Enterprise Minnesota Magazine - Fall 2021 by Enterprise Minnesota

INNOVATORS

How Central Boiler has redefined the outdoor wood-burning furnace.

Helping Manufacturing Enterprises Grow Profitably FALL 2021

Is Your Sales Operation Out of Date? A whopping 80% of business-to-business buyers now prefer digital or self-service sales transactions. It is time to adapt.

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FALL 2021

IS YOUR SALES OPERATION OUT OF DATE?

A whopping 80% of business-to-business buyers now prefer digital or self-service sales transactions. It is time to adapt.

Central Boiler

The Thrill of the Hunt

From a site alongside his farm in Greenbush, Dennis Brazier’s Central Boiler has redefined the outdoor wood-burning furnace.

For Stern Companies CEO Shawn Hunstad, the strategic chase is the destination.

American Made

The Reverse Engineer

How Glencoe’s Miller Manufacturing came to dominate the market for farm, ranch and pet products.

Entrepreneur Jeff Engbrecht transformed a high school-bred fascination with carbon fiber composites into Clearwater Composites.

2 Murky Perplexity This year’s State of Manufacturing survey will try to dissect the legacy of the COVID economy.

The Next Phase

A Hidden Gem

After 40 years, Fairmont’s Ken Detloff sells Kenway Engineering to a Spanish company.

Bertha-based Diamond Tool & Engineering perseveres through innovation and compartmentalization.

40 A (Rare) Abundance of Applicants Our new editorial director triumphed over a field of 221 aspirants.

Visit the Enterprise Minnesota website for more details on what’s covered in the magazine at enterpriseminnesota.org.

Subscribe to The Weekly Report and Enterprise Minnesota® magazine today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit enterpriseminnesota.org/subscribe. FALL 2021 ENTERPRISE MINNESOTA /

Murky Perplexity This year’s State of Manufacturing survey will try to dissect the legacy of the COVID economy.

he 2021 version of our State of Manufacturing® (SOM) survey may uncover unprecedented insights into the levels of murky perplexity with the on-again, off-again COVID economy that many — not all — manufacturers are currently trying to navigate. This year’s survey will again be conducted by Rob Autry, founder of Meeting Street Insights. One of America’s top pollsters, Rob’s company has conducted all 12 previous versions of the SOM. As we look back at our first survey, taken during the Great Recession, we found that the sudden and unexpected collapse of the U.S. economy affected manufacturers with the same indiscriminate intensity, no matter size or sector. Our most fascinating findings involved not whether they were affected but how they responded. The COVID economy in 2020 and 2021 — and by this I mean the combination of the pandemic and the related responses by the government — hit manufacturers from diverse angles and with varying intensities. Some companies, not many, were devastated; others prospered. Some were just able to tread water amidst economic and political uncertainties. Will there be a COVID legacy? If so, what will it look like, and will it matter? And what are some lingering issues? Employees. COVID certainly did nothing to ease our ongoing workforce shortages. But did it start to change the relationship between workers and their employees? Will a less loyal workforce always be on the prowl for better deals? And how are manufacturers competing to recruit new workers and, just as important, keep the ones they have? Will technical schools play an increasingly important role in these relationships? 2

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Productivity. Faced with fading employee prospects, will employers double down on improving the efficiencies in their companies’ output? Will robotics and AI play a heightened role? Do companies expect to increase their capital investments? Profitability. Will companies with static or slipping revenues be able to use increased productivity to preserve the same levels of profitability? Zoom. Have Zoom calls become a way of life? More specifically, will companies respond to current research that says their customers actually prefer computer-based sales calls to in-person visits? (For more insights on this, see the cover story by Steve Haarstad on p. 24.) Cybersecurity. The surprise finding of last year’s research was the vulnerability of our digitally connected companies. Will that continue? Has it taken on new or different forms? How have manufacturers decided to respond? I have a particular interest in whether manufacturers will share their experiences with the same candor they exhibited in last year’s Zoom sessions. Critics of computerbased meetings argue that the impersonal nature of talking to your computer screen tends to suppress open and forthright conversations. Those people didn’t attend last year’s focus groups. Feedback from those sessions reflected that even the participants themselves understood that they were part of something special. We’re returning this year with a 70-30 mix of Zoom/in-person sessions. Check our website for locations. All manufacturers are welcome to participate. Bob Kill is president and CEO of Enterprise Minnesota.

Helping Manufacturing Enterprises Grow Profitably

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Publisher Lynn K. Shelton Editorial Director Tom Mason Creative Director Scott Buchschacher Copy Editor Catrin Wigfall Writers Theresa Bourke R.C. Drews Steve Haarstad Anne Kopas Jennifer L. Kraus Peter Passi Jenna Stocker Maria Surma Manka Contacts To subscribe subscribe@enterpriseminnesota.org To change an address or renew ldapra@enterpriseminnesota.org For back issues ldapra@enterpriseminnesota.org For permission to copy lynn.shelton@enterpriseminnesota.org 612-455-4215 To make event reservations events@enterpriseminnesota.org 612-455-4239 For additional magazines and reprints ldapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event chip.tangen@enterpriseminnesota.org 612-455-4225

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TRANSITIONS

The Next Phase After 40 years, Fairmont’s Ken Detloff sells Kenway Engineering to a Spanish company, ensuring that the jobs will remain at home.

Ken Detloff, founder of Kenway Engineering.

rmed with little more than a $1,500 bank loan — secured by his car — entrepreneur Ken Detloff founded Kenway Engineering in 1981, growing it into a formidable employer in Fairmont, Minn. Today, Kenway is a 20-person company that manufactures heating and air conditioning for offroad and construction vehicles worldwide. Detloff founded the company to capitalize on the upgrades local counties were making to their motor graders, which included needing new air conditioners. In the days before email lists, Detloff

opened a road atlas, gathered a list of counties across the Midwest, and mailed a letter to the county highway engineer of each. He expanded his company by offering heating and cooling systems for a wider range of equipment types. Kenway worked with companies like Ziegler CAT on excavators and front-end loaders. It also accepted specialty manufacturing jobs, building parts for other manufacturing companies. Kenway initially outsourced things such as sheet metal work, but over time brought more work in house. It added

welding equipment and CNC machining — an automated machine control process. The company also started selling as an original equipment manufacturer (OEM) and, thanks to improvements in facilities and technology, expanded its sales to field sprayers for Hagie Manufacturing and construction cranes for Terex Corporation. But this rapid growth, combined with the 2008 recession, also posed challenges. “We knew that if we were to grow the business and attract new customers, we had to show them that we can be receptive and actually manage problems within our organization,” says Detloff.

FALL 2021 ENTERPRISE MINNESOTA /

Ken Detloff feels confident the new owners will maintain a growthoriented approach while keeping jobs in Fairmont — and even adding new jobs. Saving space, streamlining production

Since then, Detloff has transformed his company by doubling down on continuous improvement, solidifying its identity as both an OEM and a specialty machine shop. Its ISO certification enabled Kenway to keep a major client onboard and attract new ones. As part of helping the vision, mission and values within Kenway Engineering, Enterprise Minnesota proposed using Lean Thinking to support two main opportunities for Kenway: value stream mapping and enhanced employee training in lean. Through the value stream mapping process, a consultant facilitated a team of employees to map the flow of the facility — from the receipt of raw material to shipping off the final product. One of Kenway’s sticking points, they found, was moving parts through the various fabrication departments. “The problems were all symptoms of traditional manufacturing thinking that doesn’t emphasize flow,” says Greg Langfield, a business growth consultant at Enterprise Minnesota. The solution? Creating a cart system to keep parts organized, as sorting the products into carts makes them easier to move around and separate by type of mate4

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rial. This was a breakthrough, according to Langfield, who worked with Kenway. The team could build the carts themselves, customizing them to the product involved. The process reduced the time needed to move things across the floor and allowed greater flexibility in sorting, speeding up production. Another of Lean Thinking solutions was to simplify Kenway’s system for managing material drops, which is the unused material left over from using bar stock. These drops were placed on a pallet with the goal of having an employee use this material first before consuming a stock length. Unfortunately, what was an idea full of good intentions resulted in an overflowing heap of various materials. Workers, pressed for time, would often grab new pieces of material rather than checking the pallet, which meant more drop material piling up that took up valuable floor space. Under the microscope of Lean Thinking, however, Kenway realized that this floor clutter cost the company more money in space and efficiency than material saved. By setting a limit on how much drop material employees should save along with establishing an organized storage system, Kenway could use that newly created space to grow the business. This Lean Thinking approach was based on the 5S principles of workplace organization: Sort, Set in Order, Shine, Standardize and Sustain. Langfield worked with Kenway to apply lean 5S principles elsewhere throughout the facility, from the laser cutting paint area to the finished goods area. Through a series of Kaizen events, employees learned the 5S principles and applied their individual ingenuity to come up with these solutions on their own. Even smaller changes, like maintaining a systematic, organized work-

space, go a long way. The employee-driven nature of these processes has helped keep the momentum going. These methods are still in place today, says Detloff, and the company has benefited from its culture of continuous improvement. “He’s a very strategic thinker,” says Langfield of Detloff, “so it was nice to be able to show him how continuous improvement could align with his original strategy of being an OEM but also being a job shop.”

A legacy of growth

As business grew, Kenway caught the eye of Sanz Clima, a Spain-based manufacturer of heating and cooling systems for buses, trains, and other large public transportation vehicles. The company has subsidiaries in Russia, Poland, Mexico, Brazil and more. In late 2019, Sanz Clima visited 20 businesses in the United States in the hope of growing its American market. Out of those 20, Sanz Clima chose Kenway, and in October of that year, Detloff sold the company. For Detloff, the sale represented a natural evolution of Kenway Engineering. He turned down other offers that would have moved operations out of state, which he says didn’t feel right. What felt right was a family-owned business like Sanz Clima, which is currently run by a sibling team who took over from their parents, the founders. Detloff feels confident they will maintain a growth-oriented approach while keeping jobs in Fairmont — and even adding new jobs too. And Sanz Clima wanted Detloff to stay on a few years past the sale as the bridge between old and new leadership. “It’s great that the company can go beyond me. All of our employees were able

to stay here, and we’re still part of our neighborhood, our Fairmont community,” says Detloff, who plans to retire within two years.

‘They’re totally amazed’

Between the sale and his company’s enhanced processes, Detloff expects Kenway Engineering to double in size in the next five years. During spring 2020, Kenway’s revenue took a hit due to the economic slowdown resulting from COVID-19. Orders slowed to a crawl in April and May as states and nations entered lockdown periods. But business soon bounced back, and in the end, 2020 was one of Kenway’s best years on record. Now, the company is undergoing a period of change, selling off its machining centers to make room for more assembly. The facility currently looks like Kenway is moving out, but in reality, it’s an inbetween stage on the path to something new. It’s keeping sheet metal manufacturing in-house, but with the free space it will launch a new product line of HVAC for buses and other mass transportation vehicles for companies in Montreal and the Midwest. According to Detloff, Kenway produces more revenue per employee than Sanz Clima’s other subsidiaries. It’s a distinction he owes to Lean Thinking among his employees, not just lean processes on the manufacturing floor. When one person with a specialized job calls in sick, that part of the process doesn’t have to pause for the day. Instead, Kenway’s employees undergo cross-training. One employee might learn skills at the press braking, painting, and assembly stations to accommodate that day’s needs even if absences happen. “I want people to be proud of their area. I want them to be masters of everything they do out there,” says Detloff. It’s a modern company culture that’s equipped for success long after Detloff retires. “When I give people tours and I show them how our product runs through the factory, they’re totally amazed,” he says. —Anne Kopas

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Randy Shorts, CEO of Homecrest Outdoor Living.

COPING

More Employees = More Revenue If Homecrest Outdoor Living could hire 30 more workers, says its CEO, the company could quickly boost sales by 25%.

omecrest Outdoor Living CEO Randy Shorts has been in his current position for less than a year, heading the Wadena-based manufacturing company that has seen a surge in demand for its line of weather-worthy furniture. Shorts hit the ground running when he took lead of a business already racing to keep up with a red-hot market, following the retirement of his predecessor Tim DeJong. Homecrest paused production in May 2020 due to the pandemic, but as it started back up, Shorts says the company didn’t have the luxury of easing back into things. “We had to put the foot to the floor just to keep up,” and that was no small order, he says. While the COVID-19 outbreak slowed many enterprises, it forced Homecrest to accelerate.

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“During the scare, when everyone was hunkered down, people really wanted to spend more time outside,” Shorts says. And that meant more customers investing in quality outdoor furniture. Homecrest has seen roughly a 30% increase in business since the pandemic struck.

“We had to put the foot to the floor just to keep up.” Shorts says Homecrest’s completely domestic supply chain has held up well, with many of the company’s partners showing foresight in their efforts to stock up on materials in anticipation of inevitable hiccups on the horizon. But Homecrest has struggled to keep

pace, nevertheless. “The increased demand has really pushed out our lead times,” Shorts says. As of mid-summer, he says the wait time for most products in the company’s line was about 18 weeks. Shorts and his team are working hard to close that gap, but “we need more bodies to get product out the door.” If Homecrest could hire 30 more workers, Shorts predicts it could boost sales by 25% in a hurry. As of late July, Homecrest employed 108 people, and Ellen Alberg, the company’s HR manager, says she and her colleagues were eagerly awaiting the arrival of nine more new recruits scheduled to start in the next couple of weeks. “We’re catching up a little, but not in quantum leaps,” Shorts says. Based in Wadena, with a population just

north of 4,000, Shorts acknowledges that growing the workforce will likely require the company to draw more people to town. He says the company has been looking at all sorts of ways to attract additional talent, including the possibility of helping new hires find housing. Of course, offering higher wages has also been part of the equation as Homecrest competes for workers. “The idea of paying anyone $15 an hour now is simply a joke,” he says. But Shorts also considers Homecrest’s intimate small-town setting with an abundance of outdoor recreational opportunities a big selling point. A Texas transplant, he himself moved to the area in April, when offered the opportunity to lead Homecrest. Shorts is a seasoned veteran of the outdoor furniture industry, most recently serving as vice president of Brown Jordan Co. for 18-plus years.

