Enterprise Minnesota magazine - Winter 2024

Manufacturers

DREAD

Manufacturers express unprecedented anxiety about the economy amid the burden of new legislative mandates.

Doug

Record-breaking pessimism among manufacturers calls for a plan of action.

Farm-raised

Lake

Bob Kill

What Next?

Record-breaking pessimism among manufacturers calls for a plan of action.

The unparalleled pessimism voiced by manufacturers in this year’s State of Manufacturing® (SOM) survey provides a fitting opportunity to consider the next steps for Minnesota manufacturing.

The 2024 poll — the 16th we’ve conducted — was dominated by angsty concerns about the economic landscape and the health of Minnesota’s business climate. The angst surrounding the economy makes sense given continuing inflation and layoffs at major manufacturers — often the customers of our manufacturing base. Rob Autry and his team at Meeting Street Insights have conducted every SOM survey since its inception. Their research has revealed similar worries in other surveys around the country, but he says Minnesota manufacturers expressed far more concern about the business climate and far less confidence about the future than those elsewhere.

Pessimism about Minnesota’s business climate has been growing steadily for the last few years. A record-high 56% of respondents note that it’s worse this year, up from 50% last year and 15% five years

ago. At the root of this angst is the legislature’s 2023 adoption of expanded paid leave requirements that apply equally to all manufacturers, from those with a handful of employees to multinational corporations.

New hiring has ground to a halt for small employers. If you’re not hiring, it’s very difficult to grow. If you don’t think you can grow because you face additional expenses that don’t increase productivity or boost growth, you’re not going to hire. It’s a vicious cycle.

Moving forward, both Enterprise Minnesota and the manufacturers we serve have work to do. We will continue to connect manufacturers with lawmakers so they can fully understand the consequences of critical policy decisions.

We will also keep working to help manufacturers thrive in the current climate, especially the smaller ones. Small companies face big risks if they are too closely tied to a single industry, but we can help them diversify. While some areas of manufacturing are slowing down, the defense and aerospace industries are booming, and we can work with companies to earn the certification required to supply those markets. The generator and food processing markets are thriving, and we can show manufacturers how to use their existing technology, skill, and will to move into those markets.

I can think of a handful of our clients who 20 years ago were quite small but today have 150 employees or more because they identified opportunities in economic downturns. They focused on their specific challenges and met them head-on. Smaller companies can follow that lead.

Every State of Manufacturing survey leaves me with a deeper appreciation for Minnesota manufacturers and their resolve when faced with a problem: They wring their hands for a moment, then quickly pivot to tackle the challenge. While that typical resilience has taken a hit, we hope to see a return to Minnesota optimism in next year’s survey.

Publisher Lynn K. Shelton

Editorial Director

Tom Mason

Creative Director

Scott Buchschacher

Managing Editor

Chip Tangen

Copy Editor

Catrin Wigfall

Writers

Joe Bowen

Sue Bruns

Suzy Frisch

Robb Murray

Peter Passi

Kate Peterson

Mary Lahr Schier

Photographers

Amy Jeanchaiyaphum

Robert Lodge

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Helping Manufacturing Enterprises Grow Profitably

Bob Kill is president and CEO of Enterprise Minnesota.

Massman Appeal

The Alexandria-based manufacturer built a new facility that is modern, clean, and employee focused.

hen the team behind the new facility at Massman in Alexandria sat down to design their plant’s new cafeteria, they wanted something that would reflect the company’s ethos better than tables, chairs, and a few vending machines.

The result? A wall.

Not a wall with safety reminders, motivational posters, or time clocks; a wall with visual reminders of who Massman is.

The 40-foot mural that now greets lunchtime visitors includes images that tell a story of Alexandria: the Kensington Runestone; “Ole” the 28-foot Viking statue that stands on the shore of Lake Agnes; the small aircraft once owned by Massman founder Burl Massman; the sign from his ice fish house.

More importantly, though, are the items affixed to the wall — items contributed by Massman employees: a deer head, a Joe Mauer jersey, ice fishing gear, downhill and cross-country skis, snowshoes, golf clubs, hockey sticks, and skates. These items tell a story of the people who make Massman tick.

“The facility is a representation of Massman,” says Jeff Hohn, the company’s

president and CEO. “It’s who we are.”

Like many successful manufacturers, Massman outgrew its original home in Villard, a small town south of Alexandria. When the decision was made to expand, Hohn says it didn’t take long to come to a decision that stayed true to its Villard roots but that acknowledged logistical challenges to a Villard expansion. Because business was booming, they opted to maintain the Villard facility and build anew in Alexandria, the city where clients stay when visiting and where many Massman employees reside.

But the construction of a new facility, while absolutely a chance to create an efficient and lean manufacturing site, gave Massman a chance to do something else: build a facility that is as beautiful as it is efficient, one that gives employees extra incentive to come to work.

The cafeteria is just one example of how Massman’s new facility might be the model for the future, one where beauty replaces dirty, and the employee experence is a top priority.

“We’re

building the building for the people in the building, not the people driving by. No one’s going to drive by and say, ‘Oh, I’m going to stop in and buy a half-million dollar piece of automated machinery.’”

–Jeff Hohn, president and CEO, Massman

The Massman way

In 1978, Burl Massman’s idea of using automation to create packaging machines was born. A year later, he sold his first machine — which automatically wrapped aluminum storm doors for shipping — to the Chamberlain Manufacturing Corp. in Iowa.

Four years later Massman’s success al-

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INNOVATIONS

lowed him to move out of his garage and into his first building. Twenty years and thousands of sold packaging systems later, Massman built a new facility in Villard. The company expanded again in 2011, but by 2022 the writing was on the wall; they needed more space.

They purchased 80 acres of land in Alexandria and began planning Massman’s future home.

But instead of letting a consultant tell them how to design it, Massman assembled a team that included people from all walks of Massman’s workforce, from shop floor newbies to longtime veterans.

Massman, meanwhile, has grown steadily over the years. It currently employs nearly 200 people between both sites, and it has come a long way from a garage-based startup wrapping aluminum doors. Today their customers are global companies.

“We make automated machines that put things in a box, put things in a jar, put things in a cup,” Hohn says. “We don’t put the cereal in the box. We put the carton in the box for them, then we put the box onto a pallet, and then it gets shipped. We put the four candies in the box for the Halloween candy. We put the fruit cups

faced the public.

That assumption was incorrect, and antithetical to everything the Massman team wanted to do.

“The architect kept spinning the building around and facing it to the street, and I kept spinning it back the other direction. They said, ‘Why are you doing this?’ And I said, ‘Because we’re building the building for the people in the building, not the people driving by.’ No one’s going to drive by and say, ‘Oh, I’m going to stop in and buy a half-million dollar piece of automated machinery.’ So, all the views and all the orientation is to the benefit of the employees.”

People who live in Alexandria love to be outdoors and in nature, Hohn says. Many of them are hunters or fishermen. Many love to hike or otherwise enjoy Alexandria’s myriad natural recreation opportunities.

“We wanted something that, when people looked out the windows, they see what they love,” Hohn says. “They see what brings them joy and relaxation and makes them feel good about being here.”

One unique feature of the facility is the walking trails. Hohn and a few other Massman engineers mapped out a 0.9mile walking trail that employees could easily traverse on a 15-minute break.

most buildings, had a front facade that

Inside the building, 350 panes of glass surround all four sides, bringing an abundance of natural light into nearly every corner of the building.

On the floor, they saved money by not installing expensive flooring and instead embracing an industrial yet classy polished concrete look. They maintain that theme on the walls where, instead of drywall or paint, they’ve left them as is. Trims and finishes are solid wood, not the plastic recommended by the architect. And a local company was contracted to supply oak cabinetry.

Another feature of the building has nothing to do with light or design and everything to do with that old Real Estate axiom: location, location, location.

More than 80% of Massman employees currently live in Alexandria. So, while Massman could have built a 40,000-square-foot expansion in Villard, it had higher aspirations for growth. The new facility is roughly 70,000 square feet and cost just over $17 million and allowed them to get exactly the facility they wanted, including plenty of room to

“Why not pick a site that can be your

“Massman’s new home has been thoughtfully designed to advance the well-being of the company’s team members, beginning with including them in the building process,” says Rick Bauerly, Granite Partners’ founder and CEO.

future home for the next 100 years?” Hohn says. “We’ll never have to leave this site again to buy more space, unless, you know, we become the largest automated packaging company in the United States.”

When Massman brings in customers, they stay in Alexandria. And while the company’s roots remain in Villard, the region’s heartbeat sits firmly in Alexandria.

“We eat in the restaurants in Alexandria. We stay in the hotels in Alexandria. We entertain the customers in Alexandria,”

Hohn says. “So if all of that activity is happening in Alexandria today, why not just be in Alexandria?”

Bob Kill, Enterprise Minnesota president and CEO, says he was impressed by Massman’s thoughtful approach to the building’s design and the fact that it focused on improving the work lives of the people who are there every day. Focusing on that, he says, is key for retention — a major concern for nearly all manufacturers.

“That’s becoming a big competitive

advantage. I was struck by how they really understood that the most precious commodity we all have is our people,” Kill says.

In addition to Massman having a stateof-the-art facility, Kill says they’ve also got a state-of-the-art CEO in Hohn.

“He’s a leader. He’s not a manager,” Kill says, who has known Hohn for several years and watched him grow into an industry leader. “Companies with leaders in that position will grow faster than those with managers in that position.”

“Massman’s new home has been thoughtfully designed to advance the wellbeing of the company’s team members, beginning with including them in the building process,” says Rick Bauerly, Granite Partners’ founder and CEO. “Our shared vision of world-class well-being and the objective of 100-year sustainability can be felt throughout the new facility.”

There is a spirit to the new Massman headquarters: It honors the company’s history, it looks to future growth, and it honors the community and its neighbors.

Robb Murray

“If equipment is down because of people issues, you can address that.”

–Eric Blaha, Enterprise Minnesota

TECHNOLOGY

Invisible Glitches Revealed

The Guidewheel is a machine-efficiency tool that ‘can see what you can’t.’

Astamping company that Ryan Steinert, an Enterprise Minnesota business consultant, worked with had a piece of equipment that employees were sure was consistently stamping parts at a rate of one every seven seconds. They used that number to plan projects and bid out jobs. The only problem: It was wrong.

During a demonstration of Guidewheel, a new tool Enterprise Minnesota is offering to help manufacturers improve efficiency, the company discovered that its machine was hiccupping and would stamp at longer intervals erratically. Further investigation

showed that some of the problem was the machine and some stemmed from how it was being operated, but whatever the cause, it was hurting profitability.

“Guidewheel can see what you can’t,” Steinert says. “It makes the invisible visible.”

Guidewheel (guidewheel.com) is one of several new hardware and software solutions available to improve efficiency and track performance in real time. According to Guidewheel’s creator, it improves efficiency on average by 16% and reduces operating costs by 11%. While similar internal monitoring functions are built into some

equipment, many older machines don’t have it and some firms don’t use it. “We saw it as a big gap that many clients don’t use them,” says Ally Johnston, an Enterprise Minnesota business growth consultant.

Guidewheel measures electrical usage to determine how well and fast machines are running. It can measure downtime, long changeovers and late starts, power surges, and other problems in equipment. Companies use the tool to monitor equipment that may be in need of maintenance or to assess the return on investment of replacing equipment. Enterprise Minnesota has used

it in Kaizen events as well as to highlight areas for improvement or diagnose issues, Johnston says.

How it works

The Guidewheel tool starts with a sensor that is clipped onto the power supply of any machine. It can be hooked to anything that draws electricity. After the sensor is calibrated, which takes about four hours, it monitors for power usage, measuring spikes, downtime, and blips that can be translated into metrics used for decision making. An artificial-intelligence powered dashboard allows employees to see data remotely, and it alerts operators when a problem is occurring. The dashboard can be accessed from a cell phone, which is particularly helpful to fully automated companies or those running lights out. If a problem occurs, Guidewheel alerts the appropriate employee. “Wherever you are in the world, you can see the machine,” Johnston says.

“I’ve had clients surprised by the spikes in energy consumption,” she says, which has led to adjustments such as doing high-usage

activities at different times of the day or adjusting work schedules or processes to use the equipment more efficiently. “A lot of times people know something is happening with their equipment, but this gives them the data they need to take the next step.”

“Guidewheel works really well for bottleneck areas,” says Eric Blaha, an Enterprise Minnesota business growth consultant. One company found that its equipment was often operating at 30 or 40% of its potential, but it had spikes where it was operating at 80 or 90%. Using that information, the company found that a lot of time was spent setting up the machine. “It was really eye-opening for them,” he says.

Another firm discovered that a key piece of equipment was operating only 25% of the time. “When we dug into the reasons why, it was due to a lack of consistency in material delivery,” Blaha says. “We designed a Kaizen event to optimize material flow, allowing us to address the root cause of low utilization and improve overall productivity.”

How efficient should your equipment be?

There are no clear rules for that, Blaha says. “In some industries, if you get north of 60% utilization, you’re doing well,” he says. “If your utilization is under 50%, it’s a good idea to look at what’s happening.”

Common problems include unplanned maintenance on equipment, worker shortages, or slow setup times. “If equipment is down because of people issues, you can address that,” he says. In other cases, Guidewheel can uncover machine-based problems. Blaha worked with a company whose machine was issuing nuisance fault codes. “We installed Guidewheel on the equipment and were able to identify a spike in amp draw that occurred immediately before the fault code and downtime was logged,” he says. The company determined that machine overload was causing the problem and identified several possible sources. Workers are addressing each of the possible causes separately to resolve the issue.

Enterprise Minnesota has two Guidewheel units available for continuous improvement projects.

Mary Lahr Schier

Founder Glen Kadelbach and daughter Kendra, a senior at Hutchinson High School who is also the company’s lead welder. “I just like watching metal fuse together,” Kendra says. “That sounds kind of dorky, but it’s the truth.”

INNOVATORS

Pyrotechnics to the Farm

An organic family farm manufactures ‘flame weeders’ for farmers.

farm family’s emerging business is already red-hot, in a sense.

The Kadelbachs — Glen, Stephanie, Kendra, and Conrad — make “flame weeders” at their 360-acre organic farm outside Hutchinson, where they raise sweet corn, black beans, hay, small grain, and food-grade soybeans. A replacement for the herbicides used on conventional farms, the Kadelbachs’ weeders are tractor attachments that remove meddlesome plants with jets of propanefueled fire. As the tractor trundles through a field, small spigots of flame, arranged in a downward-facing row, follow behind it.

“You have to be a little bit pyro to run one of these things,” says Glen Kadelbach, the family patriarch and owner of Kadelbach Flame Weeders.

