 2%

106 68%

129 62%

2 11%

5 3%

9 5%

6 35%

6 5%

155 39%

9 54%

38 25%

5 3%

19 61% 1 3%

147 81% 2 1%

24 6%

168 42%

210 53%

12 50%

61 36%

40 19%

3 11%

5 3%

8 4%

6 24%

4 15%

90 54% 11 7%

155 74% 7 4%

189 47%

101 54%

72 38% 9 5%

6 3%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 5-5 QUESTION 2: Thinking about the upcoming year, in 2018, do you anticipate economic expansion, a flat economy, or a recession? BANNER 5

BASE=TOTAL SAMPLE ECONOMIC EXPANSION

400 100%

192 48%

136 34%

145 36%

68 17%

69 17%

241 60%

153 38%

142 35%

108 27%

113 28%

44 23%

41 30%

33 23%

26 39%

21 30%

71 29%

45 29%

36 26%

31 29%

256 64%

A FLAT ECONOMY A RECESSION

17 4%

DON'T KNOW/UNSURE

15 4%

139 72%

4 2% 5 3%

82 60% 7 5% 6 4%

102 70% 6 4% 4 3%

35 52% 4 7%

2 3%

BASE=TOTAL SAMPLE 2018 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2017 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2016 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2015 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

41 60% 5 8%

2 3%

150 62%

10 4% 10 4%

100 66%

5 3%

4 2%

90 64%

8 6%

7 5%

88 22%

302 76%

20 22%

81 27%

72 67%

63 72%

3 2%

3 4%

2 2%

98 24%

71 18%

88 22%

148 37%

24 27%

47 32%

201 66%

55 56%

52 73%

53 60%

10 3%

7 7%

1 1%

5 5%

10 3%

31 32%

15 21%

5 5%

4 5%

7 8%

81 20%

320 80%

80 20%

COMBINED INITIATIVE REGIONS ============================= NORTH SW/ -LAND WEST IF /NW SOUTH CENT INIT MN MN INIT NONE ----- ----- ----- ----- ----54 18%

53 18%

51 17%

61 21%

220 74%

20 37%

15 29%

21 34%

54 24%

2 4%

12 6%

94 64%

53 65%

188 59%

68 85%

35 65%

31 58%

4 2%

7 8%

14 4%

2 3%

3 5%

2 4%

3 2%

20 25%

2 2%

105 33%

13 4%

8 10%

2 3%

16 29%

1 2%

30 58%

5 10%

36 60% 4 6%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 6-1 Summary of 2018 Economy Trend BANNER 1

PAGE 27

M E E T I N G S T R E E T R REGION REGION II REVENUES ============================== ============ ================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 TOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

227 57%

173 43%

179 45%

96 24%

92 23%

256 64%

93 67%

59 68%

33 69%

26 60%

45 55%

152 67%

104 60%

102 57%

60 62%

17 4%

4 3%

2 2%

2 4%

3 6%

7 8%

5 2%

11 6%

10 6%

1 1%

113 28%

33 23%

25 28%

13 27%

13 30%

29 36%

232 58%

77 55%

62 72%

31 64%

24 56%

38 47%

17 4%

8 6%

2 2%

1 2%

2 4%

5 6%

128 32%

48 34%

17 19%

13 28%

15 35%

35 43%

128 32%

53 38%

23 27%

18 38%

11 25%

23 28%

60 15%

19 14%

18 21%

7 14%

7 15%

9 12%

193 48%

60 43%

42 49%

21 43%

23 54%

57 25%

139 61%

65 28%

55 32%

93 54% 64 37%

59 33%

98 55% 61 34%

34 35%

58 64% 25 28%

10 7 9 2 M E4% E T I4% N G S5% T R E2% E T

PAGE 28

UNDER PROC- PREC1-15 16+ PRES/ MGMT MANA10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----109 27%

80 20%

61 15%

54 14%

58 15%

43 11%

106 27%

293 73%

150 37%

74 80%

116 55%

72 66%

68 85%

40 66%

36 67%

39 68%

31 72%

68 64%

188 64%

87 58%

3 3%

14 7%

2 3%

1 2%

3 3%

14 5%

8 5%

48 60%

69 33%

131 56%

35 32%

17 29%

15 28%

14 24%

10 23%

29 27%

82 28%

47 32%

40 54%

32 58%

30 61%

46 57%

32 71%

70 64%

163 56%

85 53%

3 6%

1 2%

8 7%

9 3%

10 6%

74 32%

60 68%

8 10%

3 11 3 4 R E S5% E A R3% C H 5% 4%

27 34%

24 27%

27 36%

23 41%

15 32%

33 41%

9 20%

31 28%

98 34%

2 2%

2 14%

55 69% 3 3%

52 30%

58 31%

31 31%

26 34%

72 32%

31 31%

20 41%

24 31%

38 36%

20 30%

21 30%

49 40%

78 28%

39 25%

40 36%

3 33%

23 45%

38 17%

23 13%

29 15%

17 17%

8 11%

35 16%

16 16%

6 13%

12 15%

16 15%

10 15%

9 13%

20 17%

40 15%

22 14%

20 18%

8 15%

103 45%

90 52%

91 49%

47 47%

41 54%

105 47%

47 48%

23 47%

40 52%

49 46%

32 48%

36 51%

46 38%

145 53%

87 54%

26 31%

101 45%

65 38%

57 34%

43 46%

43 51%

74 34%

45 48%

38 58%

28 50%

27 37%

28 36%

32 58%

44 50%

114 39%

66 41%

51 13%

9 6%

15 17%

6 12%

4 9%

18 22%

23 10%

28 16%

24 14%

14 15%

7 9%

32 15%

14 15%

3 5%

3 6%

11 15%

19 24%

7 12%

6 7%

43 15%

22 14%

35 43%

8 53%

3 3%

76 34%

46 56%

21 48%

17 39%

53 61%

67 68%

25 26%

20 25%

19 39%

22 45%

3 3%

8 53%

6 41%

98 25%

3 20%

33 38%

37 43%

56 70%

20 25%

15 4%

26 31%

69 49% 58 41%

81 20%

54 34%

167 42% 168 42%

5 2%

E S E A R C H YEARS IN EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ================= ======================= =========== =======================

211 53%

14 15%

149 68%

95 42%

74 43%

83 49%

33 35%

31 38%

M E E T I N G S T R E E T

169

107 49%

31 33%

R E S E A R C H

24 36%

24 42%

33 45%

30 37%

15 27%

36 40%

127 43%

69 43%

46 41%

42 40%

42 41%

15 14%

5 67%

3 29%

5 44%

3 27%

20 39%

18 47%

17 44% 2 6%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 6-2 Summary of 2018 Economy Trend BANNER 2

BASE=TOTAL SAMPLE 2018 ----

206 51%

256 64%

164 80%

17 4%

4 2%

ECONOMIC EXPANSION

FLAT ECONOMY

113 28%

RECESSION 2017 ----

ECONOMIC EXPANSION

FLAT ECONOMY RECESSION

ECONOMIC EXPANSION

161 70%

17 4%

2 1%

128 32%

FLAT ECONOMY

193 48%

RECESSION

60 15%

2015 ----

ECONOMIC EXPANSION

167 42%

FLAT ECONOMY

168 42%

RECESSION

31 15%

232 58%

128 32%

2016 ----

51 13%

54 24%

83 48%

69 40% 11 7%

92 57%

49 31% 13 8%

166 41%

371 93%

86 52%

250 67%

7 4%

10 3%

66 40%

69 47%

60 41% 9 6%

43 23%

97 26%

230 61%

114 30% 11 3%

126 35%

106 57%

175 48%

70 36%

162 45%

22 11%

35 10%

32 17%

97 50%

43 12%

146 41%

23 6%

256 64%

3 12%

256 100%

6 28%

3 11%

232 100%

6 26%

2 5%

128 100%

16 44%

5 12%

167 100%

16 38%

14 61%

15 60%

17 48%

20 48%

BASE=TOTAL SAMPLE 2018 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2017 ----

ECONOMIC EXPANSION

FLAT ECONOMY RECESSION 2016 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2015 ----

ECONOMIC EXPANSION

FLAT ECONOMY RECESSION

113 28%

113 100% -

128 100% -

193 100%

17 4%

17 100% -

156 72%

46 21% 5 2%

106 65%

46 28% 4 2% -

54 14%

22 41%

29 53% 3 6%

29 39%

34 46%

8 11%

127 32%

78 61%

36 28% 9 7%

91 59%

47 31% 5 4%

240 60%

194 81%

33 14% 7 3%

171 78%

40 18%

1 -

99 56%

60 100%

62 35%

127 71%

51 100%

7 4%

168 100%

215 54%

9 5%

42 23%

21 5%

4 17%

16 75% 2 8%

7 26%

14 53%

5 18% 1 2%

19 40%

27 58% -

17 63%

9 33%

134 33%

56 42%

64 48% 8 6%

47 32%

72 49%

12 8%

28 16%

109 63%

24 14% 38 20%

108 57%

34 18%

187 47%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

151 81%

5 20%

96 54%

101 79%

20 46%

135 61%

3 1%

4 13%

10 6%

3 2%

4 8%

10 4%

27 14%

141 80%

30 17%

1 1%

81 56%

51 35%

9 6%

81 67%

32 26%

7 6%

18 64%

5 16%

16 55%

7 23% 4 7%

19 41%

25 52% 4 10%

20 54%

12 33%

65 37%

79 42%

82 44%

10 5%

43 21%

123 60%

27 13% 80 34%

117 49%

31 13%

20 15%

69 75%

13 15%

6 6%

49 49%

33 34%

12 12% 47 44%

45 42%

10 9%

19 45%

11 24%

27 58%

3 6%

17 22%

38 49%

22 28% 19 28%

36 53%

11 16%

69 31%

146 58%

87 34%

9 4%

59 28%

118 55%

26 12% 99 44%

87 39%

30 14%

EMPLOYEE WAGES ================= INC- DECREASE REASE SAME ----- ----- ----208 52%

5 1%

180 45%

28 43%

159 76%

2 34%

94 52%

5 8%

4 2%

1 17%

12 7%

28 44%

26 32%

45 55%

3 4%

11 13%

54 66%

8 9%

16 18%

52 59%

17 19%

43 20%

125 67%

45 24%

7 4%

90 38%

114 48%

24 10% -

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 6-3 Summary of 2018 Economy Trend BANNER 3

PAGE 29

M E E T I N G S T R E E T

145 36%

252 63%

256 64%

105 72%

149 59%

17 4%

1 1%

16 6%

113 28%

232 58%

128 32% 17 4%

128 32% 193 48% 60 15%

167 42%

168 42%

51 13%

35 24%

76 30%

91 67%

137 53%

4 3%

13 5%

37 27%

54 42%

55 43%

14 11%

90 35%

72 27%

136 51%

47 17% -

74 19%

322 81%

246 61%

208 52%

181 45%

155 39%

53 71%

202 63%

178 72%

149 72%

132 73%

117 75%

1 1%

16 5%

10 4%

9 5%

5 3%

4 2%

15 20%

50 73%

97 30%

181 55%

53 22%

13 18%

114 35% 12 4%

26 33%

103 32%

9 12%

50 16%

127 40%

46 15%

5 7%

38 48%

33 43%

5 6%

152 48%

133 42%

45 21%

42 23%

32 21%

88 22%

285 71%

189 47%

180 45%

174 44%

40 46%

181 63%

117 62%

115 64%

119 68%

4 5%

13 5%

9 5%

8 4%

4 3%

36 41%

81 28%

M E E T I N G S T R E E T

170

54 29%

49 27%

43 25%

R E S E A R C H

3 73%

1 27%

3 21%

4 28%

8 51% -

66 37%

95 48%

81 41%

9 5%

35 25%

74 51%

28 19% -

PAGE 30

R E S E A R C H

3 49%

51 13%

36 70%

12 24%

2 3% -

124 31%

84 68%

35 28%

3 3% -

120 30%

82 68%

34 28% 2 2%

150 37%

95 63%

42 28% 9 6%

57 14%

34 60%

19 34% 1 2%

83 21%

51 62%

23 28% 4 5%

93 23%

74 19%

56 61%

41 56%

5 6%

4 5%

28 30%

28 37%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 6-4 Summary of 2018 Economy Trend BANNER 4