Homecrest is leaning up its operation to improve productivity. In addition to staffing up, Shorts says Homecrest has focused on making the most of the resources it has, working with Enterprise Minnesota to implement lean manufacturing techniques and working to refine its welder training regimen and operations. Enterprise Minnesota’s Bill Martinson assisted Homecrest with its leadership development efforts early on, and lately the company has focused on continual improvements and operational efficiencies. “We did a project to streamline their welding operations, and that kind of pushed the constraint to their fab department,” Martinson says. “The fab department makes the parts that go to the weld shop. So now in September, we’re going to go in and do some work on the fab department.” Shorts says Homecrest also is investing in new equipment to improve efficiency, but that’s no quick fix either, as the company has encountered substantial lead times for new machines. Homecrest has a reputation for producing stylish, quality, American-made furniture that commands a bit of premium compared to low-cost imports, Shorts says. The company sells its line completely through

dealers specializing in patio furnishings. “We adjusted how we go to market,” Shorts says. “We raised the bar, and that has attracted a different buyer, a different type of demographic.” Homecrest has made definite inroads in the past couple of years, especially as the cost of shipping containers recently has soared by a magnitude of four or five times pre-pandemic levels, narrowing the gap between the price of domestic and foreign products, even as the Wadena-based company continues to hold an edge on quality and durability over most imports. “For several years, Homecrest was really hurt by imports. And the company struggled. But that’s really turned around,” Martinson says. “That likely started with people’s shift toward wanting to buy things made in the U.S.A.” “They make a higher-end furniture product than most of the imports,” Martinson continues, noting that Homecrest isn’t looking to sell through big-box outlets focused almost exclusively on offering the lowest price. “The pandemic helped them do a complete about-face, in terms of their fortunes in the marketplace,” he says. Shorts agreed the pandemic has provided Homecrest with a unique opportunity to grow. “It may be a blip, but we’re expecting it to last at least two years,” he says, and Shorts is determined to make the most of this time by establishing relationships and building the business for the long term. Shorts recently returned from the International Casual Furnishings Association show in Chicago, where Homecrest’s line was warmly received, attracting interest from an expanding field of clients. Residential customers have accounted for about 75% of Homecrest’s sales, with commercial customers generating the remaining quarter of business in recent years. Shorts says that balance has tilted even more toward the residential side during the pandemic. August is typically one of Homecrest’s slowest months for sales, as its retail customers are already stocked, and summer begins to wane. This is a time when the company has often been able to begin to rebuild stock for the year ahead. “But there is so much of a backlog and such sheer demand for our products, this year doesn’t offer us an opportunity to slow down at all,” Shorts says. —Peter Passi

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The new owners at Falls Fabricating (back row, left to right): Dan Ortloff, president; John Sorenson, director of sales; Jeff Knosalla, vice president. Front row (left to right): Sharon Hirschey, director of quality; Carmen Yasgar, director of human resources and administration; Sue Kramer, controller.

HOMECOMING

Closer to Home The new ‘inside’ owners at Falls Fab hope to foster a positive — and profitable — environment centered around its employees.

embers of the management team at Falls Fabricating believed so strongly in their Little Falls-based company that they purchased it in the midst of a global pandemic. President Dan Ortloff and Vice President Jeff Knosalla, along with their four managing partners — Carmen Yasgar, director of human resources and administration; Sue Kramer, controller; John Sorenson, director of sales; and Sharon Hirschey, director of quality — purchased the company last January. Falls Fabricating is among one of the largest corporations in Little Falls. The company offers a range of fabrication services in sheet metal, machined components, welded assemblies and tubular fabrications. The company, initially called Deer Creek Fabricating, was founded in 1973 as a place to do repair work and light manufacturing. The company relocated to Little Falls in 1987 and changed the name to Falls Fabricating Inc. It was purchased by Al

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and Susie Williams in 1991, who further expanded the company. Four years later, the new owners relocated Falls Fabricating to its current location on the northwest edge of town, where they constructed a 110,000-square-foot building. Spell Family Equity acquired the company in 2007. In early 2020, WIlliam Spell approached Ortloff, a small equity partner at the time, with the idea of selling the company to key managers. “They were always throwing out the idea of selling the business,” Ortloff says. “They had a couple of opportunities in 2018 to sell, but those deals didn’t pan out and then COVID hit. I sat down with...this management team and threw out the idea that this was an opportunity. Everybody was interested and willing to do this.” It took a village and six months to assemble the deal. The City of Little Falls assisted the management team with help from Morrison County Community Devel-

opment, and the Initiative Foundation and Rural Development Authority provided gap funding. The Small Business Administration and Minnesota Business Finance Corporation assisted with a small business loan. Knosalla, who’s been with the company since 2018, felt no doubt about doing the deal. “I wasn’t hesitant at all,” he says. “I was pretty excited to be involved in it. It’s something I hadn’t ever considered doing in my career. I’m getting close to retirement…but now I’m having so much fun I don’t want it to end.” “I’ve always been kind of a people person,” Knosalla continues, “and trying to create an environment where everybody loves coming to work every day.” Sorenson, who is going on his 34th year with the company, has done almost every job at Falls Fabricating. “The opportunity to come in and be a part of this ownership group brings it full circle for me,” Sorenson says, from working the lowest level position to being an equity partner for the company. Yasgar has been with Falls Fabricating for 10 years; Kramer is the newest member of the team, joining in February; and Hirschey joined in 2015 and never imagined she’d have the opportunity to be part owner of the company. She says a lot has changed since she first started. “There has always been a lot of opportunity and potential here. And this really looked like something I wanted to be a part of. There are a lot of positive things happening at Falls Fabricating, and as we move forward, hopefully, we’ll continue that way.” The company strives to create a positive environment centered around its employees. Employees are treated fairly, paid well, offered good benefits and even given a quarterly incentive plan. The plan is based around four metric goals — safety, customer acceptance, on-time delivery and cost savings. For each of the goals achieved in the quarter, the company pays the employee a bonus amount per hour worked within that quarter. If the employee achieves all four goals, there is an additional amount per hour in the payout. “Our goal is to continue sharing with employees as we meet the metrics and accomplish our quarterly financial goals,” the management team says. “This is our way of rewarding them for their hard work and dedication.”

The management team brings different opinions and backgrounds to the company, with each member contributing their own specialty to help the business succeed. Improving communication and learning what works and what doesn’t remain continuous efforts. “We understand that building a great culture starts with leadership,” the management team says. “Many times, it is about having the right chemistry. We found out through a survey in 2018 that our employees felt strongly about upper management lacking good communication.” “It took time, but by plugging in new leaders, we found a chemistry that works for us,” continues the management team, “and our employees felt listened to. We can now have healthy conflict and discussions as leaders. In the end, we all fully support the objectives and communicate a unified message. This process started long before we owned the company and has blossomed in the last six months.” Falls Fabricating currently employs 77 people.

The pandemic

During the pandemic, the company lost 35% of its business, laid off 20% of its workforce, and is currently down about 26 employees. However, the business is having a solid year coming out of the 2020 pandemic and hopes to increase its workforce. “When we budgeted for 2021, we really did not know what to expect with our economy and its ability to come back,” Knosalla says. “In January 2021 we started seeing sales increase like most businesses. Our new challenge was limited material availability and lack of skilled labor. We were and still are faced with cost increases that have a large impact on pricing for our customers. We are not yet back to pre-COVID sales levels, but we are hopefully headed in that direction despite these challenges.” The company plans to update its equipment and technology in the coming years. “We’ve already begun the work of investigating some of these objectives,” the management team says. “In order to stay

competitive and improve the business’ ability to grow, we place a priority on continuous improvement.” “We are still one of the largest custom reservoir manufacturers in the Midwest,” continues the management team. “With COVID challenges we may not be the largest any longer, but we remain positioned near the top in providing this type of product.” —Jennifer L. Kraus

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FALL 2021 ENTERPRISE MINNESOTA /

The Federal Package team (left to right): Jerry Bilse, vice president of operations; Melissa Niebes, chief commercial officer; Steve Dakolios, president; Linda Roggenbuck, chief financial officer; Joe Mabee, vice president of quality assurance and compliance.

SUSTAINABLE MANUFACTURING

Fantastic Plastic Federal Package devised a solution that addresses the environment without sacrificing the quality of traditional plastic.

o you remember how you disposed of that sunscreen stick you used this summer? What about your empty deodorant container? While there are those of us who recycle plastic, it’s usually not recycled. Food or other materials can contaminate containers, and the U.S. doesn’t have a large market for recycled plastics. As a result, six times more plastic waste is incinerated than recycled, according to Columbia University. And yet, most U.S. consumers want recyclable packaging, and companies are responding. “Sustainability within the beauty and personal care industries is the hot topic for manufacturers,” says Melissa Niebes, chief commercial officer at Federal Package in Chanhassen. “Almost every brand has a sustainability goal, and they’re asking manufacturers how they can fit into those goals.” Federal Package is a contract manufacturer for personal care companies, including Johnson & Johnson and Procter & Gamble. It provides formula development, compounding, filling, decorating and packaging for lip balms, sunscreen sticks and deodorant. Customers want environmentally

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friendly plastic packaging, but finding a high-quality plastic that could be recycled or biodegrade was a challenge for Federal Package. “We’d been looking for a better plastic option for our customers for years,” says Steve Dakolios, president and CEO of Federal Package. He and his team finally found their answer in an additive that enhances the biodegradation of plastic products in a landfill. Developed by Wisconsin-based EcoLogic, the organic additive allows a plastic container to degrade more quickly in a biologically active landfill. When the packaging sits in a municipal landfill, the additive reacts to the microbe-rich environment and starts a series of chemical and biological processes that break down the plastic into methane, carbon dioxide and humus (enriched soil). These processes, which start just a few days after the container lands in the landfill, shorten the time span the plastic would have occupied in the landfill from hundreds of years to several years. Federal Package’s solution addressed customer sustainability objectives without sacrificing the quality of traditional plastic. It fit within its manufacturing processes

and was third-party tested against regulated standards. Without a marketing lead at the time, Federal Package wasn’t sure how to launch the product. “A lot of manufacturers like us don’t have resources for a big marketing department,” Dakolios says. “We are the only ones using this additive in consumer products, so it’s a big deal. We knew we needed a branded marketing approach. But we didn’t know what we didn’t know.” So, he brought in someone who did. Penny Hanson, a marketing expert at Enterprise Minnesota, helped Federal Package create a brand around the sustainable plastic packaging, as well as a plan to tell the world about it.

Launching Eco Smart…smartly

Hanson and the team dove into Federal Package’s target market research, product mix, market positioning and potential competitors. They even discussed the feelings and emotions evoked by a healthy environment. “Penny had a very disciplined and structured approach,” says Dakolios. “She took the time to understand us and build the foundation for the brand and launch.” That foundation informed the strategy from which all branding and marketing efforts were created. It highlighted gaps, such as the need to hire a full-time employee to lead marketing. Niebes was chosen for the job. The new packaging was named “Eco Smart,” and Federal Package created a logo, website, key messages, mission, vi-

sion, values, tagline, elevator pitches and social media content — everything to give Eco Smart a personality of its own. “Eco Smart needs a very specific brand because it’s the first of its kind,” says Hanson. “Others will try to imitate it. Your customers need to be able to tell what’s your product and what you stand behind, and what’s a knock off.” Federal Package also identified the types of people within companies most likely to influence purchasing decisions. Called “personas,” Federal Package developed messaging that spoke to the needs and interests of each persona. “A buyer or sourcing persona is someone who’s in charge of purchasing containers from us,” says Niebes. “They are generally interested in the technical aspects of Eco Smart, like what’s in the additive and how it breaks down. A brand manager persona is interested in an inspirational message that reinforces their reputation for sustainability.” Eco Smart was launched in the spring and rolled out in phases in order to test marketing messaging and adjust along the

Without a marketing lead at the time, Federal Package wasn’t sure how to launch the product. way. “We introduced Eco Smart to our current customer base and got feedback,” explains Niebes. “There was a lot of excitement from them. We adjusted language for the next phases based on their responses, as well as some legal and regulatory considerations.” Eco Smart debuted on social media on Earth Day 2021. A media campaign targeting industry publications was executed in June, and social media and Google advertising began in July. Tradeshows were a focus in August. Customers have been particularly interested in how Eco Smart fits into the “circular economy,” which takes into account the materials that go into a product at the beginning of its life and how the product is

disposed in the end. Because Eco Smart uses post-consumer recycled plastic and can be recycled or broken down into primary organic matter, it satisfies both parts of the circular economy. “We shifted our messaging from just talking about the product’s end of life to including both its beginning and end,” says Niebes.

A partnership and product

Educating the market about a new product takes time, but Eco Smart orders are increasing. Federal Package is shipping out pilot batches for interested customers, and a production order for Target is in the works. The team continues to meet with Enterprise Minnesota to discuss goals and strategy. “The Federal Package team has wonderful engagement,” Hanson says. “They knew they had something great with Eco Smart, they just didn’t know how to bring it to the marketplace. We helped them make a plan. I’m so excited for their future.” —Maria Surma Manka

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Founder Kent Smith returned to his hometown in 1989 to launch his company.