The family’s weeders don’t simply torch unwanted weeds, though. Instead, they’re designed to flash-boil the moisture in a weed’s cells, which causes the cells to burst and prevents the weed from photosynthesizing. That, in turn, causes the weed to wilt and die — all the way down to its roots.

But how can a farmer run a series of small flamethrowers over a field without destroying the crop they actually want to

grow there?

In short: “We don’t hit what we don’t want to burn,” Kadelbach says.

The family generally tells their customers to make three passes over their crop with a flame weeder. The first: before the crop has grown out of the ground, when it’s safe from the weeder’s heat. The second: a “broadcast” burn over the entire field when the crop is three to four inches tall but is still growing from its seed. This pass can give a false impression that the farmer has destroyed his or her crop. Kadelbach tells customers to take five to seven days off

afterward and to avoid looking at the field.

“Because they’re going to hate themselves,” he says. “It looks like you killed it.”

And the third pass: when the crop is about 10 to 12 inches high. The Kadelbachs recommend angling the weeder’s torches to make a series of criss-cross patterns, an adjustment meant to avoid the plant’s leaves and stalk but still destroy the weeds underneath it.

Richard and Carol Kadelbach — Glen’s parents — purchased the farm in the late 1960s. The family ran it conventionally until 2008, the same year Richard died after a yearslong battle with cancer. Richard had been splashed with an herbicide sometime in the 1980s, and the family suspects that’s at least partly to blame for his diagnosis and death years later.

Glen says his father’s death, and a neighbor who was raising “phenomenal” crops organically, prompted him to switch to organic farming. The Minnesota Crop Improvement Association certified the Kadelbachs’ farm as an organic one in 2011, and Glen built the family’s first flame weeder after that.

Neighbors took notice, and he started selling flame weeders on Facebook Marketplace and Craigslist.

“I turned 50, and it was like either make something or stop thinking about it,” Glen says. He bought a 140-ton press brake, a CNC plasma table, CAD software, and so on, then got to work designing and building the company’s flame weeders. He estimates the company has sold 15 to 20 so far.

Even after a consumer has purchased them, many products are deliberately linked to their original manufacturers — think about repairing an iPhone outside the aegis of Apple, or refilling the ink in a printer with a generic cartridge. The same is true in agriculture, where increasingly common software is copyright protected, and where replacement parts can be proprietary and thus are sometimes hard to get ahold of quickly or easily.

The Kadelbachs’ flame weeders are designed to be repaired with parts from a local hardware store rather than a far-flung distributor.

“Something that is easy for a farmer to

fix,” Kadelbach says. “You don’t have to go looking for sprayer tips or parts, order them in and wait two, three days… If you’ve got a Hardware Hank or Ace Hardware, or a big box store, the parts are there for most stuff.”

Helping Glen are his wife Stephanie, who handles the company’s finances, and his daughter Kendra, Glen’s “right-hand man” and a senior at Hutchinson High School who found a knack for welding after her father showed her how to do it several years ago. Kendra is the company’s lead welder, and she’s considering learning more about welding, and perhaps agriculture, after she graduates high school. She’s already taken all the welding classes her high school offers.

“I just like watching metal fuse together,” Kendra says. “That sounds kind of dorky, but it’s the truth.”

Glen says he is building the business for Kendra and his son Conrad, who is studying mechatronics at Alexandria Technical & Community College. Kendra says she’s considered taking over the business at some point but isn’t sure yet.

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A Profitable Connection

Roseau-based Intercept has expanded to five plants in three countries.

n 1990, Phil and Roberta Johnson and their sons Jim and Tom set up shop in the machine shed on their Roseau farmstead and started mounting tires on rims for the nearby Polaris plant. They thought a threemonth summer operation would provide a good supplemental income for the family farm. Fast-forward to 2024 and that family business has plants in four other locations including two other countries, basically following wherever Polaris has opened plants.

That first summer was just what the Johnsons hoped it would be, but then Polaris announced they were going to year-

round production in 1991. The Johnsons incorporated as Intercept Industries, Ltd, and moved the tire-mounting operation to the old AMCO building a few miles west of Roseau. Another company affiliated with Polaris also operated out of the AMCO building, but by the spring of 1993, both operations needed more space. The Johnsons set up temporarily in a pole shed in Roseau while building a new plant west of town for offices and for the tire-assembly.

As Polaris grew, the tire-mounting business grew. Between 1994 and 2016, Polaris opened plants in Spirit Lake, Iowa; Hunts-

ville, Ala.; Monterey, Mexico; and Opole, Poland. All have Intercept shops nearby, dedicated to support Polaris recreational and off-road vehicle production.

When they started out, Phil, Roberta, Jim, Tom, sister Jenny, and brother-in-law Brian did full assembly and hired Penner Transport to deliver the mounted tires to Polaris. From 1992 until 2018, Intercept purchased the tires and wheels and sold the assemblies to Polaris, but today Polaris owns the tires and rims, and Intercept’s role is strictly assembly, tying the two companies’ workloads and schedules closely together.

Jim Johnson, president and owner; Nathan Voll, CFO

In 2007, Phil and Roberta sold the business to Jim and Tom. Today Intercept has 24 full-time employees, nine dedicated to tire and wheel assembly, and three drivers for delivery with Intercept-owned tractors. Fortunately, business for Polaris has been steady. During COVID, many stimulus checks went to purchase recreational vehicles. Polaris had huge back orders, and even as the number of new orders declined, the backlog continued through 2023. Today Roseau’s Intercept plant averages about 1,200 tire assemblies per day.

Finding and keeping good employees is key

Nathan Voll, Intercept’s chief financial officer, grew up in Roseau and had hoped to return to the area after college, which he did in 2012 when a position opened at Intercept. Voll says the friendly atmosphere of the family-owned and run business helps the company keep workers, and Intercept invests back into the company and its employees.

Fourteen of Intercept’s employees in administrative support or production have been with the company for more than 10 years — three of them over 20 years, and their operations manager, for 19 years.

The physical demands of tire mounting led Intercept to automated solutions that have eased the assembly process and opened up more options for people of different ages and physical abilities to do the assembly work. Today tires and rims move along an assembly line, are positioned, seated, identified as front or rear tires, and sent down separate lines. A camera inspects the mounted tires before they move on.

Mounted tires are inflated at an “air up” station by an employee who doesn’t have to lift or move the wheels. An automated dispenser moves pallets into loading position and a robot does the heavy lifting, picking up each assembly and placing it as prescribed for Polaris’ needs. Pallets of tires move down the conveyor line, and an automated stretch wrapper circles the pallet several times to secure the assemblies, ready to be fork-lifted and delivered.

The unique relationship and interdependence between Intercept and Polaris have worked for three and a half decades, but to fill in during less busy times, Intercept offers production machine shop services, plastic trimming, custom welding, fabrication, and warehouse services for Polaris and other customers. Sue Bruns

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“This short-term pain is really for long-term gain.”

–David Kline, LSC’s vice president of advancement and external relations

A Big Move

Lake Superior College (LSC) can attest that sometimes opportunity springs from a potential crisis.

The college was forced to scramble when it learned last year that it would lose the rented space in downtown Duluth it had long used to house its manufacturing programs.

It’s not that relocating LSC’s manufacturing programs seemed like a bad idea, says David Kline, LSC’s vice president of advancement and external relations, but the speed of that transition posed a challenge.

“We had been dreaming about having the

manufacturing programs leave downtown for years,” he says. But the quicker than anticipated turnaround meant “our dreams ended up becoming a minor emergency.”

Kline says the college had socked away about $4.5 million in anticipation of an eventual move, but it was nowhere near enough to underwrite the project. So, the school stepped back and threw what Kline refers to as “a Hail Mary pass.”

LSC successfully marshalled support from local lawmakers and the Minnesota State college system, eventually securing $8.3 million in state bonding funds.

LSC certainly won’t be lacking what it needs straight out of the gate.

The alternative seemed unthinkable to Kline.

“The Twin Ports community needs a lot of the workers we’re training, and if you have to go dark because of something like this, it would not go over very well. It would sort of look like we couldn’t find our way out of a paper bag,” he says.

The need for LSC graduates has become even more profound in a tight labor market and at a time when many skilled workers are reaching retirement. Suspending the programs, even temporarily, likely would have produced harmful ripple effects throughout the region.

“We wanted to do what’s right not only for our students but for the community as a whole,” Kline says.

While LSC ultimately received the financial support needed to sustain operations, its path forward has been far from smooth.

Originally, the school had hoped to open its new shop by the time students returned for fall classes in 2024, but that timeline has slipped, with completion now expected in January 2025.

The project involves an 8,310-squarefoot expansion and renovation of LSC’s T Building at its main campus, atop Trinity Road.

The same building also is home to LSC’s automotive, carpentry, electrical, and computer science/cybersecurity studies. When complete, the footprint of LSC’s main campus will have grown by about 10%.

LSC has reshuffled its curriculum a bit in the interim.

Many students entering LSC’s CNC machine and welding programs began their coursework in 2024 with classes that don’t necessarily require hands-on machine experience, such as blueprinting, safety, and communication studies.

CAD studies have transferred pretty seamlessly into classroom space already available on campus, Kline says.

Meanwhile, LSC was able to arrange student access to equipment on the manufacturing floors of local partners. Moline Machinery and IPS Cranes are two companies that have stepped up to help.

“Both are providing great experiences for our students,” according to LSC instructor Nate Zobel, who says he has been able to work in concert with on-site supervisors to ensure their on-the-job tasks reinforce concepts students continue to learn through their classroom studies.

Kline says LSC values and relies on the private sector to tell the school how well it is preparing students for the workforce and to sometimes recommend curriculum changes.

Kline says the school benefited from long-standing relationships with industry advisory committee partners, and notes:

“They’re paying off now, in our time of need.”

Kline says LSC’s student enrollment has held fairly steady as excitement about moving into a new space builds, but he admits some, not many, students have transferred.

“This short-term pain is really for longterm gain,” he says.

Kline predicts the new shop space will help attract more students, drawing them into manufacturing fields. He also suspects it will help the school recruit and retain faculty.

Even after the expansion is completed, Kline says LSC’s work will not stop.

Machine shops are expensive, he notes. “You’re dealing with hundreds of thousands of dollars of equipment. So, getting the building done is certainly our Phase I focus. But Phase II is to get the best equipment in there.”

LSC successfully marshalled support from local lawmakers and the Minnesota State college system, eventually securing $8.3 million in state bonding funds.

LSC has what Kline refers to as “a wish list” it’s hoping to fund with help from matching grants, which could leverage support from its local industry partners “to get the kind of equipment that they want to see us training students on.”

Despite the college administration’s desire for additional new equipment, LSC certainly won’t be lacking what it needs straight out of the gate. Kline says gear and machinery from the old downtown campus have been placed in temporary storage and remain ready for moving day.

Relocating some of the heavy equipment, weighing several tons, proved a logistical challenge, both in terms of extricating it from the downtown site and then hauling it up Duluth’s steep hillside to the main college campus.

However, Kline says, LSC’s capable staff demonstrated they were more than equal to the task.

Peter Passi

ISO

Milestones Achieved

Two Minnesota manufacturers achieve ISO certification.

MTG and Lethiguel USA recently received ISO certifications.

The timing was right, Marcus Amble says, to get ISO certified. Last year, he and his wife Trista bought Minnesota Tool Group, Inc., a precision grinding company that specializes in cylindrical OD/ID and surface grinding. Amble’s father, Marc, had started the company in 1998.

After rebranding to the company’s abbreviated name — MTG, Inc., developing a new logo, and expanding their web presence, they decided to pursue ISO certification.

“We’re always looking for more customers and expansion,” Amble says, and ISO certification would open up the company to work with more and larger clients.

MTG’s standards were already high — all of its machinists also qualified as quality inspectors. The company was basically ISO compliant but not certified.

“Our key markets include high-end medical and aerospace mission-critical components where quality and precision are non-negotiable,” Amble says. When working with expensive components that will

become surgical tools, airplane parts, and elements for the U.S. Department of Defense, the quality has to be there. The company had been “grandfathered in” by its clients, but to expand, ISO certification was essential.

MTG’s team of eight worked through the ISO process with Enterprise Minnesota business growth consultants Keith Gadacz and Amy Thimmesh. Amble was pleasantly surprised by how closely MTG’s management system adhered to ISO standards.

Within about two weeks of MTG’s ISO audit in May, Amble says, “we were contacted by an aerospace OEM and asked about our ISO certification. We wouldn’t even have received that phone call without it. It reaffirmed that we’d made the right decision.”

Lethiguel USA

Lethiguel USA in Rogers, Minn., produces components for the tool and die industry, specifically for high pressure die casting.

General Manager Mark Steen started with the company in 2018, when it was Midland Technologies. In 2021, Lethiguel, a European company based in Lyon, France,

acquired the company. Midland already had an established product line, staff, and facilities for manufacturing here, and Lethiguel wanted to get into the U.S. market.

Steen had been considering ISO certification as a good step to expand the company’s customer base. When a particular customer in North America required them to be ISO certified, that was the nudge to start the process.

“I think ISO adds a level of discipline to the whole manufacturing process,” Steen says. He sees it as an accountability feature.

The company already had good routing of the manufacturing process and good documentation, but, says Steen, “we didn’t really have certain management tools in place formally. We solidified our KPIs, submitted the SWOT analysis, and tracked the different critical aspects of the business so we could show what we’re doing.”

Through a “very good and thorough audit,” he says, “there was only one minor infraction, and with Keith’s help we got it taken care of, submitted the paperwork, and everything fell into place.”

Sue Bruns

Left to right: Bob Kill, president and CEO, Enterprise Minnesota; Mark Steen, general manager, Lethiguel USA; Keith Gadacz, business growth consultant, Enterprise Minnesota; and Joel Scalzo, business development consultant, Enterprise Minnesota

S New Members

t. Cloud Technical & Community College President Lori Kloos and Widseth Director of Business Development

Joe Breiter are the newest members of Enterprise Minnesota’s board of directors.

The eight-member board oversees and provides strategic guidance to Enterprise Minnesota’s mission of helping manufacturers grow profitably. Both Kloos and Breiter bring a wealth of leadership and management experience and are already valuable additions to the board.

Kloos has been in St. Cloud Technical & Community College’s administration for 26 years, serving as interim president and

eventually president. She’s been heavily involved in the college’s effort to work with the U.S. Economic Development Administration to grow the college’s Advanced Manufacturing Center.

Kloos says she believes her unique position as an educator of future workers will be an asset to the board.

“Joining the board felt like a natural fit with what we do here,” she says, “and a perfect place to serve and to learn.”

Breiter, a marketing professional with more than three decades of experience, has worked with Enterprise Minnesota for the past 10 years.

