Enterprise Minnesota Magazine - Winter 2020 by Enterprise Minnesota

YOUNG GUNS

Young leaders in manufacturing are thinking outside the box

Helping Manufacturing Enterprises Grow Profitably WINTER 2020

2020

Platinum Sponsors

COVID’s Long Shadow ARCHITECTS

ENGINEERS

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

The pandemic economy is taking a toll on manufacturers’ expectations for the future

9001:2015

Enterprise Minnesota FY 2019 Manufacturing Workshops and Business Events

Enterprise Minnesota

Enterprise Minnesota’s events offer outstanding professional expertise and practical business solutions to improve Enterprise Minnesota’s eventsand offer growth outstanding professional expertise competitiveness opportunities for Minnesota’s and practical business solutions to improve competitiveness and growth manufacturers and related industries. opportunities for Minnesota’s manufacturers and related industries.

2020-2021 MANUFACTURING WORKSHOPS DATE CITY Date Topic TOPIC Location 7/10/2018 Strategy St. Peter Nov. 11, 2020 Strategically Navigating an Uncertain Future Virtual 7/26/2018 Continuous Improvement St. Cloud Nov. 19, 2020 Are Your Leaders on Board? Virtual 8/7/2018 Continuous Improvement Plymouth Dec. 15, 2020 Understanding Business Management: ISO 8/23/2018 Leadership/Talent Inver Grove Heights Virtual Jan. 13, 2021 How toStrategy Manage a High-Performance Business Virtual 9/6/2018 White Bear Lake 9/27/2018 Leadership/Talent Brooklyn Park Jan. 20, 2021 Are Your Leaders on Board? Virtual 10/9/2018 Continuous Improvement Wyoming Jan. 28, 2021 Executive Manufacturing Forum Virtual 10/25/2018 Continuous Improvement Shoreview Feb. 4, 2021 Understanding Business Management: ISO Virtual 11/8/2018 Continuous Improvement Eagan Feb. 10, 2021 Are Your Leaders on Board? Virtual 11/13/2018 Strategy Anoka Feb. 25, 2021 Strategically Navigating an Uncertain Future Virtual 12/6/2018 Leadership/Talent Burnsville 1/8/2019 Continuous St. Cloud Mar. 4, 2021 Leading throughImprovement Daily Dialogue Virtual 1/24/2019 Leadership/Talent Winona Mar. 18, 2021 Sustaining Daily Dialogue Virtual 2/7/2019 Continuous Improvement Willmar Mar. 30, 2021 Investing in Your People to Create Leaders at All Levels Virtual 2/19/2019 The Value of Peer Councils Shoreview Apr. 8, 2021 How to Manage a High-Performance Business Virtual 3/7/2019 Continuous Improvement Mankato Apr. 14, 2021 Revenue Growth Virtual 3/27/2019 Strategy North Branch 4/9/2019 Leadership/Talent Apple Valley Apr. 28, 2021 Are Your Leaders on Board? Virtual 4/25/2019 Continuous Improvement Eden Prairie May 6, 2021 Strategically Navigating an Uncertain Future Virtual 5/22/2019 Continuous Improvement Bemidji May 13, 2021 Leading through Daily Dialogue Virtual 6/27/2019 Leadership/Talent Anoka May 26, 2021 Sustaining Daily Dialogue Virtual STATEWIDE ENTERPRISE MINNESOTA EVENTS June 3, 2021 Investing in Your People to Create Leaders at All Levels Virtual 5/14/2019 2019 State of Brooklyn Center Earle Brown Heritage Center June 9, 2021 Continuous Improvement Virtual Manufacturing® June 23, 2021 Strategic Virtual Statewide Release Management For more information and registration, go to www.enterpriseminnesota.org, or email us at events@enterpriseminnesota.org. Sponsorship opportunities are available. Please call Chip Tangen at 651-226-6842 or email chip.tangen@enterpriseminnesota.org.

9001:2015

WINTER 2020

COVID’S LONG SHADOW

The pandemic economy is taking a toll on manufacturers’ expectations for the future.

ISOooo Fast Some manufacturers are using the COVID downtime to pursue ISO certification at warp speed.

Manufacturers Sound Off

Young Guns

Tug of War

An emerging crop of young manufacturing leaders is taking over with fresh outlooks and new ideas.

Embedding a consistent ‘Daily Dialogue’ into a manufacturer’s culture will yield long-term benefits.

2 No Easy Answers Some manufacturers are gasping to keep up with skyrocketing demand. Others are gasping to keep solvent.

Capacitors, Resistors and the Tubes In-Between For Vintage Voltage, business is booming.

SOM focus groups prompt frank discussions among manufacturers about COVID’s toll and lingering workforce issues.

Tyson Twait Takes Helm at Dotson

Rising to Meet the Challenge

Problem-solving number cruncher excited to guide Dotson into the future.

Like manufacturers, Enterprise Minnesota adapts to the times.

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. WINTER 2020 ENTERPRISE MINNESOTA /

Helping Manufacturing Enterprises Grow Profitably

No Easy Answers

Publisher Lynn K. Shelton 9001:2015

Some manufacturers are gasping to keep up with skyrocketing demand. Others are gasping to keep solvent.

nterprise Minnesota launched the State of Manufacturing® some 12 years ago to personally survey Minnesota’s manufacturing executives about what they considered the most daunting challenges and most significant opportunities in their paths to profitable growth in the coming year. We aimed high. From the beginning, we designed the State of Manufacturing to be far more serious than the typical internet poll or a call-in survey that asks four or five questions in search of a cheap headline. We wanted to interview a statistically precise random sample of manufacturing executives across the state. To do this right, we needed a top pollster, someone with a national reputation for accuracy and insightful analysis. And we knew exactly who we wanted. We recruited Rob Autry, founder of Meeting Street Insights in Charleston, South Carolina. Rob’s company has conducted every one of our annual State of Manufacturing surveys. Our instincts have proven correct. Rob was recently named top pollster in America by a national association of polling professionals. We gave the State of Manufacturing additional credibility by adding between 12 and 15 focus groups to the research mix each year. Over time that has proven to be a valuable decision. The polling data tells us what manufacturers are thinking, the focus groups tell us why. Another attribute that has led to the State of Manufacturing’s ongoing success 2

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is that we’re not out to sell anything or push a particular legislative agenda. We figured Enterprise Minnesota was well-positioned at the intersection of all elements in Minnesota’s extended manufacturing community. So, we picked up the project along with some remarkable partners. That said, we do release this data with some significant side objectives. One of them has been to use the data to help repair what we perceived to be a disconnect between policymakers and the manufacturers in their districts. I don’t mean there was a hostile relationship. I mean that mostly there wasn’t one. We’ve always publicized the State of Manufacturing data to emphasize how manufacturers are jobcreating economic engines that sustain the state and local communities, particularly in Greater Minnesota … and that sometimes government actions can impede their ability to grow profitably. Along the way, we tried to use the data to grow the pro-manufacturing coalition to include economic developers, business organizations, and civic-minded activists. Then our data started to reveal manufacturers’ growing anxieties about the dwindling number of skilled applicants to replace the retiring Baby Boomers on the continued on page 8 Bob Kill is president and CEO of Enterprise Minnesota.

Editorial Director Robb Murray Creative Director Scott Buchschacher Copy Editor Catrin Wigfall Writers R.C. Drews Greg Langfield Peter Passi Photographers R.C. Drews Jackson Forderer Derek Montgomery Laurie Solle

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

Enterprise Minnesota, Inc. 2100 Summer St. NE, Suite 150 Minneapolis, MN 55413 612-373-2900 ©2020 Enterprise Minnesota ISSN#1060-8281. All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine. Enterprise Minnesota magazine is published by Enterprise Minnesota 2100 Summer St. NE, Suite 150, Minneapolis, MN 55413 POSTMASTER: Send address changes to Enterprise Minnesota 2100 Summer St. NE, Suite 150 Minneapolis, MN 55413

Printed with soy ink on recycled paper, at least 10 percent post-consumer waste fiber.

ENTREPRENEURS

Capacitors, Resistors and the Tubes In-Between For Vintage Voltage, business is booming.