EXCELLENCE

A Hidden Gem Bertha-based Diamond Tool & Engineering perseveres through innovation and compartmentalization.

ne might think a high precision, injection mold manufacturing company would be a modern technology, Silicon Valley upstart. But when it comes to Diamond Tool & Engineering, things aren’t always as they seem. In fact the Bertha, Minn., business had humble beginnings in 1989 as a tool and die company specializing in the injection molding plastics industry. Since then, founder Kent Smith has experienced a long journey to a modern company on the

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cutting-edge of the latest technology and industry practices. Smith exhibits his commitment to excellence by investing in the best technology, equipment, and personnel. Over the years, Diamond Tool & Engineering has developed a history of delivering quality molds, fast. From that first rubber mold for Polaris over 30 years ago to automotive molds created through integrated CAD/CAM systems, and to high-precision medical molds,

experience and efficiency enable customers to start production quickly, saving time and money. Much has evolved since 1989, when Smith returned to plant roots in Bertha, the town of his childhood. He sensed the tight-knit community would provide an excellent way to find hard-working and reliable people, which he would pay back by offering rewarding and fulfilling careers. But the business hasn’t always followed a smooth trajectory to success. The challenges Smith has faced were not unknown to other manufacturers. The bursting dot-com bubble of the late ’90s extracted a 25% drop in revenue. The aftermath of Sept. 11 forced a similar downturn. The Great Recession of 2009 compelled layoffs of nearly 25%, from 35 employees to 26 employees. For a company owner heavily invested in his community, the pain was personal. “It was hard to let go of employees who had become family,” Smith says. “But the work just evaporated.” Smith says Diamond Tool persevered through a strategy of compartmentalization. To remain viable and competitive, he rotated his automotive tooling to manufacturing plants in China, which enabled the Bertha plant to specialize in intricate, high-precision plastic injection molds for the medical industry. The combination of low cost overseas tooling and high quality domestic engineering gave Diamond Tool’s customers the best of two worlds, according to Smith. The company’s resilience also stems from its willingness to think creatively and incorporate new technologies. Smith utilizes the cost-advantages of outsourcing while keeping close oversight and quality control to maintain his company’s reputation for excelling at perfection. The company’s culture encourages spending time up front to design and engineer an injection mold that is of the highest level of integrity and quality, paired with a willingness to look for ways to improve, innovate, and anticipate potential roadblocks. “It seems about every five years you have to redefine yourself to remain viable in today’s market,” Smith says. Smith attributes some of his success to capturing opportunities that require heavy initial investment but add exponential value in the long term. Cross-training employees and offering them ownership over their roles on the manufacturing floor incentivize the retention of skilled workers. The team becomes an efficient and cohesive collabo-

ration of workers. Smith also invested in robotics and cutting-edge equipment to maximize output with minimum human resources. His skilled workers can program one of his three automation robotic cells to run overnight, utilizing

The combination of low cost overseas tooling and high quality domestic engineering gave Diamond Tool’s customers the best of two worlds. time that doesn’t require human attention. Additionally, Smith’s Toshiba EC140 molding machine gets molds ready for production following the first sampling in 98% of projects. It is this attention to detail and seeking the right investments that set Smith apart. Like others, Smith’s operation emphasizes lean production processes. By maximizing customer value while minimizing waste, lean processes have a dramatic, positive impact on the functionality of the company, its customers, and the environment. From first becoming ISO 9001:2008 certified to adopting an updated shop management system and working within the framework of Design for Manufacturability/Manufacturing (DFM), Diamond Tool is at the forefront of effectively designing parts and products for easy and efficient production resulting in sustained growth and success. Enterprise Minnesota strategy experts and consultants have made valuable contributions to Diamond’s sustained success. Capitalizing on the Entrepreneurial Operating System and implementing lean processes led to internal problem solving and fine-tuning quality control in the manufacturing facilities. Enterprise Minnesota, Smith says, has helped integrate the company’s core values into a framework that overcomes challenges and finds new ways to innovate. “We used to train employees by their current skill set. Today, we rely on versatility and cross-training. It makes for a more cohesive workforce. Enterprise Minnesota has been a good partner to help us make a better workplace for everyone.” —Jenna Stocker

GROWING COMPANIES, ENHANCING COMMUNITIES

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Metalwerx employs 13 people, 10 of whom came straight from Central Lakes College.

WHAT WORKFORCE SHORTAGE?

Youth Movement Metalwerx’s 22-year-old founder corners the market on recent welding grads.

ne reason Metalwerx has captured so many welding grads from hometown Central Lakes College is that its president is himself a recent product of the program. “I’m sure that helps a little,” says Rod Berg, the 22-year-old entrepreneur. “A younger boss will connect better (with younger workers) than an older boss. We know how life is right now, and we go with it.” Metalwerx manufactures dumpsters, the only company of its kind outside the Twin Cities. A 2017 graduate of Brainerd High School who later received a degree in welding from Brainerd’s Central Lakes College, Berg started Metalwerx after his dad, Donnie, approached him about manufacturing dumpster boxes for his own company, Green Day Solutions, that rented roll-off dumpsters to construction sites and corporate customers. Berg was just 19 years old at the time. Working from his dad’s garage, Berg welded together his first dumpster in about two weeks.

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Two years later, Metalwerx produces eight roll-off dumpsters a week, enabling it to expand its customer rolls beyond Minnesota to a growing number in other states. The company has now also begun producing custom parts for other local manufacturers. Berg says he easily acclimated to the welding aspects of the job, since he’s been doing it his whole life. But the organization, paperwork and financials provided more difficult obstacles. Especially the “financial stuff,” which, he says, was particularly challenging. Today he employs 13 people, 10 of whom came straight from Central Lakes College. With a trades workforce not necessarily easy to build and maintain in today’s stiff workforce market, Berg finds recruiting workers straight from college is the way to go. “That helps a little bit because they’re looking for jobs, and they want to stay local,” he says. “And it’s been pretty decent. I’ve had really good success with that.”

That means Berg has a relatively young team of employees, many getting their first on-the-job experience. “If they want to stay here, great,” Berg says. “If they want to find something different once they’ve got that experience, that’s great for them too.” Jarrett Crandall is one of Berg’s employees recruited out of Central Lakes College in 2020 and who has been with Metalwerx for about a year. He started taking welding classes in high school and discovered there were many job opportunities in the field. “It’s always different,” Crandall says of his job at Metalwerx. “You’ve got plenty of work to do, and Rod’s got a nice shop and equipment for all of us to use, so that makes the days go by easier.” And good management helps, too. David Otto, a welding instructor at Central Lakes College who taught Berg and has watched him build up Metalwerx, admires Berg’s workforce gameplan. “He wants to do the right things to take care of his employees,” Otto says. “He’s working on health insurance and retirement plans and all the things needed to be competitive in the industry, and he understands that.” Berg is trying to do more than put money in his pocket, Otto adds. “He also wants to give back to his employees and make sure they have a safe and comfortable place to work so they can support their families. Not all businesses have that mindset, so that’s a

good approach that also contributes to his success.” For Berg, it’s all about treating his employees well, paying them good wages and creating a positive work environment. And the four 10-hour days with Fridays off each week doesn’t hurt either. While COVID-19 slowed sales last year, Metalwerx is again on the upswing. Berg is now scouting opportunities for expansion, as he has maxed out his current space. Dumpsters will always contribute a significant part of his business, but he hopes to expand the other

“He wants to do the right things to take care of his employees,” says David Otto, a welding instructor at Central Lakes College. side by manufacturing components for other manufacturers. And business aside, Berg helps future welders beyond offering employment opportunities. He donates much of his scrap metal to Central Lakes College and other schools for students to use in class to learn to weld. “That’s huge for us,” says Otto, who feels a sense of accomplishment in seeing his former student succeeding in the welding and manufacturing industries. “He still likes to ask questions and throw ideas past me,” Otto says. “And it’s just good to get to see the motivation and intelligence he has to make things happen.” —Theresa Bourke

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FALL 2021 ENTERPRISE MINNESOTA /

Mark Davidson: “I like what I’m doing because I actually get to make an impact toward our customers’ growth.”

Inside Enterprise Minnesota

An ongoing series.

MILITARY PRECISION

Consultant Insider Marine Corps vet Mark Davidson brings a diversity of experiences to his role at Enterprise Minnesota.

ark Davidson spent four years in the United States Marine Corps in the early ’80s, earning the Marine Corps Expeditionary Medal for his service in Iraq while stationed on the USS Eisenhower. He also served two years as a vehicle commander with the 2nd Light Armored Reconnaissance Battalion at Camp Lejeune, N.C. After his years of active duty, Davidson returned to civilian life and nabbed an electronics and computer systems degree, while at the same time feeling called to a career in sales. Everyone starts somewhere, and for Davidson it was the high-pressure, high-rejection world of door-to-door sales. He knew he wanted something more, but every time an opportunity came into sight, the prerequisite of a four-year degree put

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him back in his place. “I got a lot of doors slammed in my face,” Davidson says. But he didn’t back down. Like most Marines, he opted to adapt, improvise and overcome. He took night courses at Concordia University of St. Paul and graduated in 1997 with a bachelor’s degree in organizational management and communications. He was on to something. In the late ’90s, information technology was an ever expanding marketplace with high demand. At that time, most companies needed a website, customized applications and e-commerce capabilities to compete effectively. Davidson landed his first role as an account executive with an information technology consulting firm. The firm

needed someone who could strike up a great conversation with anyone, make new clients feel like old friends, and help tailor just the right solution to everyone who was called on. Davidson was in his element. Twenty years later, he’s bringing two decades of experience in sales and account management to Enterprise Minnesota, covering companies in southwest Minnesota. He says Enterprise Minnesota provided the

There is no business too small to receive Davidson’s attention. perfect environment for his background. Joining the company in the midst of the COVID economy provided instant challenges. Davidson says automation and lean manufacturing practices offer actionable solutions for businesses ready to grow but short on workforce. “If you can’t get the people, can you consider automation? What applications could work for automation? Can you improve your process or apply some lean tools to your operations to help increase or

maintain your production level? Those are the big things trending right now,” he says. And there’s no business too small to receive Davidson’s attention. While many of his clients may employ between 30 to 100 people, he’s just as prepared for a team of 10 looking to make the next big leap. The prime candidates for his services are businesses that are already in the market but need an expert’s perspective to take things up a notch. For smaller companies or those looking to “dip their toes in” first, Davidson recommends “micro services” designed to work through larger processes one step at a time. “It’s not an all-or-nothing kind of thing; it can go in a series of steps,” he

“I got a lot of doors slammed in my face.” says. “Smaller time requirement, smaller investment, but high impact.” As an example, Davidson recounts one business owner who contacted Enterprise Minnesota recently, ready to throw in the towel. He says by connecting that client to the right training and an expert support team, a desperate situation became an opportunity. Hope replaced helplessness. As he has done for years, it’s a matter of taking the time to listen and understand, then provide meaningful solutions from a roster of talented professionals. Every company’s needs are different, and Davidson’s approachable style has helped a growing list of manufacturers in southwest Minnesota work through their challenges. From lean practices or continuous improvement consulting and leadership development to even marketing strategy and revenue growth projects, he believes the Enterprise Minnesota portfolio brings value that can be life changing. “The services that we provide are transformational, and they’re all interconnected,” Davidson explains. And ultimately, it’s that capacity to help drive growth and transformation that keeps Davidson excited for every new challenge. His success story comes from his clients’ success stories. “I like doing what I’m doing because I actually get to make an impact toward our customers’ growth,” he says. —R.C. Drews FALL 2021 ENTERPRISE MINNESOTA /

Four Questions Rob Autry, Pollster, Meeting Street Insights

s the pollster for Enterprise Minnesota’s State of Manufacturing® survey, is it unusual to conduct polling just for data’s sake? Meaning, not to test a candidate’s popularity or a product’s popularity but to see how people are reacting? For people outside of the manufacturing industry, survey data gives them a look at what’s really happening within the industry and what life is like in manufacturing — a perspective they probably wouldn’t get otherwise. Think about elected officials. Talking to one or two manufacturers in their districts is one thing but hearing how 400 of them across the state really feel about issues impacting them and their industry is another thing. The biggest benefit of the State of Manufacturing survey, to me, is that it provides a lot of people who aren’t manufacturers a better way of understanding the industry and those who are in it. Delivering the data of the State of Manufacturing survey turns out quite the crowd — Enterprise Minnesota has had as many as 600 people at a poll reveal. Does this surprise you? No, I think it speaks to the uniqueness of the survey. It’s an important project, as there aren’t many surveys like this that really drill into the issues impacting manufacturers. With other surveys, respondents mainly give a sense of how things are going on a broader level. The State of Manufacturing survey does a deep dive. Yes, the information presented in the survey provides a holistic look at the industry, but it also gets at what’s going on in the industry from a grassroots level. And it’s amazing how consistent the data can be. For example, the survey is in its 13th year, and while perspectives of manufacturers have changed over

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the years on certain things, manufacturers are consistently optimistic about their financial future. That says a lot about the industry and the growth potential it is viewed as having. And it is likely the reason why that manufacturing company was started in the first place. But we also continue to learn from the survey that health care costs and workforce shortages are pretty sig-

INNOVATIONS

nificant problems for manufacturers that aren’t going away anytime soon. In the many years that you have been in polling, how has it evolved? I think polling has changed much like our lives have changed. Smartphones weren’t around in the early ’90s, so surveys were conducted via landline phones as almost every household in America had one. That’s no longer the case, and if

Rob Autry

Rob Autry is one of the nation’s leading pollsters and research strategists. Rob and his team have worked with many of the world’s leading companies and public policy organizations in the areas of image and brand reputation, issue advocacy, message development, stakeholder relations, and crisis communication. Over the years, they’ve worked with the likes of Google, RitzCarlton, Warner Media, Ticketmaster, the Atlantic Council, and the Carnegie Endowment for International Peace.

a household does still have a landline, they don’t answer it. So polling has had to evolve to meet people where they are. We still do landline interviewing, though, because for a portion of the population that’s still the best way to reach them. But most of our surveys now are conducted on cell phones. We have also incorporated texting into reaching respondents and reaching people online as more and

“The biggest benefit of the State of Manufacturing survey, to me, is that it provides a lot of people who aren’t manufacturers a better way of understanding the industry and those who are in it.” more Americans become electronically connected. Because of this, we as an industry have had to change the way we collect data, using more mixed methodology samples, to make sure we are capturing the population we need to for an accurate and holistic picture of who we are sampling. You have mentioned the survey call complete rate for the State of Manufacturing is higher than you usually get from other polling. What do you attribute this to? Initially, in the first few years of the State of Manufacturing survey, people were interested in giving their opinions on the wide range of topics it tackled. But as they got more familiar with the project, and saw the perceived value that it brought, I think that encouraged them even more to participate. I have been surprised at how high the response rate has been. It has been neat to see the State of Manufacturing project become a space where manufacturers not only give their opinions but, on the backend, can also hear other people’s opinions too.