Joe Breiter, director of business development, Widseth

“Marketing and business development are important to the organization,” Breiter says. “I have a tremendous amount of respect for Enterprise Minnesota.”

Lori Kloos, president, St. Cloud Technical & Community College

TECHNOLOGY

Maximizing Returns

Manufacturers optimize automation with VESSA.

nterprise Minnesota President and CEO Bob Kill is an enthusiastic cheerleader for automation, but he has concerns about how some manufacturers have approached decisions about new technologies.

“We started to see our clients rushing toward automation during COVID because they either couldn’t have as many people on site as they wanted, or they couldn’t find people to work for them,” Kill says. “Sometimes I think it’s reverse decision making. We decide to invest in something, and then we rationalize what it’s going to do for us

and why it’s going to be valuable.”

The urgency to reduce the burden on employees or to fill gaps left by a tight labor market led some manufacturers to purchase and install promising technology that didn’t always boost the company’s value or solve the problem at hand, and often left wasteful practices in place.

To prevent that type of cart-beforethe-horse decision making, Enterprise Minnesota consultants began developing an employee-driven, step-by-step methodology to maximize the impact of automation.

The result is VESSA, Enterprise Minnesota’s proprietary approach that involves five steps: assessing the source of value in the company; eliminating waste; standardizing; simplifying; and finally, automating It’s aimed at laying a foundation for automation that helps manufacturers maximize the value of any new technology adopted.

“VESSA leads to more strategic and thoughtful use of automation,” Kill says. “Skipping the VESSA process can lead to automating inefficiencies and deficiencies inherent in the manufacturing flow.”

Employees at the center

While every step in the VESSA approach is important, involving manufacturing employees from the very beginning is the key to success, Kill says.

“You need employees involved at every step. When the people closest to the issue are driving the changes, you’ll have the best outcomes,” Kill says, adding that it boosts morale as well. “Engagement and satisfaction reach a whole new level when you trust and rely on your employees to make these changes.”

Ally Johnston, a business growth consultant at Enterprise Minnesota who helps companies evaluate automation options, adds, “You want the whole organization to understand the value stream and the strategic initiatives, because then we’re all pushing in the same direction.”

Johnston specifically encourages manufacturers to engage employees to identify waste and suggest opportunities for improvement. “They’re the ones spending minutes searching for a tool, continuing to get poor quality from a supplier, not having a maintenance plan so a machine is constantly down,” she says. “We need those subject matter experts to be suggesting improvements.”

Start with value

John Connelly, vice president of consulting at Enterprise Minnesota, says that embracing VESSA allows manufacturers to link value and continuous improvement with opportunities for automation. Identifying value — the “V” in VESSA — is a key first step, he says.

“Think about the services you perform or the products you produce most often,” he continues. “Pick one and then start applying continuous improvement — eliminate, simplify, and standardize. With the process tightened up like that, you are in a great position when you get to automating.”

Kill says the way the VESSA steps are woven together forces manufacturers at each step to think about the next letter, ensuring nothing falls through the cracks. Starting with identifying value makes sense, he says, because it typically leads to finding waste — those items or actions in the process that are wasteful or not adding value.

After eliminating waste, companies should consider ways to simplify processes. Eric Blaha, an Enterprise Minnesota business growth consultant, says simplifying really means error-proofing.

Blaha suggests a thorough review — again, driven by those employees closest to the process. It should include eliminating unnecessary steps, replacing tools or processes with more efficient approaches, preventing errors before they occur, facilitating improved processes with better guidance, detecting errors before they disrupt production, and mitigating the effects of challenges that cannot be prevented.

Next up is standardization, Johnston says. She points out that quality production is often kept on track through human intervention — extra steps that aren’t part of the process and can lead to inconsistency.

“When I hear words like Band-Aids, workarounds, adjustments, or tweaks, that says they’re doing these things that aren’t

“Sometimes I think it’s reverse decision making. We decide to invest in something, and then we rationalize what it’s going to do for us and why it’s going to be valuable.”

–Bob Kill, president and CEO, Enterprise Minnesota

standard. They don’t flow and there’s a lot of variation. They have to intervene to make that good part,” Johnston says.

Before implementing automation, manufacturers need to eliminate those extra steps. With standardization, every process is repeatable, no matter which employee is completing the task.

Expand the definition of automation

With value determined and continuous improvement efforts in place, companies can evaluate where automation will yield the best returns. As automation became a buzzword in recent years, Kill says, some manufacturers only thought of robots or other fancy equipment. “Automation is so broad — it’s ERP systems, it’s putting tablets on the shop floor versus paper tracking, it’s digitizing records so they can be analyzed more easily,” he says.

Enterprise Minnesota defines automation as any change that reduces or eliminates human interaction. With that definition in

mind, the VESSA philosophy supports a broad range of efforts, and the result is a thoughtful, strategic, systematic approach to making major investments.

The steps of VESSA could be useful on their own, even if an automation decision isn’t under review. But once a company begins considering automation, the cost — in equipment, training, and time — makes VESSA even more important. “If you don’t do it right, it becomes a much more costly error if you’re adding automation,” Kill says.

On the other hand, he says, “you may arrive at the end of VESSA and realize you don’t need to buy this technology, but you do need to do this other thing. That’s the value of the approach.”

VESSA in action

Kill describes a manufacturing operation that recently installed a new technology to solve a thorny production challenge. The process had required heavy lifting and complicated assembly that involved exact placement and many pieces, making it difficult to complete manually. “It had become a bottleneck in the overall process, was very loud and borderline dangerous, and a job that very few people wanted to do. Naturally, there was a lot of turnover in that position,” he says.

“They stepped back and thought about how that task fit into the process. They looked at the whole cycle, from beginning to end, and decided they could automate that aspect of it,” Kill says.

“It wasn’t about automating super-fast processing. It was about eliminating a difficult job that no one wanted to do, and the result is that now it’s no longer an issue. It’s no longer creating turnover. It’s no longer a situation that would be considered unsafe, and the process disruption is under control,” he says.

Kill points to ERP systems as another opportunity for VESSA to maximize outcomes. “A common thing you’ll hear from many manufacturers is, ‘We hate our ERP system,’” he says.

“Part of the reason is because they’ve skipped steps. They didn’t look at how their ERP system could increase value, and they didn’t go through the steps of eliminating waste, simplifying, and standardizing,” he says. “I bet if companies went through VESSA many would find they just aren’t using their current ERP system to its maximum potential.”

Kate Peterson

Four Questions INNOVATIONS

Scott Stallman,

president Dunwoody

College of Technology

What originally attracted you to Dunwoody?

I’ve spent over 20 years in higher education at a variety of schools, both public and private, with the majority of my career at two-year public community and technical colleges in Illinois, Texas, and now Minnesota. As I grew in the field, I started to look at some of the big issues in higher education and how we can address the larger systemic problems: debt, access, the

opportunity gap, and the shortage of skilled trades in the labor marketplace. All of those things are passions of mine and areas I try to effect change in. When I was looking for my next opportunity, I researched which colleges were doing these things well, and I came across Dunwoody. It’s this interesting non-profit college, and honestly, I wondered how it even existed. It’s providing similar degrees and programs as other public techni-

cal colleges, but in ways that are much more student-centric. I looked at the strategic plan and I realized, that’s it We are hyperfocused on mission, and our mission is to prepare students for high-pay, high-demand jobs.

How does that mission-focused approach translate into how Dunwoody operates?

It means when a program isn’t working for students anymore, if students are no longer getting good, high-paying jobs when they graduate, we sunset that program. We are comfortable parting ways with it so we can put our resources into other programs that are seeing that return on investment. That means we feel good about all of the programs we offer, even at our price point,

We take a very hands-on approach from the first semester; and we’re lab heavy.

knowing that students are going to get great jobs in great fields. And we’re always willing to make changes. Our program advisory committees, which are stacked with representatives from industry, meet with our faculty twice a year to discuss what’s new and what’s needed in each of the fields where we have programs.

We also take pride knowing that students are prepared and ready to make an impact in their field from their first day on the job. We take a very hands-on approach from the first semester; and we’re lab heavy. Our students tend to start working really quickly, especially in manufacturing. Often, they’re working in the field by the end of their first year, getting tuition help from employers.

Scott Stallman became president of Dunwoody College of Technology in Minneapolis in July 2024 after serving as provost since 2021. A private not-for-profit institution focused on technical and skilled trade education, Dunwoody is unique in a field where nearly all similar colleges are public institutions.

Your enrollment has increased during a time many private colleges have lost students. What’s behind that growth?

As the price of higher education has gone up, more people are rightly asking about the return on investment. If you don’t choose a program that is going to have that return on investment, it can be a decision that affects the rest of your life. I think it used to be that people were looking more at an institution, but now I think folks are considering not only the institution, but also the program — and the career that follows.

This leaves Dunwoody in a really favorable position, because we only offer programs in high-pay, highdemand fields. It’s one of the reasons I came to Dunwoody, and it’s why we’ve gone from about 1,240 students when I started three and a half years ago to well over 1,500 this fall.

We also have a 95% job placement rate in their field of study. Employers want to hire our students. We had

almost 200 employers come to our spring career fair last year, and we only had 500 students graduating. And, those employers pay a fee to be here. It’s astonishing.

What

gets you excited about manufacturing education and the future manufacturing workforce?

I’m excited to work with manufacturers to help change the way these fields are viewed by students and parents — and counselors in high schools. Often students will go into a counselor’s office with a lot of ideas about their future. They don’t want to work behind a desk. They want to be on their feet solving problems every day. They want to work in a fast-paced environment. They want a high-paying job but don’t want to go to school for four years. That counselor often will direct students to the health sciences — nursing or respiratory therapy or radiology. Those fields are in high demand, and we do offer a Radiologic Technology program that has a wait-

ing list, but there are great careers in advanced manufacturing and skilled trades that are left out of the conversation way too often.

It’s an image problem. When people picture a manufacturing facility, they are not always picturing modern manufacturing in America. The facilities I’ve toured are high-tech, clean, wellrun, and safe. They are unbelievable working environments where there’s endless opportunity for advancement.

We have so many examples of Dunwoody graduates who came out of a machining program, or any of our advanced manufacturing programs, and they started working for a company and then started their own businesses. They’ve become entrepreneurs and have gone on to amazing careers. It’s limitless.

Students at a younger age need to find out these fields offer tremendous opportunities for them. I don’t think that story gets told enough, and I’m excited to be an outspoken advocate for manufacturing.

Dread

Manufacturers express unprecedented anxiety about the economy amid the burden of new legislative mandates.

Formerly a bullish group, manufacturers are feeling downright pessimistic about prospects for their industry and the health of Minnesota’s business climate. Their fears about inflation, recession, and the economy have merged and metastasized into record low levels of confidence in their ability to succeed in the state.

An alarming trend line in the past four years has been a growing percentage of manufacturers who believe that the Minnesota business climate is worse than before.

In this year’s State of Manufacturing® (SOM) survey, a record-high 56% of respondents note that it’s worse, up from 50% last year and 15% five years ago. This year,

By Suzy Frisch

30% believe the business climate has held steady and 12% think it’s better — a decline from 2021 when 20% thought it was better.

“The last time we saw numbers like this the economy was falling off a cliff. This is the highest percentage of people who feel that the business climate of Minnesota is worse since the Great Recession in 2008,” says Bob Kill, president and CEO of Enterprise Minnesota. “When manufacturers see revenue down and profitability down, then capital expenditures trend down. That means they don’t have confidence, so they won’t invest long term. They will invest less in technology and invest less in people.”

Now in its 16th year, the SOM survey has steadily gauged the health of Minnesota’s manufacturing industry. The tenor of manufacturers’ mood this year is one of worry paired with concerns about the economy and their own business prospects.

Pollster Rob Autry, whose research company Meeting Street Insights has conducted the survey since its start in 2008, noticed a stark shift in manufacturers’ outlook this year.

“The big things that stand out to me are growing anxiety and worry about the economy, inflation, and the financial pressure that many of these manufacturers are now feeling. I think that’s noticeably different than what we saw a year ago,” says Autry.

Every year the pollster surveys more than 400 manufacturing executives statewide, in addition to an oversampling of 50 executives in each of the six McKnight Initiative Foundation regions. Respondents represent a broad mix of manufacturers by region, employee count, and annual revenue. The SOM survey uncovers the latest trends in key business areas including growth, workforce, supply chain, economic confidence, and more.

A random sample of Minnesota manufacturing executives participate in the telephone survey, including owners, CEOs, CFOs, COOs, presidents, vice presidents, and managing officers. The survey has a margin of error of ±4.9%. In addition, Enterprise Minnesota pairs its polling data with focus groups held in the fall to gain deeper understanding from manufacturing leaders. Combined, these efforts provide a macro view and rich insight into the state’s economic engine.

“The last time we saw numbers like this the economy was falling off a cliff.”

–Bob Kill, president and CEO, Enterprise Minnesota

Waning confidence

The 2024 SOM survey found that manufacturers’ confidence in their own companies landed at 80% — a number that typically sat in the high 80s and low 90s in past surveys. Confidence held steady even during the depths of the COVID-19 pandemic. The only time this metric was worse occurred during the Great Recession period of 2008-2010, when it hovered around 78-79%.

Kill believes that the crashing confidence stems from legislative changes enacted in 2023, which started rolling out this year and will continue into January 2026. Minnesota manufacturers big and small are starting to feel the financial hit

from newly required programs like earned sick and safe time and paid family and medical leave.

“The takeaway message for me from the survey is that the people our legislature thought they were helping are hurting the most,” Kill says. “The inflation of wages and inflation of benefits are things they have to live with. Manufacturers are usually optimistic, despite the challenges, when they can deal with the problem. But when they are forced to pay for these new mandates, the reality of remaining employers of great jobs starts to wane because it’s more difficult for many small manufacturing companies to remain in business.”

To make matters worse, a strong

Minnesota Initiative Foundations

The State of Manufacturing survey did an oversample of 50 interviews with manufacturers in each of the six Minnesota Initiative Foundation regions.

• Northwest Minnesota Foundation

• West Central Initiative

• Northland Foundation

• Initiative Foundation

• Southern Minnesota Initiative Foundation

• Southwest Initiative Foundation

fear of recession has intensified among Minnesota manufacturers. When asked whether they believe 2024 will be a year of economic expansion, a flat economy, or a recession, 41% believe there will be a recession — an eight-point increase from last year. Autry notes that in his tenure conducting the SOM survey, fears of recession topped 40% only two other times: during the Great Recession in 2008 and in 2022, when the economy was struggling to recover from the pandemic and inflation

was spiking.