BASE=TOTAL SAMPLE 2018 ----

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

ECONOMIC EXPANSION

256 64%

FLAT ECONOMY RECESSION

ECONOMIC EXPANSION FLAT ECONOMY

2016 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

ECONOMIC EXPANSION FLAT ECONOMY

5 5%

8 3%

17 4%

113 28%

8 7%

9 4%

58 56%

155 57%

6 5%

10 4%

33 31%

60 15%

19 18%

49 47%

167 42%

47 44%

51 13%

20 18%

38 36%

94 35%

209 52%

144 69%

31 28%

34 33%

72 64%

80 29%

128 32%

168 42%

RECESSION

181 65%

232 58%

193 48%

2015 ----

56 59%

28 29%

128 32%

RECESSION

279 70%

113 28%

17 4%

2017 ----

96 24%

BASE=TOTAL SAMPLE 2018 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2017 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2016 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

2015 ----

ECONOMIC EXPANSION FLAT ECONOMY RECESSION

95 24%

75 19%

60 63%

49 65%

73 18%

58 79%

66 17%

32 8%

44 66%

133 33%

25 78%

107 27%

86 65%

70 66%

121 30%

80 66%

16 4%

155 39%

207 52%

9 54%

106 68%

129 62%

2 11%

5 3%

9 5%

55 26%

27 28%

21 28%

14 19%

21 32%

6 19%

37 28%

29 27%

30 25%

6 35%

69 60%

122 60%

60 57%

39 53%

37 59%

35 64%

58 53%

59 58%

88 62%

11 64%

6 6%

4 2%

3 2%

8 11%

1 1%

3 5%

7 6%

2 2%

7 5%

31 27%

71 35%

7 8%

5 6%

37 35%

26 35%

2 3%

22 35%

1 1%

1 3%

13 24%

3 2%

5 5%

40 36%

35 34%

6 5%

41 28%

38 25%

31 8%

19 61%

181 45%

147 81%

63 30%

8 26%

29 16%

5 31%

24 6%

6 24%

168 42%

90 54%

210 53%

189 47%

155 74%

101 54%

2 1%

12 50%

4 15%

61 36%

40 19%

138 64%

90 50%

9 4%

8 5%

1 3%

11 7%

7 4%

61 28%

85 32%

41 36%

57 32%

35 35%

19 36%

11 28%

15 25%

34 28%

32 39%

49 32%

4 27%

57 37%

42 16%

14 12%

24 14%

20 20%

9 16%

8 19%

12 19%

13 11%

11 13%

26 17%

5 32%

21 14%

129 49%

54 47%

87 50%

40 40%

23 43%

19 49%

34 53%

67 55%

35 43%

73 48%

126 45%

39 36%

100 48%

48 45%

33 46%

20 32%

39 42%

40 39%

41 44%

66 43%

32 11%

20 18%

24 12%

13 12%

12 17%

10 16%

18 20%

15 15%

9 9%

19 12%

115 41%

47 43%

78 38%

46 43%

25 36%

30 47%

33 37%

46 45%

37 40%

6 36%

66 42%

68 45%

15 62%

81 52%

1 4%

14 9%

7 30%

58 37%

72 38% 9 5%

67 37%

70 29%

121 50% 39 16% 83 35%

109 46% 36 15%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 6-5 Summary of 2018 Economy Trend BANNER 5

PAGE 31

M E E T I N G S T R E E T R E S E A R C FUTURE CHALLENGES GROWTH DRIVERS GENDER ============================== ============================== =========== ATTRACT UNFAV DEVEWORK- RISING HLTH LOWER BIZ NEW MAX NEW STRTGY LOP TOTAL ERS COSTS COSTS SALES CLIM CUST PROD PROD PLAN MGRS MEN WOMEN ----- ----- ------ ----- ----- ----- ----- ----- ----- ------ ----- ----- ----400 100%

192 48%

136 34%

145 36%

68 17%

69 17%

241 60%

153 38%

142 35%

108 27%

88 22%

302 76%

98 24%

256 64%

139 72%

82 60%

102 70%

35 52%

41 60%

150 62%

100 66%

90 64%

72 67%

63 72%

201 66%

17 4%

4 2%

7 5%

6 4%

4 7%

5 8%

10 4%

5 3%

8 6%

3 2%

3 4%

10 3%

113 28%

44 23%

41 30%

33 23%

26 39%

21 30%

71 29%

45 29%

36 26%

31 29%

20 22%

81 27%

PAGE 32

AGE EMPLOYEES COMBINED INITIATIVE REGIONS ======================= =========== ============================= NORTH SW/ -LAND WEST UNDER IF /NW SOUTH CENT 18-44 45-54 55-64 65+ 50 51+ INIT MN MN INIT NONE ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----71 18%

88 22%

148 37%

81 20%

320 80%

80 20%

54 18%

53 18%

51 17%

61 21%

220 74%

55 56%

52 73%

53 60%

94 64%

53 65%

188 59%

68 85%

35 65%

31 58%

30 58%

36 60%

149 68%

7 7%

1 1%

5 5%

4 2%

7 8%

14 4%

2 3%

3 5%

2 4%

5 10%

4 6%

5 2%

31 32%

15 21%

24 27%

47 32%

20 25%

105 33%

8 10%

16 29%

20 37%

15 29%

21 34%

54 24%

232 58%

91 67%

43 58%

76 52%

36 41%

99 65%

169 57%

103 64%

66 69%

170 56%

62 64%

48 69%

44 51%

86 60%

37 53%

191 60%

40 54%

34 63%

21 56%

26 51%

20 51%

131 60%

17 4%

5 3%

4 5%

7 5%

6 7%

6 4%

14 5%

7 4%

16 5%

2 2%

7 5%

4 6%

13 4%

4 5%

1 2%

2 5%

3 5%

2 4%

10 4%

48 30%

107 33%

63 31%

44 41%

100 31%

29 36%

28 45%

30 32%

46 31%

15 20%

102 32%

20 41%

23 41%

6 18%

12 25%

14 32%

73 33%

29 18%

52 16%

32 16%

13 12%

51 16%

9 12%

5 9%

12 13%

30 20%

11 15%

51 16%

6 13%

4 7%

8 25%

7 13%

5 13%

36 16%

128 32%

34 25%

24 33%

128 32%

47 45%

16 27%

60 15%

8 8%

14 24%

193 48%

46 43%

53 37%

43 32%

37 42%

34 26%

41 27%

26 45%

69 51%

63 48%

76 47%

19 14%

28 21%

97 33%

157 48%

46 28%

96 47%

24 26%

46 43%

99 33%

154 48%

30 31%

38 48%

17 25%

25 40%

39 46%

44 47%

42 29%

71 48%

21 31%

41 56%

98 31%

152 48%

27 36%

23 47%

16 30%

26 45%

11 31%

18 54%

19 38%

27 56%

17 42%

22 53%

65 30%

99 46%

167 42%

68 59%

28 36%

67 40%

25 26%

62 36%

131 44%

69 43%

49 49%

130 40%

37 48%

18 45%

43 42%

61 41%

32 42%

119 38%

38 58%

22 38%

8 24%

23 44%

15 38%

98 45%

51 13%

7 6%

9 11%

26 16%

15 16%

29 17%

32 11%

22 14%

9 9%

43 13%

8 10%

5 13%

9 9%

18 12%

11 15%

46 15%

3 5%

11 19%

4 12%

7 13%

10 24%

20 9%

168 42%

39 33%

39 49%

66 40%

52 55%

74 43%

128 43%

65 41%

36 37%

139 43%

30 38%

16 38%

48 47%

68 45%

29 37%

138 44%

24 36%

24 42%

20 58%

20 39%

14 35%

90 42%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 33 Table 7-1 QUESTION 3: Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same? M E E T I N G S T R E E T R E S E A R C H BANNER 1 YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----BASE=TOTAL SAMPLE

**D/S (GOTTEN BETTER GOTTEN WORSE) GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME DON'T KNOW

400 100%

140 35%

215 54%

77 55%

160 40%

54 14%

127 32%

4 1%

87 22%

48 12%

43 11%

82 20%

227 57%

42 51%

122 54%

28 34%

72 32%

59 42%

32 37%

20 42%

19 43%

30 36%

18 13%

13 15%

6 13%

5 13%

12 15%

44 31%

2 1%

45 52% 28 32% 1 1%

27 56% 14 29% 1 2%

24 56% 14 32%

92 40%

173 43%

68 40% 92 53%

179 45%

96 24%

92 23%

211 53%

47 51%

107 51%

33 35%

66 31%

72 40%

41 43%

34 37%

94 53%

54 56%

30 13%

24 14%

23 13%

12 13%

13 14%

3 1%

1 1%

4 2%

56 32%

58 33%

30 31%

171

M E E T I N G S T R E E T

74 35%

109 27%

80 20%

61 15%

54 14%

58 15%

32 58%

37 64%

18 33%

16 28%

43 40%

43 54%

31 50%

28 52%

34 16%

15 14%

6 7%

6 10%

4 7%

4 2%

1 1%

58 54%

35 32%

R E S E A R C H

48 61%

26 32%

37 61%

17 28%

1 2%

33 57%

43 11%

15 36%

23 53%

106 27%

42 40%

58 54%

293 73%

119 41%

157 54%

150 37% 46 31%

8 53%

55 56%

48 32%

29 36%

5 36%

33 34%

16 15%

38 13%

26 18%

1 2%

3 3%

1 -

3 2%

97 33%

98 25%

45 46%

44 54%

7 17%

30 28%

15 4%

6 41%

73 49%

4 8%

12 28%

81 20%

36 45%

7 9%

1 1%

2 12% -

10 10%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 34 Table 7-2 QUESTION 3: Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same?

BANNER 2

BASE=TOTAL SAMPLE **D/S (GOTTEN BETTER GOTTEN WORSE)

GOTTEN BETTER GOTTEN WORSE

STAYED ABOUT THE SAME DON'T KNOW

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----400 100% 160 40%

206 51%

103 50%

215 54%

120 59%

127 32%

67 33%

54 14% 4 1%

17 8% 1 -

166 41%

56 34%

371 93%

83 50%

203 55%

54 32%

121 33%

27 16% 2 1%

23 6%

159 43%

113 28%

17 4%

7 32%

156 61%

46 41%

6 28%

78 30%

-2 -9%

44 12%

9 40%

3 1%

133 52%

17 15%

22 9%

29 26%

36 32%

1 -

2 2%

215 54%

54 14%

127 32%

240 60%

5 28%

215 100%

152 63%

9 52%

127 100%

68 28%

1 7%

3 21%

215 -54 100% -100% -

54 100%

133 56% 19 8% 1 -

21 5%

134 33%

187 47%

9 42%

52 39%

113 61%

56 42%

57 31%

-1 -3%

10 45%

3 13%

28 21%

24 18%

2 1%

98 52% 15 8%

1 -

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

10 35%

87 49%

82 63%

22 52%

110 50%

25 40%

117 56%

60 34%

37 28%

-1 -3%

11 38%

7 23%

1 3%

60 34%

73 56%

27 16%

9 7%

2 1%

13 29%

10 23%

11 25%

77 35%

33 15%

78 35%

1 -

16 24%

94 45%

5 1%

180 45%

5 84%

91 51%

4 68%

62 34%

10 15%

23 11%

1 16%

29 16%

3 1%

29 45%

65 31%

60 33%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 35 Table 7-3 QUESTION 3: Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same?

BANNER 3

BASE=TOTAL SAMPLE **D/S (GOTTEN BETTER GOTTEN WORSE) GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME DON'T KNOW

145 36%

252 63%

215 54%

85 59%

128 51%

160 40%

54 14%

127 32% 4 1%

62 43%

23 16%

36 25%

74 19%

322 81%

246 61%

208 52%

181 45%

155 39%

45 61%

167 52%

142 58%

118 57%

104 58%

96 62%

97 39%

39 53%

30 12%

6 8%

91 36%

4 1%

120 37%

48 15%

22 30%

106 33%

1 1%

2 1%

114 47%

97 47%

27 11%

21 10%

75 31%

68 33%

2 1%

1 -

87 48%

17 10%

58 32%

1 -

88 22%

285 71%

189 47%

180 45%

174 44%

46 52%

166 58%

109 58%

108 60%

94 54%

77 50%

35 39%

19 12%

11 13%

39 25%

30 34%

2 1%

1 1%

126 44% 40 14%

77 27%

3 1%

M E E T I N G S T R E E T

81 43% 28 15%

52 27%

1 -

87 48% 21 12%

50 28%

1 -

51 13%

70 40%

17 34%

24 14%

6 13%

54 31%

1 1%

24 46%

21 41%

124 31%

49 40%

65 53%

16 13%

42 34%

1 1%

120 30%

150 37%

40 33%

71 47%

58 48%

87 58%

18 15%

16 11%

43 36%

44 29%

1 1%

2 1%

57 14%

13 23%

20 35%

7 13%

29 52%

83 21%

28 34%

38 46%

10 12%

34 42% 1 1%

93 23%

32 35%

45 49%

74 19%

18 24%

32 43%

13 14%

13 18%

1 1%

34 36%

29 39%

R E S E A R C H

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 36 Table 7-4 QUESTION 3: Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same?