MANUFACTURING IS VITAL TO MINNESOTA’S ECONOMY Our programs and services here at the Minnesota Department of Employment and Economic Development (DEED) can help you through the economic recovery.

Look to DEED for: ● Business financing programs

Look to CareerForce for: ● Virtual and in-person hiring events

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Specialized training grant programs

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Job posting and hiring guidance

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Workforce strategy assistance and more

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November 10, 2021 • Minneapolis Marriott Northwest

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Innovators

Terri and Dennis Brazier.

Boiler Maker From a site alongside his farm in Greenbush, Dennis Brazier’s Central Boiler has redefined the outdoor wood-burning furnace.

By Sue Bruns

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n the mid-1980s, in the northwest corner of Minnesota — an area better known for snowmobiles Today’s consumers are than lawn mowers — a farm kid named Dennis Brazier decided to build a better wood-burning also concerned about the furnace. He kept at it until he had a company that environmental impact, owns over half the market and has sold a quarter of a million furnaces across the U.S., Canada and and Central Boiler has internationally. Central Boiler started out in a small farm covered that base as well. shop just south of Greenbush, Minn., in Roseau County in 1984. Today it consists of three companies that produce top-line outdoor Central Boiler and WoodMaster furnaces and Altoz lawn mowers, employs 240 people in two manufacturing facilities, and is North America’s largest manufacturer of outdoor furnaces. Brazier grew up on a farm near Greenbush, a dot on the map between Thief River Falls and the Canadian border. Like most farmers’ sons, he developed good work habits, a generalist’s range of knowledge, creative problem solving skills, and a love of motors and wheels. While still in high school, Brazier bought his own seed and fertilizer, worked 18 acres with his dad’s 1950s-era farm equipment, and used the profits for spending money. He expanded his farming operation after graduatEVOLUTION OF THE FACILITY: CENTRAL BOILER ing, but he had his sights on other things. He bought, repaired, and CONTINUES TO OUTGROW ITS SPACE sold cars and farm machinery on the side. Two summers of bridge Brazier designed his earlier furnaces on his kitchen floor and in an building taught him additional life skills and leadership lessons that 18’ x 50’ shop on the farm. With money earned from farming and he applied to Central Boiler. the help of family and friends, he built a 54’ x 104’ workshop in By the time he married Terri in 1985, he had already built his first 1986. By 1988, Central Boiler offered the Classic CL-17 and CLwood furnace. “Outdoor furnaces had been around a while,” Brazier 40, their first outdoor wood furnaces with all-weather steel siding. says. “I had seen little buildings with smoke coming out but hadn’t What had started as a side business that peddled just a few furnaces paid much attention.” Then his brother-in-law bought one — some a year quickly grew into a full-fledged manufacturer — one that assembly required — which Brazier described as “a crazy contrapbroke its own sales records year after year. Brazier further develtion, a pile of black metal.” Meanwhile, Brazier’s parents, who still oped the company by buying equipment and materials as he could lived on the farm, had welded together their own outdoor furnace. afford them. He took out a small loan once the company was start“It was terrible — not efficient,” Brazier says. “I thought, this is ed, but interest rates in the volatile ’80s ran in the two-digit range. ridiculous. I know I can do something better.” He didn’t spend money he didn’t have. “I borrowed my father-inIn 1984, Brazier’s first furnace resembled an overgrown barrel law’s welder for two years before I bought my own,” he says. stove, but he discarded it as having too many flaws. That first design, Terri worked at the post office and took over bookkeeping for however, was the birth of Central Boiler. With further experimentathe company. “We have the same money management views and tion and working with his brother-in-law, he designed, built, and sold complementary skills,” Brazier says. “She is super meticulous.” his first outdoor wood furnace with a square firebox in 1985. As Central Boiler grew, Dennis built, sold and delivered furnaces and parts himself. “The business grew big fast,” he says, “and Terri OUTDOOR WOOD-BURNING FURNACES: started getting things organized.” She handled invoicing and acA SAFER, BETTER, WOOD-HEAT OPTION counts receivable for several years, with the accuracy her husband Outdoor wood-burning furnaces — usually located 30 to 200 feet describes as “down to the exact penny with everything detailed.” away from the house — present a safer, cleaner option to indoor “We’ve been an excellent team,” says Terri, now corporate ofwood-burners. They eliminate smoke, carbon monoxide dangers, ficer/owner. “Dennis is the head; I’m the heart. He’s always had an and chimney fires. But early units on the market were inefficient engineering spirit. He does the product development; I work with the and inconvenient. Within a few years, Brazier had found ways to people and the things that make Central Boiler a good place to work.” improve on virtually every aspect of earlier designs. His furnaces were better constructed, easier to install and maintain, safer, THE COMPANY GROWS, PRODUCT cleaner, and more energy efficient. As fuel prices fluctuated, the CONTINUES TO IMPROVE market for better outdoor wood-burning furnaces grew, especially In 1989, Central Boiler sold over a hundred furnaces and introduced where wood — much of which could be harvested by the users — the CL-75, nicknamed the “jumbo furnace.” Over the next few was readily available. years, sales tripled and semi-loads of furnaces were shipped out FALL 2021 ENTERPRISE MINNESOTA /

to meet the orders of more than 40 dealers across the country. In 1991, Central Boiler sold over 700 furnaces and had outgrown its workspace. Brazier built a new 24,000-square-foot facility at its current location, adjacent to the family farm. The facility included offices and research and development space. With room to grow, the company built over 1,600 furnaces in 1992, and added 25,000 square feet of manufacturing space the next year. Further additions to the shop occurred in 1993, 2000, 2001, 2006 and 2011. Today’s facility houses assembly lines for both outdoor furnaces and Altoz lawn mowers in a 300,000-square-foot plant. Demand grew steadily through the early 2000s; Central Boiler added a second production shift and set up a dealer ecommerce website for online ordering. In 2004, an unprecedented 1,000 furnaces were shipped out in a single month — a record broken the very next year when 1,000 furnaces were ordered in a single week. That year, 2005, Central Boiler hired close to 50 new workers, dealers increased by one-third, and Central Boiler produced 10,000 furnaces.

CENTRAL BOILER FURNACES GO GREEN

Improvements continued. Brazier developed new products and models for wood pellets and corn, more efficient and leaner manufacturing processes, plant expansions and upgrades. Initially, customers purchased Central Boiler furnaces because they were wellbuilt, economical and easy to install and use. Today’s consumers are also concerned about the environmental impact, and Central Boiler has covered that base as well. In 1995, Central Boiler participated in an Environmental Protection Agency (EPA) project that evaluated its Classic furnace for efficiency and emissions. The Classic performed the best of all wood furnaces tested. Early in 2007, the company partnered with the EPA “to promote the manufacture and sale of cleaner outdoor wood furnaces.” That year, the Central Boiler E-Classic 2300 became the first outdoor wood furnace to receive a qualifying label from the EPA’s Outdoor Wood-fired Hydronic Heaters program. In 2008, the state of Vermont’s Control 22

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Central Boiler’s designs use a water jacket that surrounds the furnace firebox and heat exchanger. The heated water travels through underground insulated pipes to the home. Designed to work with any existing heating system, these furnaces can also heat the home’s domestic water and multiple outbuildings — a garage, workshop, or greenhouse, and even swimming pools and hot tubs.

Division certified that the Central Boiler EClassic 2300 met their emissions standards — the first outdoor furnace to do so — and became the only such product allowed to be sold in Vermont at the time. As the company moved toward additional eco-friendly furnaces, they also made them more user friendly. The Classic Edge FireStar Combustion Controller makes burning wood almost fool proof by monitoring how the wood is burning and adjusting the air intake for maximum efficiency, ensuring longer burning times and consuming 60% less wood. Text or email notifications alert the owner about when more wood needs to be added. Today, Central Boiler’s central heater furnaces hold the top three rankings in the country for low emissions and high efficiency in a field of about 250 heaters. The EPA certifies Central Boiler’s Classic Edge Titanium HDX outdoor wood furnaces at 90% efficiency, and consumers can claim a 26% federal tax credit on qualified Central Boiler models and installation. Ease of installation, loading and maintenance have contributed to Central Boiler’s top rankings. The company’s 10-year warranty on its outdoor furnaces (1998) was more than one-upped in 2002 with an impressive 25-year warranty. Central Boiler has over 400 dealers throughout the U.S. and Canada. Their furnaces are certified under European test standards and are sold in Norway, Sweden, Germany, Austria, Ireland, the U.K. and Russia.

PRODUCTION AND CENTRAL BOILER’S GROWTH

Most of the cutting, bending, welding, washing, painting and assembling of Central Boiler furnaces is done on site, allowing more control over the quality of

work. The company buys welded steel fire boxes from a number of suppliers, but all fire boxes undergo stringent inspection and testing before they can become part of a Central Boiler furnace. The company purchased its first laser cutter in the mid-1990s and has added six more since then. In 1996, Brazier added his first turret punch and press brake, and in 2009, added a state-of-the-art robot to perform some of the heavy repetitive work in order to reduce physical demands on employees. The assembly line raises or lowers the boilers as needed so that workers don’t have to strain to work or lift above the shoulders or below the knees. In 2010, Central Boiler manufactured its 1,000th Maxim wood-pellet furnace and launched the E-Classic 2400, which won the Vesta Award at the Hearth, Patio & Barbecue Expo. That same year, Brazier was inducted into the IDEA Competition Partner’s Hall of Fame, honoring him for over 25 years of innovation.

FROM OUTDOOR WOOD FURNACES TO ZERO-TURN MOWERS

In 2010, the company also announced its newest venture: production of zero-turn Altoz mowers. In 2011, a 46,000-squarefoot addition was built to accommodate increased manufacturing, and the company started producing Altoz. For Brazier, manufacturing lawn mowers seemed a perfect diversification. “Altoz mowers were for the summer season,” he says, “so they complemented the Central Boiler furnaces. To diversify, we wanted something out of the heating business. I like machinery, love mowing lawn — it seemed natural to me.” And although northerners think of mowing as a summer task, there are lawns to be

mowed around the country (and in other countries) all year long. An early attempt at building his own lawn mower had resulted in a functional but Frankenstein-ish machine; but after three decades of designing and manufacturing experience, Brazier was ready to produce a better mower. Zero radius turn machines had been around for a while, but as Altoz’s brochure says, the machine was “purpose-built to work longer and cover more ground” than its competition, especially in areas with hills, slants, moist soils or delicate obstacles like orchards, vineyards and solar fields. Production of the Altoz filled winter months when outdoor furnace production slowed. After a decade of production, demand for Altoz continues to grow in stride with its reputation for powerful performance, reduction of trenching or rutting, and simplicity to use. Maneuverability, particularly around obstacles or making sharp turns, ranks high for the Altoz. With models that offer up to 37 hp, speeds of 8-12 mph, and cutting widths up to 72”, the Altoz boasts agility, stability and comfort for getting big jobs done quickly and precisely. Earlier this year, Altoz introduced its first tracked stand-on mower, the Altoz TSX. Primarily for commercial use and lawn care professionals, it is billed as “the first of its kind in the world.” “Most [Altoz mowers] go east of the Mississippi,” says Karl Bjorkman, Altoz sales and marketing director. “We’ll move west as we continue to expand. Many are sold for commercial use on places where other mowers can’t go — solar fields, water retention ponds, etc. These are niche markets for the Altoz, especially for the newly released track models.” Altoz ride-on or stand-on track machines, both industry firsts, “can replace guys with string trimmers” cutting grass in areas that are inaccessible for most mowers.

CENTRAL BOILER’S THIRD COMPANY

Central Boiler’s most recent venture was the acquisition of WoodMaster, another outdoor wood furnace manufacturer, located in Red Lake Falls just 60 miles south of Greenbush. “WoodMaster was our biggest competitor,” Brazier says. “We joined forces with them. Most of the family that owned it still work there. The advantage we bring is our

“We’ve been an excellent team,” says Terri Brazier, corporate officer/owner. “Dennis is the head; I’m the heart. He’s always had an engineering spirit. He does the product development; I work with the people and the things that make Central Boiler a good place to work.”

organizational umbrella.” Central Boiler has moved some of its production to Red Lake Falls, expanding their operation and creating jobs in the community of about 1,400. In spite of the pandemic, Brazier says 2020 was a good year for both furnaces and lawn mowers. People didn’t travel but spent more time outdoors and at home. With the trend toward self-sufficiency, chopping and burning wood became more popular. Sales manager Bjorkman notes, “My woodpile has never been so high.”