Another contingent of manufacturers aren’t particularly optimistic either, with 42% expecting the economy to stay flat. Only 12% envision an expanding economy, a drop of four points from last year. “I think manufacturers really do feel that the economy is in a bad place,” Autry says. “On top of the real fear that we’re heading into a recession, there is the expansion number. The percentage of manufacturers who believe it will be a year of economic expansion has never been lower than the first survey we did in December 2008, when it was 8%.”

Small manufacturers are feeling especially shaken by their prospects, showing an erosion in confidence from last year. This year, those with less than $1 million in revenues had decreasing confidence in their companies’ future, dropping to 71% from 75% last year. This segment makes up nearly two-thirds of the state’s manufacturing sector, Kill says. In addition, manufacturers with less than 50 employees also had falling confidence, decreasing to 78% this year compared to 84% in 2023. Comparatively, larger companies stayed relatively confident — 94% in 2024 and 95% last year.

Low confidence in action

staring down decreases in revenues and profitability, it’s not surprising to Kill that only 29% intend to increase their capital expenditures. “Manufacturers have less confidence overall in the state of Min-

The sour outlook about the state’s economy and business climate is having a real impact on how manufacturers operate their companies.

The sour outlook about the state’s economy and business climate is having a real impact on how manufacturers operate their companies. When asked about projections for 2024, just 24% expect an increase in revenue, while 21% expect an increase in profitability. Both metrics are down five points from 2023.

Autry points to another concerning survey result. The number of manufacturers bracing for decreases in gross revenues and profitability is significantly bigger this year compared to 2023. In 2024, 41% expect a decrease in profitability, up from 26% who predicted a decline last year. Similarly, 40% now foresee a drop in gross revenue, compared to 25% who anticipated a decline in 2023.

With this sharp increase in companies

nesota as a friendly place for business,” he adds.

“In the second quarter, Minnesota GDP growth was 1.8% and the average nationally was over 3%. The only lower states were Alaska and North Dakota,” Kill says. “That lack of confidence means that they will invest less in technology and invest less in people, which means that companies will not be growing.”

Barriers to success

When thinking about their biggest impediments to growth, inflation (33%), rising costs of materials (30%), and attracting and retaining a qualified workforce (27%) topped manufacturers’ list. The most dramatic change comes in a different

category: respondents cite an unfavorable business climate as their biggest obstacle to growth. This concern increased to 21% from 14% in 2023.

A perennial challenge for manufacturers — attracting and retaining a qualified workforce — eased up this year, dropping to 27% compared to 39% in 2023. However, that change shouldn’t be taken as good news. “If manufacturers are not growing or confident, they’re not hiring,” Kill says. “The cost of salaries are up, inflation is up, health care is up. That puts wind in their face, and they are not going to grow and add workers.”

In fact, opportunities for job seekers in manufacturing have declined. This year, 58% of manufacturers report having no open positions, a decrease from 55% in 2023. Just 42% of manufacturers are hiring, the lowest number recorded in survey history, Autry adds.

“Manufacturers are usually optimistic, despite the challenges, when they can deal with the problem. But when they are forced to pay for these new mandates, the reality of remaining employers of great jobs starts to wane because it’s more difficult for many small manufacturing companies to remain in business.”

Fig.

1 Manufacturer confidence dips to its lowest level since the Great Recession (2008 and 2010).

Fig. 1 Manufacturer confidence dips to its lowest level since the Great Recession (2008 and 2010).

Fig. 1 Manufacturer confidence dips to its lowest level since the Great Recession (2008 and 2010).

“From a financial perspective, how do you feel right now about the future for your company?”

“From

“From a financial perspective, how do you feel right now about the future for your company?”

Confident Not Confident

Fig.

2

Recessionary

fears

are on the rise –up eight points from a year ago.

Fig. 2 Recessionary fears are on the rise – up eight points from a year ago.

–Bob Kill, president and CEO, Enterprise Minnesota

Small companies with fewer than 50 employees have seen a big drop in hiring. This year, 32% are hiring, a decrease of 23 points since 2021 when 55% of manufacturers were onboarding new hires. And despite having fewer positions to fill, manufacturers still find it challenging to find qualified candidates. Overall, 79% find it very difficult or somewhat difficult to attract qualified candidates.

Fig. 2 Recessionary fears are on the rise – up eight points from a year ago.

“And, even though we only have a few months left in

“Do you think these legislative developments have made Minnesota more attractive or less attractive for businesses, or does it have no real effect one way or the other?”

“And, even though we only have a few months left in 2024, as you think about this year, 2024, as a whole, do you think this year will be one of economic expansion, a flat economy, or a recession?”

Fig. 3 Confidence has eroded even more among smaller manufacturers.

Fig. 3 Confidence has eroded even more among smaller manufacturers.

Confident in

Heartburn issues

Fig. 4 Projections for increases in gross

and

are down.

Fig. 6 Fewer manufacturers are hiring. Those who are hiring, aren’t hiring many.

“Does your

“And

Inflation and rising health care costs have put immense pressure on manufacturers. When asked about their biggest concerns, overall inflation came in first at 53%, up from 38% last year. The increasing cost of health care ranked second, jumping eight points from 2023 to land at 51%. Attracting and retaining a qualified workforce was third at 41%, a one-year decline from 44% last year.

Survey data certainly demonstrates

“Manufacturers have less confidence overall in the state of Minnesota as a friendly place for business,” Kill says.

the impact of inflation on manufacturers, Autry says, and SOM focus groups especially underscored those headaches. “We heard that inflation is part of their larger concerns about the economy, but they are also concerned about expenses. That’s not just impacting them, it’s impacting their customers,” he adds. “Their customers feel like they can’t invest money in parts or the products manufacturers are manufacturing, and that impacts revenue and profitability.”

Also weighing on manufacturers’ minds are recent legislative changes that started hitting their bottom lines this year, including earned sick and safe time policies. In January 2026, Minnesota’s new paid family and medical leave law will go into effect. Manufacturers are anticipating negative financial impacts from these new programs, with 68% expecting a major or minor effect from the payroll tax required to fund the paid family and

medical leave program.

In addition, 67% anticipate major or minor effects from the earned sick and safe time requirements. Another big sticking point: 65% see major or minor impacts on small businesses needing to contribute to employees’ paid leave at the same rate as larger corporations. Overall, these legislative changes make Minnesota a less attractive place to do business, according to 65% of respondents. Of that group, 45% believe it is much less attractive.

Regional differences

Views about top concerns varied sharply across the state, illustrated by the McKnight Initiative Foundation regions. Though five of the six regions shared the top concerns of inflation and rising health care costs, worries about overall inflation were amplified in Greater Minnesota. Northwest Minnesota saw the highest number at 80%, followed by 67% in Central Minnesota. In Northeast Minnesota, inflation was the third biggest concern at 44%.

The Northeast’s chief concern is the cost of health care at 47%, while worries about these costs were even greater in other regions. In Central Minnesota, health care concerns ranked second at 62% and 58% in Southwest Minnesota. Twin Cities manufacturers cite inflation as their biggest concern at 60%, while costs of health care landed second at 56%.

Regardless of region, there are storm clouds over manufacturers and a pervasive sentiment that Minnesota is headed in the wrong direction. “Manufacturers have real concerns about the broader economy and the business climate in the state,” Autry says. “They are more pessimistic about how their own company is performing, and they have real concerns about the actions taken by the legislature and governor last year and the impacts on their business. There is a lot more anxiety bubbling up and a lot more negativity than we’ve seen in the past.”

EDITOR’S NOTE: Full results of the State of Manufacturing® survey can be viewed at www.enterpriseminnesota.org. They include the survey’s top-line results and edited transcripts of all focus groups.

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Cathy Mehelich

Economic Development Director

cathy.mehelich@ci.stcloud.mn.us (320) 650-3111

www.ci.stcloud.mn.us

BACKDROP

Light in the Gloom

Doug Woods tells manufacturers they will flourish by capitalizing on technology, new markets, and thriving industries.

A

t Enterprise Minnesota’s State of Manufacturing® event in November, Doug Woods tells manufacturers they will flourish by capitalizing on technology, new markets, and thriving industries.

As an industry expert, Woods believes there couldn’t be a better time to be in

manufacturing. He was born into the industry and has spent more than four decades in leadership capacities at different companies. Woods’ long view is that manufacturers have golden opportunities to thrive — even if they are facing some current obstacles.

From recent government investments

in infrastructure to the promise of automation, manufacturers have rich opportunities for growth. And they have ever-evolving tools to help them do their work faster, better, and leaner, Woods says. These boons to business will help Minnesota manufacturers power through challenges like the rising costs of health care and benefits, coupled with inflation.

“It’s almost ‘kid in a candy shop’ time,” says Woods, president of the Association for Manufacturing Technology (AMT) in Virginia.

“Two million jobs have been reshored in the last 11 years. And we’re one of the biggest locations for foreign direct investment in new manufacturing facilities,” Woods says. Thanks to the 2020s enactment of the Inflation Reduction Act, Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, “there are trillions being spent. There’s an acceleration of work for the U.S. Department of Defense with what we’re giving to our allies. Then there’s the fact that we’re the biggest consumption market, and consumer spending is at fairly elevated levels. All of that has to be manufactured.”

Add in a stunning array of technology advancements. To Woods, the promise of manufacturing is readily apparent when AMT hosts the International Manufacturing Technology Show (IMTS), its biannual event in Chicago. He gets astounded by the vast array of technology that will help companies improve operations and break into emerging fields.

“There is a lot of great new technology driving manufacturing to places where it couldn’t have gone a decade or two ago,” Woods says. “Think about what you can do with generative artificial intelligence, advances in additive manufacturing, augmented reality or virtual reality, cognitive automation, advances in robotics, and advances in materials.”

Macro perspective

Woods’ view of manufacturing began with childhood weekend visits to his grandfather’s tool and die company in New York. He followed in his grandfather’s footsteps, inspired by his passion for manufacturing and innovation. During 27 years in the industry, Woods rose from apprentice to CEO while specializing in automation technology and equipment.

He took the helm of AMT in 2009

intending to stay five years, but he inherited his grandfather’s thirst for pairing innovation with manufacturing excellence. Today, he is motivated to continue making a positive impact on the country’s manufacturing industry. That aligns with AMT’s mission to help manufacturing technology companies navigate global markets and provide them with industry and market intelligence. AMT also assists manufacturers with assessing new technologies and developing insights through surveys, research, and other data.

Woods’ tenure in manufacturing gives him a cool head about its challenges, providing him with the perspective that the industry does experience cyclical

“There is a lot of great new technology driving manufacturing to places where it couldn’t have gone a decade or two ago,” Woods says.

down times. However, manufacturers can propel themselves forward by focusing on enhancing their operations with technology or making capital investments that improve operations and productivity. A recent proof point: An AMT survey found that companies making the most capital investments perform the highest in profit margin, revenue, and growth.

Though Minnesota manufacturers currently feel pessimistic, Woods wants them to know that industry analysts and experts see sunny skies ahead. At AMT’s annual MTForecast Conference in October, its guest economists, market segment analysts, Federal Reserve representatives, and leaders from end markets like aerospace, automotive, and energy collectively reported being very positive about market opportunities for manufacturers, he says.

The outlier is Minnesota manufacturers, who are anxious about how recent legislative requirements for earned sick and safe time plus paid family and medical leave will affect them. “What I’m seeing in Minnesota is what I would consider a self-inflicted wound, which is different from other places in the United States,” Woods adds.

Get proactive

To grapple with challenges, manufacturers have levers to pull to keep their businesses prospering. One critical step that Woods recommends is investing in technology, focusing especially on ways to improve operations. It’s critical to be smart about what technologies to adopt, he says. It’s not one-size-fits-all, and it doesn’t have to be bleeding edge.

There is a wealth of options to consider, from new machine interfaces and optics to high-speed machining. Manufacturers also have big opportunities with robotics, which can ramp up production or pitch in when staffing is short. To find the right technology, manufacturers should identify their top five problems and then seek out options to solve them.

“There are a lot of things at cost points that are very affordable, where they can bring technology into their facility to increase production and help with uptime,” Woods says. “We counsel our members to be very focused and not go after the shiny object. Look for something that will have a useful impact on their business.”

Lately, another way to thrive involves becoming a supplier to the U.S. Departments of Defense and/or Energy. Both are trying to make it easier to work with them. Plus, ramped up spending on military materiel and new investments in clean energy are providing hearty opportunities for manufacturers.

A final avenue for growth involves branching out into new global markets. There are organizations like AMT aligned with different segments of the industry, such as the National Tooling & Machining Association or the Precision Machined Products Association. They offer intelligence and guidance to manufacturers on growing global business.

With these approaches, Woods is confident manufacturers will persevere through the tough times as they consistently do. “There is always something new and creative you can try, whether it’s finding new ways to create your products, bringing in automation, using software or hardware, or finding new end markets,” Woods says. “If you are interested in building technology to solve problems, there are endless problems to solve. This is probably one of the best times in the world to be in manufacturing.”

Suzy Frisch

FOCUS GROUP

Coping With Change

Manufacturers describe how they maneuver around unpredictable markets and predictably intrusive regulations.

Editor’s note: This is an edited transcript of a focus group of manufacturing executives conducted at St. Cloud Technical & Community College as part of the 2024 State of Manufacturing® survey research project. It was one of eight focus groups. Transcripts of all focus groups can be found at www.enterpriseminnesota.org.

When you look at 2025, are you predicting a good economy? Expansion? Recession?

• The challenge is, because most of us service other customers and don’t build our own product, understanding how the variety of industries we serve could be impacted. We can only see what our customer tells us. You worry about whether or not it’s going to be a growth year. We were finishing a big expansion and a recession hit. Rates went up, buying equipment got more expensive. Now we’re coming out of that hopefully, at least that’s what they tell us, so we look to 2025 as a recovery year.

• We are in a little bit of a different scenario. Starting in early 2021, our sales boomed, and we have been trying to work off a large backlog for a couple of years. For the first time, certain parts of our business are seeing orders slow down. We still have backlog to keep going, but it looks like 2025 is going to be slower.

• This year we slowed down so much we still had to buy all our product. Next year, we won’t buy anything for six to nine months.

• I think it depends on what markets you’re touching. It seems like some of our customers with five-year plans are already set, and they are so capital intensive that even if the market turns to crap, they’re going to continue to their best ability. They already have billions of dollars started. We’re just a small piece of that, unfortunately. But that business is a longer strategic investment, so those tend to continue even if the market doesn’t do well. So, we have a really hard time predicting. You have to play defensive, but you also have to prepare for those booms so that you can take care of your customers. If you can’t, they are going to find somebody else who can.