BANNER 4

BASE=TOTAL SAMPLE **D/S (GOTTEN BETTER GOTTEN WORSE)

GOTTEN BETTER GOTTEN WORSE

STAYED ABOUT THE SAME DON'T KNOW

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

96 24%

160 40%

33 35%

54 14%

16 17%

215 54% 127 32% 4 1%

279 70%

110 40%

48 43%

40 14%

13 11%

49 52%

150 54%

30 31%

86 31%

1 1%

113 28%

3 1%

CANDIDATE NOT TAKE JOB/FOLLOW THRU =================================== LOW JOB SKILL COMP- LONG FLEX MOBIL CHILD REQD ENS COMM SCHED -ITY CARE ----- ----- ----- ----- ----- ----209 52%

75 19%

73 18%

66 17%

46 49%

46 62%

43 58%

37 56%

102 49%

35 37%

24 12%

11 12%

61 54%

126 60%

39 35%

58 28%

95 24%

1 -

37 49%

10 13%

37 39%

18 24%

1 1%

33 46%

9 13%

21 29%

32 8%

24 36%

GREATEST EMPLOYEE NEED ======================= TECH/ NO TECH/ ENTRY EXP EXP COLL+ ----- ----- ----- -----

10 33%

17 52%

13 19%

6 20%

17 25%

9 28%

133 33%

107 27%

121 30%

64 48%

62 58%

73 60%

46 35%

49 46%

17 13%

13 12%

52 39%

30 29%

M E E T I N G S T R E E T

2 2%

58 48%

16 4%

SHORTAGE SKILLED JOBS ================== TOTAL TOTAL EXPE- TOTAL WORSE CTED BETTER ----- ----- ------

4 25%

7 42%

155 39%

207 52%

83 54%

109 52%

19 62%

50 32%

67 32%

9 30%

62 40%

15 12%

3 17%

21 14%

1 1%

1 6%

1 1%

33 27%

5 34%

78 38%

30 15%

2 1%

31 8%

STRATEGIC TAX REFORM IMPACT GROWTH PLAN ================== =========== NO HELP HURT IMPACT YES NO ----- ----- ------ ----- -----

17 54%

181 45% 81 45%

109 61%

24 6%

168 42%

210 53%

12 50%

78 47%

122 58%

9 39%

57 34%

96 46%

2 8%

28 16%

3 11%

22 13%

26 12%

2 1%

41 23%

9 39%

66 39%

61 29%

189 47%

64 34%

92 49%

28 15%

67 35% 2 1%

R E S E A R C H

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 PAGE 37 Table 7-5 QUESTION 3: Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same?

BANNER 5

BASE=TOTAL SAMPLE **D/S (GOTTEN BETTER GOTTEN WORSE)

GOTTEN BETTER GOTTEN WORSE

STAYED ABOUT THE SAME DON'T KNOW

192 48%

215 54%

109 57%

127 32%

53 28%

160 40%

54 14% 4 1%

80 42%

29 15% 1 -

136 34%

145 36%

81 59%

84 58%

66 48%

15 11%

39 29%

1 1%

68 17%

69 17%

241 60%

30 44%

127 53%

23 34%

79 33%

72 50%

27 39%

15 21%

12 8%

9 13%

15 22%

49 33%

35 52%

23 33%

1 1%

94 39%

33 14%

3 1%

153 38%

73 48%

88 57%

15 10%

49 32%

1 1%

142 35%

108 27%

88 22%

302 76%

98 24%

71 18%

88 22%

148 37%

81 20%

320 80%

80 20%

54 18%

53 18%

71 50%

73 68%

50 57%

157 52%

58 59%

43 60%

51 58%

73 49%

43 53%

166 52%

48 61%

30 55%

25 48%

22 20%

26 30%

98 33%

29 30%

20 29%

28 32%

52 35%

25 31%

102 32%

26 32%

18 34%

18 33%

49 34%

62 58%

23 16%

11 10%

46 33%

2 1%

1 1%

38 43%

12 14% -

M E E T I N G S T R E E T

BASE=TOTAL ASKED 2018 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

2017 ----

GOTTEN BETTER

GOTTEN WORSE STAYED ABOUT THE SAME

44 15% 3 1%

47 49%

10 10% 1 1%

37 52% 6 9%

2 3%

43 49% 8 9%

1 1%

51 35%

22 15% 1 1%

30 37%

13 16%

117 37%

49 15%

4 1%

43 54%

6 7%

24 44%

6 11%

51 17%

61 21%

220 74%

16 30%

21 42%

19 32%

88 40%

9 17%

5 11%

12 19%

29 13%

1 2%

3 1%

27 53%

19 37%

31 51%

18 29%

118 53%

70 32%

R E S E A R C H

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 8-1 Summary of Business Climate Trend BANNER 1

113 37%

PAGE 38

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100% 160 40%

215 54% 54 14%

140 35% 59 42%

77 55%

18 13%

87 22%

32 37%

45 52%

13 15%

48 12%

20 42%

27 56%

42 48%

18 38%

20 14%

12 14%

32 37%

28 34%

72 32%

-2 -2%

64 46%

50 36%

122 54%

7 16%

162 41% 74 18%

42 51%

10 20%

14 29%

154 39%

227 57%

30 36%

12 15%

28 32% 29 34%

24 56%

82 20%

5 13%

44 31% 44 32%

19 43%

6 13%

127 32% 88 22%

43 11%

9 18%

20 42%

14 32%

16 37%

9 21%

17 40%

22 27%

24 29%

35 43%

92 40%

173 43%

68 40%

92 53%

179 45%

72 40%

94 53%

96 24%

41 43%

54 56%

92 23%

211 53%

47 51%

107 51%

33 35%

66 31%

34 37%

30 13%

24 14%

23 13%

12 13%

13 14%

74 32%

15 8%

44 25%

24 26%

18 22%

56 32%

58 33%

30 31%

74 35%

109 27%

80 20%

58 54%

48 61%

35 32%

26 32%

43 40%

34 16%

15 14%

48 21%

23 26%

43 54%

54 14%

58 15%

37 61%

32 58%

37 64%

17 28%

18 33%

16 28%

23 42%

19 39%

35 43%

16 35%

28 35%

26 57%

31 50%

6 7%

6 10%

13 18%

11 19%

106 47%

56 33%

74 42%

39 42%

32 41%

92 40%

38 43%

29 38%

82 36%

72 42%

66 37%

35 38%

32 41%

89 38%

35 39%

29 39%

M E32 E T I42 N G S30 T R E15 E T 15 R E S44 E A R15 C H 15 14% 24% 17% 17% 19% 19% 17% 21%

172

61 15%

13 23% 20 35%

28 52% 4 7% 4 9%

15 30% 14 29%

33 57%

43 11%

15 36%

23 53%

106 27%

42 40%

58 54%

293 73%

150 37%

157 54%

73 49%

97 33%

48 32%

29 36%

5 36%

33 34%

114 39%

62 39%

31 35%

3 21%

37 47%

31 36%

6 40%

31 40%

119 41%

4 8%

7 17%

16 15%

38 13%

19 24%

14 32%

30 27%

58 20%

16 19%

12 28%

2 4%

30 28%

48 44%

18 17%

41 37%

56 19%

114 39%

81 20%

15 4%

98 25%

46 31%

36 45%

6 41%

45 46%

26 18%

7 9%

2 12%

10 10%

29 18%

33 21%

60 37%

44 54%

7 8%

24 27%

8 53%

-1 -6%

4 27%

55 56%

28 35%

10 12%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 8-2 Summary of Business Climate Trend BANNER 2

BASE=TOTAL ASKED 2018 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

2017 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----400 100%

206 51%

166 41%

371 93%

215 54%

120 59%

83 50%

203 55%

54 32%

121 33%

160 40%

54 14%

127 32% 88 22%

103 50%

17 8%

67 33%

82 36%

56 34%

27 16% 11 7%

17 4%

7 32%

156 61%

46 41%

5 28%

6 28%

78 30%

36 32%

5 19%

106 46%

46 36%

11 44%

91 39%

47 37%

9 40%

65 17%

9 37%

157 42%

154 39%

86 38%

57 39%

143 38%

40 27%

113 28%

-4 -18%

50 34%

25 11%

256 64%

93 25%

107 47%

-2 -9%

44 12%

162 41% 74 18%

23 6%

159 43%

133 52%

BASE=TOTAL ASKED 2018 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

2017 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

77 33%

29 12%

BASE=TOTAL ASKED 2018 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

2017 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

BASE=TOTAL ASKED 2018 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

2017 ----

GOTTEN BETTER GOTTEN WORSE STAYED ABOUT THE SAME

29 26%

3 21%

12 9%

-5 -27%

34 26%

8 48%

9 52%

215 54%

54 14%

127 32%

240 60%

215 100%

152 63%

215 -54 100% -100% -

54 100%

162 -74 100% -100%

4 21%

162 100%

5 31%

19 8%

127 100%

68 28%

104 48%

74 100%

133 56%

154 100%

21 5%

134 33%

187 47%

9 42%

52 39%

113 61%

3 13%

56 42%

57 31%

6 21%

46 32%

89 50%

6 23%

64 44%

56 32%

-1 -3% 10 45%

78 36%

-9 -35%

26 12%

15 56%

82 38%

28 21%

24 18%

15 11%

31 21%

98 52% 15 8%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

10 35%

87 49%

82 63%

22 52%

110 50%

25 40%

117 56%

7 23%

60 34%

37 28%

11 25%

6 22%

59 32%

48 52%

18 39%

91 36%

22 27%

81 44%

3 76%

74 37%

8 29%

90 49%

29 32%

13 27%

112 44%

46 57%

62 34%

1 24%

87 44%

-1 -3%

11 38%

62 35%

-7 -23%

27 15%

13 45%

60 34%

73 56%

27 16%

9 7%

27 14%

34 38%

32 17%

14 15%

13 29%

77 35%

16 24%

94 45%

5 1%

180 45%

5 84%

91 51%

4 68%

62 34%

10 23%

33 15%

10 15%

23 11%

1 16%

29 16%

2 4%

49 19%

12 14%

41 22%

3 76%

45 23%

16 34%

78 35%

42 17%

29 45%

10 12%

65 31%

40 22%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

400 100%

160 40%

60 33%

29 15%

PAGE 40

215 54%

145 36%

252 63%

74 19%

322 81%

246 61%

208 52%

181 45%

85 59%

128 51%

45 61%

167 52%

142 58%

118 57%

104 58%

36 25%

91 36%

22 30%

106 33%

75 31%

33 48%

129 39%

68 58 39 30 77 52 50 54 33% 32% 25% 34% 27% 27% 28% 31% M E E T I N G S T R E E T R E S E A R C H -

25 36%

129 39%

62 43%

54 14%

23 16%

88 22%

20 15%

74 18%

31 23%

127 32% 162 41% 154 39%

97 39% 30 12%

39 53% 6 8%

63 25%

22 32%

43 17%

11 16%

51 38%

106 41%

52 38%

102 40%

120 37% 48 15%

67 20%

62 19%

114 47%

400 100%

96 24%

279 70%

113 28%

215 54%

49 52%

150 54%

61 54%

160 40%

54 14%

127 32%

33 35%

16 17% 30 31%

88 22%

17 17%

74 18%

22 21%

162 41% 154 39%

97 47%

27 11%

21 10%

155 39% 77 50%

96 62%

88 22%

285 71%

189 47%

180 45%

46 52%

166 58%

109 58%

108 60%

35 39%

126 44%

17 10%

19 12%

11 13%

87 48%

40 14%

81 43%

28 15%

87 48%

174 44%

70 40%

94 54%

21 12%

24 14%

51 13%

17 34%

24 46%

124 31%

49 40%

65 53%

120 30%

150 37%

40 33%

71 47%

58 48%

87 58%

57 14%

13 23%

20 35%

83 21%

28 34%

38 46%

93 23%

32 35%

45 49%

32 43%

34 36%

29 39%

6 13%

16 13%

18 15%

16 11%

7 13%

10 12%

13 14%

21 41%

42 34%

43 36%

44 29%

29 52%

34 42%

74 19%

18 24%

13 18% -

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----110 40%

40 14% 86 31%

CANDIDATE NOT TAKE JOB/FOLLOW THRU =================================== LOW JOB SKILL COMP- LONG FLEX MOBIL CHILD REQD ENS COMM SCHED -ITY CARE ----- ----- ----- ----- ----- -----