THE SUCCESS COMES FROM ITS EMPLOYEES

Both Dennis and Terri Brazier attribute Central Boiler’s success to the people who work there. Most employees live within 20-30 miles of Greenbush (population about 700). Many grew up together, went to school together; they know each other’s families, and the workplace is an extended family. Central Boiler has a balance of long-term and recent employees. Jarod Reierson, human resources manager for Central Boiler, says 41% of the company’s workforce has been with the company for over 10 years, and 31% of the workforce has been hired since July 1, 2020. Originally from Thief River Falls, Reierson was recruited to join Central Boiler at a college career fair. Now he’s hiring people — some of them through job fairs — in careers from engineering and manufacturing to IT, network systems, website management, marketing, shipping and receiving, and more. Central Boiler employs machine shop programmers and operators, welders, and has its own videographer, graphic designers, and technical writers who produce the company’s brochures and other publications.

“We have 16 youth who are employed for the summer — recent high school graduates and college students,” Reierson says. They work in assembly, shipping, office work and IT. Some have earned internships; some will go on for training in any one of several areas needed at Central Boiler and, hopefully, return. Central Boiler offers incentives, like a $2,500 hiring bonus for new full-time employees and a $1,000 completion bonus for high school and college students who work at least 400 hours during the summer. “These have been very successful incentives,” Reierson says. Terri Brazier describes the Central Boiler crew as “a well-honed team” and adds: “We work from the philosophy of treating people as you would want to be treated and respecting each person’s personhood.” The company holds health fairs and wellness programs. They celebrate length of service, hold company picnics, and host a bonus party at the end of the year with fun themes like “Red Neck” or “The 1980s.” In June 2021, Central Boiler was named by the Star Tribune as one of the Top 175 Work Places in Minnesota, ranking 29th of 60 mid-sized companies. The recognition is employee initiated and based on employee surveys by Energage. Central Boiler employees listed several benefits ranging from the company’s commitment to its employees’ health and safety to profit sharing bonuses and a 401(k) match. Central Boiler employees work with the safety director to design and implement safety practices, and the company has been a MNSHARP workplace for the past several years, going above and beyond OSHA standards. A sign posted in the plant boasts: “Over 20 years (7,333 days), we are proud to have had only two lost time injuries.” FALL 2021 ENTERPRISE MINNESOTA /

A Call to Action

Is Your Sales Operation Out of Date? A whopping 80% of business-tobusiness buyers now prefer digital or self-service sales transactions. It is time to adapt. By Steve Haarstad

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he past year has seen massive changes in how businesses communicate and connect with customers. Statistics from a recent McKinsey article highlight the dramatic way businesses and customers relate to each other and how changing habits altered the landscape — in some cases permanently. For example, the article states that only 20% of businesses hope to return to in-person selling. What that means to me — and what makes that important for your business and communicating to your customers — is that 80% of business-to-business buyers now prefer a digital or self-service sales transaction. This change of buying and selling mindset warrants a change in the approach businesses communicate and sell their product — or service — without diminishing the effectiveness of the communication and selling process. I strongly believe this change has resulted in a fundamental shift in the way that we do business both now, today, and in the future, regardless of the status of the pandemic. It is a universal takeaway every business can use to fuel future revenue growth.

value received. We want to think about and consider value received — specifically the perception of value received and more importantly, the customer’s perception of value received. That perception of value really drives and influences all of these relationships.

CHANGING STRATEGY WITHOUT CHANGING CORE VALUES

In order to properly identify value, it’s important to start out defining who the target customers are, where they are, what they need, and what they care about. The better a business leader understands those things, the more likely the business is to yield positive results in growth and also positive sales efforts.

In order to continue on a positive profitability and growth trajectory, it is important to build on and maintain the core principles that haven’t changed. By working through those foundational pieces to profitable growth, there are practical steps to help you think through how to identify and define them for your business. Doing so helps leverage them for profitable growth now and in the future. The important keys worth sharing with you revolve around: • Identifying the right customer. • Defining the right message. • Delivering the right value. Even though the way we connect with our customers has changed, the foundational keys to profitable growth have not changed. The identifying factors above can be described as knowing and identifying the right customer, defining the right message that resonates with those customers, and deliverWhat really connects the ing value — the right dynamic relationship value. I can’t overemphasize the role that among your company, value plays and how your customers and your integrated this concept of value is in relationcompetition is value — ship with customer value delivered and message and the value delivered. value received. When we discuss the relationship between customers and how to influence the choices they make, it’s imperative to talk about how value permeates that relationship and some of those choices. There’s a foundational relationship between three entities: your company, the customer, and the competition. There is a continual dynamic relationship happening between all three of those entities. What really holds them together and what connects them all is value — value delivered and

BUILDING A PERCEPTION OF VALUE

The first step is understanding who your customers are, what they care about, the kind of things that they value, and how they perceive and define value. Next, create and deliver value that aligns and matches it. A successful business leverages value — defined as benefit less cost — for profitable growth. When thinking about customers, their perception of value should far outweigh that same level of cost — whether it’s financial commitment, time opportunity costs, or other factors. The better we are as business leaders at understanding our customer’s perspective around value, the more likely we are to be able to leverage that knowledge and insight and help to utilize it and grow profitably with our businesses.

FOCUS ON THE CUSTOMER

Who is the target customer? Customers who: • Help us to maximize our capabilities to get the most out of our business. • Value what we do, our products or services, and/or who we are and why we exist.

Steve Haarstad is a business growth consultant at Enterprise Minnesota who helps manufacturers better understand how they can grow their top-line revenue and strengthen their leadership culture. Prior to joining Enterprise Minnesota, Haarstad served as global customer support manager, global education manager, and marketing training manager for Emerson Process Management in Eden Prairie and Rosemount. He earned a B.S. in mechanical engineering at Michigan Technological University and an MBA at the University of Nebraska-Lincoln.

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Cycle

defined, it can be used to begin quantifying the opportunity that exists with that target by applying it as a filter within any number of business databases. Hoovers is a good example of a strong database or business listing. Once we have a list of businesses that match our target customer profile, we can make some assumptions about average revenues to quantify the potential of the market. But before we get too far, let’s dig further into the development of the target customer profile.

Discover

Explore

Engage

TARGET CUSTOMER PROFILE Buy

Historical Customer Life Cycle • Predictable • Sellers had powerful influence • Ways to connect and search were limited Customers help us maximize capabilities, whether that equates to maximizing workflow, output, or the way a facility is set up, which also helps them maximize the value that they provide to the clients. It can also mean developing strategies to start engaging in social media and creating blog posts and writing and putting these posts out to the universe on a regular basis. Many companies publishing posts write stories about who they are, their products, their services, their capabilities, and the kind of value that they provide to the marketplace. It can help gain traction, build an audience and build interest on a human level. As a first step, it helps to develop a profile of our target customers. I like to build profiles that include demographic (who they are), geographic (where they are), and psychographic (how do they think) characteristics. Once the profile is

We oftentimes go through this process with our clients by using a tool that we call the most valuable customer analysis. It’s basically a process of using the information we know about some of our existing customers to define who we want to target. We can then use this information to create the profiles we’ve been talking about. Here are some things to think about as you identify the characteristics of each profile you develop. Remember, it is easiest to start by thinking about one of your favorite customers.

Demographic

Think about demographics as a kind of census-type data and look for common characteristics. Try asking the following questions: • What industry do we want to target? • What type of business are they in? (e.g., OEM, reselling, manufacturing, etc.) • What size of business are they from a revenue standpoint or from an employee standpoint? • What is the ownership model? (e.g., private, partnership, public, equity firm, etc.) An important characteristic to identify is the job title of the target contact, the decision maker, or the ideal person who you would work with at that business.

Geographic

Think about geographic characteristics in a few different ways. Oftentimes we think locally, and we think about radius distance around our business. The radius could be 25 miles, 200 miles or it could be something else. We can also think about this from a regional perspective. Maybe it involves looking at the entire United States divided into its regions: the Northeast, the Southwest, etc. Maybe it involves looking nationally versus internationally. Geographics could also involve a sales team that has different sales territories, so we think about it from a territorial perspective. Consider how logistics might impact the size of the

Even though the way we connect with our customers has changed, the foundational keys to profitable growth have not changed. sales territory and the distance from which you can effectively sell or provide goods or services. Consider the size and weight of the product for transportation purposes. In the end, what geographic region are you targeting?

Psychographic

Think about psychographic characteristics as the needs, cares, and things that the target customer values. It’s about how customers think and behave, which is really a reflection of the culture at their business. What are the things customers care about or need? It could be things they appreciate from their suppliers. It could be benefits they’re seeking to gain from their suppliers, or maybe it’s those issues or challenges that they’re currently struggling with, or that they’ve faced in the past.

Current Customer Life Cycle

Current Customer Life Cycle • Meandering path • Much is out of our control • Buyer purchase based on information and emotion • Control what we can 26

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▪ Meandering path ▪ Much is out of our control

▪ Buyers purchase based on information and emotion ▪ Control what we can

age

e, etc.

lenges, warranty or part integrity — whether it’s with their own part or with a part from a current supplier. Are there on-going supply issues? The customer could be looking to resolve a manufacturability issue or something else along supply chain management.

Right Message 21

Communicates

value, solutions, experience, etc.

Differentiates

you from other options

Resonates

with the right customer Analyzing psychographic characteristics is probably the most challenging. It requires the deepest level of thinking about our customer profile. Breaking down the psychographic characteristics of the target customers into four categories streamlines the process. The four categories are: 1. How they think (culture). 2. What they need. 3. What they appreciate. 4. What are the potential challenges. Customers may have a strong culture of continuous improvement, or maybe they’re really focused on innovation or being innovative. Maybe they have a culture of “good enough” and they just need basics to cover their bases. Maybe they have a service-heavy orientation culture. Needs might range from looking for a reliable supplier or looking to launch a new product. Maybe customers need design support on a product or service they’re putting out. Maybe they’re looking for a supplier who can simply and reliably provide a quick, easy, low cost part and it’s just a transaction. Maybe they’re looking for a supplier who is more relationship focused and is looking to create a long-term partnership. Similar to needs, what customers appreciate often varies. Maybe they appreciate communication — either proactive communication or just a lot of communication within the business. Maybe they appreciate 17 the ability to connect and interact in a digital way or some type of online self-service rather than in-person. Potential challenges facing the customer is the last category. Questions to ask regarding those challenges include labor chal-

THINK ABOUT THE RIGHT MESSAGE — WITH PURPOSE

With our target customer identified in our profiles, it is time to think about designing a message that communicates the value provided. A good message communicates our solutions as well as the experience. It’s the right message with the right purpose. Customers use messaging to differentiate us from other options including competitors, a do-it-yourself model, and even doing nothing! The right message resonates with the right customer. How our message resonates and the purpose of what we’re trying to accomplish with our message is vitally important. If our message doesn’t connect with customers, they’re not going to come to us. That is why it is crucial to understand that target customer and craft our message accordingly. Targeted, resonating messaging includes examples such as guaranteed delivery, 24-hour response time, and business with a culture of precision quality. Remember that we have experienced life as a customer and we have experienced messages from people

who want to do business with us. And the messages that resonate with us as customers compel us to want to do business with those companies and businesses. Conversely, if we create messages that resonate with our target customers, it will cause them to want to come and do business with us. The other key element of the right message is purpose. Think carefully about what you are trying to accomplish with your message and what ways you define what that message does or what it communicates to the world. Examples are things like credibility, urgency, quality, craftsmanship, function and utility. It could be an attentiongrabber or a call to action but be clear about what you’re trying to accomplish with that message.

MAKING THE CONNECTION

With a clear target customer and the right message, the next step is to connect the message with the customer. This step is really about identifying and articulating the pathways with which we deliver the value of our message to our target customers — our right customers. Generally, getting the message out in more places provides more opportunity to connect with the right customers. Also keep in mind that the way we connect with customers has changed how we deliver and get our communication. But the why hasn’t changed. The why is that we are trying to get our right message out to our right customer and make that connection in a consistent way. The way we connect with our customers is still based on information and emotion. Those things that they value or care about are influencing the decisions they make. Instead of focusing on the things that we no longer control, we can focus on and control the things that will help us design the right message that resonates with the right customer where that customer is most likely to find it. The key takeaway from this is that the way we connect with customers has changed. So, we need to change how we connect with our customers. But take heart because those foundational keys to profitable growth have not changed. The solution for growing profitably will help you navigate this new landscape successfully, and it lies in finding the right customer, identifying the right message, and having the right value delivered.

mer Profile – Psychographic (Cares, Needs)

culture)

iate

s Sought

nges Faced

Customer Profile: Psychographic (Cares, Needs) • • • • •

Think (culture) Need Appreciate Benefits sought Challenges faced

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Agile Growth

The Thrill of the Hunt

For Stern Companies CEO Shawn Hunstad, the strategic chase is the destination. By R.C. Drews

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Throughout 2017, Shawn Hunstad struggled to attract a sufficient workforce to process the extraordinary growth in sales that threatened to overwhelm the production capabilities at Stern Companies, Inc., his Baxter-based manufacturer and distributor of rubber and plastic products. Rather than cannibalize the existing workforce in the greater Brainerd region, he discerned that a stable solution might be to expand elsewhere. His instinct proved prescient when he learned of the empty facility of Premier Plastics in Hoyt Lakes. A Wisconsin company had purchased Premier a year earlier before relocating its manufacturing operations to Wisconsin. Finding the space gave Hunstad room to expand, but finding people comprised the prize. Many experienced plastic thermoformers didn’t make the move to Wisconsin. The plant and the people provided Stern with exactly the capabilities Hunstad needed to fulfill a contract with Brunswick New York Mills — the manufacturer of Lund and Crestliner boats. Hunstad acquired the plant with financial assistance from the Minnesota Iron Range Resources and Rehabilitation Board (IRRRB). For Hunstad, the number-one priority was growing the company’s workforce without compromis-

ing the Brainerd and Baxter operations. “We looked at Hoyt Lakes as far enough away from this region to be able to tap a different employee pool,” he recalls. The 35,000-square-foot Hoyt Lakes facility today runs two shifts of 20 total staff on rotational molding and thermoforming of boat consoles for that aforementioned Brunswick contract, BOSS Snowplow salt-spreading hoppers for ATVs and pickups, sleds for Eskimo-brand fish houses, and outdoor food oil tanks for Restaurant Technologies. But while the Hoyt Lakes venture offered an expanded workforce and new manufacturing processes for in-house production — which was reaching over 50% of their sales for a company that began as a brokerage — new business continued coming in to Stern every month. Even with the increased capacity, eventually the company would need to find another creative way to avoid turning down work. The Hoyt Lakes solution to Stern’s workforce challenges is just one insight into how Hunstad has used entrepreneurial vision, agility, and self-confidence to create a diverse, $27 million, 135-employee company that occupies a quarter-million square feet of manufacturing space in four facilities across Minnesota.