• I agree. We’re forecasting a 10% reduction in sales, and Monday we move into our new construction. The timing is not good, but in the future, we’re going to need that space.

• We see a lot of indicators that staffing is a big issue still, yet it’s softening. We have also heard interest rates in some industries impacted capital expenditures, and others not so much because of either size or product offerings. I would say it is a wait and see, but I’m generally optimistic that once the election is done

things will start picking up again.

• Most of my conversations right now don’t have workforce issues as a top priority or the biggest issue anymore, which is nice compared to a year ago. It was pretty slow this summer with capital purchases, expansions, things like that.

What is your biggest challenge now as a manufacturer and in the coming year?

• The ability to be agile. If that boom comes, how do you cover it? If it doesn’t, how do you resize and restructure to survive the next level of whatever it might be? Hopefully not a recession, but we don’t know. We don’t know what the future holds.

• Kind of the same thing for us. We can’t scale up fast enough for what we have seen the last couple of years in terms of expansion. In some of our markets, we are hearing from our customers that we should be expecting continued growth. In other areas, not so much. So, how do you plan for that, both from a people standpoint, even though it’s easier to find people today than it was two years ago, and on the equipment side — lead times for new equipment and expansion are still very long. It’s tough to make decisions today on things that will have an impact a year or so from now.

• One thing we are struggling with right now is reduction in business. How long is this going to last, and how much cash do you want to burn keeping your employees? When it gets busy, they are going to be hard to find again.

Let’s talk more about that topic — talent and leadership development. Are there still challenges with finding people compared to, say, a year ago or not so much?

• I would say it’s still challenging. I mean, you can find one or two good candidates, maybe you get five applications instead of two applications like you did last year. But it’s not like you can just put a sign out and get 20 employees in a week who are all ready to hit the ground running.

• I think the quality of the applicants is not there. We need the right people who fit our core values, can do the job, and you can depend on, and we are just not seeing that very often. When we find somebody like that, we hold on to them really tight.

• We have been looking at technology. If you can’t find good individuals or people who have the skillset you need, you bring in technology. We spent the last year putting in technology to replace people. We are still investing in people because it’s the right thing to do, but we just got two more industrial robots in. With the caliber of people available, it is challenging.

What are some things you are doing to retain your employees?

• Technology has been big. The struggle out there is finding good employees. For our growth, it was essential that we invest in technology because you can’t find people with that tribal knowledge.

“If that boom comes, how do you cover it? If it doesn’t, how do you resize and restructure to survive the next level of whatever it might be? Hopefully not a recession, but we don’t know. We don’t know what the future holds.”

To back up a little bit, I think we are still feeling the effects of COVID, especially with the professional workers we want to bring in. We’ll interview people, they want to work hybrid, work from home, that type of stuff. In my opinion, that’s not reality when you’re in manufacturing. You have to be there with your people, your team. We’re in central Minnesota, and we are having to recruit out of the Twin Cities. To get someone to relocate and then offer competitive wages in central Minnesota is a challenge, but we’ll do it if it’s the right person, the right fit, and we feel that they are committed.

What are you doing to get people?

• Historically, we didn’t utilize recruiters, so we’re having to invest heavy on the recruiters. We might come up with 10 candidates and one comes out of it. We have raised our wages to be more com-

petitive to bring that talent in. But that all goes back to an investment in technology, because technology increases your margins and then you’re able to use that to bring better talent in.

Are you investing in automation, and do you see more investment in automation in the next year? And what is your definition of automation?

• We are looking at an ERP (enterprise resource planning) system. We are a lot smaller than most of the companies here, so hoping that will help streamline how we do things. Also, definitely looking at automated filling. We have done a lot of manual processes up to now, and we are expanding with bigger equipment, making bigger batches.

• We are investing in systems to make our office people more efficient at what they do. That way, you don’t have to hire as many people, just have better information at their fingertips. We have a new $3 million press coming in next month, and it’s going to eliminate the need for hiring three people. We are going to be making two parts off that press with one operator instead of one operator on each press. It’s making people more efficient.

• We are doing the same. It’s not about replacing people with technology; it’s about finding technology that makes people more efficient. Instead of just trying to hire a button pusher, we hire somebody and turn them into a utility player who we can move around as our production flows through a process.

• I think, too, when you talk about technology, the education part is so big. We can invest in a piece of equipment, but what good does it do if it’s just sitting in the corner and you don’t have the right people to run it? That’s where we have been utilizing our area technical colleges to bring these people in. You’re seeing a shift with the youth; they are looking for opportunities or careers out there.

• When you automate a program, you need somebody who can read a drawing and take that drawing and convert it into one of these automated tools. We’re investing in AI that can do a lot of that work and a lot of that programming.

Are others using AI? Is it a benefit? Are you nervous about incorporating it?

• We are not heavily invested in it, but our IT folks say they use it every day to program the different functions of our online tools and streamline their work.

• AI scares the crap out of me because of attacks — attacks on your systems. But at some point, I think we are going to have to use AI to fight those attacks.

• It has been a wonderful tool on the sales side. You can find anyone at any place, any name, any title, any phone number, and basically make a direct connection. Prior to that, it was more of a networking type of thing to get in the door. Now it’s one click of a button and before you know it you’re talking to a VP of operations.

• We use AI a lot. We have a program for contract review, where we load a contract with our set of terms and it compares and tells us where we are on compliance. We also use AI for our accounts payable department. Invoices come in, it compares and does the three-way match and puts it all in the system so that we can reduce the number of people in financing. There are things that AI can do that reduce the monotonous work that people do. So, we are using it in many areas of the business.

Let’s talk about supply chain. Is it still an issue?

• Our supply chain is healthier now than it has been in a long time. It’s not an issue for us anymore.

• The supply chain is pretty good right now. What I am seeing from some of our suppliers might be related to that talent gap. We’re seeing more mistakes coming in from suppliers than we have seen in the past. So, that’s been a challenge. Before you just couldn’t get the stuff. Well, now we are getting the stuff, but it may not be coming in the way we need it to come in.

Some manufacturers have said that their customers are holding on to inventory longer because of uncertainty. Are you seeing that amongst your customers as well?

• Our customers are asking us to hold on to their inventory longer. They want it, they just don’t want to ship it. We became their warehouse, which is interesting because our supply base is pretty stable. We’re starting to get pushback from some of our larger customers who think they know how to buy product better than we do.

• We had customers who were replacing excessive orders and building inventory at a time when lead times went long and its supply chain was unreliable. As things

have kind of stabilized the burning inventory, we are seeing orders normalize.

• We service the food industry, and with prices the way they are right now, especially with proteins, freezers are full. People are not wanting to pay, let’s say, $8, $9 for a pack of bacon or something. So, the inventories on that end, depending on the business, are higher than they were before. It is a challenge because these big companies can’t stop. They can’t slow down.

“We look to buy companies that fit us strategically, and we tend to not look at Minnesota because the regulatory environment is not favorable to businesses. It would have to be an amazing opportunity here for us to consider Minnesota given that it’s so hard to do business here.”

How many of you have a formal strategic plan in your organization? Are you well-positioned for future succession?

• Yes, we have a strategic plan, and yes, we formalized it more this year.

• We have one; it can be better. We have some new leadership within the business, and it’s time to bring us all on the same page and make sure we are all over the next one to three to five years.

• Yes and no. We do have a strategic plan. We follow EOS, so that helps us with our vision, but we do not have an exit

strategy at this point. We are really trying to scale up at this point and increase our value. But we have not gone that far into the future of what’s going to happen when the owner’s ready to retire.

• We have a strategic plan, but not one for exit time for the owners. We plan year to year, different stages, we have big meetings once a month, so we communicate all the time. Guess maybe we should start talking about exit strategies, too.

• We are a family-owned company and currently transitioning to a fourth generation, so regarding an exit strategy, there is no exit. But when you talk about strategy, yes, we do. We have one-year plans, five-year plans, and, believe it or not, a 100-year plan. We are a 125-year-old company. How do we continue to exist for another hundred years? We spent a lot of time with that at the leadership level and communicating it to the whole organization.

• We have a strategic plan. I think it was essential to the growth of our business. We meet quarterly on it. We set our oneyear, five-year, and 10-year goals, and

we bring our entire management team in on that strategic plan. I think where we are probably lacking a little bit is in succession planning, and we try to work through it, but having owners who have been in the business for long, it’s tough to let go and understand what that’s going to look like in the future.

How do workforce laws, including paid family and medical leave, impact your business?

• So, this year the earned sick and safe time (ESST) has had a pretty profound impact on our business. We’ve paid people to be out anyway, now they don’t have to call in. Our four supervisors are standing there wondering, “Well, who’s going to show up today? What do I schedule?” Let us run our business. We have provisions for paying employees for sick time. Just get out of our way.

• I would say listen to us. It just feels like we voice our opinions, and we throw them all out there, and the government and the legislature just get tied up in this big knot and it doesn’t seem to move.

We can talk about it, but as a leader of a company I don’t feel like we are really being heard. It’s frustrating.

• We look to buy companies that fit us strategically, and we tend to not look at Minnesota because the regulatory environment is not favorable to businesses. It would have to be an amazing opportunity here for us to consider Minnesota given that it’s so hard to do business here.

• The challenge for us is being competitive in the future if new mandates keep coming that cost us more money. With ESST or paid family and medical leave, it’s hard enough finding employees and then allowing them to come and go as they please doesn’t help us schedule and plan work. With the added cost, we are not competitive with other companies that do what we do in Wisconsin and Iowa and North and South Dakota. How do we continue to be competitive in the market when the state is taking away that competitiveness?

• We have done our last expansion in Minnesota, that’s for sure.

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Tours With a Purpose

Minnesota manufacturers open the eyes of policymakers when they open their plants for tours.

BY PETER PASSI

Enterprise Minnesota’s Bob Kill and Lynn Shelton recently joined Reps. Duane Quam and Greg Davids for a tour of Valley Design, a table-base maker that employs 87 people in Fountain, a tiny Minnesota community of 234 people about a half-hour southeast of Rochester. The tour illustrated the outsized economic role manufacturers often play in their respective communities. Kill is Enterprise Minnesota’s president and CEO and Shelton is vice president of marketing and organizational development.

Butch Isensee, Valley Design’s CEO, and his son, Luke Isensee, the company’s vice president of sales and heir-apparent, had planned for about a one-hour visit, but it stretched to more than twice that length, as the lawmakers and manufacturers talked shop and policy.

The junior Isensee says he feels there’s previously often been “a disconnect” between the state legislature and manufacturers regarding the value of the jobs they provide and the work they do.

Butch Isensee says they also wanted to advocate for more state funding for Enterprise Minnesota so it can help manufacturers like Valley Design grow and thrive.

In 2023, Valley Design expanded its operations and added to its equipment line. The Isensees walked Quam and Davids through their 110,000-square-foot facility, showing off their powder-coating lines, their machine-cutting centers, and laser

technologies.

Butch Isensee launched Valley Design 38 years ago and is planning to turn over the reins to his son, Luke. He says Enterprise Minnesota has been working with Valley Design to ensure a smooth transition.

The elder Isensee says he certainly could sell the company. But that could lead to the work potentially migrating out of state. That doesn’t sit well with him.

“Then all of our people wouldn’t have jobs. So, it feels like our responsibility to really keep this going,” he says. After all, Valley Design is far and away the largest employer in Fountain.

“Loyalty goes two ways,” Luke Isensee says, noting that the company has a number of people who have been with the business for 20-plus years.

Nearly all manufacturers appear united on one front: a desire to slake their thirst for more qualified workers.

“They’re loyal to us, and we’re loyal to them.”

The Valley Design tour was just one of some 500 tours that Enterprise Minnesota has orchestrated over the past 17 years to help enhance relations between manufacturers and their legislators.

Shelton says the tours originally were inspired by the realization that many manufacturers were so focused on their products and customers that they paid little attention to how proposed new legislation and regulations could affect their ability to grow profitably, often until it was too late.

“We decided to become a matchmaker,” she continues.

On top of that, Shelton says the plant tours provide decision-makers with a greater appreciation for all that manufacturers contribute to both their communities and the state as a whole.

“And to do that, we have to create some visibility,” she says.

“We want to help connect all things that affect manufacturing in Minnesota,” she continues. That means bringing together policymakers, business leaders, economic development agency representatives, and

Modern Metal Products tour, left to right: Jason Pfieffer, vice president of human capital; Sen. John Jasinski; and Shawn Pfieffer, president

educators from both the high school and college levels.

Former U.S. Congressman Tim Penny, president of the Southern Minnesota Initiative Foundation, says manufacturing tours give legislators not only a first-hand appreciation of the manufacturing facilities in their region but of the increasingly complex workforce issue manufacturers face.

As a former legislator and member of Congress, Penny says he took “every opportunity” to visit local manufacturers, “because you really get a deeper understanding of the nature of these businesses, the skill sets they need in their employees, and the contributions they make to their communities.”

Here is a snapshot of four other tours that produced meaningful results.

Modern Metal Products

Shawn Pfieffer, president of Modern Metal Products, for example, recently welcomed Sen. John Jasinski and Rep. John Petersburg into his Owatonna plant for a tour that led to a lively conversation about the impact of the state’s new earned sick and safe time requirements. The lawmakers outstayed their scheduled visit to talk shop with Pfieffer and his brother and business partner, Jason.

Pfieffer says he hopes legislators will consult with business leaders as they consider future employment legislation, noting: “There’s nothing better than being in somebody’s contact list.”

Modern Metal Products has been in business for 99 years and manufactures metal enclosures. The company, which currently employs about 40 people, has provided

steady employment for generations of workers, often including multiple family members, Pfieffer says. The company originally made metal boxes largely for the U.S. military but now manufactures metal containers for all manner of public health and safety items, from defibrillators to Narcan.

He calls his company “a community gem that probably just doesn’t get a lot of shine.”

He agrees that new state regulations can be a burden, but admits that the recent law that addressed earned sick and safe time benefits prompted the company to evaluate its current package.

“We thought we had a good benefit offering prior to this legislation going into effect. But it gave us an opportunity, to ask: ‘How good does this look?’” he says.

Pfieffer says that’s a valuable question in a world where manufacturers struggle to recruit and retain talent.

“While it was a challenge, it also made us look inward and ask: ‘Are we who we want to be?’” Pfieffer says.

Metal Services

Kurt Schrom, CEO of Metal Services in Blooming Prairie, just south of Owatonna, hosted Sen. Gene Dornink for a tour of the company’s facility in September. He describes the legislative visit as “worth its weight in gold.” Metal Services is a low-volume, high-complexity job shop that fabricates and supplies parts primarily for OEM manufacturers. He says Metal Services’ workforce typically ranges between 42 and 45 people.