PHOTOGRAPHS BY R.C. DREWS

ung on the wall beneath a goldhued Fender Stratocaster sits a row of books, with titles ranging from Sound System Engineering and Musical Applications of Microprocessors to Modern Dictionary of Electronics. On one end, a studio monitor — playing At Fillmore East by The Allman Brothers Band — holds the books upright, while the other end is braced by a pair of CD-ripping computer drives. Below them, a workbench lies cluttered with screwdrivers, parts trays, and a wallet that was too thick to sit on. There’s a bump, a click, and the sound of satisfaction. One wall away, under a row of Gibson Les Paul guitars, a huddled figure tweaks and twists at his latest design — a topsecret prototype for an out-of-state client. Classic blues licks waft through the room as he wields a soldering iron against threads of molten metal that birth plumes of silver smoke. We’re in lake country, a short drive from Fergus Falls, and it’s from this riverside shop that Maurice Skogen — friends call him “Mo” — manufactures custom tube amplifiers in the spirit of the 1950s. He estimates he’s built over 900 speaker cabinets in his life, and his work has brought him together with big names. A storyteller by nature, Skogen works away as he recounts that time he refused to sell a prized guitar to Gregg Allman, of Allman Brothers fame, and his brush with guitar legend Les Paul. “I’ve been in the industry for 50 years,” he says. “I’ve networked. I know all the video guys, I know all the sound guys, I know all the light guys, I know all the studio guys, I know all the bar guys, I know

WINTER 2020 ENTERPRISE MINNESOTA /

Maurice Skogen began making his handmade, hand-wired amplifiers in 2012 under the brand name Vintage Voltage. Making amplifiers allowed him to combine his love of music with his aptitude for electronics. Most of his handmade, hand-wired products sell in Colorado, Alabama and through referrals from music studios.

“When I was a kid, we didn’t have all those guitar pedals. We had to figure it out.” —Maurice Skogen all the churches.” Skogen doesn’t look like an electrical engineer. His shoulder-length white hair is juxtaposed with smart spectacles. And when you hear him speak — his tone rhythmic, his energy electric — you recognize a child of the ’60s, a man inhabited by the spirit of the blues. His workshop is a collection of HAM radios, classic guitars and flintlock pistols. “The word’s out there. Everyone knows I’m doing it,” Skogen says. “We’re shooting directly to the touring musician by word-of-mouth through the Nashville studios.” He shuffles from workbench to work4

/ ENTERPRISE MINNESOTA WINTER 2020

bench, tweaking and tuning, and humming or singing along with the music belting out of his vintage stereo speakers. When the room goes quiet, you can even hear the vinyl spinning on his favorite turntable. Most of Skogen’s handmade, handwired products — under the brand Vintage Voltage — sell in Alabama, Colorado, or through referrals from music studios themselves. And while the business engine churns, Skogen never stops prototyping, always seeking the best switches and potentiometers or a better button. “It’s just resistors and capacitors. That’s all it is,” he muses.

Growing Up Groovy

Now 67, Skogen discovered his musical passion around the age of 12, in the heart of the 1960s. Compared to today’s artists, music at that time was primal, almost spiritual. It was instinct rather than science. “When I was a kid, we didn’t have all those guitar pedals (for tone-shaping),” Skogen recalls. “We had to figure it out.” As his passion grew, he quickly discov-

ered there was no straight road from where he was — the son of a relentless entrepreneur in a small, Midwest town — to the future of stage and fame he would later orbit. Instead, Skogen took a series of retail sales jobs. He sold appliances, VCRs and later personal computers when that technology was still young. From his father he learned adaptability and hard work. The pair spent their days loading refrigerators, stoves, and other household necessities until the mid1980s, when both father and son suffered disabling accidents. Skogen’s father was injured falling down an embankment while elk hunting in the Montana mountains, and Skogen traded ski poles for crutches after a slalom accident in 1985. His injuries required 11 skeletal surgeries, and even today he’s recovering from a spinal fusion (his second) last May. Rather than give up, the father-son duo adapted. Two years later Skogen returned to college, making the two-hour commute to earn an engineering degree while raising a family. In 2000, Skogen took a job with the sound department of Concordia College, and the school’s live performances boomed. “We started out doing 200 events a year; we ended up doing 650 because that’s how good we were,” he says. “And then the expectations went through the ceiling.” Skogen was forced to leave Concordia in 2012, however, due to increasing discomfort from his decades-old wounds. But he couldn’t sit still. Retirement in the traditional sense was out of the question, and he wanted to take what he had learned in years of retail and combine it with his passion for music. “You learn how to read the customer. You learn how to extract information. Now you’ve made a connection,” Skogen says.

tions, and the process can involve months of prototyping. Sometimes, the greatest challenge is cutting through overinflated jargon. “There are all these terms people use to describe this stuff, and you gotta kind of go, ‘What the hell are they talking about?’” Skogen says with a laugh. “That’s the thing, over time and talking to people — and hearing this and playing that — you know what’s in someone’s head,” he continues, and then pauses. “Kinda.” Vintage Voltage is a one-man operation, but Skogen’s success is as much from his ability to listen and understand his clients as it is from his decades of experience as a musician and engineer. It’s a combination difficult to duplicate, and he says his only regret was not launching the business sooner. “I’m thinking now I should have done this 40 years ago, but I didn’t know then what I know now,” he says. Skogen still plays live shows himself, treating audiences to rhythmic blues and screaming guitar solos. Even if his company looks the same five years from now as it does today, he says he’ll be happy — though he has plans to scale up should the need arise.

Licks and Legacies

“People appreciate when you bring them into the conversation. You don’t get that at Walmart.” Enter Vintage Voltage, the culmination of Skogen’s now 50-plus years in music and engineering. The epiphany hit in January of 2012. “That’s when I thought, ‘I’m going to be my boss; no more [BS]. I’m going to start doing this.’ That next day, that was my decision.”

Nontraditional Approaches

Today, Skogen’s workshop has piles of gadgets and electrical components. He identifies hand-wired, point-to-point electronics that power his tube amplifiers. “These are from the ’40s and ’50s — battleships, submarines, tanks, everything,” he says. “Nobody’s looking at this really anymore except a few people. I’m just learning things that I never learned or finding things that I missed.”

Day in and day out, Skogen dissects classic electronics from decades past in search of the science behind a soulful sound. But the work is never without a challenge. Small things, such as changes in the U.S. energy network, can have consequences that mean his designs need to do more than duplicate vintage audio gear. “In the ’50s, the wall voltage was 105110 [volts],” Skogen explains. “Nowadays, its 117-125 — that’s a 20% increase. So, the tube amps, they’re running really hot.” To tame the sound and protect fragile tubes, Skogen has designed custom power systems that can step down the voltage to safer levels — or leave it cranked to 11, for those who prefer that kind of power. It’s all up to the customer. His amps are made one at a time, with the chassis produced by local Minnesota manufacturers and the rest done by Skogen’s own guitar-string-calloused fingers. Every unit is tuned to a client’s specifica-

Still wondering about that Gregg Allman story? It happened in a roundabout way, but Gregg caught sight of Skogen’s early Gibson Les Paul — signed for Skogen by the legendary guitar maker himself years earlier. As Skogen tells it, Allman wanted the guitar badly, but Skogen wanted to trade. Skogen had his eyes on a relic of history, a guitar owned by Gregg’s brother, Duane, before his death in 1971. Skogen offered a swap, but no dice. Gregg wouldn’t part with his brother’s memory, and Skogen valued his own axe more than a check with a lot of zeros. So, both guitars stayed put. Skogen keeps his still — though you won’t get to see it without first hearing the Gregg Allman story. Skogen says it’s that sort of musical legacy that makes it all worth it. For him and his artisan amplifiers, it’s about leaving his mark. “Some of this stuff appreciates in value over time, and I’m hoping what I build will too.” — R.C. Drews WINTER 2020 ENTERPRISE MINNESOTA /

Tyson Twait became the new CEO of Dotson Iron Castings over the summer. He brings a strong accounting background to one of the best small foundries in America.