HISTORY OF ADAPTATION

directly, Stern Industries would function as a brokerage between suppliers and manufacturing clients. Hunstad assumed the lead role within the first year of the two-man company’s history. Working from a spare room in his Brainerd home, Hunstad says it was a matter of building relationships with vetted suppliers that could meet manufacturing needs on time, every time. In effect, he offered a turn-key solution to manufacturers, and the company grew as customers found how simple it was to work with Stern Industries rather than researching and coordinating with suppliers themselves. A year later, the business model evolved slightly, from a pure brokerage into a model of “buy, hold, supply.” “The company with that format grew exponentially over the years,” Hunstad says. “The engineers at many of these companies found how easy it was to just go to us. It went crazy.” In the first year, the two-man sales team brought in about $250,000, Hunstad recalls, and doubled that to $500,000 the next year. One decade later, that number was north of $10 million. The company grew until a spare room could no longer contain the activity. Hunstad rented a small office suite with room enough for two salesmen and a receptionist. Shortly thereafter, he upgraded to another new facility on Highway 371 that provided some warehouse space. And when that was no longer enough, Hunstad relocated to Stern’s present 11,000-square-foot headquarters in Baxter.

Stern’s path to success hews closely to the intuitive vision of Hunstad. After receiving a SOLUTION SEEKING degree in business administraAt Stern Industries’ parent company, Stern tion from the University of Rubber, growth had been swift around 1997 Shawn M. Hunstad, CEO of Ardell C. Paulson, President North Dakota in 1988, he knew and 1998, expanding to a second facilStern Companies, Inc. of Stern Companies, Inc. his future began in Brainerd. ity in Aitkin. A new operation opened in a He moved there straight out of downtown incubator building before being college, and after a few years relocated to the Aitkin industrial park in selling copy machines, found his calling in a traveling sales job with 2002. Things looked good for both halves of the company until, the Stern Rubber Company. The company provided custom-molded Hunstad says, the owners made a “colossal” mistake by failing to rubber parts via compression, transfer, or injection molding from move some of the labor-intensive rubber manufacturing overseas. a facility in Staples. In 1992, it was headed toward a growth spurt. National competitors were already making the switch, and Stern Hunstad would play his part, but it was a winding road from here to Rubber was being priced out of the market. there that would test his resolve and the company’s ability to adapt. For his part, Hunstad — who had worked his way into a 50-50 Initially a road warrior combing the state for clients, he left the road and serviced his ever-expanding customer list via telephone. He split the national list with John Ace, a more experienced salesman who became Hunstad’s mentor. Living close by, the two commuted to and from the office every day, a time Hunstad used as in-car training. “I can’t put enough emphasis on how important that was for me,” Hunstad says. “Being able to talk to John on the way to work for that half hour, and then the same on the way home, was beneficial for me.” In 1995, the company’s biggest client, Polaris, was facing challenges with its plastic component suppliers and urged Stern to venture beyond rubber manufacturing. The two “The company with that format grew exponentially over the companies had a good relationship, and Polaris, Hunstad years,” says Shawn Hunstad. “The engineers at many of these says, believed Stern could provide a better value. The fathercompanies found how easy it was to just go to us. It went crazy.” and-son ownership of Stern Rubber started a subsidiary company, Stern Industries. Rather than enter manufacturing FALL 2021 ENTERPRISE MINNESOTA /

ownership of Stern Industries alongside Terry Stern, the younger co-founder of Stern Rubber — hired a representative in Asia to handle importing for Stern Industries. Stern Industries remained primarily a brokerage between manufacturers and suppliers, now with competitive offshore products as well. Hunstad says it was around 2005 that his side of the business began to eclipse its parent company. In 2006, Hunstad had his eyes on bringing at least a portion of the manufacturing in house, which today makes up approximately 60% of Stern’s revenue. To him, it was the best way to maintain control over production and ensure good relationships with his manufacturing clients, rather than being entirely beholden to other suppliers. Hunstad bought out a Brainerd-based supplier, Nor-Pac Industries, that provided plastic rotational molding products, such as kayaks, and was looking to transition out of the business. It was an opportunity he couldn’t resist, and it would be the first acquisition of many. Stern bought up the equipment and existing clients without skipping a beat, under the new subsidiary of Stern Assembly, marking their first foray into plastic production. As Stern Rubber and Stern Industries jockeyed to outsell one another, the owners of both companies (Hunstad and Terry Stern of Stern Industries, and Terry Stern of Stern Rubber) decided to bring the two together as one under the new name of Stern Companies, Inc. Things looked great for the few years prior to the recession, but the economic downturn would be crushing for Hunstad’s half of the business and its brokerage model. The company’s biggest clients, like Polaris, were themselves fighting to weather declining sales of recreational vehicles. The “middleman markup” of working with a brokerage was a cost Polaris wanted to leave behind. Hunstad says he believes the decision proved more costly than those companies anticipated because they lost his team’s expertise and relationships, but the immediate problem was a major revenue gap for Stern Industries. It could have been a death spiral. In 2009, Hunstad and Terry Stern split the two companies back apart for good. Hunstad says he took control of the plastic operations (Stern Industries, along with Stern Assembly). Terry Stern walked away with the rubber business, including the offshore rubber manufacturing suppliers brought in by Hunstad under the Stern Industries banner. The recession in ’09 and the resulting 30

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President Ardell Paulson says internal success is about competing through efficient processes and a well-trained team committed to continuous improvement.

split, “righted the ship,” Hunstad says, by exposing flaws in an inadequate way of doing business. Both companies, Stern Rubber and Stern Industries, had leaned too much on a single client to support their businesses, and the recession taught Hunstad never to make that mistake again. For context, in 2008, the combined Stern companies were a $50 million business with one customer, Polaris, accounting for more than 80 percent of revenue. When Polaris had a problem, Stern had a problem. Diversification would have to become the new normal. Hunstad took his lumps and, along with his team, researched which industries would best complement Stern’s network of suppliers and rotational molding. Furthermore, he decided that if Stern Companies (now and still today the official name of Hunstad’s company) was going to reach a broader audience, it would need to be flexible. More than a decade later, Hunstad says the business — through his

sales team’s constant recruiting of new clients in new industries, like agriculture and food services — sees most clients providing 5-10% of the company’s revenue. Polaris, who remains an important partner, is near that lower figure.

ACQUISITION

The Hoyt Lakes purchase followed the Brainerd buyout, but it wouldn’t be the last. In November 2020, Hunstad visited Maple Plain-based American Custom Rotomolding (ACR) on news that the company would close. He had hoped to scoop up leftover equipment and supplies, but what he found was an ample factory and 25-30 people still on staff who might be brought in to Stern — exactly what the company needed for a third site. “We bought forklifts, CNC machines, tables, chairs, you name it. Whatever they had in there, we bought,” Hunstad says. The purchase closed on January 15, 2021, and the doors reopened just three

days later. Better yet, Stern Companies also took over a few government defense contracts. “The growth potential was just too great to pass up,” Hunstad says. “All the pieces had come together, and pursuing it put us in a really good position long term.” The latest acquisition brought the company’s total workspace up to just shy of a quarter-million square feet across four cities and four facilities, though much of the Maple Plain space (which totals 135,000 square feet) will be leased out until it’s needed. Despite the purchase, the company is still running 25-40 employees short and turning away work. Which leads to the final pieces of the puzzle: Ardell Paulson and a new focus on efficiency.

INTEGRATION

If Hunstad had a user’s manual for good business, it might just be Traction, by Gino Wickman. Hunstad says he is a textbook “visionary” entrepreneur in the popular Entrepreneurial Operating System (EOS). Here’s how Wickman describes the visionary mentality: A Visionary is a person who has lots of ideas, is a strategic thinker, always sees the big picture, has a pulse on your industry, connects the dots, and researches and develops new products and services. The Visionary typically is the founding entrepreneur, operates more on emotion, and has ADD (but not always). This person is great with big relationships, the culture of the organization, and solving big, ugly problems (not the little ones); sees things others can’t; creates and holds the company vision; and is great at closing big deals. Visionaries are the creators of everything. Hunstad says that definition describes both his strengths and his weaknesses. He’s grown Stern Companies entirely through custom manufacturing — no proprietary products — with daring leaps, sure, but also through positive reputation, client referrals, and even referrals by fellow rotomolders. But there was something the company lacked. Namely, the right person to make it all sing in harmony. Hunstad could find and close big deals, but the minutia behind those deals exposed his blind spot. In EOS terms, his company needed an “integrator.” Enter Ardell Paulson, who in January was named president of Stern Companies.

A self-described “reformed sales guy,” Paulson spent nine years in banking and managed his own firms for another 14 years. Then, he transitioned to managing the businesses of others, including five years at Premier Plastics prior to the Stern Companies acquisition. Paulson and Hunstad go back years and met through mutual clients. They first talked about the job last fall, Paulson says, with Hunstad looking for someone to focus on production and improving efficiencies. “I looked at coming here as a great opportunity,” he says, “because they were a very sales-driven organization and were needing more focus on the opera-

The Hoyt Lakes solution to Stern’s workforce challenges provides just one insight into how Hunstad has used entrepreneurial vision, agility, and selfconfidence on his way to creating a diverse $27 million, 135-employee company that occupies a quarter-million square feet of manufacturing space in four facilities across Minnesota. tional side. That’s what I’ve been doing for the last 20-some years.” Paulson and Hunstad first created a continuous improvement team, hiring experienced professionals from other firms to bring their knowledge to Stern Companies. Paulson says internal success is about competing through efficient processes and a well-trained team committed to continuous improvement. Like other change agents, Paulson says he experienced resistance when Stern Companies rolled out its first efficiency recommendations, but that resistance melted away when he could demonstrate how these new techniques pushed out more product in less time and through less effort. Meanwhile, Hunstad says some of the company’s “rock star” operators had already made process improvements through their own deductions,

and the continuous improvement team provided them an opportunity for dialogue up and down the ladder. Paulson describes the continuous improvement process as addicting and infectious and says it’s in Stern’s best interest in an environment still starved for enough workers. Not only do the efficiencies lower production costs, the investment in people and training shows a commitment that encourages loyalty. “You get enough people thinking the same way and you can change anything,” Paulson says. “Everybody’s struggling with attracting talent, but if you get retention, that will help you attract. Word of mouth is invaluable. You’ve got to differentiate yourself from the thousands of other options that are out there.” There’s still work to be done. The nascent continuous improvement team at Stern Companies is in its first few months, but Hunstad, Paulson, and the teams they lead aren’t short on ideas. Hunstad is investigating the viability of robotics and automation in his operation. It’s a unique challenge to rotational molding, where robotic quality control, for example, is more difficult to program. Errors in flashing are easy for a human eye to identify, but a computerized system could require extensive programming to recognize and flag a defect. But Hunstad’s not put off by the road ahead. “Over the next two to five years, we’re going to have a significant investment in automation,” he says. He has lofty goals and recognizes the company will need to grow to achieve them. For want of a workforce, automated techniques will be essential to support that growth. Meanwhile, this man with a track record for spotting an opportunity and wrestling it to the ground is ready for the next big chase. “I still love the thrill of the hunt, so if something pops up, I will be talking about it,” he says. “Ardell will have to talk me off the cliff.” Hunstad’s two sons also work for the company he’s helped build, and he hopes the business will continue on through the generations being trained today. Hardwired into his nature though it may be, he recognizes that some day he’ll have to step back and step down, leaving others to take the lead. For now, he’ll trust Paulson and the team he’s surrounded by to keep his dreaming grounded in reality so that the company can get the most from every big idea. FALL 2021 ENTERPRISE MINNESOTA /

COVID Success

American Made

How Glencoe’s Miller Manufacturing came to dominate the market for farm, ranch and pet products. By R.C. Drews 32

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he Miller Manufacturing Company campus is a sprawling, 500,000-square-foot facility on the outskirts of Glencoe. With 350 employees, it is the town’s leading employer apart from Green Giant during harvest season. Its inventory includes more than 1,200 items for farm, ranch and pet products, especially for backyard hobbyists in equine, cattle, hog, poultry, pet and even beekeeping. “I don’t think there’s a farm store anywhere in the United States that we don’t sell to,” says Dan Ferrise, Miller’s CEO. And not just the United States. Miller’s products are sold in 30 countries around the world. Miller’s facility has undergone endless expansions. Since 2005, its distribution center staff has grown from 8 to 80; its 30-bay loading dock is a whirlwind of lights and horns, as forklifts buzz between pallets and trailers. Meanwhile at the company’s front desk, you’ll spot local farmers, mud still fresh on their boots, dropping off Hot-Shot and Springer Magrath cattle prods for in-house repairs. Miller operates on a one-page business plan posted throughout the facility so that everyone at every level knows where the company is headed. Originally packed in a 3-inch binder full of planning documents, Ferrise made it a personal project to reduce the business plan to a single page, something maintained now for at least a decade. It is part of a company culture built around employee involvement. Ferrise says the Miller brands focus on products that satisfy a basic human instinct to nurture and provide. It’s quite a turn for what began 80 years ago with one man and a chicken fountain.

consolidate its far-flung operations under one roof, an abandoned Nordic Track building outside Glencoe. The facility was so large that Miller leased out half of the space. Today, 16 years later — following several expansions — Miller operates the entire campus and owns land nearby, ready to accommodate future growth. Also in 2005, Miller recruited Ferrise as CEO. Ferrise remembers the 18-month merger of four facilities into the Glencoe building as both fun and challenging. Miller Manufacturing went through a brief staff reset when nearly all of their 74 employees opted not to move with the business. It was a clean slate, then, but Ferrise knew Miller’s products well and used many of them himself for years. In fact, just last year he harvested 175 pounds of honey from his three beehives. “You look at every possible way to eat honey,” he says with a smile. The company rebuilt its staff with other passionate backyard hobbyists like Ferrise, and today that level of product familiarity isn’t uncommon at Miller. It aligns with a customer base that is equally committed to their outdoor pursuits. “Our customers are very passionate about what they do,” Ferrise says. “They want to take good care of their animals, and from a cause perspective, I think that’s really important.”