“Sen. Dornink got to see what we do,”

Schrom says, describing him as “a good listener” who seemed somewhat surprised to learn about the many ways Enterprise Minnesota has been helping manufacturers up their game.

“It probably goes without saying that small businesses create jobs. It shouldn’t matter what your political affiliation is,” Schrom says. “Creating jobs is good for everyone. Nobody loses in that deal.”

The legislative agenda for most manufacturers hosting a tour, Schrom says, will probably be: “Don’t tie our hands with rules that negatively impact us.” The current keen competition for workers already compels manufacturers to provide attractive pay and benefit packages, he says, eliminating the need for a heavy-handed legislative approach.

Nearly all manufacturers appear united on one front: a desire to slake their thirst for more qualified workers.

“If I can get anyone in the building, that’s a win — a customer, a supplier, a partner, or a legislator. We’ve always had an open-door policy.”

“The key message we want to send is: It’s okay to work with your hands. It’s okay to be a welder. It’s okay to be in the trades,” Schrom says.

Sen. Jasinski agrees. He says that message needs to reach not just young people but their influencers, including parents and teachers.

Backdraft Manufacturing

Tyler LeBrun, owner and CEO of Luvernebased Backdraft Manufacturing, welcomed local legislators Sen. Bill Weber and Rep. Joe Schomacker into his high-tech plant this past summer. Backdraft specializes in designing, engineering, fabricating, and integrating machines to automate production in a wide variety of industries, including the manufacturing of products for the construction, agricultural, medical device, and aerospace sectors.

“I think it helps to get local legislators in to see some of the challenges we face due to the state’s overbearing regulatory environment,” he says.

That point wasn’t lost on Sen. Weber, who notes that Minnesota has already lost manufacturers to states with less burdensome expectations of employers.

Metal Services tour, left to right: Kurt Schrom, CEO; Bob Kill, Enterprise Minnesota; and Sen. Gene Dornink

Weber says communities such as Luverne, just 12 miles away from the South Dakota border, have been particularly vulnerable.

“Crossing that state line is not that big of a move, and we’ve seen a lot of businesses make it,” he says, pointing to the departures of Luverne Truck Equipment and Luverne Fire Apparatus, which both opted for South Dakota.

LeBrun says some of the costs of new employment rules have been difficult to absorb for a small business with little in the way of human resources support. Backdraft Manufacturing had 11 people on its payroll in Luverne as of September, although LeBrun says that number fluctuates with project load.

LeBrun says visitors are often surprised by the sophistication of the work performed in his shop.

Sen. Weber was no exception, saying that the business has made great technological strides since he first toured it about five years ago.

“They’ve expanded and added a lot of equipment,” he says. “I’m impressed by what they’re capable of doing these days.”

The shop’s advances have been driven by necessity, according to LeBrun.

“No one is going to trust you to build robots out of a garage,” he says.

Advanced Coil Technology

General Manager Devon Barnes at Advanced Coil Technology says he didn’t need any convincing to host a plant tour for legislators Jasinski and Petersburg, with Enterprise Minnesota staff accompanying.

“If I can get anyone in the building, that’s a win — a customer, a supplier, a partner, or a legislator. We’ve always had an open-door policy.”

Barnes harbors no illusions about what the tour likely achieved.

“I know that one visit is not going to change legislation. But we can at least get our message out there,” he says, noting the collective value of manufacturers sharing their stories.

When Advanced Coil needs to hire additional staff to document the company’s compliance with state mandates, Barnes says: “All you’re doing is raising our overhead costs.” He explained these sorts of added costs threaten to put the business at a disadvantage against competitors from other states.

Rep. Petersburg agrees, pointing to the “large regulatory overreach” of the last state legislative session. “A lot of bills were passed without really understanding the consequences and the outcomes that would

be generated.” He says those actions left many companies — especially in Greater Minnesota — asking, “How does this work?”

Unfortunately, Petersburg admits, even state officials sometimes struggle to answer that question.

Touring businesses can provide legislators with insight into the consequences of their actions, he says.

“It really does help us figure out how to fine tune, how we can fix things, and adjust to what works and what doesn’t work. The problem, of course, is it usually takes a few years before we understand that. And in the meantime, companies have to deal with it, sometimes without the best outcomes,” Petersburg says.

Sen. Jasinski says the tour underscored the difficulty for small- and mid-sized businesses to compete when government takes a one-size-fits-all approach to regulation, often failing to differentiate between companies of different scale when mandating employee benefits and requiring proper documentation.

“Most employers in a free market are going to provide the best benefits they can anyway, because they need to be competitive. But they just get bogged down, needing to comply with all these state mandates,” Jasinski says.

Rep. Petersburg concurs: “These guys are being swamped with accounting requirements and regulations, while they’re not receiving great direction from the state agencies to tell them exactly what needs to be done.” He pointed to confusion even at the state regulatory level about exactly what documentation is required for companies to demonstrate their compliance in providing mandated employee-leave programs.

He warns that the state’s economy runs the risk that excess regulations will chase away manufacturers.

“Most smaller businesses stay here because they love their communities and their people. But if the cost of doing business is so high that they can’t make it work, they’ll go someplace else,” he says.

Barnes says Advanced Coil recently recalculated a four-year-old quote for a client and discovered that his overhead costs had climbed 50%.

“That is just my cost of being here in Minnesota and keeping my employees happy,” he says. “That’s not sustainable.”

At Advanced Coil, Barnes says visitors often are surprised by the scale of the work being done, and it’s a point of company pride.

The company manufactures industrial

heat-transfer systems, particularly those made to withstand high-pressure, high-temperature, and sometimes corrosive environments. Its clients include papermakers and processors of grain and oilseeds.

The company is nearly 30 years old and has a staff of 17, with about half of employees working on engineering and design and the remainder handling fabrication, largely welding.

Advanced Coil tackled a project earlier this year for a hypersonic wind tunnel, shipping a custom-designed, self-contained metal system that weighed about 90,000 pounds to its client upon completion.

Barnes says some ask why his Owatonna shop would take on such massive and ambitious projects. His answer? “Because no one else will.”

It’s the nature of Advanced Coil’s business, according to Barnes.

Made in Minnesota

The tours also provide an opportunity to advocate for a program called “Made in Minnesota,” which Shelton says targets manufacturers with no more than 250 employees and essentially “buys down the cost of what it takes for a business to invest in itself,” with consulting support from Enterprise Minnesota.

Shelton says the program has historically delivered at least $15 of economic return for every dollar invested by the state.

Enterprise Minnesota just completed its 16th annual State of Manufacturing Survey®, and Shelton says the motivation has been clear from the beginning: “We wanted to elevate the visibility of what manufacturers think in this state.”

Pointing to another example, he says: “We’re doing a massive, custom-designed, never-been-done-before air handler for the largest fertilizer plant in the U.S. That ships next week.”

“People are coming to understand that these are good, rewarding jobs,” Barnes says.

Rare Breed

Discipline and market savviness keep Hanson Silo growing in the ag sector and beyond.

BY MARY LAHR SCHIER

Brothers Matt and Mike Hanson

When you enter Matt Hanson’s office on the sprawling campus of Hanson Silo near tiny Lake Lillian, you notice two things: several impressive deer mounts and a huge TV screen with images from all of the production lines at the company. The lines are spread across five buildings on 40 acres where four generations of Hansons have been making and selling products to farmers since 1916. That the company exists still makes Hanson Silo a rarity. Fewer than 5% of family-owned companies survive to the fourth generation — and fewer still are thriving. Founded by Matt Hanson’s great-grandfather on his farm, the company has evolved, grown, and changed along with its agricultural clients.

President of the company Matt Hanson and his brother, co-owner and director of business development Mike Hanson, are determined the firm will make it to the fifth generation and beyond. To do that, the

As he’s focused more on new opportunities for the company, Hanson Silo president Matt Hanson has also reconsidered its heavy vertical integration. Doing it all isn’t always the financially sound choice.

company has diversified and expanded its businesses and more than doubled its sales over the past 15 years through a combination of disciplined decision making, a deep understanding of its customers, and a willingness to try new products, processes, and businesses.

“They read the tea leaves well,” says Steve Haarstad, an Enterprise Minnesota business consultant who has worked with the company on strategy for several years.

“Matt knows his market,” says Bob Kill, president and CEO of Enterprise Minnesota. “He’s really got a sense of what’s going to happen. He’s a try-it-fast, fail, learn from it, and move on kind of guy.”

While the company’s main business is still precast concrete — products not too

different from the one great-grandpa Emil Hanson invented using sand from Lake Kandiyohi to build his first silo staves — it hasn’t built a silo since 2018. Over the years, it has expanded into contract manufacturing, powder coating, laser cutting and bending, design and installation of feeding and manure handling systems for cattle and hogs, sales of farm equipment, as well as precast concrete walls for everything from municipal sand and salt storage to car dealerships.

“They’ve done a good job of asking,

12 and behind the wheel of a semi-truck (on property only!) by 14. “It was a fun place to grow up,” Hanson says. In high school, Hanson sold sporting goods for minimum wage plus commission, which he describes as “a good lesson in sales compensation.” By 18, he had worked summers in different departments at Hanson Silo. But after graduating from the University of St. Thomas in St. Paul, Hanson joined 3M as an international supply chain analyst, helping ship abrasives from Brazil to California. He had a chance

‘What are our current capabilities and how can we apply what we do now to these other opportunities?’” says Abbey Hellickson, an Enterprise Minnesota business growth consultant who has worked with Matt and his father before him.

“The mix keeps changing,” Matt Hanson says of the company’s product strategy, “but our core business is in the Midwest. We try to go after a lot of base hits instead of home runs.”

Growing up in the business

Matt credits his father, Greg, for adapting Hanson Silo’s products and services to changes in agriculture as well as creating a clear plan for passing the business on to the next generation. He also introduced young Matt to working at the company.

“When we were kids, my father worked six days a week as a rule,” Hanson recalls. “For me to see dad, like on a Saturday, I would have to come with him. So, he would bring me out here and it was like a 40-acre playground.”

Matt was driving forklifts before he was

to stay with 3M, but after a year, he decided to join the family business full time. “It was enough to get a taste of what else was out there,” he says.

He started in 1998 and was named president of the company in 2007 at age 31, focusing on operations while brother Mike, who joined the company in 2008, handled sales. His father continued to work with the firm in different capacities for more than a decade, but soon handed off most responsibility to his sons. “Once I got the backpack fully on, it was heavier than I expected,” Hanson says of leading the company.

From its earliest days, Hanson Silo has been willing to do it all for their clients. While its silo business started with staves (interlocking concrete blocks), the company soon made and painted the metal roofs for the silos as well as equipment to load, unload, and chop the silage, and provided crews to put them up. “We were extremely vertically integrated,” Hanson says. “A pivotal moment was in 2004 when we made a deal with one of our competitors to sell our silo unloaders and feeding equipment line

and distribution channel. That opened up opportunities to get more into the precast concrete business as well as contract manufacturing and powder coating.”

Growing and letting go

The precast business involved selling to a wide range of markets besides farmers, including municipalities and commercial applications. The company even makes extremely sturdy picnic tables out of precast for use in public parks. “We knew the silo business was waning and we knew the bunker silos were going to be the replacement,” Hanson says. “But the precast bunker walls have many uses, everything from food grade to waste treatment plants.”

As a young company leader, Hanson joined the Enterprise Minnesota Peer Council in Monticello in 2006, a move he recommends other business leaders take. “You need to find a mentor or a group of people who you can be open with,” Hanson says. “Not someone running a $100 million company, but someone who understands your business.”

For years, Matt ran all the operations of the company, at one point overseeing 15 direct reports. About three years ago, he realized that for the company to continue its growth, it needed help.

“We have really good people, but we brought them all up from the inside. They knew what they had learned here. The tribal knowledge was amazing, but we had to get some additional professional management,” he says. He hired Steve Haley, an operations leader with more than 25 years of experience, to run the day-to-day, while Hanson focuses more on new products and markets as well as tightening up the company’s finances and “being deliberate about making good decisions.”

It took about a year for Haley to learn the complexities of the company and Hanson to start to let go of the day-to-day reins. “It was a little bit of a struggle for Matt to fully let go,” Haley says.

“With Steve really able to pull the levers and control the flow of work, people have finally gotten used to not coming to me to get the answer,” Hanson says. “It feels a little different not knowing everything that is going on. At the same time, I feel so much more confident that all of our folks are in a good place.”

Checking the boxes

A big part of Hanson’s role now is to figure out where agriculture is headed, and how Hanson Silo can manage the ups and downs of a volatile industry.

“Matt knows his market,” says Bob Kill, president and CEO of Enterprise Minnesota. “He’s really got a sense of what’s going to happen. He’s a try-it-fast, fail, learn from it, and move on kind of guy.”

“So many people start their business because they have what they think is a great idea and that they can make it. That is not the secret sauce,” Hanson says. “It’s selling it. Selling it and marketing it and distributing it is 10 times harder than making it.”

As farms have become larger and more complicated, getting access to decision makers is more difficult, Mike Hanson says. The company relies on a robust customer relationship management system and many partnerships and collaborations built on deep industry knowledge. “We call it a hunter sales model,” Mike Hanson says. “Once someone has their concrete, they often don’t need more, but working with us is like hitting the easy button. We have industry knowledge that other companies don’t have.”

The company has also been willing to mix up its product line. “We had a lean manufacturing philosophy before we knew it was lean, which is fail fast, fail cheap, learn lots,” Matt Hanson says. His goal

is to keep the company as diverse as possible while remaining mostly focused on agriculture.

“If I had advice for somebody just starting out, I’d say don’t put your last name in your company name and don’t list what you do,” Hanson says, laughing. “We love the history of our name but it’s not where we are headed. Markets change and new opportunities always present themselves. The challenge is to see them coming.”

When Hanson Silo adds a new product or service, it has to check all the boxes that make it a good fit for the company, Hanson says, diversifying sales and helping to balance the natural ups and downs of agriculture, preferably in a way that enhances capabilities the company already has.

Consider the 12-gun GEMA Switzerland paint booth the company purchased in 2020. Hanson already had a batch powder coat line and was experienced at painting items up to 30 feet long. “As we got more opportunities,” Hanson says, “we decided to grow it. It was almost organic growth.”

The GEMA booth offers expanded capabilities. It senses when parts come into it for powder coating, says Haley, and recovers 90% of the paint that leaves the gun.

About one-third of the company’s 85 employees work in fabrication, welding, and painting, Haley says. The rest primarily work in the core precast concrete business. The company’s contract manufacturing jobs are varied and offer stability. “We’ve made a lot of cool stuff through partnerships with OEMs,” Hanson says. For example, one of its customers is the premier maker of digital displays, such as those

used in commercial signage and sports arenas. Hanson Silo fabricated and painted part of the display that now counts the goals and gets fans cheering at TD Garden, formerly known as Boston Garden. Hanson Silo recently powder coated a large manlift cage to go up the side of a dam for the U.S. Army Corps of Engineers.