TRANSITIONS

Tyson Twait Takes Helm at Dotson Problem-solving number cruncher excited to guide Dotson into the future.

n 2008, Tyson Twait took a job as an accountant for an Owatonna company called Central Valley Co-op. Six months into the job, he had the grim task of breaking bad news to one of their best customers: He’d gone over their numbers with a fine-toothed comb and even checked every number twice, three and four times. Their financial records just weren’t adding up. To help guide the company back to a place where it could pay its bills, Twait came on as a temporary bookkeeper. But during the second month he was there, Twait spotted an accounting error that revealed a stark and painful reality for the company. They were bankrupt. “That’s hard news to break to a company owner. But I think he knew it. Piecing it all together, there was kind of a sickening feeling on both sides,” Twait says. “I had to foreclose on our largest customer, giving me a very quick MBA in the real world.” Fast forward a few years and Twait, after a successful accounting career at various

6 / ENTERPRISE MINNESOTA WINTER 2020

southern Minnesota companies, is the new CEO and president of Dotson Iron Castings in Mankato. He takes over for outgoing 45year company veteran CEO Jean Bye, who had taken over for Denny Dotson, a titan of the small foundry world whose family has been involved in the company’s ownership since the 1940s. (Both Bye and Dotson remain close by, with Bye taking over as executive chair of the company’s board of directors, and Dotson never more than a phone call away.) Twait takes over during an interesting period for any business. With the COVID-19 pandemic producing a volatile business climate, change seems in the air for every industry. But Twait is no stranger to change. He was born and raised in Emmetsburg, Iowa, a town of roughly 2,500 people. “We have both stop lights in the county,” he says with a note of ironic pride. After high school, Twait enrolled at Gustavus Adolphus College in St. Peter intending to study athletic training.

But athletic training wasn’t for him, and he transferred down the river to Minnesota State University, Mankato where he studied mass communications and marketing. He’d planned on going to law school, but those plans … changed. After working for a brief stint with his father in the financial world, he decided to enroll at Gustavus again — where his wife was now a faculty member — and get an accounting degree. “I knew I needed to do something to get back into the workforce,” Twait says. “People said, ‘Go get an MBA.’ But I thought I should do accounting because that’s something tangible, and Gustavus paid for it.” If you’re thinking accounting is a far cry from athletic training and mass communications, you’re not wrong. But Twait is the kind of person who is curious about everything. He’s also the kind of person who happened to be good at most school-related things. Writing and words came easily, he says. So did numbers and math. But even though he likes numbers and math, he couldn’t see a future hunkered down over balance sheets tallying debits and credits. So, instead of becoming a Certified Public Accountant, he chose the Certified Managerial Accountant track, which keeps his work with numbers focused more on the big picture — how the numbers contribute to the overall success and health of a particular business. He then started working for Ridley, Inc. in Mankato. A few years later, he took that job in Owatonna where he had to share the bankruptcy news to the company’s biggest client. He learned a

PHOTOGRAPH BY JACKSON FORDERER

lot from that experience, though. “You go through school, and you’re moving numbers around, and moving debits and credits and what not,” he says, “and then you get into something like that and everything is moving so quickly that you’re having to react and really rely on common sense and logic — but you’re still using that financial background and how it relates to individuals and people. It taught me that sometimes when you’re moving numbers around on a piece of paper, people can get a little lost.” Prior to his transition to Dotson, Twait had returned to Ridley and was promoted to Chief Financial Officer. A few years later, when Ridley’s parent company, Alltech, made some organization changes, Twait left. Then, in the summer of 2018, a few members of Dotson’s leadership team reached out to Twait to see if he’d be interested in becoming their new finance manager. After reading news accounts of how well Dotson treats its employees and how well regarded the company is in the community, he agreed. A few years later, he made another move — an internal, upward move. Because CEO Jean Bye was preparing her exit from the day-to-day operations, Denny Dotson thought Twait, despite having relatively little experience in foundries or castings, might be the right man to lead the company into an uncertain future. “As I’ve watched Tyson interacting with employees, I notice he has the ability to ask incredibly good questions, and that’s the job of the CEO,” Dotson says. “We have highly talented technical people, many of whom have been with us for years.” Despite Dotson’s vote of confidence, Twait says he’s still intimidated. From a business standpoint, Twait says he felt comfortable quickly. And while he’s still learning the industry, he’s confident that the people with decades of experience who understand every nuance of the industry won’t let him fail. “It’s not like anyone’s looking to me to solve anything,” he jokes. Twait says he’s been inspired to learn more about Dotson’s standing in the foundry world. “When you start visiting other foundries, other competitors, it really comes through that, wow, I guess we really do have a pretty good shop and really highend things here.”

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continued from page 2 shop floors. So, we began to emphasize workforce issues so that teachers, administrators, school counselors, students and parents might all grasp the lucrative and rewarding career opportunities that manufacturers had to offer in their home communities. The 2020 version of the State of Manufacturing has attempted in part to illuminate how the surreal weirdness of COVID-19 and the government’s attempts to deal with it have affected Minnesota’s manufacturers. And I think we have never seen a better example of how data and focus group interviews can work together to find clarity in a murky marketplace. The survey analysis we are about to hear from Rob Autry is maybe the most nuanced in the 12 years he’s reported State of Manufacturing data. Few of you are going to leave your computers today, thinking, “Here’s what manufacturers think.” Or, “Here’s what manufacturers need.” We have experienced many years of that kind

This weird COVIDthemed version of our survey reinforced for me how much I like and appreciate Minnesota’s manufacturers. When times get tough, they care for their employees and their communities. of unified messaging. But this year is not among them. I think about the Great Recession of 2009, the first year we conducted the survey. Back then, all manufacturers were caught flatfooted by the collapse of the American economy, and all were affected basically on similar terms. The differentiator in those days was who would best exploit the downtime to position their company to take advantage of the economy’s eventual comeback.

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The effects of the 2020 COVID economy have hit all manufacturers differently. But there are similarities, of course. Manufacturing floors contain more plexiglass than they once did. Employees are wearing masks or shields. They are social distancing. Many are working from home. Some manufacturers are gasping to keep up with skyrocketing demand. Others are gasping to keep solvent. Once-reliable supply chains have, for some, become unstable and unresponsive. Trade shows — at least for now — have become a relic of the past. So have customer visits. So have cold calls. To address this, manufacturers increasingly rely on the internet and mobile technology for sales, customer contact, supply chain communication, or even just monitoring off-site employees. And so, I wasn’t surprised when many mentioned that information and that cybersecurity has catapulted to a top corporate concern. If there is a quiet surprise in our focus group research, it was how cybersecurity has become a first-tier priority for so

many manufacturers. But my takeaway from this year’s focus groups was far more personal than in other years. The fact that we had to conduct them via Zoom surprisingly seemed to make participants more reflective and candid than when we sat around a conference table. I was continually impressed by how manufacturers were stepping up to take care of their employees. Some made room in the office so that students could do schoolwork while their parents worked. Others allowed flexible workdays to accommodate classroom schedules. Slowing sales forced some to cut their workweeks to four days, and their workdays to six hours, but in doing so they did not reduce their employees’ compensation. In Alexandria — I don’t think they’d mind me outing them for this — manufacturers actually facilitated open trades of employees, so that hard-hit companies could temporarily relocate employees to companies that are struggling to keep up. We don’t have time to talk about more examples, but there are many. I encourage you to go to our website and read the transcripts of our focus groups to see how manufacturers are responding. The discussions are fascinating. For me, I walk away from every State of Manufacturing survey with a deeper appreciation for how Minnesota’s manufacturing executives continue to drive their local economies by finding more strategic sophistication to meet the demands of their increasingly global markets. That’s no less true today. But this weird COVID-themed State of Manufacturing survey reinforced for me how much I like and appreciate Minnesota’s manufacturers … and how when times get tough, they care for their employees and their communities. They are not just good business executives, but good corporate citizens. We could not undertake this large project without our great industry platinum partners and sponsors. They are: Bremer Bank, Fafinski Mark & Johnson (commercial law firm), Granite Partners, Grey Search + Strategy, King Solutions (transportation and logistics), MN DEED, Olsen Thielen CPAs and Advisors, PROduction Workforce Professionals, and Widseth (architects and engineers).