AMERICAN MADE

Under the Frandsen Corporation’s leadership, Miller used a series of acquisitions to complete its six brand offerings. In total, the company includes: Little Giant, Hot-Shot, Pet Lodge, Springer Magrath, Double-Tuf, and API — producing everything from beehives and honey bottles, feed buckets, and cattle prods to pet transporters UNLIKELY PATHS and cages, and heated water buckets In 1941, inventor and St. Paul native and hoses. At every step, Ferrise says Barney Miller created what he bethe company was careful to analyze Dan Ferrise, CEO of Miller lieved was the world’s first automatic how the new products might affect its Manufacturing and COO of Frandsen poultry water fountain. Connected policies and procedures. Corporation outside the half-millionto a source of fresh water, the Little “You have to reinvent all of your square-foot Miller Manufacturing Giant used gravity and an innovative systems every time,” Ferrise says. “Evheadquarters in Glencoe. vacuum design to provide a constant erything from your ERP (Enterprise source of water for poultry, meaning Resource Planning) systems, how you one less thing for farmers to worry release orders to what inventory levels about. Miller later sold to the Bowell family, who acquired nearby you choose to build and your work instructions and standard work.” Dassel Metals to produce a new line of galvanized automated nestOne of those systems included offshoring the manufacturing of ing boxes that included an automatic egg collection feature aimed many products overseas. Ferrise devoted nearly a decade to flying at commercial operators. The new owners, however, found greater between the U.S. and Asia to ensure that suppliers in China would support with smaller farm and ranch hobbyists, who to this day not compromise Miller’s high standards of quality. remain the company’s best customers. In late 2019, the company’s cost for offshore manufacturing was By the time it was acquired by the Frandsen Corporation in 1996, rising, and the logistical complexity of container shortages and Miller’s properties were spread across four manufacturing sites importing led to a search for alternatives. An analysis by company in two states. In 2005, Miller’s management team had decided to accountants determined that many of Miller’s plastic injectionFALL 2021 ENTERPRISE MINNESOTA /

Sean Syring, Director of Marketing, joined Miller during a period of heavy growth and focused his team on recruiting new staff and advertising the company’s “Buy American” promotion.

molded products could be manufactured competitively here at home, and so the reshoring began. “It’s just better to have control over your own operation,” Ferrise says. “And once you baked in all of the associated costs, the delta (the difference between total domestic and offshore costs) was getting smaller and smaller all the time.” Manufacturing in the U.S. would eliminate shipping delays and barriers in language or culture. What’s more, producing from the Miller site in Glencoe or partner locations in Rush City and Anoka meant the company could quickly respond to the demands of sudden growth. “We made the decision about three months before the pandemic that we were going to bring the business we had spent the last 20 years outsourcing to China back [to the U.S.],” Ferrise recalls. But the company — and the country — couldn’t possibly have known what lay ahead. Some of the problems were expected, like shortages in shipping containers or raw materials. Others had a more human element, like leaving behind their offshore partners. Miller contacted its Chinese suppliers and requested the plastic injection molds needed for manufacturing be returned to the U.S. Some suppliers, according to Ferrise, responded with concern. It was no secret that the offshore sites had been struggling to maintain a steady supply, but, even as the business transitioned, every effort was taken to maintain good international working relationships. When those molds returned stateside, 34

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they were transferred to Lakeland Tool & Engineering, a 2019 Miller acquisition that began as an injection molder and had the tools needed to do some necessary “tune up” work. Ferrise explains that quality control issues — like excess flashing on the finished plastic products — were a top concern. Where their Chinese team overcame defects through extra labor, Lakeland and its higher average wages needed to ensure its manufacturing would require less human intervention. Then the pandemic hit. And just as in the Great Recession of 2008, demand for Miller’s products skyrocketed. The pandemic proved to be very good for farm, ranch and pet products. “People take care of their animals when the economy tanks,” Ferrise says. “With schools shut down,” he adds, “a lot of parents decided to teach their children to raise and care for animals. Specifically, a lot of poultry. That’s exactly what we do.”

DOUBLING DOWN

As Miller pushed to return manufacturing to the United States, the company recruited Sean Syring as director of marketing. With sales soaring, however, Syring focused his talents toward recruiting and retaining workers. “I mean, we grew 30-40% in one year,” he says. Like many firms, Miller offered greater scheduling flexibility, increased wages, and overtime for those employees who appreci-

Neal Brady, General Manager of Miller Manufacturing, overlooking the facility’s 30-bay loading dock. Their distribution center staff has grown from 8 people in 2005 to 80 today.

ate it. Neal Brady, Miller’s general manager and a former high-tech industry veteran, says it’s difficult finding 350 people in an area the size of Glencoe (population 5,500), but Miller has a built-in advantage with its ag-centric mindset of the region. Many take pride in working on products they and their families use themselves. Miller grew across several categories during the pandemic, rising on average by more than 20%, but poultry products exploded, increasing by more than 40%. Rural, urban, and suburban consumers alike were fascinated by home-raised eggs and the peculiarities of keeping their own chickens. Syring and his team produced educational YouTube videos and social media content for new poultry owners on topics

Rising demand for Miller products during the pandemic meant a need for staff and raw materials. Here, a portion of Miller’s hard-fought supply sits ready for manufacturing at its Glencoe facility.

like incubation, housing, and product displays around the sweepgeneral care. Their engagestakes, and some have become Leadership ment numbers boomed, with permanent fixtures. thousands of inexperienced “A lot of them are leaving their keepers seeking guidance. displays up, and they’ll rotate what Meanwhile in the Miller they know are U.S.-made products Dan Ferrise became Miller’s CEO after warehouse, inventory levels from Miller. So, when consumers being employed for 17 years at MINNCOR Industries — dropped with the rush of new come in they know they’re getting a non-profit arm of Minnesota’s prison system. customers, and the company’s U.S. made,” Syring says. policy of maintaining a 30- to In the customer service depart90-day stockpile was being ment, the team receives phone Dan Ferrise’s rise is as tested. New hires were a precalls weekly praising the return to remarkable as the comcious commodity, so the crew American manufacturing, with the pany’s own history. He doubled down. only call to action being demand says he struggled to pay “As we ramped up, the for more. Meanwhile, workforce attention during high folks here really rallied to morale is buoyed by the pride taken school and found his only the challenge. A lot of places in Miller’s commitment to in-house interest in woodworkwere closing, a lot of people and in-country production. Ferrise ing and cabinet building. were out of their jobs; there notes that the bump in morale also So, he pursued a trade was a lot of uncertainty,” aids an increase in retention. school education and spent a decade in cabinet making. Brady remembers. “We Elsewhere, Miller is fine tuning Until his life took an unexpected turn. flipped a switch the other for e-commerce — a growing “I was in prison for 17 years,” Ferrise says, and the direction, and it was instantrend for their partners. While conference room falls quiet. Having achieved his effect, taneous that our sales were Ferrise is clear that Miller has no he explains that he spent that time as a civilian employee going through the roof. We intention of entering direct sales, teaching inmates how to build office furniture. “That’s needed a lot more people than ensuring packaging meets stanhow I got started,” he says. we were ever going to get, so dards such as Amazon’s “FrustraIn time, Ferrise became CEO of MINNCOR Industries, a we started running overtime, tion-Free Packaging” certifications non-profit arm of the Minnesota Department of Correcwe started running weekends, — which are designed to minimize tions that trained inmates in practical life skills through we were going around the waste and non-recyclable matemanufacturing jobs within prison walls. And, yes, that clock. There was a good rally rials — is a value add for their occasionally meant license plates and similar high-volume, that happened from people’s online retailers. Ferrise also keeps labor-intensive products. During his years at MINNCOR, own realization as to what Ferrise says he oversaw 1,500 inmates in 10 different a list of prospective acquisitions was going on and then apfacilities, but it was in the year 2000 when he approached and foresees one or two in the preciation for what they were Dennis Frandsen, founder of Frandsen Corporation, about next two years. Plus, the commanufacturing.” a MINNCOR contract. A deal was struck, and the work pany is beta testing 12 different Inventory levels would turned out to be on behalf of Miller Manufacturing. automation programs to offset the slowly recover, which Brady A short time later, Frandsen offered Ferrise a chance 60-70 employee deficit it regularly attributes to the team’s hard to join Miller Manufacturing. That experience solidified experiences. work and dedication to the Ferrise’s belief in the importance of mentors, and he urges “We’ve really started to focus on customers they serve. And others to reinvest in the people around them through our automation initiative,” Ferrise while product sales were mentoring. says, “and I think that’s going to be strong, Syring saw the perfect “There’s a half dozen people out there who I credit with an important piece of our future.” opportunity to highlight the taking me under their wing and teaching me how to do Syring calls last year’s “Buy return to American manufacthings. Dennis is one of them,” Ferrise says. American” promotion a great first turing. The two are still in contact daily. At 86, Frandsen today start, and the 2021 Miller ManuMiller pushed forward with works only “part time,” at around 40 hours a week. And facturing catalog wears the new its reshoring efforts, and the the MINNCOR contract from years ago? The project still branding with pride, with special company launched a “Buy provides high-volume work for Miller as a sort of “relief labels to highlight products either American” campaign last valve” during high-demand periods. made or assembled in the U.S.A. fall through its website, retail As the company’s selection of partners, and social media. American-made products grows, The company used a sweepMiller Manufacturing is chalstakes program with prize lenging a decades-old notion that from October to January, before being packages themed around different farm, domestic labor can’t compete on overall entered into the grand-prize drawing. More ranch, and pet hobbies and a final $2,500 value. The company is pushing for more than 50,000 customers responded, and shopping spree as a way to gauge conAmerican manufacturing with fewer Syring says the data Miller received paints sumer interest and raise awareness for its nagging qualifications, like country of a clear picture: While some shop on price, American-made products. Customers were materials origin or country of assembly. many of Miller’s backyard hobbyists put asked to register on the company website, And Ferrise says they won’t be letting up value in supporting American products. and three winners were chosen each month any time soon, either. Miller’s retail store partners created custom

‘I was in Prison for 17 Years’

FALL 2021 ENTERPRISE MINNESOTA /

Personalities

By Tom Mason

Reverse Engineer

The

Entrepreneur Jeff Engbrecht transformed a high school-bred fascination with carbon fiber composites into Clearwater Composites — a company that will be opening a new 40,000-squarefoot facility in Duluth.