48 43%

13 11%

95 24%

75 19%

73 18%

66 17%

126 60%

46 49%

46 62%

43 58%

37 56%

102 49%

24 12%

37 49%

11 12%

10 13%

9 13%

24 36%

10 33%

13 19%

6 20%

107 27%

121 30%

64 48%

62 58%

73 60%

46 35%

17 52%

49 46%

17 13%

13 12%

16 4%

58 48%

4 25%

15 12%

3 17%

41 20%

34 32%

53 20%

18 16%

42 21%

18 17%

18 25%

38 37%

95 35%

54 47%

83 41% 72 35%

52 50% 34 32%

28 37%

25 40%

26 47%

51 46%

32 31%

63 44%

6 36%

25 34%

25 40%

15 28%

34 31%

42 41%

56 39%

9 53%

9 15%

12 21%

23 21%

26 26%

20 14%

SHORTAGE SKILLED JOBS ================== TOTAL TOTAL EXPE- TOTAL WORSE CTED BETTER ----- ----- ------

7 42%

25 21%

43 37%

37 39%

33 46%

133 33%

63 23%

116 43%

58 28%

35 37%

32 8%

PAGE 41

GREATEST EMPLOYEE NEED ======================= TECH/ NO TECH/ ENTRY EXP EXP COLL+ ----- ----- ----- -----

18 21 17 9 52 30 33 5 24% 29% 25% 28% 39% 29% 27% 34% M E E T I N G S T R E E T R E S E A R C H 9 16 14 28 5 43 4 13% 26% 26% 25% 5% 30% 26%

39 38%

39 35%

209 52%

2 10%

155 39%

207 52%

83 54%

109 52%

62 40% 21 14%

78 38% 30 15%

31 8%

STRATEGIC TAX REFORM IMPACT GROWTH PLAN ================== =========== NO HELP HURT IMPACT YES NO ----- ----- ------ ----- -----

17 54%

19 62%

2 8%

181 45% 81 45%

109 61%

28 16%

24 6%

168 42%

210 53%

189 47%

12 50%

78 47%

122 58%

92 49%

9 39%

3 11%

57 34%

22 13%

96 46%

64 34%

26 12%

28 15%

54 25%

33 19%

50 32%

67 32%

9 30%

41 23%

9 39%

66 39%

61 29%

94 43%

67 37%

79 36%

74 41%

40 18%

67 35%

34 19%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 8-5 Summary of Business Climate Trend BANNER 5

1 7%

Table 8-4 Summary of Business Climate Trend BANNER 4

17 15%

22 9%

Table 8-3 Summary of Business Climate Trend BANNER 3

PAGE 39

PAGE 42

192 48%

136 34%

145 36%

68 17%

69 17%

241 60%

153 38%

142 35%

108 27%

88 22%

302 76%

98 24%

71 18%

88 22%

148 37%

81 20%

320 80%

80 20%

54 18%

53 18%

51 17%

61 21%

220 74%

215 54%

109 57%

81 59%

84 58%

35 52%

30 44%

127 53%

88 57%

71 50%

73 68%

50 57%

157 52%

58 59%

43 60%

51 58%

73 49%

43 53%

166 52%

48 61%

30 55%

25 48%

27 53%

31 51%

118 53%

127 32%

53 28%

160 40% 54 14%

80 42% 29 15%

66 48% 15 11% 39 29%

72 50% 12 8%

49 33%

27 39% 9 13% 23 33%

88 22%

45 33%

27 37%

28 19%

10 12%

74 18%

19 14%

11 15%

27 19%

22 25%

162 41% 154 39%

64 47% 48 35%

38 52%

24 32%

55 38%

59 41%

33 37%

29 33%

15 21% 15 22% 23 34%

10 7%

50 33%

40 26%

60 39%

94 39% 33 14%

73 48%

15 10%

49 34%

23 16%

62 58%

11 10%

38 43%

12 14%

113 37%

44 15%

47 49%

10 10%

37 52%

6 9%

79 49 46 22 26 98 29 20 33% 32% 33% 20% 30% 33% 30% 29% M E E T I N G S T R E E T R E S E A R C H 57 31 31 59 30 30 19% 19% 32% 19% 30% 44% 115 39%

60 37%

44 47%

119 39%

43 44%

38 54%

114 39%

69 42%

37 39%

117 39%

37 38%

21 30%

58 20%

29 18%

14 14%

173

M E E T I N G S T R E E T

60 20%

13 14%

R E S E A R C H

7 10%

43 49%

8 9%

51 35%

22 15%

30 37%

13 16%

117 37%

49 15%

43 54%

6 7%

24 44%

6 11%

16 30%

21 42%

19 32%

88 40%

9 17%

5 11%

12 19%

29 13%

-3 -8%

9 17%

4 9%

74 34%

28 32%

52 35%

25 31%

102 32%

26 32%

18 34%

18 33%

40 47%

50 35%

23 34%

130 41%

29 38%

19 35%

9 23%

18 35%

13 34%

103 47%

64 45%

26 38%

124 39%

29 39%

20 37%

16 44%

22 43%

17 42%

79 36%

25 29%

16 18%

28 33%

25 17%

25 18%

5 8%

18 26%

71 22% 58 18%

13 18%

15 21%

5 9%

14 26%

11 31%

19 37%

9 18%

18 29%

10 24%

70 32%

29 14%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 9-1 QUESTION 4: As you look to 2018, do you project your company's gross revenues to... increase or decrease compared to 2017, or will they probably stay the same? BANNER 1

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE -------------TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10%

DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY DON'T KNOW STATUS QUO ---------3/3

2/3

PAGE 43

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

227 57%

173 43%

179 45%

240 60%

86 62%

56 65%

30 63%

22 51%

45 54%

143 63%

97 56%

93 52%

143 36%

51 37%

37 43%

19 39%

15 36%

20 25%

89 39%

54 31%

66 37%

8 2%

2 1%

2 2%

1 2%

2 4%

2 2%

4 2%

5 3%

218 55% 21 5%

96 24% 13 3%

134 33% 6 1%

64 16%

57 14%

79 56% 7 5%

35 25% 5 4%

43 31% 4 3%

21 15%

20 14%

50 57% 7 8%

19 22% 5 6%

22 25%

2 2%

8 9%

29 61% 1 2%

11 24% -

17 35%

7 15%

9 18%

18 41%

5 11%

7 16% 3 6%

16 38%

9 21%

6 15%

43 52%

2 2%

24 30% -

35 43%

19 23%

14 17%

129 57%

14 6%

54 24%

10 5%

65 29%

6 2%

28 13%

28 12%

90 52%

7 4%

42 25%

3 2%

69 40%

35 20%

29 17%

79 44%

14 8%

96 24%

92 23%

211 53%

109 27%

58 60%

69 75%

104 49%

70 65%

65 82%

38 62%

29 52%

37 64%

27 63%

31 32%

33 36%

70 33%

34 31%

39 49%

26 43%

17 32%

24 41%

20 47%

53 55%

69 75%

5 6%

86 41%

18 8%

80 20%

67 61%

65 82%

4 3%

61 15%

35 58%

3 4%

54 14%

25 46%

4 7%

58 15%

36 62%

1 2%

43 11%

23 55%

4 8%

106 27%

69 65%

72 68% 3 3%

53 50%

293 73%

149 51% 167 57% 18 6%

90 31%

150 37%

81 20%

15 4%

98 25%

74 50%

59 73%

9 59%

60 61%

53 36%

40 49%

5 29%

27 28%

6 4%

58 39% 16 11%

27 15%

27 28%

36 39%

34 16%

36 33%

26 33%

11 19%

11 21%

13 22%

7 17%

19 18%

77 26%

21 14%

10 5%

2 2%

10 5%

3 2%

1 1%

3 5%

3 6%

3 2%

11 4%

10 6%

69 39%

3 2%

40 22%

23 13%

4 4%

33 34%

21 23%

2 2%

13 13%

7 7%

17 17%

11 12%

7 3%

86 41%

4 2%

47 22%

32 15%

1 1%

35 32%

13 16%

2 3%

15 14%

2 2%

16 15%

9 11%

2 3%

20 34%

7 12%

9 16%

1 2%

22 41%

7 14%

12 22%

1 2%

19 33%

1 2%

8 14%

9 15%

1 2%

12 28%

5 11%

8 18%

1 1%

28 26%

3 3%

12 12%

13 12%

7 2%

105 36%

3 1%

51 18%

43 15%

58 39%

2 1%

31 21%

23 16%

59 73% -

19 24% -

22 27%

10 12%

9 59% -

5 29% -

6 41%

3 18%

2 11%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 9-2 QUESTION 4: As you look to 2018, do you project your company's gross revenues to... increase or decrease compared to 2017, or will they probably stay the same? BANNER 2

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10%

INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY DON'T KNOW STATUS QUO ---------3/3

2/3

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----400 100% 218 55%

206 51%

147 71%

166 41%

78 47%

371 93%

235 63%

143 36%

96 47%

44 26%

140 38%

4 3%

5 1%

96 24% 8 2%

13 3%

2 1%

52 25% 1 -

1 -

9 5%

43 26% 4 3%

1 4%

194 76%

33 29%

124 49%

11 48%

87 52%

96 26% 5 1%

1 4%

3 12%

8 36%

190 74%

17 15%

17 4%

215 54%

54 14%

127 32%

7 40%

152 71%

19 34%

2 12%

97 45%

7 13%

5 29%

4 1%

16 14%

2 11%

69 27%

20 17%

5 29%

10 8%

2 11%

2 1%

14 12% 6 6%

143 67%

9 17%

9 4%

10 18%

55 25%

11 21%

1 -

8 4%

5 10% 4 8%

240 60%

21 5%

134 33%

187 47%

68 53%

240 100%

163 87%

37 29%

143 60%

117 62%

65 51% 3 2%

30 24% 2 1%

1 1%

134 33%

52 25%

69 42%

121 33%

11 48%

56 22%

64 56%

8 49%

52 24%

24 44%

56 44%

64 16%

27 13%

29 18%

57 15%

6 28%

28 11%

28 25%

5 32%

25 12%

10 18%

29 23%

6 1%

57 14%

4 2%

22 11%

1 1%

31 19%

5 1%

53 14%

3 12%

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE)