At the same time, Hanson’s deep knowledge of agriculture has helped him spot opportunities that align with the company’s existing products. Recently, the company developed a partnership with an Irish company that produces a deep pit manure aeration system known informally as “the bubbler.” The product pushes air into the manure pits that sit under modern cattle barns. It keeps the manure aerobic instead of anaerobic as it breaks down, creating a healthier environment for the cattle and the people who work with them. “It’s like putting a hot tub in the manure pit,” Hanson says. “We resell that, but we’ve become the go-to people in the Midwest for design and installing it. We have enjoyed working with some third-generation Hanson customers on this technology.”

Hanson Silo manufactures the concrete slats for the floor of the cattle barns as well as sells the rubber mats on top of the slats to prevent slipping. It also can make the columns and beams that hold up the floor and the precast around the pump-out area for the pit. Its crews have become skilled at installing the piping and electronics to run the bubbler. At many farms, Hanson Silo also provided the bunker storage for feed and all the robotic equipment to feed a herd of cattle with the tap of a button on an iPhone. “We’re now working with customers to design around the automated system,” he says.

The company is doing more work with hog farmers, too, but it’s cognizant of competitors in the industry who may also be customers. “We’re really careful about trying not to step on people’s toes,” Hanson says. “We would rather get a shot at selling them the slats on the next job rather than taking work away from them.

“The fun part is that we know a lot of people in our respective markets,” he continues. “It gets back to the values and culture that we have. It’s always been that you treat people fairly, be honest, if something goes wrong, fix it.”

As he’s focused more on new opportunities for the company, Hanson has also reconsidered its heavy vertical integration. Doing it all isn’t always the financially sound choice. At one point the company owned a fleet of semi-trucks, but most of

those have been sold off in favor of hiring independent drivers. “We’re not making money on trucks sitting here,” he says. “Drivers are hard to get so we’re subbing it out to brokers. We hire some local guys, too, but they are 1099s, not employees.”

They’ve also worked to sell or retire legacy equipment, and Hanson applies the same thinking to buying pricey new equipment. “It’s easy to invest in something that becomes a constraint,” he says. “All of a sudden you have a robot that flows into a road block.” To avoid that, the company is currently leasing a robotic welder to do a repetitive project. The robot helps free up company welders for more complicated work, Haley says, but the company can retire the robot when the job is done and its services aren’t needed.

Another struggle for the company is the seasonality of its business. Like farmers, most of the company’s work comes in the warmer months. By adding contract manufacturing, powder coating, and laser cutting, Hason Silo has worked to stretch its busy season out by several months. But when you work with farmers, even the

weather can throw the schedule off. The extreme rains in June and July this year, for example, pushed so many projects back that the company ended up billing 11% of its expected annual income in a single week. “It was crazy,” Hanson says.

To manage erratic schedules and so many business lines, Hanson Silo uses the Traction Enterprise Operating System and meets quarterly with Haarstad to discuss strategy and set priorities and with Hellickson to discuss leadership issues. “It holds us accountable,” Hanson says of the Traction model, “which is something that can be tough with a family business.”

And, making sure the family business remains healthy, financially and culturally, is a big goal for Hanson. Divided responsibilities have helped, says Mike Hanson. He and Matt each have their areas of expertise and stick to them. “It’s not that difficult to get along well. We still hunt together and hang out at the lake,” he says.

The future looks good with a potential fifth generation in sight. Matt Hanson’s son, Sam, is a 19-year-old entrepreneurship major at South Dakota State University.

The Automation Loan Participation Program makes companion loans to fill gaps in financing needs for businesses purchasing

Harvesting Growth

Farm-raised consultant Eric Blaha combines his ‘farm kid’ roots with innovative thinking to bring a unique view to lean consulting.

BY ROBB MURRAY

Eric Blaha, business growth consultant, Enterprise Minnesota

On a farmer’s quiet pasture in north central Minnesota, a cow munching on a dense layer of grass and clover defecates and lets out a lazy moo.

Moments later, a fly gets wind of the latest bovine byproduct and buzzes by to inspect.

Finding said byproduct a hospitable holding area for fresh larvae to feed and grow, the fly lays a hundred or so eggs before flapping its wings and flying off into the humid summer air.

Days later, a farmer moves that herd of cows to another pasture and brings his chickens in to feed where the cows once grazed.

As the chickens roam among the growing clover and grass, the larvae in the cow pies have now matured into maggots — the perfect chicken feed. The chickens peck through the manure to find the maggots. The ones they find, they eat. The ones they don’t may grow to become flies, flies that may one day buzz through this same pasture, find a cow pie — maybe even from the same cow — and the circle of life continues. (And as a bonus: The swarms of mature flies feeding on and irritating the festering hides of grazing cows are diminished greatly, as many of those cow-pie maggots never escaped the darting beaks of hungry chickens.)

While some may find this story a tad on the grotesque side, its exquisite efficiency is actually quite beautiful. The grass feeds the cow. The cow’s waste feeds the flies. The flies’ larvae feed the chickens.

Far from a made-up scenario to make a point, this story illustrates the vision of Enterprise Minnesota business growth consultant Eric Blaha, and this circle-of-life situation happens very much by design. It’s an example of how Blaha uses the principles of “lean” — designing and arranging work areas and practices to maximize efficiency — to best utilize resources.

“The plants feed the pasture, so I’m not having to apply nutrients,” Blaha says. “I’m eliminating a wasteful pass of transportation. The cows are picking their own feed. I’m eliminating transportation feeding cows. And the chickens are turning a waste resource into valuable protein that I can feed my family with or that I can sell to someone else to feed their family.”

Blaha is unique among consultants. Raised on a farm just a few miles from

where he now lives with his wife and two kids, Blaha’s “farm kid” values define his work ethic and inform his expertise as a consultant.

Growing up on a farm isn’t the typical route to becoming a business growth consultant. But that’s the beauty of Blaha’s ethos. Nothing comes more naturally to a farmer than growth. He’s driven by results, not afraid to take calculated risks, and, in his own words, is always striving for improvement, making manufacturers more profitable by day, and ruling over 300 gorgeous acres of farmland in his spare time.

Verndale strong

Before he purchased his farmland and home in rural Verndale, population 600 or so, Blaha grew up on an 80-acre “hobby farm” just a few miles away. Growing up there was a great model, he says, for how he wanted to raise his own family. Luckily, he found the right partner the day he walked into Verndale Elementary School.

He’s known his wife almost as long as he’s been alive. It surprised no one when the two married and started a family. While Eric works the fields and tends to his Enterprise Minnesota clients, Angela tends to the children as well as the vegetable garden, where cucumbers, tomatoes, melons, broccoli, peppers, and beans eventually make their way to waiting customers. (The Blahas also sell meat from their cattle and eggs from their chickens.)

After graduating from Verndale High School, Blaha earned a bachelor’s degree in agricultural engineering from North Dakota State University. What he did not earn was street cred from the party scene.

“Didn’t party at all. Never went to a football game,” Blaha says. “I played a lot of sports in high school. I like to do things. It’s never been that intriguing to me to watch other people do things. I’d rather be out there doing something.”

To illustrate that sentiment, Blaha admits he didn’t watch a single event in the recent Olympics. “I was out putting in my waterline the whole time the Olympics were on. I just don’t find that much joy in watching others do things.”

During college Blaha worked for the Case New Holland (CNH) farm tractor manufacturing company, first as an intern and later a full-time employee. He worked in quality assurance and operations man-

agement for CNH. After five years he took a job with Stern Assembly. Two years later, Enterprise Minnesota hired him.

Blaha says his breadth of experience and work ethic likely caught Enterprise Minnesota’s eye.

While working at CNH, Blaha got the opportunity to travel and observe lean principles in a variety of settings. Eventually, when he became Stern’s plant manager, he applied what he’d learned about lean. He improved his skills at securing employee buy-in and became an evangelist for the “touching once” mentality and relaying out the facility for optimal utilization.

“All those different things fit really well and nest really well in lean manufacturing,” Blaha says. “And I just kind of took that stuff and ran with it.”

Taking a different look at a problem has sort of become Blaha’s specialty. One need only look at the way he farms to see this principle at work.

John Connelly, Enterprise Minnesota’s vice president of consulting, says Blaha’s work ethic and zeal were obvious.

“Right off the bat meeting Eric I was struck by how engaging he is,” Connelly says. “When it comes to continuous improvement, Eric can converse all day long. His strong work and application experiences provide great perspective to analyze processes and consider progress from many angles. And he presents his ideas logically and thoroughly. A conversation with Eric leaves you something actionable, valuable.”

Outside the box

The way Blaha has “run with it” has garnered plaudits from his clients. And there is no better example than “the race,” a gambit he conceived to convince line workers at Lind Electronics in Minnetonka that their packaging process was less efficient than what is known as “single piece flow.”

Blaha and fellow Enterprise Minnesota consultant Kari Rusing, rank amateurs in the packaging game, raced the seasoned veterans, men who had packaged hundreds

of thousands of items to ship. The veterans won, but not by much. “The race,” Lind Electronics general manager Joe Carlin says, created a “transformational moment.” Blaha’s simple idea, an idea that required them to take a new, fresh look at the kind of growth that can come from a different perspective, led to concrete results for Lind. Taking a different look at a problem has sort of become Blaha’s specialty. One need only look at the way he farms to see this principle at work.

Driving through the pastoral acres of Wadena County, there is a familiar uniformity of farming that has fed Americans for centuries: Brown-black dirt, arrowstraight rows of planted corn or soybeans, and farmers using time-honored methods to work fields and harvest crops.

Blaha honed his craft as a consultant and reimagined how his own farm could make more sense.

Blaha’s methods, however, are slightly unorthodox.

You won’t see any black dirt on Eric Blaha’s fields. It’s certainly there, but it’s covered by beneficial vegetation that will not only enrich the soil but eventually become feed for his herd of cows.

And he’ll still plant seeds in these fields. Just not in the way most farmers do. Blaha utilizes a concept called “no-till” farming. Where most farmers will run first a plow and then a disc through the soil, Blaha does none of that. Instead, he lets nature — and hooves of 30 cows (and one bull) — trample the grass and contribute to the process of making it dense through added growth and managed cow consumption.

To add that growth, Blaha uses a special tool to cut through and plant additional seeds.

“I have a seed drill that’s specifically designed for planting in no-till fields,” he says. “Imagine a knife blade with 2,000 pounds of force on it that cuts through the residue. Behind that is what’s called the seed boot, which puts the seed in the trench.”

Maintaining fields this way combines a consultant’s eye and a willingness to resist the millennia of momentum nudging farmers in a particular direction. It requires patience. And it requires a farmer to want

to do it. Changing minds about something as ancient as farming can be like moving a mountain. But Blaha says that great benefits await those willing to face new farming frontiers.

“It requires you to want to do it, to want

utter these words: “Don’t move things more than you have to.” Blaha doesn’t just believe those words, he’s put them into practice in several ways.

Consider how he feeds his cattle. Most farmers feed their cattle in a pen or barn,

to go move your cows every day, or move them more than you have to,” he says. “You have to believe it will work, and you have to have enough patience to see it start to work. I’m in year five now, and it’s really starting to take off, but you have to be patient enough and willing enough to put the effort into those first few years.”

He admits, though, that some farmers don’t have the luxury to transform their acreage into a system of farming that might work. After all, Blaha isn’t just a farmer. He has a full-time job and a dedicated partner tackling a monumental job herself.

“A lot of full-time farmers can’t afford to have a couple of down years while they get the soil working for them, not against them. I can afford to have 10 acres that don’t do well for a year or two because it’s not going to affect me being able to feed my family.”

Self-sustaining cows

If you work on a manufacturing shop floor you’re bound to hear a “lean” consultant

which may seem efficient. But in Blaha’s thinking, cows that aren’t in the pasture aren’t depositing their waste where it can provide nutrients to the soil. Blaha’s stock eat from bales of hay at strategic spots across his acreage. He’ll deposit all the hay in one day, instead of hauling hay daily.

“I started thinking, ‘Well, I move [the hay] to a stackyard, and then I move it out to the pasture, so I’m moving it more than I have to.’ So then I just took it and placed it out there, skipping the stackyard step. And now I’m really happy that’s done, because that used to be a full Saturday in October.”

This approach eliminates labor from feeding cows in the wintertime, and deposits nutrients right where he wants them: on the pasture.

“You also don’t have to clean the poop, put it in a manure spreader and haul it out to a field and spread manure,” he says. “They’re spreading it for me. They’ve got four legs. Why would I haul them feed and then haul their poop away? Make them go

get the food and spread their own poop.”

Blaha concedes that he’s very much in the minority among farmers. He also concedes that his method is likely wasting more feed than farmers who employ more traditional methods. But he’s quick to point out that farmers, historically, have been

“Most farmers work really hard and spend all their time to save a penny, but they’re missing the dollar.”

remiss in accounting for one crucial thing.

“Farmers tremendously devalue their time,” he says. “They don’t account for it when they count break-evens and costs.”

Blaha’s feeding schedule completely eliminates his time from the equation, he says. “I don’t spend any time feeding them. I don’t have an expensive TMR mixer on a tractor for feeding that I have to account for in my budget. That doesn’t exist for me.

“I want my cows to fend for themselves,

take care of themselves, and then I’ll just give them the necessities,” he says. “Most farmers work really hard and spend all their time to save a penny, but they’re missing the dollar.”

Blaha has also invested significant time and money in a plumbing system that delivers water to the cows. Over the course of several months, Blaha dug trenches and ran water lines. He believes a costly up-front investment will save him money in the long run by not having to haul water. It will also make for happier cows, he says.

“The water line was a huge one. I never have to haul water again.”

Light reading

A few years back, Blaha was on a plane flying to Europe. In flight, he started reading a book he’d purchased called, Dirt to Soil: One Family’s Journey Into Regenerative Agriculture by Gabe Brown.

The book changed the way he looks at not just farming but his work as a consultant for manufacturers, as well. One concept stood out.

“Brown wrote that 78% of our atmosphere is nitrogen, and that most of the nutri-

ents farmers apply to their soil is nitrogen,” he says. “Why, then, with so much natural nitrogen all around us — including in plant life — are we paying for it? Why not let the naturally occurring nitrogen that’s already there feed the soil’s need for it?

“And that’s what got my head spinning,” Blaha continues. “From there I started thinking about all the different things that we did in agriculture that didn’t make sense.”