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NEW VOICES

Collaborative Strength Matt Hanson joins Enterprise Minnesota’s board of directors.

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att Hanson knows a thing or two about change, transition and adapting. He also knows the value of experience, sharing knowledge and fostering a community of like-minded manufacturers. Now, with his own company Hanson Silo humming along and adapting nicely to the COVID economy, Hanson will use his experience, positive outlook and expertise to help other manufacturers in a big way. Hanson has joined Enterprise Minnesota’s eight-member board of directors, where he hopes to be a voice for rural Minnesota during a time that — despite the challenges of COVID paired with traditional challenges such as workforce development — he sees is strong for manufacturers. “I see the state of manufacturing as healthy,” Hanson says. “I think that the state government needs to continue to remember the small and mid-size manufacturers in its policies, which is a constant challenge in the state.” There was never a time in Hanson’s life when the family business wasn’t in his life. Dating back 104 years, Hanson Silo’s reputation is formidable. Founded in 1916, the company used to manufacture and erect more than a thousand silos annually. And while the silos were first rate, the company’s ability to adapt and evolve was even better. As the agriculture industry evolved and shifted away from silos, Hanson Silo moved to manufacturing precast concrete bunker walls, livestock feed storage and handling equipment, and powder coating, among other products. So, while the company hasn’t manufactured silos for years, they do still service the ones in operation.

Matt Hanson

Hanson says he believes manufacturing in Minnesota is healthy, but he hopes the state government won’t forget manufacturers in its policies. Hanson graduated from Willmar High School and then the University of St. Thomas. After graduating, he went to work for 3M before returning to the family business. Since returning, he’s dabbled in marketing, sales and operations. Today he’s the company president,

a post he’s held since 2007. He and his brother each hold equal stakes in the company while their father, Greg, maintains half ownership. Hanson has had extensive involvement with Enterprise Minnesota and its services. He, his brother and his father each have served on Enterprise Minnesota’s peer councils. The peer councils, set up across the state, are exclusively for manufacturing executives from small and medium-sized companies. During monthly meetings, participants speak candidly and confidentially with peers about business challenges and opportunities, and they learn key ways to grow their manufacturing enterprises profitably.

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“The power of Enterprise Minnesota’s peer councils is definitely in the networking.” —Matt Hanson Greg has been a part of the Owatonna peer council for years. Brother Mike is a member of the St. Cloud peer council. And Matt is a member of the Monticello peer council. Being a part of the peer councils, Hanson says, has given him a window into the power of collaboration and networking. “The power of Enterprise Minnesota’s peer councils is definitely in the networking and the ability to call another business owner and say, ‘Hey, you know, we’re seeing this. Are you seeing it? And what are you doing about it?’” Hanson says. “I think I’ve experienced better networking, in relation to manufacturing, than I ever could have done on my own. You’re kind of in the boat with a bunch of people who understand what you’re facing and what you’re up against.” Hanson also is looking forward to bringing a regional voice to the board. “I’m excited to represent west central Minnesota,” Hanson says. “I have a lot of friends who own manufacturing companies. And I know a lot of people who run companies out here. So, I’m excited to bring the pulse from here to Enterprise Minnesota’s board meetings. I think that will make us all better.”

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This billboard in Winona celebrated success at Alliant Castings and gave a shout-out to Enterprise Minnesota.

KEY INDICATORS

A Sign of Excellence When Winona-based Alliant Castings saw big results after working with Enterprise Minnesota, the foundry let its community know in a big way.

or a few weeks in September and October, it would have been difficult to drive by the Target store in Winona without seeing the larger-than-life — literally — smiling faces of a handful of Alliant Castings employees. Alliant Castings, a foundry with roots dating back to 1885, rented space on an electronic billboard to herald some of the company’s recent achievements, one of which was the implementation of an employee training program called Iron University. “Celebrating a year of hard work and dedication creating the new Iron Univ Foundry Apprenticeship Program,” the billboard read, “with help from Enterprise Minnesota.” Iron University is a program the company implemented with help from Enterprise Minnesota Business Growth Consultant Abbey Hellickson. In an article published in the 2020 spring issue of Enterprise Minnesota magazine, Alliant Castings President Tom Renk called Iron University an educational and enrichment program aimed

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at producing not just better employees, but better people as well. The billboard campaign was the brainchild of Alliant Castings Accounting Manager Julie Tenner. “This is something new I just brought to the table here,” she says, “to kind of put a good image out there of our company.” The idea’s genesis was twofold. Part of it was to recognize the Iron University program and the role Enterprise Minnesota played in getting it done. The other part was to try and drive potential employees to fill out job applications; like most manufacturers, Alliant has vacant positions it needs to fill. So, advertising agency Lamar created two billboard designs — one featuring Iron University and the other appealing to potential employees. Tenner says it’s too soon to tell how well the recruiting billboard is doing, but it’s never a bad time to celebrate your employees and their hard work. Iron University is an example of an investment in the company that will pay off big-time down the road.

When asked to evaluate the Iron University program’s financial impact over the next three years, Renk estimated an impact of $1.5 million in new and retained sales; $250,000 in cost savings; and an investment of $100,000 in workforce practices and employee skills. How’d they get there? Hellickson and Enterprise Minnesota Business Growth Consultant Greg Langfield assessed Alliant’s company leaders, managers, and lead workers, taking into account competencies needed by each to ensure the company’s success. They also assessed each employee’s tasks and duties. With that information, they created training content aimed at producing the best work performance, whether it’s from an entry-level worker or a seasoned veteran. They’ve created visible career pathways across the organization and built content so employees, if they choose, can train on-site and advance within the company. Hellickson says this enrichment and education effort at Alliant Castings is innovative. “For the foundry industry and for the size of their organization, it’s extremely unique,” she says. “Tom values growth, and he really values elevating his employees to be their best here and at home. So, there’s a foundation to this Iron U that’s really all about just being better people.” Says Renk, “Iron University’s curriculum, created with Enterprise Minnesota’s guidance, provides the structure to enrich and develop our people. Development of our people, through IU, will give us the ‘secret sauce’ for future success.”

NEWBIE

New Faces Mark Davidson has 20 years of experience in sales.

ark Davidson, a Marine Corps veteran with 20 years of experience in sales and account management, joins Enterprise Minnesota’s business development team. Davidson says he’ll be working primarily in the southwest part of the state. He hopes to bring his business development and relationship management skills to grow Enterprise Minnesota’s client base, help clients become stronger financially, help them attract talent, and help them become leaders in the markets they serve. Born and raised in Minneapolis, Davidson enlisted in the U.S. Marine Corps after high school and served four years of active duty. He is a graduate of Concordia University in St. Paul and currently lives in Chaska with his wife and mini poodle. For the past 20 years, Davidson has been in sales and account management roles within both large and small Mark Davidson information technology consulting firms. “My four years with Verizon, two with British Telecom and four with Capgemini enabled me to build my skills and knowledge around adoption of new technology,” Davidson says. “That typically involved discovery meetings with business and IT executives who struggled with how to ensure business needs were met.” Davidson’s military career included four years active duty, two of which were on board the USS Eisenhower as a security guard stationed out of Norfolk, VA. He earned the Marine Corps Expeditionary Medal for service during the Beirut crisis. And during his final two years, he served as a vehicle commander with the 2nd Light Armored Reconnaissance Battalion at Camp Lejeune, NC.