2 1%

24 9%

28 25%

3 17%

2 1%

24 11%

2 4%

12 21%

1 1%

20 16%

240 -21 100% -100% -

96 40%

21 100% -

8 38%

13 62%

134 100% -

64 48%

57 43%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

2 6%

71 40%

101 78%

16 38%

119 54%

150 72%

22 13%

73 57%

7 16%

62 28%

162 86%

-8 -29%

1 -

10 35%

46 25% 1 -

2 6%

8 28%

4 2%

20 11%

16 8%

17 59%

10 36%

61 35% 10 6%

49 28% 5 3%

4 2%

95 54%

1 1%

64 36%

31 18%

100 77%

5 12%

1 1%

11 25%

27 21%

9 21%

1 1%

6 15%

1 1%

27 21%

19 15%

5 11% 16 37%

10 23%

110 49% 10 4%

58 26%

4 2%

6 3%

TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10%

STAY THE SAME TOO SOON TO SAY DON'T KNOW STATUS QUO ---------3/3

2/3

145 36%

252 63%

240 60%

102 71%

135 54%

143 36%

63 44%

79 31%

8 2%

3 2%

5 2%

218 55%

21 5%

96 24% 13 3%

134 33% 6 1%

64 16%

57 14%

96 66%

6 4%

39 27% 4 2%

121 48%

14 6%

56 22% 9 4%

74 19%

322 81%

246 61%

208 52%

181 45%

155 39%

57 76%

182 56%

175 71%

154 74%

140 77%

123 79%

42 56%

101 31%

102 42%

88 42%

77 43%

69 45%

55 74%

2 2%

15 20%

2 2%

163 51%

19 6%

81 25% 8 3%

11 3%

165 67%

10 4%

72 29% 4 2%

6 3%

149 72%

5 2%

66 32% 2 1%

3 1%

134 74%

5 3%

63 35% 2 1%

3 2%

88 22%

285 71%

189 47%

180 45%

174 44%

32 37%

170 60%

112 59%

111 61%

106 61%

23 27%

104 37%

63 33%

65 36%

65 38%

120 77%

23 26%

3 2%

10 11%

54 34%

2 1%

1 1%

9 10%

4 4%

6 7%

157 55%

13 4%

66 23%

4 1%

9 3%

103 55%

9 5%

50 26%

4 2%

5 3%

103 57%

7 4%

45 25%

3 2%

5 2%

98 56%

8 5%

41 23%

3 2%

5 3%

51 13%

124 31%

31 62%

83 67%

30 58%

2 4%

19 37%

12 24%

1 2%

78 63%

5 4%

47 38% 36 29%

3 2%

2 1%

120 30%

71 59%

77 64%

5 5%

88 49%

89 43%

1 18%

52 29%

2 1%

1 16%

2 1%

61 29%

23 11%

27 13%

63 33%

61 34%

58 33%

18 35%

37 30%

35 29%

13 9%

51 20%

9 12%

55 17%

28 11%

26 12%

20 11%

13 8%

25 28%

48 17%

31 17%

33 18%

30 17%

6 12%

13 11%

14 12%

18 12%

39 15%

5 7%

51 16%

22 9%

16 8%

12 7%

13 8%

20 23%

45 16%

M E E T I N G S T R E E T

174

5 2%

25 13%

2 1%

22 12%

2 1%

20 12%

R E S E A R C H

7 13%

16 13%

9 9%

2 2%

98 34%

5 2%

34 46%

2 2%

45 51%

1 1%

50 54%

4 6%

29 19%

1 1%

8 9%

74 19%

3 2%

2 1%

36 20%

7 12%

43 52%

93 23%

42 45%

4 3%

33 27%

49 24%

3 2%

33 58%

83 21%

35 42%

33 35%

58 24%

3 1%

98 66%

57 14%

26 46%

3 2%

15 12%

44 29%

17 31%

3 6%

11 13% 6 7%

8 10%

2 3%

34 37%

14 9%

9 16%

18 22%

14 15%

29 20%

5 8%

14 17%

22 30%

7 7%

32 39%

11 14%

12 16%

17 30%

24 32%

18 19%

48 32%

1 1%

73 41% 14 8%

36 20% 5 3%

9 5%

76 42% 2 1%

39 22%

29 16%

PAGE 45

32 38%

118 37%

4 1%

150 37%

95 64%

2 1%

64 100%

26 12%

4 82%

4 66%

64 29%

4 2%

-3 -64%

55 26%

15 27%

15 20%

1 1%

16 16%

13 13%

1 18%

64 100%

54 36%

99 39%

4 1%

2 2%

180 45%

89 40%

44 37%

34 24%

2 1%

34 34%

5 1%

148 71%

CURRENT LEADERSHIP SIGNIF SOME NOT MUCH/ EMP DEVLPMT DEVLP PROG USING AUTOMATION IMPACT OF DEPARTURE IMPACT OF DEPARTURE NO IMPACT OF DEPARTURE =========== =========== ============================== ======================= ======================= ======================= PRODNOT SKILL SKILL SKILL UCTI- QUALENHAN CONS CEO/ MGMT MGR/ -ED CEO/ MGMT MGR/ -ED CEO/ MGMT MGR/ -ED TOTAL YES NO YES NO VITY ITY SPV OWNER TEAM SPV WORK OWNER TEAM SPV WORK M E SAFETY E T I N-CING G S TAUTO R E EOWNER T RTEAM E S E A R CWORK H ----- ----- ----- ----- ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

2 2%

1 1%

PAGE 44

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 9-3 QUESTION 4: As you look to 2018, do you project your company's gross revenues to... increase or decrease compared to 2017, or will they probably stay the same? BANNER 3

33 34%

113 28%

10 3%

149 72%

3 3%

EXPAN INC- DECINC- DECINC- DECM E RECEE T I N G S T R E E T RINCE S EDECA R C H -SION FLAT SSION BETTER WORSE SAME REASE REASE SAME REASE REASE SAME REASE REASE SAME 3/3 REASE REASE SAME ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----256 64%

-10 -44%

240 60% 21 5%

23 6%

225 61%

57 58%

19 21%

3 4%

28 37%

20 26%

7 10%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 9-4 QUESTION 4: As you look to 2018, do you project your company's gross revenues to... increase or decrease compared to 2017, or will they probably stay the same? BANNER 4

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE -------------TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10%

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

96 24%

279 70%

113 28%

60 63%

176 63%

61 54%

142 68%

143 36%

31 32%

97 35%

43 39%

83 40%

8 2%

1 1%

5 2%

2 2%

4 2%

218 55%

240 60% 21 5%

96 24%

DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY DON'T KNOW STATUS QUO ---------3/3 2/3

CANDIDATE NOT TAKE JOB/FOLLOW THRU =================================== LOW JOB SKILL COMP- LONG FLEX MOBIL CHILD REQD ENS COMM SCHED -ITY CARE ----- ----- ----- ----- ----- -----

13 3%

55 57%

5 6%

29 31% 5 5%

163 58%

14 5%

79 28% 9 3%

55 48%

6 5%

17 15% 4 4%

209 52% 136 65%

6 3%

60 29% 3 1%

95 24%

75 19%

56 59%

51 69%

63 66%

73 18%

50 68%

66 17%

32 8%

40 61%

22 69%

133 33%

107 27%

121 30%

76 57%

60 56%

69 57%

16 4%

155 39%

207 52%

121 58%

16 53%

128 71%

10 43%

6 37%

92 59%

109 52%

31 8%

15 48%

36 37%

26 35%

31 43%

25 38%

11 34%

51 38%

37 34%

45 37%

5 31%

55 36%

73 35%

13 41%

81 45%

5 22%

48 29%

99 47%

3 3%

2 2%

2 3%

3 4%

2 6%

4 3%

2 2%

1 1%

3 2%

5 2%

1 3%

5 3%

4 2%

6 6%

3 4%

27 29%

28 37%

3 4%

1 1%

3 4%

21 29% 1 1%

4 6%

3 8%

19 28%

8 6%

14 44%

1 1%

5 4%

33 25%

1 3%

28 26%

4 3%

3 3%

5 4%

29 24% 4 4%

1 6%

7 5%

2 11%

43 28%

1 6%

5 3%

12 6%

48 23%

7 3%

2 5%

4 12% 1 2%

4 14%

39 29%

36 34%

40 33%

8 52%

48 31%

71 34%

12 38%

64 16%

13 13%

39 14%

24 22%

30 14%

14 15%

9 12%

8 11%

10 15%

2 5%

18 14%

14 13%

21 17%

2 11%

22 14%

36 17%

5 17%

25 12%

44 23%

99 64%

19 28%

18 16%

85 45%

7 42%

18 24%

37 13%

155 74%

74 61%

18 24%

13 13%

85 50%

65 61%

26 28%

57 14%

189 47%

84 63%

59 28%

1 -

210 53%

150 72%

25 78%

46 41%

168 42%

75 45%

44 66%

85 30% 5 2%

24 6%

7 28%

53 72%

30 31% 1 1%

181 45%

120 67%

54 72%

134 33% 6 1%

PAGE 46

8 8%

7 10%

8 11%

6 9%

3 2%

2 6%

1 1%

15 11%

20 19%

2 1%

14 12%

1 1%

6 35%

23 15%

4 2%

27 13%

1 3%

6 18%

7 4%

46 26%

4 15%

5 21%

3 1%

4 15%

3 2%

43 24%

15 8%

24 13%

10 6%

36 22% 6 4%

10 42%

72 43%

5 20%

40 24%

4 19%

2 1%

25 15%

5 2%

68 36% 17 9%

56 27%

41 21%

5 2%

9 5%

8 4%

48 23%

86 45%

18 8%

46 24%

3 1%

25 12%

2 1%

32 17%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 9-5 QUESTION 4: As you look to 2018, do you project your company's gross revenues to... increase or decrease compared to 2017, or will they probably stay the same? BANNER 5

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE -------------TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10%

FUTURE CHALLENGES GROWTH DRIVERS GENDER ============================== ============================== =========== ATTRACT UNFAV DEVEWORK- RISING HLTH LOWER BIZ NEW MAX NEW STRTGY LOP TOTAL ERS COSTS COSTS SALES CLIM CUST PROD PROD PLAN MGRS MEN WOMEN ----- ----- ------ ----- ----- ----- ----- ----- ----- ------ ----- ----- ----M E E T I N G S T R E E T R E S E A R C 400 192 136 145 68 69 241 153 142 108 88 302 98 100% 48% 34% 36% 17% 17% 60% 38% 35% 27% 22% 76% 24% 218 55%

TOO SOON TO SAY DON'T KNOW STATUS QUO ---------3/3 2/3

72 53%

143 36%

75 39%

51 37%

60 41%

8 2%

3 1%

2 1%

21 5%

96 24%

13 3%

6 3%

61 32%

4 2%

134 33%

47 24%

64 16%

20 10%

6 1%

57 14%

3 2%

21 11%

77 56%

89 61%

136 71%

DECREASE BY MORE THAN 10% STAY THE SAME

129 67%

240 60%

4 3%

26 19%

4 3%

55 40% 1 1%

23 17%

24 18%

93 64% 5 3%

33 23%

3 2%

47 32%

22 15%

21 31%

29 42%

INCREASE DECREASE STAY THE SAME

2017 ----

INCREASE DECREASE STAY THE SAME

2016 ----

INCREASE DECREASE STAY THE SAME

2015 ----

INCREASE DECREASE STAY THE SAME

99 65%

135 56%

101 66%

16 24%

23 34%

90 37%

60 39%

2 3%

5 8%

5 2%

8 12%

13 19%

6 9%

8 12%

16 23%

3 4%

30 44%

22 31%

15 22%

15 21%

2 3%

14 20%

6 9%

14 6%

2 1%

86 61%

72 67%

93 65%

75 70%

6 5%

4 3%

56 39%

38 35%

56 64%

172 57%

60 69%

191 63%

33 38%

125 41%

5 5%

19 6%

46 47%

48 50% 3 3%

18 19%

49 69% 51 71% 2 3%

29 41%

50 57% 55 62% 4 5%

38 43%

72 49% 79 53% 6 4%

39 27%

42 52%

49 61% 7 8%

33 40%

153 48%

174 54% 21 7%

104 33%

65 82%

39 49%

30 55%

35 65%

31 50%

138 63%

25 46%

20 38%

17 34%

13 21%

84 38%

2 3%

2 4%

1 2%

4 2%

1 3%

2 3%

37 26%

38 35%

27 31%

66 22%

30 31%

21 30%

17 19%

39 27%

16 20%

70 22%

26 33%

7 12%

16 30%

9 4%

1 1%

5 3%

2 2%

3 3%

11 4%

2 2%

1 1%

2 2%

3 2%

6 7%

13 4%

1 3%

91 38%

2 1%

41 17%

39 16%

50 32%

1 1%

23 15%

24 16%

2 2%

41 29%

29 27%

2 1%

15 10%

15 14%

22 15%

13 12%

2 2%

20 23%

3 3%

5 6%

10 11%

7 2%

91 30%

2 1%

44 14%

39 13%

1 1%

43 44%

4 4%

20 21%

18 18%

1 1%

16 22%

3 4%

7 10%

3 3%

28 32%

1 1%

13 15%

12 13%

4 3%

1 1%

61 41%

25 31%

24 16%

19 24%

2 1%

29 20%

6 7%

8 3%

121 38%

4 1%

62 19%

48 15%

13 16%

2 3%

2 2%

9 11%

REGION REGION II REVENUES ============================== ============ ================= $1 UNDER MILL $1 - $5 $5 MILL MILL MILL+ ----- ----- ----G S T R E E T R 179 96 92 45% 24% 23%