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ntrepreneur Jeff Engbrecht guided his long-held all the way down to mites — gave it a resounding endorsement. ambition to own a composites-based manufacturing They adopted the expensive new technology as a necessary cost of company with the recognition that their often hefty doing business, ultimately relegating the wooden hockey stick to price tags can easily undo the dazzling innovations a place with Pac-Man and the Macarena in the gallery of kitschy enabled by composite engineering. cultural artifacts. “Making things is not always the hard part,” says So how was this life changing for Engbrecht? Engbrecht, who today owns Duluth-based Clearwater To answer that, we have to go back almost exactly 10 years ago Composites, a company whose 30-plus employees to a jury-rigged composites lab that Engbrecht had built in the design and manufacture carbon fiber basement of his Duluth home. A composites and parts for a wide range composite engineer, Engbrecht had of customers nationwide. “The hard already established a 15-year career part is making money. You have to be that spanned the horizon of composadept at business, or it’s not going to ite industry experience, from startups work.” to the largest carbon fiber company Engbrecht says that manufacturin the world. At the time, he was ers are attracted to carbon fiber’s working as an application engineer combined lightweight and strength for Ticona Corporation, selling fiber but worry that it is expensive relative reinforced thermoplastic composites to other materials. “You have to demto clients across the country. But his onstrate value. It has to save them future, he knew, would be entrepremoney on something else or give neurial. them better performance.” Engbrecht outfitted his basement Consider how the evolution of shop using household items and trips the simple hockey stick relates to to Menard’s to affordably jury-rig a Engbrecht and his company on two workable composites lab. His favorite levels: one theoretical, the other life adaptation was a repurposed doublechanging. Back in the classic era of decker oven after a kitchen remodel the NHL, the likes of Bobby Orr and with an insulated pipe added as a fan Gordie Howe muscled and finessed and a controller from Menard’s. “I’d their paths to hockey renown usnever done anything like that, but I ing wooden sticks that traced their figured it out,” he says today. “Maybe lineage to the one-piece chunks of it wasn’t the safest, but it worked. carved wood used by players as far Nobody got hurt, and we didn’t burn back as the mid-1800s. Manufacturthe place down.” (A new oven would ers improved the sticks over time by have cost $60,000 and would have adding various levels of fiberglass, been too big for his basement.) even aluminum, to the shafts and In 2009, a former colleague blades, but the first generation of one- In 2009, a former colleague tipped Engbrecht to tipped Engbrecht to a manufacturing piece carbon fiber sticks that debuted executive looking for an engineer a manufacturing executive looking for an engineer in ice arenas in the early 2000s revoto help him develop and launch a to help him develop and launch a new generation of lutionized the game forever. new generation of composite hockey composite hockey sticks. Players valued how the new sticks that could be custom manufacgeneration of lighter-weight sticks tured to fit the playing characteristics enhanced more nimble stickhandling, of individual players. And he wanted crisper passing and dexterous wrist shots; the slight flex in the shaft someone outside of hockey. added an explosive velocity to the blueline slapshots. “He wanted someone with a different set of eyes,” Engbrecht But the new sticks arrived with a considerable tradeoff: price! recalls. “I didn’t know how they make them, but I’d figure it out,” In the early 2000s, high school players could invest maybe 20 he says, launching a nine-month process of reverse-engineering the bucks to hit the ice with virtually the same wooden sticks as their current lot of carbon fiber sticks and eventually emerging with a NHL heroes. Today’s carbon fiber composite sticks can cost $300 viable prototype. or more, and they break almost as easily as their wooden predecesNext, another colleague alerted him to a company that was sors. (And we wonder why hockey parents are crazy.) One report looking for engineering insights to develop carbon fiber softball estimated that NHL teams have to budget upwards of $25,000 to bats. The company had initial plans to have the bats manufackeep just one player equipped with sticks for a single season. tured overseas. To comply with Engbrecht Admonition that composite products Working with Dan Boyum, one of the first employees who still must always demonstrate value, the hockey world — from the NHL works with Clearwater, Engbrecht developed prototype bats out of FALL 2021 ENTERPRISE MINNESOTA /

his garage. The company was not able to find a reliable overseas source, so Engbrecht rented space and was soon manufacturing the bats under a separate company. The company produced thousands. Engbrecht calculated it was time to launch his own company. He quit his day job in August 2011 and founded Clearwater Composites. Using guidance from GoDaddy, Engbrecht created his own website and switched on AdWords, Google’s advertising sales platform. The response was immediate. “It was unbelievable,” he remembers. Within a couple of months, Clearwater was working with an archery company and a kayak company that needed composite shafts for paddles. All projects required tweaking. “There were things that we had to figure out,” Engbrecht says. “It wasn’t just like, oh, here’s your tube in a catalog and go ahead and buy it. There was a lot of niche customizing.” The process of listening first and then solving challenges became one of Clearwater’s market differentiators, according to Engbrecht. “Our technical ability is one of our core uniques,” he adds. And the inquiries kept coming. So fast, in fact, that at one point Engbrecht had to switch off the internet. ** Engbrecht may have glimpsed his entrepreneurial destiny back in 1990 on a student tour of what was then called Polymer Composites, Inc. Engbrecht, an A-student with a particular interest in math and science — and drawn to the concept of “making things” — watched spellbound as a company rep explained the company’s patent-level work in something called “long-fiber reinforced thermoplastic composites.” That fascination carried him into the fledgling Composite Materials Engineering program at Winona State University, which to this day is the only such undergraduate program offered in America. “I don’t think I even applied anywhere else,” Engbrecht says, admitting that he was also attracted to the idea of playing collegiate golf alongside several older golf buddies. Engbrecht combined his love of golf and engineering to launch his career. He used his senior project at Winona State to develop a differential equation that helped predict how various levels of stiffness in composite golf club shafts would affect 38

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their performance. This work, and a mutual connection with Dennis Cleveland — a local banker and talented golfer — led to an introduction to Stan Prossen, a pioneer in carbon fiber composites and renal entrepreneur. Prossen had just founded Coda Composites, a Winona-based startup that manufactured violin bows composed of carbon fiber. Engbrecht stayed six years. “We were starting from scratch,” he says. At Coda, Engbrecht helped develop a series of computer programs that would mimic the weight and stiffness of a bow in an effort to replicate the sound of wood.

Engbrecht’s vision for letting his new facility mark a significant plotpoint in Clearwater’s future also includes an evolution in management. As a word-of-mouth side product — the internet was not yet a source of business leads — the team at Coda discovered a market for “kite spars,” tapered composite tubes that help stunt kites take maximal advantage of the wind. Stunt kites were enjoying a faddish popularity at the time, and kite enthusiasts appreciated how carbon fiber outperformed fiberglass. After Engbrecht reverse engineered competitive

products, Coda sold hundreds of thousands of them, Engbrecht recalls. The experience roused Engbrecht’s entrepreneurial ambitions, so much so that he rejected an opportunity to become a partowner at Coda. While the owner wanted to focus on bows, Engbrecht thought the future of composites would help companies use composite to solve all measures of manufacturing challenges. But instead of venturing out on his own, Engbrecht snared an offer from a corporate recruiter and accepted a job in tech sales and marketing in the southern California office of Toray Carbon Fibers America, the world’s largest supplier of carbon fiber. “I was risk-averse. I wasn’t ready to jump off the cliff into deep waters,” he says. “I just wanted to spread my wings.” His eight-plus years as a technical manager and marketer at Toray, which also included a stint in Dallas, exposed Engbrecht to the endless potentiality of composites and the inner workings of a massive international corporate bureaucracy. And, at Toray, he sharpened one of his most potent skills. “If somebody has a need for carbon, I can quickly see the technical side but also the business side,” he says. The company also showed Engbrecht “it is hard to make a difference. Decisions take a long time.” Perhaps most instructive was his exposure to Japanese attitudes about manufacturing and technology, which are much different from prevailing American attitudes.

“They’re not necessarily smarter than us — a lot of them are — but they’re so thorough,” Engbrecht recalls. “When something’s wrong, they look at every detail. They view Americans as sloppy, and for the most part, we are. We rush, and we overlook things.” By 2007, Engbrecht — now married with a baby — was ready to move his family home to Minnesota. A notice that Cirrus Aircraft was hiring was all he needed. “I’ve always loved the North Shore,” so he took the position. “But my ulterior motive was to get something going on my own. I just didn’t yet know what I was going to do.” His Cirrus experience was short-lived. The recession of ’08 forced layoffs, and within 18 months, Engbrecht was using his home office to rep for Ticona, the same company that had inspired him in high school. He was also launching his home lab.

learwater experienced dramatic 50% per-year growth in its first half-dozen years before leveling off. The COVID economy cut into sales by about 20%, Engbrecht says, but the company used the relief to tighten up its operations. Like many (maybe all) visionary entrepreneurs, Engbrecht admits to periods of weariness while he attends to his company’s day-to-day operational wheels and levers. “I do get bored sometimes because I have to do things that I don’t always want to do,” he says. “But it goes in waves.” Time on the golf course provides some summer relief, he says, but the expanded capacity of his new building promises to reinvigorate his creativity, he adds. “We have an op-

portunity to grow again. We have a million ideas about things we can do.” Engbrecht’s vision for letting his new facility mark a significant plot-point in Clearwater’s future also includes an evolution in management. Engbrecht intends to steer the company’s next phase of strategic growth using the Entrepreneurial Operating System (EOS), a popular holistic approach to managing entrepreneurial cultures conceived by author Gino Wickman. A longstanding disciple of Wickman’s insights, Engbrecht acknowledges that his personal work traits fit Wickman’s portrayal of successful entrepreneurs. He’s a passionate visionary whose drive for success is found in a love of problem-solving. He can still barely conceal his glee at listening to a customer’s challenges and then plotting composite-driven solutions based on his own experience and creativity. But those traits also reveal some challenges. Engbrecht, a “participatory” manager, acknowledges he must loosen his grip on day-to-day activities if Clearwater can systematize its procedures and empower trusted employees to implement them. Engbrecht, like most innovating entrepreneurs, built his company on a foundation of skills, instincts, and passion. “I was very hands-on to come up with solutions and make sure they’re working. I would go make the part and then to some degree oversee the production of the product — making sure it was done right and then shipped out the door.” Wickman advises entrepreneurs to recruit “integrators” to whom they can delegate their organization’s operations and growth. Engbrecht recently recruited David Baughman as a “fractional” — part-

time — integrator. A fractional integrator is an incremental step to adding a full-time COO. Baughman works remotely from his home in Texas 10-15 hours each week, and visits the Clearwater plant monthly. Baughman brings skills and experiences on the production operation side through lean and continuous improvement, areas in which Engbrecht lacks experience. “I know what they are, but I’ve never lived and breathed them,” he says. “They make the process a welloiled machine,” he says. “They make things better and reduce defects.” Engbrecht continues to play the “integrator” role on the financial side, where he says he knows the details better than the typical visionary. “They usually just want to see the bottom line, and they’re not going to get into the details of costs and margins,” he says. “I like doing that. So yes, Baughman has really helped. It’s been working well.” Baughman’s responsibilities will be to help ensure that Clearwater is able to recruit and retain a quality workforce in an era of chronic employment shortages. Clearwater’s leadership team recently gathered to set three-year goals, one financial and one related to people. “We’d love to be a great company where people are knocking on our door to work here,” Engbrecht says. “It’s just smart business and common sense to treat people fairly, pay them well, and give them a good opportunity to grow.” Part of the tactic is to groom a culture that won’t lament departures. If people leave, he says, “I’m happy that they grew with us. I’ll hate to lose them, but that’s just life.” FALL 2021 ENTERPRISE MINNESOTA /

Final Word

A (Rare) Abundance of Applicants Our new editorial director triumphed over a field of 221 aspirants.

am delighted to announce that Tim Carey has become our new editorial director at Enterprise Minnesota. With more than 29 years as a news reporter and editor at the St. Paul Pioneer Press, Tim is an experienced journalist who understands the value of storytelling, not just reporting facts. On top of that, recent consulting engagements at Wells Fargo and Thompson Reuters have given him insights into business services. He learned much about writing for websites, social media and TV news through his consulting relationship at KARE 11. Tim emerged as the top candidate from a lengthy and highly competitive list of experienced and talented writers and editors. The fact that this position attracted 221 applicants may surprise many manufacturers, whose chase for qualified (and even unqualified) employees can feel as futile as watching the Twins’ march to the 2021 World Series. We can credit part of our success to how the internet has disrupted the economics and stylistic journalism of traditional print media. The web-based “New Media” (no longer so “new”) prioritizes quick turnaround factoids delivered in ever-shorter editorial nuggets. Consequently, many web writers today “write” as quickly as they can type, under the light supervision of Mother Grammarly. There is far less demand for writers who care about crafting well-honed sentences and even less need for writers who want to dig into long-form narratives. (You remember: the old-fashioned magazine story.) Like everyone else, Enterprise Minnesota relies on web-based communications to reach out to manufacturing’s ecosystem, but Enterprise Minnesota® magazine remains our differentiator. Print publishing is not dead, as many “experts” would have you believe. Hardly. Niche publications that delve knowledgeably and deeply into 40

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Lynn Shelton is vice president of marketing and organizational development.

specific topics or communities continue to thrive. And Enterprise Minnesota magazine is among them. Our editorial outlook is to celebrate the kind of lengthy feature profiles that share the challenges and successes of Minnesota’s manufacturers through their personal experiences. I have yet to meet a manufacturer who doesn’t have an interesting background story. (We sometimes have to dig deeper for some than others!) Enterprise Minnesota magazine’s popularity has grown over the years because, first and foremost, we understand manufacturing and manufacturers. Other media, if they cover manufacturing at all, mainly report surface issues that will appeal to a broad mass audience. You won’t read about how manufacturers are creatively deploying lean or ISO or value-stream mapping — or how they are rethinking overall strategy or really rethinking their efforts to recruit and retain workers. Topics that matter to other

manufacturers. And the ultimate secret sauce for Enterprise Minnesota magazine is that we always focus on manufacturers — people! — whose realworld experiences will enlighten or inspire those in the same industry. Where else will you read, as you did in this magazine, about the Duluthbased entrepreneur who transformed a high school-bred obsession with composite materials into a sophisticated company that this week opens a new 40,000-square-foot facility? Or what about the farmer in tiny Greenbush, Minn., who turned a hobby of making outdoor woodburning furnaces into a mammoth enterprise that today operates out of a 300,000-square-foot facility? And then there’s the Glencoe-based company that makes equipment for farm, ranch and pet products whose sprawling facility today employs 350 people. It also helps that our writers frequently rely on the experience and opinions of our own staff to bring color and relevance to many of the stories. And sometimes they produce their personal takes on essential topics, as our Business Growth Consultant Steve Haarstad does in this issue with a timely analysis about how manufacturers need to adapt to customers who vastly prefer digital or self-service transactions. I should add, too, that it doesn’t hurt that our art director Scott Buchschacher presents it all in such an inviting and accessible graphic design. I’m biased, but I don’t think there is a better-looking regional business magazine anywhere. All that said, Tim Carey evolved as the best-of-the-best in a field of exceptionally talented writers and editors. His admiration for long-form storytelling combines well with his appreciation of crisply written, relevant copy for the web. We’re grateful he elected to work with us. We all look forward to working with him.

Helping manufacturing enterprises grow profitably. For over 30 years, we’ve been helping Minnesota’s small and mid-size manufacturers achieve sustainable profits and growth. Enterprise Minnesota manufacturing experts can help you discover ways to reduce waste, increase revenues, streamline operations and grow profitably.

Let our team of experts become your trusted advisors.

www.EnterpriseMinnesota.org 612.373.2900 Enterprise Minnesota® is the official MEP center for the state of Minnesota.

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