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WINTER 2020 ENTERPRISE MINNESOTA /

ADAPTABILITY

Change Leadership is More Nuanced Than You May Think Michele Neale’s manufacturing workshop maps a strategy for navigating change.

ichele Neale sometimes brings Legos with her to do consulting work with clients. No, it’s not for killing time during break sessions. She uses them to make a point. Sometimes during the training session, Neale will pass out Legos to attendees and instruct them to get to work building something. Piece by piece, they lock together Lego bricks, guided only by the ideas and images in their own minds. And then she throws them for a loop. “Halfway through I’ll stop them,” Neale says, “and I’ll say, ‘OK, we need this person to rotate one to the right, this person rotate one to the left.’ And you now have different teams working on different projects. And then I’ll say, ‘You have two minutes left to finish your project.’” Wait, what? How can a team come into a project that is in progress and be expected to complete it adequately and on time? The obvious answer is, “They can’t.” Yet it happens all the time. “It’s no different than how we might have to reassign people in production,” she says, referring to how employees are often asked to move to different areas of a manufacturing plant’s operations. “And as a leader, what did you do to tell them? Did you explain ‘why’ first? Did you have those conversations with them to share the bigger picture and the vision? Or did you just move people and get right down to it?” The Lego trick is a prescient one. As a business growth consultant for Enterprise Minnesota, Neale understands well the psychology behind people’s response to change. She’s also, like most of us, acutely

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aware of just how much change is taking place right now. The coronavirus pandemic has upended life as we know it, forcing business leaders to grapple with a change agent like none they’ve ever seen before. Luckily, Neale — who has presided over recent Enterprise Minnesota manufacturing workshops on the topic — has keen advice for anyone facing change in the coming weeks, months and beyond. There’s a right way to approach change and there’s a wrong way. With forethought and planning, manufacturing leaders can do it the right way.

Resistors and Curves

It’d be natural to assume that someone who has reached the upper echelons at a company has mastered the art and nuances of leadership, including how to guide a company through change. But, sadly, not all leaders have those skills. And bungling an opportunity to lead a workforce through major change can have catastrophic results. Like anything else in business, managing change is a skill leaders would do well to hone and sharpen. The biggest obstacle to change, of course, is resistance. Neale says all resistors can be placed into one of three categories: I don’t get it; I don’t like it; or I don’t like you. As the old axiom suggests, the first step in solving a problem is recognizing there is one. By that same logic, the first step in addressing the source of resistance is determining its type. When you know why someone is resisting change, you help them power through in constructive ways. “I learned early on in my leadership

career that, if I encountered someone who was my biggest resistor, I’d want him or her on my team,” she says. “I would want to make sure that when we came out with this new project, when we went to roll it out, that they were on board.” Neale says it’s also important for leaders to be cognizant of the Kübler-Ross change curve and how it applies to change leadership. The roughly V-shaped curve follows a familiar path: shock, denial, frustration, depression, experiment, decision and integration. After the initial shock of an announcement of change (such as a new supervisor or a mask mandate), some employees may move quickly to denial, as in, “this can’t be true” or “this isn’t happening.” Leaders should make sure any change that happens is in alignment with company goals and mission.

THREE REASONS FOR RESISTANCE 1. I don’t get it 2. I don’t like it 3. I don’t like you Frustration sets in next. “This is ridiculous! Who came up with this idea, anyway?” an employee may say. Communication here is key. Employees deserve to know the “why” behind changes — big or small. Giving them as much information as possible can minimize frustration. Schedule regular meetings or check-ins, or perhaps institute a daily huddle routine to keep employees apprised of any developments. “Listen, listen, listen,” Neale says. “And ask questions. Help create that open dialogue between you and your team.” At the depression phase, employees may lack energy. It’s the leader’s job, Neale says, to address that by providing motivation. That motivation can lead to the next phase of the Kübler-Ross curve: experimentation. At this phase, the goal is for employees to realize, after trying something new, that the results were good. “Working from home wasn’t as bad as I thought.” Or, “Wearing a mask isn’t a big deal; it’s just a piece of cloth.” The decision and integration phases come when employees begin to accept and buy into the change. They may feel more positive about their situation.

The Kübler-Ross Change Curve Integration

Denial

Changes integrated; a renewed individual

Disbelief; looking for evidence that it isn’t true

Shock

Surprise or shock at the event

Create Alignment Decision

Learning how to work in the new situation; feeling more positive

Frustration

Recognition that things are different; sometimes angry

Experiment

Initial engagement with the new situation

Maximize Communication Spark Motivation Develop Capability Share Knowledge

Depression

Low mood; lacking in energy

“In the past two weeks, I’ve had several conversations with clients about projects or initiatives they are trying to implement but aren’t experiencing success with,” Neale says. “It’s because they didn’t understand the change curve response, nor did they follow the change model. Whether it’s adding another shift, asking for overtime, implementing AS9100, ISO or ESO management systems, the dedication to change leadership is underestimated or ignored.”

Resilience

Neale’s presentation highlights another key area of change leadership: adaptability and resilience. To illustrate these values, she points to the story of a company called InLine Motion. Normally a manufacturer of equipment for the food industry, InLine sensed an opportunity when COVID hit and its business lagged. Its engineers quickly designed face shields and used social media to gauge interest. After a positive response, they manufactured thousands of face shields and backed it up with a bold marketing blitz. InLine soon found itself awash in orders for its new face shields. Such a pivot wouldn’t have been possible without the company being both adaptable and resilient. “When you build that culture of resiliency, then those who are resilient are going to be more likely to accept change, and maybe even embrace changes going forward because they see them as chances

to grow and learn and experience new things,” Neale says. “It’s very similar to the continuous improvement environments. If you are a company that focuses on continuous improvement, your world is changing all the time. You’re constantly looking for those little things and asking, ‘How can I make my day better tomorrow? How can we have a better day today than we did yesterday?’” Neale says she heard a recent example of a leader who could have used some resilience training. A manufacturer lamented feeling helpless in a situation where COVID-exposed employees may not be able to come to work. “She was saying, ‘I’m worried about

RESILIENCY DEFINITION The ability to become strong, healthy, or successful again after something happens. Or after a change occurs.

Modified Elizabeth Kübler-Ross 1980s change management model

people who get exposed and then they have a two-week quarantine. What’s that going to do?’ Well, when you have those changes that come in, how can your team then bounce forward? How can they be prepared for those disruptions in the workforce and the workflow to be able to then know that we can do better?” Neale says. “Are your other people going to be able to come in and do more because they know that next week it might be them who’s out, and they don’t want to leave their teammates in a lurch?” How a workplace responds to these kinds of pressures says a lot about company culture and its ability to be resilient. Neale says recent cases where some workers chose to stay home for COVID-related safety concerns can serve as a case study in how resilient your company is. “There is a small percentage of people taking advantage of COVID so that they don’t have to work. But most people want to show up and help. Most people want to get things back to normal. Most people want to be a value to your organization,” Neale says. “When we talk about resilience, it’s also respect, fair treatment and appreciation. And it’s how that culture in your organization then comes together. We can have a we-can-do-this mentality as opposed to, ‘Oh my gosh! All these excuses. Are you kidding me? That’s going to shut us down!’ That tells me a lot about what your organization is going to look like.” WINTER 2020 ENTERPRISE MINNESOTA /

Four Questions Joe Breiter, Director of Marketing and Business Development for Widseth

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his month, manufacturers around the state will be paying close attention to the release of Enterprise Minnesota’s latest State of Manufacturing® survey. From your perspective, what is the value of the State of Manufacturing survey and the value of the data it provides? The survey helps us keep our finger on the pulse of manufacturing in Minnesota. We got involved with Enterprise Minnesota because we wanted to better understand how manufacturers think and function, and the best way to do that was to go where the manufacturers are. The survey is a trove of information. One of the most interesting things to me every year when the results come out is how the responses differ between metro companies and the rest of the state, and between large and small operations. It underscores the point that you can’t approach everyone with the same solutions because everyone has different challenges. Another thing we consistently learn from the survey is the level of optimism or pessimism among manufacturers. The range of questions it poses gives multiple angles from which to predict what the future might hold. I don’t see how you can get this kind of data anywhere else. What have been the biggest changes in how you approach sales and marketing over the past decade or so, and how might that apply to manufacturers? About eight years ago, we began gravitating toward account-based marketing, or ABM, which focuses resources on highvalue prospects and sidesteps less valuable accounts by eliminating scattershot tactics that rake in anything that gets caught up in your net. You pinpoint prospects you’ve identified as would-be ideal customers, then marshal your resources to go get them. One of the keys to this strategy is the ability to create relevant content about your business and consistently get it in front of your prospects. Nobody gets sold