REST COLLAR TWIN OF TOTAL MSP COS NE S W/NW CITIES STATE ----- ----- ------ ----- ----- ----- ------ ----M E E T I N 400 140 87 48 43 82 227 173 100% 35% 22% 12% 11% 20% 57% 43% 218 55%

240 60%

21 5%

134 33%

79 56%

86 62%

7 5%

43 31%

50 57%

56 65%

7 8%

22 25%

29 61%

30 63%

1 2%

17 35%

18 41%

22 51%

5 11%

16 38%

43 52%

45 54%

2 2%

35 43%

191 48%

72 51%

48 55%

28 58%

25 59%

18 22%

27 7%

7 5%

4 5%

3 6%

10 12%

218 55% 145 36%

128 32%

175 44% 47 12%

174 43%

79 56%

50 36%

53 60%

26 30%

31 64%

14 28%

28 65%

12 29%

59 42%

31 36%

13 28%

13 31%

12 9%

9 10%

7 14%

5 12%

71 51% 56 40%

40 46% 37 43%

20 42% 20 42%

18 43% 20 46%

129 57%

143 63%

14 6%

65 29%

120 53%

90 52%

97 56% 7 4%

69 40%

71 41%

79 44%

93 52% 14 8%

69 39%

74 42%

53 55%

58 60% 5 6%

33 34%

53 58%

69 75%

21 23%

48 60%

21 39%

11 21%

9 17%

5 9%

10 19% 3 5%

1 2%

18 29% -

15 28%

19 38%

29 48%

7 14%

10 20%

14 23%

6 11%

8 16%

11 17%

104 49%

18 8%

86 41%

97 42%

67 61%

70 65%

4 3%

65 82%

35 58%

38 62%

3 4%

25 46%

29 52%

4 7%

36 62% 37 64%

1 2%

23 55%

27 63% 4 8%

69 65%

72 68% 3 3%

149 51%

167 57% 18 6%

58 39%

60 61%

22 27%

6 41%

34 34%

16 11%

20 34%

22 41%

19 33%

12 28%

28 26%

105 36%

58 39%

29 51%

19 38%

34 42%

29 62%

62 57%

129 44%

57 58%

9 59%

13 16%

38 51%

9 59%

59 73%

35 32%

55 62%

59 73%

74 50%

65 41%

51 59%

6 40%

13 8%

7 8%

2 14%

40 49%

29 64%

69 63%

149 51%

77 49%

42 52%

77 34%

68 40%

73 41%

30 32%

20 26%

95 41%

24 27%

23 31%

19 34%

18 36%

36 44%

14 30%

32 29%

114 39%

68 43%

20 23%

4 26%

29 37%

58 36%

60 54%

4 44%

20 40%

41 37%

4 56%

26 50%

69 43%

40 39%

3 29%

20 54%

78 49%

52 51%

6 55%

17 44%

11 14%

26 31%

14 17%

41 50%

90 40%

111 49% 21 9%

93 41%

15 9%

38 22%

64 37% 26 15%

81 47%

15 8%

3 3%

6 7%

52 28%

37 38%

26 34%

19 10%

10 10%

11 15%

71 38% 97 52%

47 48% 40 41%

37 49%

46 27%

42 45%

38 46%

17 10%

13 8%

6 7%

8 9%

39 48%

100 44%

65 38% 90 52%

59 35% 95 56%

48 51% 38 41%

29 35%

M E E T I N G S T R E E T

175

6 12%

6 7%

1 2%

30 40%

36 35%

13 19%

24 34%

26 12%

12 13%

8 16%

10 13%

10 10%

10 15%

9 12%

83 37%

49 28%

11 5%

113 50%

4 7%

18 37%

46 55%

103 45%

6 8%

34 34%

93 42%

101 45%

13 16%

3 4%

67 30%

28 36%

15 18%

28 34%

17 8%

46 47% 40 41%

26 53% 14 28%

40 53% 26 33%

46 44% 49 46%

22 34%

34 52%

33 46%

27 38%

6 6%

20 7%

66 55%

61 22%

39 24%

5 4%

42 15%

18 11%

71 59%

44 36%

102 37%

128 46%

82 51%

67 30%

42 45%

35 53%

22 39%

23 32%

23 29%

33 58%

45 50%

98 33%

58 36%

16 7%

6 6%

5 7%

6 11%

6 8%

2 3%

2 4%

2 2%

26 9%

11 7%

119 54%

47 51% 40 43%

R E S E A R C H

40 60% 21 31%

28 49% 21 38%

29 40% 38 51%

26 33%

51 64%

35 63%

19 33%

47 52%

39 43%

123 42%

144 49%

49 44%

11 10%

31 30% 9 9%

8 53%

42 53%

25 50%

12 5%

58 67%

3 3%

32 58%

23 54%

86 41%

44 59%

20 46%

27 57%

UNDER PROC- PREC1-15 16+ PRES/ MGMT MANA10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----E S E A R C H 211 109 80 61 54 58 43 106 293 150 81 15 98 53% 27% 20% 15% 14% 15% 11% 27% 73% 37% 20% 4% 25%

58 66%

3 7%

40 46%

YEARS IN EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ================= ======================= =========== =======================

115 49%

14 29%

61 43%

PAGE 48

53 67%

5 6%

190 47%

27 12%

28 13%

56 61%

36 42%

20 46%

6 3%

89 50%

5 4%

17 36%

10 5%

63 29%

87 50%

67 48%

41 48%

54 25%

132 58%

27 7%

72 51%

14 6%

28 34%

151 38%

179 45%

124 57%

27 53%

40 26%

2 1%

30 49%

36 69%

44 18%

1 1%

23 44%

31 58%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

BANNER 1

2018 ----

121 50%

39 57%

Table 10-1 Summary of Gross Revenue Trend

BASE=TOTAL SAMPLE

31 45%

PAGE 47

4 44% -

1 12%

2 16%

44 55% 2 2%

15 30% 5 10%

20 53% 1 1%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 10-2 Summary of Gross Revenue Trend BANNER 2

BASE=TOTAL SAMPLE 2018 ----

INCREASE

DECREASE STAY THE SAME 2017 ----

INCREASE

DECREASE STAY THE SAME 2016 ----

INCREASE

DECREASE STAY THE SAME 2015 ----

INCREASE

DECREASE STAY THE SAME

134 33% 191 48%

206 51%

166 41%

149 72%

87 52%

52 25%

69 42%

121 33%

147 71% 2 1%

148 65%

78 47% 9 5%

51 35%

371 93%

225 61% 235 63% 10 3%

200 53%

218 55%

153 67%

65 44%

217 58%

145 36%

63 28%

68 46%

131 35%

27 7%

128 32%

175 44% 47 12%

174 43%

4 2%

95 54%

107 61% 12 7%

13 9%

46 24%

65 35%

19 10%

18 5%

140 39%

172 47% 31 9%

54 31%

101 54%

179 45%

97 60%

76 39%

173 49%

190 47%

60 37%

106 55%

166 47%

151 38% 27 7%

94 58% 3 2%

64 33% 11 6%

155 43%

159 45% 14 4%

23 6%

256 64%

113 28%

1 4%

194 76%

33 29%

11 48%

56 22%

64 56%

1 4%

171 74%

40 31%

15 59%

47 20%

72 56%

3 8%

99 77%

62 32%

-10 -44% 11 48%

-8 -33% 9 37%

-12 -35%

15 43%

190 74% 4 1%

164 71% 7 3%

98 76%

1 1%

BASE=TOTAL SAMPLE 2018 ----

INCREASE DECREASE STAY THE SAME

2017 ----

INCREASE

DECREASE STAY THE SAME 2016 ----

INCREASE

DECREASE STAY THE SAME 2015 ----

INCREASE

DECREASE STAY THE SAME

17 15%

16 14%

26 20%

14 11%

43 22%

19 10%

17 4%

215 54%

54 14%

127 32%

240 60%

21 5%

134 33%

187 47%

7 40%

152 71%

19 34%

68 53%

240 100%

163 87%

8 49%

52 24%

24 44%

56 44%

134 100%

20 11%

1 5%

104 64%

26 35%

82 53%

218 100%

149 85%

12 67%

46 28%

31 42%

64 41%

145 100%

19 11%

9 15%

175 100%

5 29%

2 11%

-4 -22% 5 28%

-18 -30% 27 45%

17 50%

28 22%

109 57%

24 39%

6 14%

127 76%

42 25%

7 13%

22 51%

38 23%

108 64%

34 66%

-8 -18% 13 32%

127 76% -

25 15%

17 10%

-2 -4%

9 18%

143 67% 9 4%

99 61% 6 3%

9 17%

10 18%

11 15%

15 20% -

65 51% 3 2%

76 49% 6 4%

21 100%

218 -27 100% -100% -

27 100%

175 -47 100% -100% -

47 100%

179 100%

162 86% 1 -

145 82% 5 3%

112 77% 113 78% 1 1%

174 100%

101 84%

190 100%

18 15%

179 -27 100% -100%

240 -21 100% -100%

27 100% -

28 19%

100 83% 1 1%

EMPLOYEE WAGES =================

INC- DECREASE REASE SAME ----- ----- -----

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

2 6%

71 40%

101 78%

16 38%

119 54%

150 72%

17 59%

95 54%

27 21%

16 37%

89 40%

64 100%

55 26%

14 30%

137 54%

120 65%

-8 -29% 10 35%

-10 -36%

61 35% 10 6%

54 29%

100 77% 1 1%

65 71%

5 12%

11 25% 1 3%

110 49% 10 4%

124 49%

208 52%

M E E T I N G S T R E E T

115 62%

-2 -47%

5 2%

3 73%

107 45%

-2 -13%

101 40%

81 100%

57 31%

2 4%

59 29%

62 62%

23 30%

87 40%

130 55%

14 29%

132 64%

30 30%

33 42%

108 50%

82 100%

81 34%

4 23%

86 60%

3 7%

75 31%

57 53%

22 32%

100 45%

15 42%

155 65%

46 43%

30 44%

112 50%

-31 -64% 32 68%

-16 -44% 18 51%

46 22% 14 7%

67 28% 8 3%

55 56% 7 7%

53 50% 3 3%

13 27%

1 1%

22 29% 6 9%

16 24%

13 5%

68 32% 18 8%

92 42% 8 3%

90 100%

23 10% -

322 81%

246 61%

208 52%

181 45%

155 39%

88 22%

285 71%

189 47%

180 45%

174 44%

51 13%

124 31%

120 30%

150 37%

57 76%

182 56%

175 71%

154 74%

140 77%

123 79%

32 37%

170 60%

112 59%

111 61%

106 61%

31 62%

83 67%

77 64%

98 66%

134 33%

34 24%

99 39%

15 20%

118 37%

58 24%

49 24%

36 20%

29 19%

45 51%

98 34%

63 33%

61 34%

58 33%

18 35%

37 30%

35 29%

218 55%

86 64%

128 49%

41 60%

175 53%

145 36%

36 26%

108 42%

17 24%

128 39%

69 54%

104 39%

174 43%

42 33%

179 45%

21 5%

191 48% 27 7%

128 32%

175 44% 47 12%

151 38% 27 7%

190 47%

6 4%

76 56% 10 7%

54 42%

15 12%

14 6%

111 43%

2 2%

32 46%

17 6%

9 13%

72 27%

26 33%

19 6%

157 48% 18 5%

103 32%

10 4%

39 50%

136 43%

131 49%

26 32%

147 46%

46 58%

131 41%

30 38%

32 12%

13 17%

43 55% 2 3%

33 10%

106 33% 25 8%

160 50%

5 2%

5 3%

120 77%

23 26%

3 2%

10 11%

157 55%

13 4%

103 55%

9 5%

103 57%

7 4%

98 56%

8 5%

30 58% 2 4%

78 63% 5 4%

71 59%

5 5% -

NOT MUCH/ NO IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- ----57 14%

83 21%

93 23%

33 58%

43 52%

50 54%

34 46%

48 32%

17 30%

32 39%

34 37%

28 37%

95 64%

3 2% -

26 46%

7 12% -

35 42%

8 9% -

42 45%

9 9% -

74 19%

24 32% 11 14% -

M E E T I N G S T R E E T

176

R E S E A R C H

1 27%

89 45%

86 44%

5 32%

39 27%

7 45% -

18 9%

23 16%

16 11% -

PAGE 50

R E S E A R C H

74 19%

134 74%

71 36%

20 43%

1 1%

135 54%

149 72%

14 8%

23 25%

8 5%

252 63%

165 67%

76 42%

4 82%

114 62%

14 48%

102 71%

163 51%

2 1%

73 41%

11 39%

145 36%

55 74%

88 49%

66 72%

240 60%

121 48%

1 18%

62 34%

400 100%

96 66%

180 45%

-3 -64%

4 13%

5 1%

148 71%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 10-3 Summary of Gross Revenue Trend BANNER 3