With his background as a lean expert, combined with reading the right book at the right time, Blaha honed his craft as a consultant and reimagined how his own farm could make more sense.

The end result looks something like the cow-maggot-chicken scenario. Blaha’s agricultural upbringing ingrains a “growth first” mentality, which in turn makes him very good at helping manufacturers become more profitable. More profitable manufacturers hire more workers and maybe even raise pay. Better paid and happier workers spend more money in the community. And with a few of those dollars, they purchase a dozen eggs and some grass-fed ribeye steaks from Blaha.

Roaring

Into Profitability

Pride Solutions builds success on an inclusive approach through enhanced productivity, sensible growth, and a responsiveness to customer needs.

BY ROBB MURRAY

When Jack Daggett enters a room, it’s hard not to imagine him back in his playing days.

The current president of Pride Solutions in Hutchinson once suited up on the defensive line of the St. John’s University Johnnies, a legendary Division III football program in central Minnesota. A standout player at Hutchinson High School, playing football at St. John’s gave him a chance to stay close to his family — and close to the legacy he’d one day carry on.

At 6-feet-7, Daggett towers over just about everyone. And he prowls the halls and shop floors with the quiet confidence befitting the leader of a company that gets its name from the king of the jungle: the lion.

But Pride Solutions’ story isn’t one built around Daggett’s Thor-like appearance. Instead, it’s built upon a collaborative and inclusive approach to improving the company through enhanced productivity, sensible growth, and a responsiveness to customer needs. And it doesn’t hurt that the man on top has learned from a legend in the central Minnesota manufacturing scene. Jack is the son of Tom Daggett, the owner of Hutchinson Manufacturing and Pride Solutions. After grooming his son to take over the company, he’ll soon hand over the reins to Jack. Those will be big shoes to fill.

Under Jack Daggett’s leadership, Pride Solutions (which comprises four different business units that operate in the compression molding and plastic fabrication environments) continues the growth and success started by his father. That growth includes a boom period during the COVID years. One product that saw major sales growth is an after-market plastic shell that goes on snowmobile skis. As a symbol of pride, signed posters from some of the world’s top snow racers line the walls of one area of the shop. This product, Daggett says, is in high demand by racing teams all over the world.

But the biggest seller is something a little less sexy yet arguably much more important: the G4 Stalk Stomper, which protects farm combines from damage by genetically modified corn stalks that can wreak costly havoc on a combine.

Daggett says this product is the company’s top revenue producer.

“The new GMO corn is really rigid. When it gets harvested, some of that stock is still sticking out of the ground and it damages tires and tracks on combines. Those tracks are extremely expensive,” he says. “The G4 bolts onto the back of a corn header and flattens that stalk after it’s harvested but before it gets to the tires. It shatters it and bends it over so the tires are safe. It’s by far our largest product, and there’s a lot of labor that goes into it.”

As Pride Solutions continued to grow,

At 6-feet-7, Daggett prowls the shop floors with the quiet confidence befitting the leader of a company that gets its name from the king of the jungle: the lion.

Daggett says the chinks in his company’s armor began to be more obvious. That’s when he sought the help of Enterprise Minnesota. The company could have undertaken an expansion without a consultant’s help, but Daggett says his gut told him guidance from someone with experience was the better move. Now they’ve doubled the company’s footprint in Hutchinson and have done so, as Daggett says, with an eye on “growing smarter, not just bigger.”

Same goes for their plans to pursue an ISO certification. They could have tried to handle it in-house, but Daggett says getting expert help was one of the best business decisions he’s ever made.

You might say he and the rest of the Pride Solutions leadership team chose to pursue efficiency and profitability by remembering the advice of a good coach and mapping out a proven and solid game plan.

Lawn boy

Like many men who take over a family business, Daggett began the oldfashioned way: by mowing the lawn and mopping the floors.

Jack Daggett, president, Pride Solutions

But he didn’t mind. At least not much. He says he understood all along that just because he was the owner’s son he wasn’t better than anyone else. And doing those jobs gave him an appreciation for the idea that everyone’s role contributes to the team’s success.

“It was pushing a broom, trimming parts, yard work, inventory — that kind of stuff,” he says of his summers working for his dad. “It was good, honestly, growing up doing some of the not-so-fun jobs. I enjoyed it. I learned a lot more about the businesses, rather than coming in fresh out of college.”

Eugene and Doris Daggett, Jack’s grandparents, started Hutchinson Manufacturing in 1953. They manufactured picnic table frames and clothesline poles, and the company saw steady growth. Their son, Tom, became general manager of the company in 1978. By 1991, he became president.

Under Tom’s leadership, Hutchinson Manufacturing became a major player in central Minnesota’s manufacturing scene. Employing as many as 200 people, Hutchinson Manufacturing specializes in metal fabrication and for years has secured U.S. Department of Defense contracts. They produce custom parts, including nuclear and industrial metal fabrication.

Tom Daggett sold Hutchinson Manufacturing seven years ago when he retired.

Pride Solutions’ genesis goes back to the 1970s with a company called May Wes, and that name remains as one of the companies under the Pride Solutions umbrella. Launched on a farm, May Wes was the first company to create a plastic skid for a corn combine header — the precursor to the G4 Stalk Stomper. In 2002, May Wes, which by this time had changed its name to Plastic Specialties, filed for bankruptcy and shut down production. When they did, there were still finished products in the shop waiting to be shipped.

Daggett’s father purchased the company out of bankruptcy and soon brought back most of the workforce.

The elder Daggett took over Plastic Specialties conditionally: if, within a few months, he didn’t like what he saw, he was prepared to cut ties. But that never happened, and today May Wes remains the company’s producer of agriculture products, including the lucrative G4.

Tom Daggett liked what he saw, but changed the name. Jack Daggett says his father appreciated the strength behind the

Design can make or break a workspace.

Designed poorly, and workers can spend chunks of time walking around searching for tools. Designed wisely, and all such time-wasters can be eliminated.

idea of a lion, and so chose to call this new company Pride Solutions.

Watching his father bring a once-thriving manufacturer back to glory made an impression on Jack Daggett.

“I always knew that I wanted to come back and work with dad in some fashion,” Daggett says. “We’re very close and he’s been a great mentor to me over the years.”

In addition to May Wes, the other companies under the Pride Solutions pride are: Pride Engineered Plastics, Pride Assembly, and C&A Pro (where the snowmobile ski parts come from).

The products Pride Solutions makes for snowmobiles are responsible for some substantial growth in recent years.

Silver lining

When COVID hit, Daggett says the company leadership braced for lean years. But just the opposite happened.

Instead of refusing to leave their homes, many took the pandemic as an opportunity to get reacquainted with nature. And for some, that meant buying a snowmobile.

“I was concerned that we weren’t going to sell anything. I mean, we sell snowmobile skis; who’s going to buy snowmobile

skis in a global pandemic?” Daggett wondered. “Turns out, a lot of people! No one saw that coming.”

Pride Solutions employs compression molding using ultra-highmolecular-weight polyethylene (UHMW), a material that resembles silica sand and is known for its strength. They use the same process in manufacturing the G4 Stalk Stomper.

The boost in outdoor recreation interest resulted in a boost in sales for Pride’s ski products. And, Daggett, while declining to offer revenue figures, says the business’ size doubled from 2020 to 2022. The company’s workforce increased from 25 to a high of 40. All that business created a problem, the kind of problem that’s good to have: They needed more space.

Enterprise Minnesota consultants helped them efficiently map out a new 20,000-square-foot facility. They included logic in the design, meaning everything would have an efficiency-based reason for being where it was.

Daggett points to the shipping department to illustrate.

“Before we added on, shipping and receiving had one dock door, and that was difficult at times. In the new building we put two more in,” he says. “We’d have trucks backed up in the lot and that created delays.”

On a walking tour of the shop, he passes by an employee named Kent whose work life has been improved by giving him a proper space to operate in.

“This is Kent. He’s our assembly lead at C&A Pro skis,” he says. “Before, he was essentially putting these together in a back corner. Now he has everything he needs right here. The efficiency gain has been tremendous. And it’s just been great. He can actually be organized and efficient.”

The new efficiency effort began when Enterprise Minnesota business growth consultant Greg Hunsaker challenged the team at Pride Solutions to visualize the “why” of their operations. Hunsaker had them make printouts of the space as well as required structures that needed to be inside. Daggett jokes that they called the pieces “paper dolls” but admits the idea succeeded in helping them see how best to craft the space.

Design can make or break a workspace. Designed poorly, and workers can spend chunks of time walking around searching for tools. Designed wisely, and all such

time-wasters can be eliminated.

“You can fill 20,000 square feet pretty darn quickly, but is it efficient?” Daggett says. “And that was really the main point; are we laying it out efficiently?”

Documentation

In addition to expanding the company’s footprint, Daggett also wanted to expand the company’s professionalism. To do it right, they needed an ISO certification, specifically ISO 9001:2015, which focuses on quality management systems.

Daggett, who had experienced an ISO certification earlier in his career, says Pride Solutions got a rude awakening when a customer asked them to conduct an informal audit.

“That was the straw that broke the camel’s back,” he says. “We did not do very well,” he admits. His team engaged Enterprise Minnesota to achieve its ISO certification. “I’m really glad we didn’t try to do it ourselves,” he says.

Daggett says the process uncovered deficiencies in their documentation and management systems. “Our documentation was lacking from each operation,” he says. The improvements, he says, will

ultimately make them a better and more profitable company.

Part of the leadership team’s discussions was about the cost of getting an ISO certification. On the front end, it’s a substantial investment. In most cases it can cost around $50,000.

But Daggett says a better way to look at it is what will the cost be if you choose to

in the morning and it can be anywhere from three to 10 of our people in it. But at the end of the day, we’re going to improve. It’s going to help us in the long run. Essentially, it’s an investment in our future and investment in growth,” he says. “Also, if we want to continue to operate and get more and better clients, this has to get done.”

Initially, Daggett says there was some pushback about changing processes. And some workers may have been a little intimidated by the unknown, as well as the scope of a project that promised to delve into and potentially change/improve every part of the way a company operates.

But as more people understood the process, he says, the more people started to get excited about their own jobs and the company’s performance overall.

not do it. How many clients will you lose? If so many areas of your documentation are inefficient or subpar, how long will it take for those inefficiencies to add up to real money?

“It’s not an inexpensive thing. There’s also the time investment of our people. Every two weeks, it’s a four-hour meeting

DISCOVERING AUTOMATION

“Once people learn what this is and that it will benefit us in this way or that way, then they understand that it’s not just extra work, it’s not just more paperwork,” he says. “It’s how we structure our business and how we go about doing things. It’s not necessarily ‘in addition to.’ It’s maybe just changing a little bit on how we’re currently doing something for our betterment.”

JOURNEY STARTS HERE! SCAN HERE TO START YOUR ONLINE JOURNEY INTO FINDING THE AUTOMATION SOLUTION THAT’S RIGHT FOR YOU!

New Name, Same Great Program

‘Made in Minnesota’ legislation will help small Minnesota manufacturers reduce the cost of improving their operations.

Enterprise Minnesota has worked with state lawmakers for more than 15 years to fund an effort to help small- and medium-sized manufacturers expand and improve their operations. Previously called the “Growth Acceleration Program” (GAP), the legislation will be re-introduced in 2025 as “Made in Minnesota,” a name that reflects the manufacturing-focus of the program.

“Made in Minnesota” will help manufacturers with 250 or fewer full-time employees access funds that cover up to 50% of the cost of services provided through Enterprise Minnesota. Companies have used the funding to implement quality initiatives, ISO certification, automation, expanded marketing and improved cybersecurity programs.

Eligible manufacturers must be located in Minnesota, operate as independent profit centers, have a business plan for

improvements, and demonstrate an economic need for funding. Resources go toward business improvement services that increase job creation, job retention, and business growth, and all companies awarded funding match at least $1 for every $1 spent through the program.

Independent auditors have shown that the program has generated an average $30-to-$1 return on investment. Manufacturers have created 12,556 jobs, generated $1.4 billion in additional sales, saved $206 million in costs, and invested $583 million in plant, equipment, technology, and skills development.

One in seven jobs in our state is directly manufacturing related, and each of these jobs creates two additional jobs. That means fully one-third of Minnesota jobs are dependent on the manufacturing sector.

The funding provided through “Made in Minnesota” couldn’t come at a better time. Manufacturers who participated in this year’s State of Manufacturing® survey expressed uncertainty about the future at a level not seen in the history of the poll. Concerns about a potential economic slowdown, costly regulation, and the inability to attract quality employees loom over Minnesota manufacturers as they enter 2025. As manufacturers prepare to face these challenges, ensuring access to cost-effective services that spur growth and improved efficiency is vital.

One encouraging sign amid this landscape is a growing understanding among legislators about the importance of manufacturing to the vitality of communities across Minnesota. We’ve made great strides in sharing the value of manufacturing with policymakers over the years. Since its beginning, many of our clients have testified at the legislature in support of this program. Manufacturing lead-

ers have shared specific examples of the value of funding for their companies and the positive impact on their communities when they thrive.

We have also benefited from more than 500 manufacturer-hosted tours of their facilities for state lawmakers, members of Congress and their staff, local mayors, and economic development leaders. Tim Penny, former state legislator and member of Congress and current president

The funding provided through “Made in Minnesota” couldn’t come at a better time.

of the Southern Minnesota Initiative Foundation, says, “It’s hugely important just visiting these plants and seeing what’s being produced. You drive by, but you don’t realize what’s going on inside and how many local people are working there. I don’t think there’s anything better than bringing legislators right down on the plant floor.”

These legislative outreach efforts have led to a growing understanding of the critical nature of manufacturing across the state. They are also a key reason this program has enjoyed strong bipartisan support over the years.

We will continue to build on the relationships we have forged with legislators as we return to the Capitol in January to seek funding for “Made in Minnesota.” Through support for this program, legislators can signal their understanding of how essential manufacturing is to the economy as they boost growth in their own communities.

Lynn Shelton is vice president of marketing and organizational development.

2024 State of Manufacturing® Events

Nov. 14 Minneapolis

Nov. 19 Roseau

Nov. 21 Granite Falls

Dec. 4 Owatonna

Dec. 5 St. Cloud

Dec. 11 Fergus Falls

Jan. 15 Duluth

Jan. 17 Grand Rapids 2024 Platinum Sponsors

GROWING COMPANIES ENHANCING COMMUNITIES

Granite Partners is a private investment and long-term holding company founded in 2002 in St. Cloud, Minnesota, with a mission to grow companies and create value for all stakeholders. We advance a culture of trust, innovation, and excellence as essential to 100-year sustainability, and we aspire to world-class wellbeing for everyone in the Granite community.