to anymore, not in the age of Google. Your prospective customers probably know a good deal about your company well before you ever meet them. The content you create must not merely be a sales pitch. It should both educate your customer and build trust that you’re the best choice to deliver what he or she needs. We use video, photography, blog articles, email blasts and social media to get our message across. It may sound daunting, but there are ways to break it down into manageable bites. Things in 2020 have gotten volatile; how have your sales and marketing tactics changed over the last nine months? We used to do lunch-and-learns in person with prospective clients, where we would bounce around ideas and get acquainted. Obviously, that has become a less desirable approach in 2020. We have managed to continue that tactic in an altered form over the past several months, and while a video conference doesn’t have the same dynamic as a face-to-face meeting, we’ve still found it can be effective. The key is that we’re not trying to sell anything in these meetings. We just want to get to know them, find out what gives them heartburn and help them think about possible solutions. In the tradeshow world, many conferences were canceled, postponed or switched to virtual events. That changed how we present information to attendees. Now it all has to be digital and postable on their virtual tradeshow sites. Because we had a process in place to develop just this type of content, we were in good shape to forge ahead. How does a smaller company manage marketing with all the other balls it has in the air? With roughly 80% of manufacturers in Minnesota comprising 20 employees or fewer, an in-house marketing staff is unrealistic for most companies. You still must promote your company, but you

INNOVATIONS don’t have to be a marketing whiz, and you don’t have to do everything yourself. If someone in the company — at whatever level — has the skills, time and desire to take on some of these tasks, you can capitalize on that. You can produce a perfectly good, highquality two- or three-minute video on an iPhone. Show your customers your facility, walk them through your processes, introduce them to the people who make things. Website platforms such as WordPress allow you to keep your site fresh without having to learn HTML, and many provide convenient tools for blogging, which is perhaps the easiest way to keep your customers and prospects up to date on what’s new in your company. If none of this seems feasible, there are a lot of small marketing agencies all around the state that know how to do this stuff and can take the load off your shoulders without breaking the bank.

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Joe Breiter

Joe Breiter is the director of marketing and business development for Widseth, an architecture, engineering, land surveying and environmental services firm with offices in Minnesota and North Dakota. He’s worked in marketing for 30 years, starting in the Washington, D.C. area and eventually working his way back home to Mankato. He is now based in Brainerd.

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The Need for Speed

ISOooo

FAST

Some manufacturers are using the COVID downtime to pursue ISO certification at warp speed. By Peter Passi

he ongoing COVID-19 pandemic has thrown manufacturers across the nation a major financial curveball. But some have capitalized on this challenging moment, recognizing it as an opportunity to look inward with an eye toward improvement and a sense of urgency. In recent months, Enterprise Minnesota has worked with a number of these businesses to fine-tune their operations and help them comply with the rigorous quality assurance standards established by the International Organization for Standardization, seizing the moment to move their businesses forward. Among the companies Enterprise Minnesota Business Growth Consultant Keith

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Gadacz has counseled as of late on these improvements are: Ritz Machine Works Inc., Next Innovations, and Van Technologies, each of which either completed the ISO process or is on track to complete the process swiftly. “There’s a trend forming that companies want to run their businesses better, and one of those ways is through ISO certification,” Gadacz says. Fellow Enterprise Minnesota Business Growth Consultant David Ahlquist adds, “The companies I’m working with currently started at a downturn in business, so they decided, despite the COVID problem, they’re going to forge ahead and use the time to upgrade their systems or invest in quality management systems

Adam Teeter, director of U.S. operations for Ritz Machine Works, says the company began its ISO certification process in August and is on schedule to be done by January.

to build some business.” Several manufacturers are not only doing ISO work, but they’re doing it very quickly. A typical ISO project is about a 10-month process: five months for consultants to analyze a manufacturing facility and come up with an action plan, three months using the newly implemented system and two more months for final certification steps. As COVID continues to define the landscape, organizations have redeployed their efforts to shorten the certification time frame to as little as four to six months.

Ritz Machine Works

Ritz Machine Works is pursuing an ISO 9001 certification partly in hopes that it will open doors to some new markets, says

PHOTOGRAPH BY LAURIE SOLLE

Adam Teeter, the company’s director of U.S. operations. Known for its tube-bending expertise, the business is based in Dauphin, Manitoba but opened its first U.S. plant in Cambridge, Minnesota in 2018. As the company has grown, Teeter says it has recognized the need for “a robust organizational structure that works not just for us but for our customers.” He noted that ISO certification could provide the company with access to supply more parts for original equipment manufacturers (OEMs). “It’s certainly a requirement for a lot of the larger OEMs. We’ve offered sample product and good pricing. But we’ve found with a few of the larger OEMs we were unable to get to the next level,” Teeter says. Gadacz says large OEMs’ preference for ISO-certified suppliers should come as no surprise. “They want well-run companies, and ISO certification helps improve their confidence in the supplier. So, they ask their supplier to get certified so that they can say, ‘Yes. I know you’re being checked. I know you care. I know you have good systems in place to support your business.’” But the ISO certification process is more than just a stamp of approval. It also should help the company boost its overall performance, says Dave De Braga, Ritz’s director of business development. “Enterprise Minnesota is helping us design a quality management system. So, the ISO certification is just a cherry-on-top type deal,” he adds. That’s the right view to take, in Gadacz’s eyes. “There are lots of reasons to do it. But the best reason is to become a better business. ISO certification gives you a way to run a better business,” he says, noting that the drive to improve should be the top priority. “The challenge is, sometimes when it’s just to get a stamp of approval, the internal drive to improve isn’t there or it may be woefully missing because it’s just to get a certificate — a stamp,” Gadacz says. Ritz employs 65 people company-wide, including 14 in Cambridge. The company is privately held and doesn’t disclose many financial details, but Teeter offers a bit of guidance, saying its annual sales total between $10 million and $20 million. Moreover, the business had enjoyed consistent growth until the pandemic struck. “We were anticipating a pretty rapid and aggressive 2020 in early January and February. But when the COVID situation hit, we found ourselves falling behind those expectations and customers shutting down for a month or two at a time. So, we kind of took that opportunity to advance our ISO

plans,” Teeter says. Ritz is moving swiftly. It started working toward certification in August and aims to complete the process in January 2021. If Ritz stays on track, it will earn ISO certification in just over six months — an undertaking Gadacz says typically takes eight to 10 months. De Braga acknowledges that’s an aggressive timeline. “But everybody on our team is motivated to get this done.” Few firms handle the range of tubing Ritz does, all the way from five-eighths of an inch to 8-inch diameter stock. “I think tube-bending is an especially challenging sector of manufacturing in that when you think of a piece of tube, be it rolled or rectangular, it has already undergone an entire manufacturing process before it comes to us,” Teeter says. “So, we have to take the tolerances of the previous manufacturing process and then couple it with the tolerances of our own. There’s quite an art and science behind the tubebending side of the business.” Ritz is also looking at other new opportunities. “Ag is definitely a big focus of ours right now,” De Braga says. “We do have some (ag) clients of a smaller scale, but it’s definitely on the top of our radar. And we are in current discussions with large OEM ag providers.” Teeter says gaining access to new markets, such as agriculture, is an attractive prospect, especially during uncertain times. “For our business’ security, I think a little diversity goes a long way,” he says. De Braga gives Enterprise Minnesota high marks for the role it played in the process: “We’re very impressed with how everything has gone and the overall approach they’ve taken. We’ve had consultants in the past on our Canadian side. But definitely this is a huge improvement, and we appreciate it.” Gadacz says that, particularly in light of the pandemic, Enterprise Minnesota has had to rethink the way it delivers services, which are often from a distance now. For Ritz, he describes the service delivery as a hybrid model of two remote consultations followed by an in-person visit. “That’s kind of the cadence we’ve been under.”