PAGE 49

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 10-4 Summary of Gross Revenue Trend BANNER 4

BASE=TOTAL SAMPLE 2018 ----

INCREASE

DECREASE STAY THE SAME 2017 ----

INCREASE

DECREASE STAY THE SAME 2016 ----

INCREASE DECREASE STAY THE SAME

2015 ----

INCREASE

DECREASE STAY THE SAME

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100% 218 55%

96 24%

55 57%

240 60%

60 63%

134 33%

30 31%

21 5%

191 48%

5 6%

40 39%

279 70%

113 28%

176 63%

61 54%

85 30%

46 41%

163 58% 14 5%

22 8%

3 3%

49 47%

145 54%

145 36%

43 41%

97 36%

27 7%

128 32%

175 44%

47 12%

174 43%

151 38%

9 9%

27 25%

44 42%

17 16%

44 42%

41 39%

6 5%

63 55%

218 55%

98 37%

130 49%

31 12%

102 38%

109 39%

55 48%

123 45%

209 52%

95 24%

142 68%

63 66%

54 72%

53 72%

59 28%

26 28%

18 24%

136 65% 6 3%

58 51%

BASE=TOTAL SAMPLE 2018 ----

INCREASE

DECREASE STAY THE SAME 2017 ----

INCREASE

DECREASE STAY THE SAME 2016 ----

INCREASE

DECREASE STAY THE SAME 2015 ----

INCREASE DECREASE STAY THE SAME

44 66%

25 78%

84 63%

65 61%

3 4%

19 28%

4 14%

39 29%

6 9%

4 7%

65 37%

84 48%

19 11%

70 40%

89 43%

39 52%

35 33%

31 41%

28 28%

17 32%

42 43%

24 44%

14 15%

7 13%

43 43%

23 43%

47 44%

30 42%

98 47%

53 49%

36 51%

190 47%

52 48%

130 46%

55 51%

99 48%

49 45%

27 39%

9 4%

5 5%

6 9%

22 69%

4 6%

5 7%

33 54%

3 8%

22 35%

9 23%

22 35%

15 37%

6 14%

19 47%

23 36%

37 40%

32 50%

47 52%

9 14%

8 52%

48 31%

60 55%

54 53%

79 55%

40 36%

38 37%

53 37%

4 26%

69 45%

6 38%

29 36%

10 59%

35 43%

66 43%

17 69%

40 43%

68 44%

17 69%

48 47%

44 47%

78 50%

7 31%

8 9%

4 27%

59 38%

45 44% 7 7%

6 36%

17 11%

31 34%

2 10%

52 34%

8 10%

7 5%

8 49%

7 5%

38 47%

92 59%

1 6%

72 50%

7 6%

38 38%

6 37%

5 4%

47 47%

55 45%

7 8%

40 33%

69 57%

5 4%

12 10%

29 32%

36 34%

52 43%

26 41%

14 22%

99 64%

40 33%

7 11%

7 42%

9 9%

29 46%

74 61%

51 46%

13 24%

155 39%

60 56%

8 6%

38 69%

16 4%

76 57%

9 6%

207 52%

31 8%

109 52%

15 48%

181 45%

120 67%

121 58%

16 53%

128 71%

71 34%

12 38%

43 24%

12 6%

2 5%

7 4%

24 6%

7 28%

168 42%

75 45%

210 53%

189 47%

150 72%

68 36%

10 43%

85 50%

155 74%

85 45%

10 42%

72 43%

48 23%

86 45%

137 63%

80 45%

59 27%

85 48%

4 15%

10 6%

65 27%

19 12%

28 12%

80 53%

52 34%

80 51%

93 38%

120 49%

68 28%

87 56%

88 37%

60 39%

127 53%

13 7%

62 40%

14 6%

17 9%

67 38%

5 2%

123 57%

7 4%

21 9%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018

Table 10-5 Summary of Gross Revenue Trend BANNER 5

121 30%

8 8%

59 56%

47 44% 6 6%

107 27%

18 9%

129 46% 20 7%

133 33%

34 63%

48 45% 6 6%

32 8%

28 45%

74 36%

41 38%

3 4%

66 17%

40 61%

34 45%

42 36%

13 11%

6 6%

73 18%

50 68%

51 49%

110 54%

31 27%

51 69%

93 45%

67 58%

44 38%

75 19%

56 59%

179 45% 27 7%

PAGE 51

192 48%

136 34%

145 36%

136 71%

77 56%

93 64%

218 55%

129 67%

21 5%

6 3%

240 60% 134 33%

47 24%

72 53% 4 3%

55 40%

89 61%

68 17%

21 31% 29 42%

69 17%

142 35%

108 27%

88 22%

135 56%

101 66%

93 65%

75 70%

60 69%

91 38%

50 32%

41 29%

29 27%

92 57%

14 6%

39 57%

8 12%

30 44%

153 38%

121 50%

5 3%

47 32%

241 60%

31 45%

22 31%

191 48%

79 58%

35 47%

61 42%

25 29%

77 50%

145 49%

27 7%

9 6%

5 6%

12 8%

10 12%

10 7%

21 7%

218 55% 145 36%

128 32%

87 64% 39 29%

56 53%

39 53% 26 36%

13 22%

73 50% 57 39%

47 35%

35 40%

39 45%

17 13%

87 56% 52 34%

47 29%

175 44%

64 60%

20 34%

59 44%

41 32%

71 44%

174 43%

33 31%

30 51%

62 46%

64 49%

65 40%

47 12%

151 38% 179 45%

27 7%

190 47%

7 7%

57 49% 64 55%

7 6%

44 38%

7 12% 29 36% 30 37%

1 1%

49 61%

12 9%

64 39% 75 46%

11 7%

79 48%

24 19% 26 28% 33 35%

7 8%

53 57%

24 15% 55 32% 72 42%

17 10%

78 46%

166 56%

105 35%

111 34%

99 65% 2 1% -

86 61%

72 67%

6 5%

4 3%

80 49%

12 7%

55 34%

70 35%

302 76%

98 24%

191 63%

20 23%

PAGE 52

88 22%

148 37%

81 20%

320 80%

80 20%

54 18%

53 18%

48 50%

51 71%

55 62%

79 53%

49 61%

174 54%

65 82%

31 58%

36 69%

91 30%

43 44%

16 22%

28 32%

61 41%

25 31%

121 38%

13 16%

21 39%

15 28%

19 38%

29 48%

62 66%

163 54%

55 57%

43 62%

46 54%

87 61%

26 38%

173 54%

44 59%

27 49%

20 53%

29 57%

16 40%

127 58%

26 28%

112 37%

21 53%

73 34%

56 64%

172 57%

5 5%

19 6%

58 61% 5 5%

43 40%

142 47% 21 7%

99 31%

46 47% 3 3%

50 51% 5 6%

33 34%

30 37%

49 69% 2 3%

42 61% 1 1%

23 34%

33 54%

50 57% 4 5%

37 43%

9 11%

28 33%

28 30%

72 49% 6 4%

77 54% 9 6%

44 31%

43 29%

42 52% 7 8%

20 30% 6 8%

36 52%

17 23%

153 48% 21 7%

152 47% 21 7%

119 37%

101 32%

65 82%

38 51% 6 8%

23 31%

18 37%

30 55%

1 3%

22 40% 5 9%

22 40%

20 35%

51 17%

61 21%

35 65%

23 44%

30 49%

2 3%

5 9%

1 2%

15 40%

5 13% 11 31% 2 6%

27 53%

24 47% 5 9%

17 34%

13 26%

31 50%

14 36% 2 4%

8 18%

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10%

INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/DON'T KNOW REFUSED

138 63% 14 6%

63 29%

116 53% 11 5%

86 39%

147 45%

94 46%

54 51%

140 44%

35 44%

35 57%

40 44%

64 43%

24 34%

139 43%

26 53%

24 42%

9 28%

19 39%

15 37%

107 49%

141 43%

84 41%

42 39%

137 43%

37 46%

25 41%

38 42%

61 41%

38 53%

141 44%

14 28%

29 50%

14 42%

23 47%

19 45%

89 41%

36 11%

112 37%

20 7%

131 44%

146 49%

23 11%

54 34%

68 43%

75 47%

14 9%

11 10%

43 43%

41 13%

116 36%

49 50%

140 43%

43 43%

155 48%

7 7%

24 8%

6 7%

36 46% 39 50%

3 4%

35 45%

2 3%

21 52%

22 55% 1 3%

17 41%

13 14% 39 38%

46 45% 7 7%

48 47%

22 15%

52 35% 64 43% 11 8%

73 49%

8 11%

31 41% 37 48% 6 8%

32 42%

38 12% 108 35% 130 41%

22 7%

159 51%

8 16%

35 53% 40 60%

5 7%

21 31%

4 7%

19 33% 23 41%

4 7%

30 52%

8 23%

7 21% 11 32%

4 12%

19 56%

7 13%

21 40% 21 40%

32 60%

8 18%

7 16%

21 10%

98 45%

15 38%

108 50%

15 38%

95 44%

9 21%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 11-1 QUESTION 5: And, as you look to 2018, do you project your company's profitability toC2017, or will it probably stay the same? M E to E T increase I N G S Tor R decrease E E T Rcompared E S E A R H BANNER 1

220 74%

124 57%

11 5%

PAGE 53

YEARS IN REGION REGION II REVENUES EMPLOYEES PRIMARY BUSINESS OPERATION JOB TITLE ============================== ============ ================= ================= ======================= =========== ======================= $1 REST UNDER MILL COLLAR TWIN OF $1 - $5 $5 UNDER PROC- PREC1-15 16+ PRES/ MGMT MANATOTAL MSP COS NE S W/NW CITIES STATE MILL MILL MILL+ 10 11-50 51+ ESS ISION METAL OEM YRS YRS OWNER CEO TEAM GER ----- ----- ------ ----- ----- ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----400 100%

140 35%

87 22%

48 12%

43 11%

82 20%

227 57%

173 43%

179 45%

187 47%

69 49%

44 51%

21 44%

19 44%

34 42%

113 50%

74 43%

78 43%

110 27%

43 31%

26 30%

12 24%

12 28%

17 21%

69 30%

41 24%

52 29%

159 40% 28 7%

61 44% 7 5%

38 44% 6 7%

16 33% 6 12%

14 34% 5 11%

30 36% 5 6%

100 44%

13 6%

60 35%

15 8%

62 35%

15 9%

96 24%

92 23%

211 53%

109 27%

42 43%

52 56%

89 42%

52 48%

47 59%

33 55%

24 44%

30 51%

23 53%

58 55%

129 44%

22 23%

26 28%

57 27%

25 23%

28 35%

21 35%

13 25%

15 26%

15 34%

42 40%

1 2%

3 5%

2 4%

3 3%

33 35%

8 9%

49 53%

3 4%

69 33%

20 9%

45 42%

6 6%

80 20%

45 56%

2 2%

61 15%

27 45%

6 10%

54 14%

19 36%

4 8%

77 19%

26 18%

18 21%

10 20%

7 16%

17 21%

44 19%

33 19%

25 14%

20 21%

26 29%

31 15%

27 25%

19 24%

12 20%

10 19%

15 4%

4 3%

4 5%

2 4%

4 4%

8 3%

7 4%

8 4%

5 5%

2 2%

10 5%

4 3%

2 2%

3 4%

4 7%

13 3%

4 3%

2 2%

4 8%

3 6%

1 1%

5 2%

7 4%

4 4%

2 2%

10 5%

3 2%

4 6%

58 15%

27 46%

3 5%

15 25%

43 11%

20 47%

3 6%

8 19%

1 2%

106 27%

52 49%

6 6%

16 15%

3 3%

293 73%

150 37%

81 20%

61 41%

67 23%

43 29%

10 3%

5 4%

107 37% 22 7%

62 21%

12 4%

45 30% 16 11%

15 4%

98 25%

44 54%

5 29%

47 48%

22 28%

2 12%

23 23%

43 53% 1 1%

4 23% 1 6%

42 42% 6 6%

18 12%

22 27%

3 18%

24 25%

10 7%

1 6%

1 1%

5 5%

177 44%

63 45%

30 34%

21 44%

20 45%

43 53%

93 41%

84 48%

85 48%

47 48%

31 33%

101 48%

51 47%

25 32%

17 27%

26 48%

25 42%

16 38%

41 38%

135 46%

71 47%

34 42%

8 52%

43 44%

2 1%

2 2%

2 1%

2 2%

2 3%

2 4%

2 1%

2 3%

6 1%

1 1%

5 6%

6 3%

1 -

4 4%

2 1%

177 M E E T I N G S T R E E T

R E S E A R C H

4 5%

2 4%

1 2%

1 1%

5 2%

2 1%

2 12%

2 2%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 11-2 QUESTION 5: And, as you look to 2018, do you project your company's profitability to increase or decrease compared to 2017, or will it probably stay the same?