Next Innovations

Unlike Ritz, Next Innovations of Walker, Minnesota, has seen sales surge in the wake of COVID-19. Arnold Volker, president and owner of the firm, says about half of Next Innovations’ revenue comes from the sale of lawn and garden decor, as well as metal wall

art. The other half comes from a metal job shop, with much of the capacity from that operation devoted to the production of metal shooting targets made from the company’s own proprietary design. “Because of COVID, we’ve had an unexpected upturn just due to shooting targets and patriotic items,” Volker says. “If all things go the way they’re looking right now, we’re projecting maybe to be up about 45% this year.” The company appears on track to achieve $2.5 million in sales — the best since prior to 2009. “So, we’re kind of reinvesting in our company because we’re having such a good year,” Volker adds. Volker says he’s always looking to attract new business and predicts Next Innovations could take better advantage of its location in a Historically Underutilized Business Zone, often known as a HUBZone. That designation could put the company in the running for government contracts through the Small Business Administration. But ISO certification is often a requisite. The company has seen its business fluctuate dramatically through the years, with its workforce peaking at 84 employees from 2005 to 2006, when the company’s colorful line of decorative metal wind spinners took off internationally. But cheaper knockoffs appeared, and as business waned, Next Innovations’ workforce shrank to 12. Today, the company employs 16. “So, we’re kind of rebounding back up,” Volker says. As the company’s name implies, it’s always looking for the next opportunity. “Our tagline is: ‘innovative metal products.’ So, we’re always looking for new things, and right now we’re looking at basically some prototypes of body armor that goes in a vest. So, we love creating things that we’re passionate about.” Volker’s 20-year-old son, Dawson, shares that passion. He developed the company’s line of shooting targets and is now working on the body armor project. “The thing that’s really helped us this year has been the shooting targets,” Volker says. “But I personally don’t believe that you should rely on one thing. It seems like the best opportunities sometimes come when you least expect them, and you really need to be prepared for that. So, that’s why the ISO thing I think is going to help us weather the storm.” The pandemic and the growing popularity of online commerce has also changed the way Next Innovations does business. “We’re getting enough orders online that WINTER 2020 ENTERPRISE MINNESOTA /

we need to take the next step and invest in technology that does it all automatically,” Volker says. Traditionally, more than 95% of Next Innovations’ business has been wholesale. “This year, though, we’ve seen that completely almost flip,” Volker says. “On the wall art side of things, wholesale has almost gone away, and we’re doing more e-commerce.” Next Innovations has seen sales via Amazon and Etsy grow, but Volker says they are also developing their own website — metalartmaker.com. When it comes to certification, Next Innovations isn’t exactly new to the ISO world. Volker says the company was most of the way through an ISO 2008 certification process, but it never completed an audit to earn the actual certification. “We kind of had an ISO framework. So, that’s kind of helped us walk through this process a little bit faster,” he says. The company expects the certification process to take seven months or less to complete. “Enterprise Minnesota has been wonderful to work with. They were able to look at what we have and tweak it. The other reason why we did the certification, in all honesty, is because there was a grant” that covered about half of the ISO certification cost, he says. Even though many companies have leaned toward remote training in recent months, Gadacz notes that different clients have different needs. “With Next Innovations, the company has desired nearly all on-site meetings to work through the improvements, partly to help them stay focused on the improvement project. If it’s remote, it’s easier to get distracted,” he says. “So, I’ve been going to their site almost weekly to help them get their implementation done.” Volker says he’s in the process of entering a sign contract with a big Florida firm. “That’s another reason why I wanted to up our game, in a sense, and improve our own internal quality and efficiencies.” Volker believes seeking the ISO certification can help everyone focus on a common goal. “I think it helps the employees understand the importance of quality. It just raises that to the forefront,” he says. But Volker is the first to admit that juggling ISO training with the demands of a growing business has not always been easy. “We have a small team of people, and my other people on the team I think have 20

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Larry Van Iseghem, founder, president and CEO of Van Technologies, says pursuing ISO certification was one of the best expenditures he’s ever made for the company.

done better than me,” he says. “It’s been extremely difficult to meet a pretty aggressive deadline along with being busy. But everybody has done wonderfully, realizing that it’s important.” Next Innovations was scheduled to undergo an ISO audit in October.

Van Technologies

Van Technologies Inc., a Duluth-based maker of high-performance, environmentally-friendly coatings, headed into 2020 expecting to have its best year ever. And the company appeared right on track to do so. Then COVID-19 came knocking. Although it has since begun to recover, Van Technologies’ order book took a second quarter hit, says Larry Van Iseghem, the company’s founder, president and CEO. “We’re back up to steam, but we saw a 6% reduction in revenue, year to date,” he says. As business slowed amidst the onset of the pandemic, Van Iseghem and his team stepped back and thought about how best to use a temporary lull. “You have to look at your circumstances, and then you’ve got to look beyond COVID. You have to look beyond all this other activity that’s hitting us, and you have to make sure when you come out of it, you’re running faster than ever. And we collectively agreed. If we could get ISO 9001 accomplished at the back side of this pandemic, we’re going to be running faster than ever,” he says. The company has since earned its certification, and Van Iseghem says the results speak for themselves. “It was one of the best expenditures I’ve made in the history of the company, because it’s going to have such a profound

impact,” he says. “I already see the benefits of the process — from organization to operational efficiencies. People feel much more focused, and it’s a less stressful environment.” Gadacz describes those results as a common denominator for many of his most successful clients. “The motivation with Van Technologies, Ritz Machine Works, and Next Innovations is they want to improve their business and open markets. And they lead with improving the business. That’s important.” Gadacz says Van Technologies had many of the quality assurance practices for successful certification already in place and was in a unique position to compress the ISO timeline. The company completed its ISO final certification audit on Sept. 18, whizzing through the process in an impressive 5½ months — shaving 2½ to 4½ months off the norm. “We were ahead of the game,” Van Iseghem says, “but we didn’t really know how far ahead we were. So, the biggest challenge is in the unknown. Keith came on, and through his consultancy, he identified exactly where we were.” “He removed that unknown factor,” Van Iseghem adds. “We were expecting to go through the balance of this year striving to get compliance. But it didn’t take us much time at all.” Almost all of the consulting services Gadacz provided to Van Technologies were delivered remotely, except for the auditing, which needed to be done in person. While that meant less time on the road, Gadacz says it often involved more planning and adapting to new modes of communication. “If I’m having trouble explaining a

PHOTOGRAPH BY DEREK MONTGOMERY

concept in the classroom, I can turn to the whiteboard, and I can sketch out an idea. But if I’m having trouble explaining a concept virtually, I need to have the content available at a moment’s notice so I can do a screen-share and explain it a different way,” Gadacz says. “It means some of my travel time turns into thinking time.” Van Technologies currently employs 14 people, and while the company is a privately held family business, Van Iseghem ballparked last year’s sales between $5 million and $10 million. He says the company doesn’t aspire to make a commodity-type product. Rather, the business delivers highly specialized, tailored products and counts as one of its primary customers the largest window manufacturer in North America. “We just don’t make paint. I don’t even like to use the word ‘paint.’ We manufacture coatings. We innovate solutions for surfaces,” Van Iseghem says. While Van Technologies previously had been growing at an annual rate of about 10%, Van Iseghem aims to accelerate that. “We’re going to target doubling our revenue and profitability. We want to keep our profitability proportional to where we are now, but we want to double our revenue in five years.” Van Iseghem acknowledges that’s a lofty goal in uncertain times, but he contends it’s still one worth pursuing, with open eyes. “Now, that’s a target. It’s not hardcast,” he says. “Look at what COVID has done.”

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Final Word

A quick turnaround for an ISO project has advantages and disadvantages. “Getting to certification quickly can open new markets and better how businesses are run,” Gadacz says. “Enterprise Minnesota conducts the internal audits for the client, while the client focuses on his manufacturing processes.” On the other hand, Gadacz adds, manufacturers must understand how an ISO project will impact their operations and determine if a quick turnaround is in their best interests. “They need to think about if they are able to run the system independently. Or, do they need additional sustainment support for another year? Are they ready to walk on their own for internal audits, or will that be part of the following year?”