BANNER 2

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10%

INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/DON'T KNOW REFUSED

FUTURE OF FIRM ======================= TOTAL VERY SMWT TOTAL NOT TOTAL CONF CONF CONF CONF ----- ----- ----- ----- ----400 100%

206 51%

166 41%

371 93%

187 47%

120 58%

62 37%

182 49%

73 35%

34 20%

107 29%

9 6%

12 3%

159 40% 28 7%

110 27%

117 57% 4 2%

47 28% 15 9%

77 19%

47 23%

28 17%

15 4%

1 -

6 4%

13 3%

3 1%

1 4%

151 59%

27 24%

92 36%

19 5%

9 40%

145 57%

9 8%

17 4%

215 54%

54 14%

127 32%

240 60%

3 16%

113 53%

15 28%

57 45%

163 68%

1 5%

67 31%

11 20%

31 25%

99 41%

1 6%

3 1%

6 10%

5 4%

10 62%

87 41%

27 50%

60 47%

71 30%

2 1%

-1 -6%

5 2%

18 16%

4 22%

1 4%

59 23%

14 13%

2 11%

7 2%

8 36%

2 1%

11 9%

3 16%

5 1%

1 4%

3 3%

76 20%

79 39%

84 51%

163 44%

2 1%

-8 -36%

2 1%

3 1%

256 64%

164 44%

177 44%

6 1%

23 6%

1 4%

PAGE 54

4 1%

13 11% 7 6%

12 52%

96 37%

65 58%

2 1%

104 48% 10 5%

47 22% 7 3%

2 1%

5 9%

11 20%

4 8%

5 9% 1 2%

51 40% 7 5%

26 20% 2 1%

3 2%

21 5%

134 33%

1 4%

20 15%

28 7%

177 44%

129 32%

43 11%

222 56%

64 16%

208 52%

187 100%

79 61%

11 27%

95 43%

115 55%

53 41%

8 18%

48 22%

3 2%

-9 -41%

2 1%

10 46%

17 12%

63 27%

1 4%

13 10%

77 41%

2 1%

8 37%

5 4%

2 1%

1 4%

2 8%

3 3%

187 47%

161 67%

7 5%

11 8%

10 46%

95 71%

2 2%

187 -28 100% -100% -

110 59% -

28 100% -

13 46%

15 54%

74 57% 5 4%

25 20%

2 1%

4 10%

7 17%

81 36% 14 6%

4 9%

47 21%

7 17%

4 2%

10 5%

5 1%

180 45%

1 18%

70 39%

63 30%

1 18%

45 25%

8 4%

105 50% 10 5%

52 25%

2 1%

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10% DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10%

STAY THE SAME TOO SOON TO SAY/DON'T KNOW REFUSED

CURRENT LEADERSHIP EMP DEVLPMT DEVLP PROG USING AUTOMATION =========== =========== ============================== PRODNOT UCTI- QUALENHAN CONS TOTAL YES NO YES NO VITY ITY SAFETY -CING AUTO ----- ----- ----- ----- ----- ----- ----- ------ ----- ----400 100%

145 36%

252 63%

74 19%

322 81%

187 47%

78 54%

109 43%

49 66%

138 43%

129 52%

99 90 83 27 110 67 64 64 48% 50% 53% 31% 39% 35% 35% 37% M E E T100 I N G 89 S T R 34 E E T128R E 84 S E A 79 R C H 77 107 52% 55% 57% 39% 45% 44% 44% 44%

110 27%

47 32%

63 25%

30 40%

80 25%

75 30%

59 29%

55 30%

51 33%

21 24%

81 28%

45 24%

47 26%

13 3%

4 3%

8 3%

13 4%

6 3%

5 2%

3 1%

3 2%

4 4%

7 3%

7 4%

159 40%

28 7%

77 19% 15 4%

73 50%

5 4%

31 22% 1 1%

87 34%

23 9%

46 18%

14 6%

48 64%

1 1%

19 26%

1 1%

111 34%

27 8%

57 18%

14 4%

246 61%

114 46%

15 6%

54 22%

8 3%

208 52%

181 45%

155 39%

88 22%

8 4%

10 5%

6 4%

7 8%

SIGNIF IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- -----

48 23%

4 2%

45 25% 7 4%

38 25% 4 2%

14 15% 4 4%

285 71%

189 47%

180 45%

174 44%

18 6%

17 9%

15 9%

13 7%

47 17% 11 4%

39 21% 10 5%

33 18%

42 32%

22 51%

112 50%

64 100%

82 39%

2 33%

89 50%

2 2%

2 1%

9 5%

120 30%

150 37%

26 50%

61 49%

63 53%

50 29%

13 26%

32 26%

3 2%

4 7%

5 4%

10 6%

12 24% 1 2%

2 5%

1 -

2 1%

55 44% 6 5%

29 24% 1 1%

83 21%

93 23%

76 51%

28 50%

40 49%

43 46%

32 27%

36 24%

13 24%

32 39%

29 31%

5 5%

7 5%

7 6%

31 26% 2 1%

68 46%

8 5%

23 40%

5 10%

36 44% 4 5%

38 41% 5 6%

74 19%

26 34%

33 44% 7 10%

23 31%

41 27%

15 26%

8 10%

14 15%

10 13%

1 1%

4 6%

4 5%

4 6%

2 3%

1 1%

3 4%

57 39%

117 47%

25 33%

150 46%

97 40%

85 41%

71 39%

59 38%

47 53%

134 47%

85 45%

81 45%

81 47%

21 41%

52 42%

47 40%

61 41%

21 37%

37 45%

44 47%

34 45%

2 1%

2 2%

2 1%

3 2%

3 1%

6 2%

3 1%

5 2%

1 1%

4 1%

3 1%

3 2%

2 2%

2 1%

2 4%

1 1%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 11-4 QUESTION 5: And, as you look to 2018, do you project your company's profitability to increase or decrease compared to 2017, or will it probably stay the same?

BANNER 4

BASE=TOTAL SAMPLE **D/S (INCREASE - DECREASE) TOTAL INCREASE --------------

TOTAL DECREASE --------------

INCREASE BY MORE THAN 10% INCREASE BY LESS THAN 10%

DECREASE BY LESS THAN 10% DECREASE BY MORE THAN 10% STAY THE SAME TOO SOON TO SAY/DON'T KNOW REFUSED

ATTRACT EMPLOYEES ================= TOTAL VERY TOTAL NOT TOTAL DIFF DIFF DIFF ----- ----- ----- ----400 100%

96 24%

279 70%

113 28%

187 47%

40 41%

128 46%

110 27%

21 22%

13 3%

2 2%

159 40% 28 7%

77 19% 15 4%

31 33% 8 9%

19 19% 6 7%

CANDIDATE NOT TAKE JOB/FOLLOW THRU =================================== LOW JOB SKILL COMP- LONG FLEX MOBIL CHILD REQD ENS COMM SCHED -ITY CARE ----- ----- ----- ----- ----- ----209 52%

95 24%

75 19%

57 50%

107 51%

41 43%

72 26%

36 32%

62 30%

8 3%

4 3%

9 4%

108 39% 20 7%

55 20% 12 4%

49 44% 7 6%

21 19% 3 3%

94 45% 13 6%

44 21% 4 2%

207 52%

44 37 33 10 68 48 59 6 M E E 50% T I N 50% G S T 32% R E E 51% T R 45% E S E 49% A R C 37% H 59%

71 46%

25 27%

24 32%

19 26%

21 32%

4 4%

2 2%

4 5%

4 6%

7 8%

15 16% 4 4%

40 54% 4 5%

20 27% 2 2%

31 43% 6 8%

18 24% 2 2%

66 17%

32 8%

28 42%

6 19%

5 8%

4 14%

12 18%

5 15%

2 3%

133 33%

61 45% 7 5%

107 27% 41 39%

5 30%

7 7%

13 11%

1 6%

19 18%

27 22%

39 29%

29 27%

1 3%

4 3%

3 3%

3 11%

3 2%

16 4%

46 38%

6 18%

28 21%

121 30%

4 4%

61 39%

10 6%

31 8%

181 45%

24 6%

168 42%

210 53%

104 50%

10 34%

101 56%

5 22%

66 39%

126 60%

8 25%

62 34%

5 22%

35 21%

79 37%

6 3%

2 8%

5 3%

3 1%

87 42%

16 8%

32 26%

5 31%

37 24%

63 30%

5 4%

1 6%

4 2%

9 4%

8 7%

1 6% -

PAGE 56

SHORTAGE STRATEGIC SKILLED JOBS TAX REFORM IMPACT GROWTH PLAN ================== ================== =========== TOTAL TOTAL EXPE- TOTAL NO WORSE CTED BETTER HELP HURT IMPACT YES NO ----- ----- ------ ----- ----- ------ ----- ----155 39%

34 36%

73 18%

GREATEST EMPLOYEE NEED ======================= TECH/ NO TECH/ ENTRY EXP EXP COLL+ ----- ----- ----- -----

34 22% 6 4%

41 20% 7 4%

10 31%

1 2%

3 9% 1 2%

95 52%

6 4%

40 22%

1 -

1 4%

5 19%

3 11%

51 30% 15 9%

31 18% 10 6%

119 57% 6 3%

47 22% 4 2%

189 47% 39 21%

60 32%

22 11%

30 16%

30 16% 10 5%

11 6%

177 44%

47 49%

124 44%

49 43%

84 40%

46 48%

27 36%

31 42%

28 42%

17 54%

55 41%

47 44%

50 41%

9 57%

69 45%

85 41%

19 61%

68 38%

14 59%

83 50%

73 35%

104 55%

2 1%

2 2%

2 1%

6 1%

1 1%

6 2%

4 2%

1 1%

4 3%

M E E T I N G S T R E E T

178

2 2%

R E S E A R C H

3 2%

2 1%

1 3%

3 2%

NOT MUCH/ NO IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- ----57 14%

56 47%

PAGE 55

177 44% 6 1%

4 2%

11 6%

124 31%

27 15%

3 49%

25 14%

177 100%

51 13%

5 9%

15 8%

SOME IMPACT OF DEPARTURE ======================= SKILL CEO/ MGMT MGR/ -ED OWNER TEAM SPV WORK ----- ----- ----- ----21 41%

3 49%

55 31%

2018 STATE OF MANUFACTURING STUDY / MARCH 2018 Table 11-3 QUESTION 5: And, as you look to 2018, do you project your company's profitability to increase or decrease compared to 2017, or will it probably stay the same?

BANNER 3

-2 -31%

3 2%

3 1%

3 2%

$15.95

My overall analysis consists of four themes. Manufacturers expect record revenues, record profitability, to invest in their company at a record level, and to increase wages. The workforce shortage—for skilled and unskilled employees—looms large as a likely impediment to future growth to manufacturers across the board. An unexpectedly small number of manufacturers are preparing their operations with leadership training, productivity efforts, and overall strategic planning. Notably, large and urban companies for the first time are indicating accelerating urgency about workforce issues, possibly signifying employers in Greater Minnesota will face even more intense levels of competition for employees.

—Rob Autry, pollster, State of Manufacturing®

Inside, you’ll find:

• Topline results from a survey of 500 Minnesota manufacturing executives • Detailed analysis from pollster Rob Autry, founder, Meeting Street Research • Full transcripts from 14 manufacturing focus groups conducted across the state • Selected cross tabulations

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