Join us for upcoming Manufacturing Workshops 9001:2015

enterpriseminnesota.org

WINTER 2020 ENTERPRISE MINNESOTA /

COVID’s

Long Shadow The pandemic economy is taking a toll on manufacturers’ expectations for the future. 22

/ ENTERPRISE MINNESOTA WINTER 2020

he COVID-19 pandemic has cast a long shadow over Minnesota’s manufacturers, triggering the deepest plunge in manufacturers’ expectations for their companies since the Great Recession of 2009, according to the 2020 edition of Enterprise Minnesota’s State of Manufacturing® survey. A record low number of companies expect increased revenues in 2020; the number of executives who fear recession has increased seven-fold, and confidence in the business climate has sunk to half of what it was in 2018. Pollster Rob Autry and his team

A record low number of companies expect increased revenues in 2020; the number of executives who fear recession has increased seven-fold; and confidence in the business climate has sunk to half of what it was in 2018. at Meeting Street Insights, a South Carolina-based survey research company, interviewed a random sample of 400 Minnesota-based manufacturing executives from Sept. 8-Oct. 7, 2020. Respondent titles were limited to owners, CEOs, CFOs, COOs, presidents, vice presidents, and managing officers. The survey has a margin of error of ±4.9%. Autry added an “oversample” of 50 manufacturer interviews in each of the six Minnesota Initiative Foundation regions. (Figure 1) This set of data marks the 12th annual edition of the survey — the only statistiWINTER 2020 ENTERPRISE MINNESOTA /

Fig. 1 Minnesota Initiative Foundations We also did an oversample of 50 interviews with manufacturers in each of the six Minnesota Initiative Foundation regions.

Northwest Minnesota Foundation

Northland Foundation

West Central Initiative Initiative Foundation Southwest Initiative Foundation

1 Minnesota Southern Initiative Foundation

Fig. 2 Executives clearly believe that COVID-19 has had a significant impact on the state’s economy and Executives clearly believe that COVID-19 has had a significant manufacturers’ businesses.

impact on the state’s economy and manufacturers’ businesses. “Overall, what impact do you think the COVID-19 outbreak has had on the state's economy and business climate, if any at all?”

Major Impact Modest Impact Minor Impact No Impact at All

“Overall, what impact would you say the COVID-19 outbreak has had on your business, if any at all?”

66% 26%

Major/Modest Impact

Major Impact

35%

Modest Impact

35%

Minor Impact

20%

No Impact at All

9% 16

92%

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70%

Major/Modest Impact

cally valid regional poll of manufacturing executives in the nation — but is the second time Autry’s team fielded a State of Manufacturing survey in 2020. Enterprise Minnesota set aside the results of the first one, which was conducted in March, after President Trump declared a national pandemic emergency in the middle of the research field work. Meeting Street Insights informally released the results to illustrate how attitudes of manufacturers changed before and after the announcement. The State of Manufacturing polling research was also complemented with 11 Zoom-based focus groups held Sept. 10-29.

“All manufacturers were caught equally flatfooted by the collapse of the American economy during the Great Recession of 2009. All were affected basically on similar terms,” Bob Kill says. “That’s not true today. While many are struggling, some are enjoying record sales.” Bob Kill, Enterprise Minnesota’s president and CEO, says the focus groups proved particularly valuable in 2020 as participants discussed how the COVID economy affects different manufacturers differently. “All manufacturers were caught equally flatfooted by the collapse of the American economy during the Great Recession of 2009. All were affected basically on similar terms,” Kill says. “That’s not true today. While many are struggling, some are enjoying record sales.” Overall, 92% of manufacturers said that COVID-19 has had either a “major” (66%) or “modest” (26%) impact on Minnesota’s economy and business climate. (Figure 2) Seventy percent say it has had a “major” (35%) or “modest”

(35%) impact on their businesses. The impact appears to be felt less in the western half of the state. (Figure 3) Despite this, manufacturers continue to have confidence in their companies’ long-term resilience, as they have shown in all the years of the poll. This year, 85% declared confidence in the financial future of their companies. At the same time, however, 14% of executives were “not confident” in their future, three times worse than in 2019.

Overall, 92% of manufacturers said that COVID-19 has had either a “major” or “modest” impact on Minnesota’s economy and business climate. Seventy percent say it has had a “major” or “modest” impact on their businesses. The impact appears to be felt less in the western half of the state.

Fig. 3 Manufacturers say COVID-19 has impacted their original plan for 2020. Manufacturers say COVID-19 has impacted their original plan for 2020. “Thinking about your company's strategic plan for growth, has the impact of COVID-19 and the global pandemic changed your original plan for 2020 for growth or recovery?”

Overall

• Roughly two-thirds of manufacturers across the board said that COVID-19 has impacted their business plan for 2020. (Figure 3) • The survey revealed a significant increase in the number of manufacturers who fear recession, 36%, up from just five percent in 2019. (Figure 4) • Manufacturers have also soured on Minnesota’s business climate. Fully 35% said it has gotten worse — 20 points higher than 2018 — while 27% said it has gotten better, just half as many as 2018.

Business Performance

• Key business metrics experienced the biggest slide in the history of the poll. (Figure 5) Just 21%

62%

57%

40%

45%

43%

39%

Twin Cities

62%

59%

57%

41%

38%

Greater MN

Under $1 Million

Yes

Over $1 Million

38%

Less Than 50 Employees

More Than 50 Employees

Fig. 4 Recessionary fears are at their highest level since 2008. Recessionary fears are at their highest level since 2008. “Thinking about the upcoming year, in 2020, do you anticipate economic expansion, a flat economy, or a recession?”

Economic Expansion

56%

53%

55%

49%

32%

26% 19%

December January 2008 2010

10%

9% January 2011

January 2012

Flat Economy

34%

37%

7% March 2013

March 2014

64%

48%

42%

49%

32%

42%

15%

Recession 58%

54% 46%

40%

34%

Troubling Times

61%

59%

15%

13%

March 2015

March 2016

28% 32% 4%

March 2017

March 2018

40%

Flat

39%

36%

Recession

20%

5% March 2019

Expansion Sept-Oct 2020

Fig. 5 We also see a significant downward trend We also see a significant downward trend in key 2020 business metrics. in key 2020 business metrics. Percent of Manufacturers Expecting Increases in 2020 for…

Gross Revenue

51% 44% 36% 23% 19% 17% 2008

24% 2010

2011

Capital Expenditures 55%

47% 41%

39% 32%

Profitability

45% 35%

45%

44%

60%

59%

47%

45%

37%

31%

32%

27%

28%

27%

25%

23%

2012

2013

2014

2015

2016

2017

30% 32%

31%

2018

2019

25% Cap Exp 24% Profit 21% Revenue Sept-Oct 2020

WINTER 2020 ENTERPRISE MINNESOTA /

Fig. 6 The number of manufacturers who are expecting significant decreases in revenue and profitability is higher now than in 2008.

of executives expect an increase in gross revenues, down from 59% in 2019. Expectations for profitability also fell considerably. Only 24% anticipate increased profits, down from 45% in 2019. • That perspective worsens as 39% of respondents predict decreases in gross revenue to exceed 10%, 17% more than at the peak of the Great Recession; 33% expect profits to fall by more than 10%, also considerably worse than 2008. (Figure 6)

Fig. 7 Health care costs continue to be the most pressing concern, but there has been a significant rise in Health care costs continue to be the most pressing concern, but there economic and global uncertainty. has been a significant rise in economic and global uncertainty. Change Since 2019

Concerns Ranked by % Concern (8-10) 50%

The costs of health care coverage 39%

Economic and global uncertainty Attracting qualified workers

36%

Retaining qualified workers

36%

-10 -1

30%

Cyber security

N/A

28%

Developing Future Leaders

27%

Federal Government Programs Resulting from Pandemic

N/A

26%

State Government Programs Resulting from Pandemic

-8 +23

N/A

24%

Costs of Employee Salaries and Benefits

-5

15%

Getting Your Products to Market

Fig. 8 Workforce challenges are a bigger deal for larger companies. Workforce challenges are a bigger deal for larger companies. “What would you say are the one or two biggest challenges your company is facing that might negatively impact future growth?” (Red Highlights Top Two Challenges) Less than $1 Million Revenue

Between $1-$5 Million Revenue

Over $5 Million Revenue

50 or Fewer Employees

Over 50 Employees

Unfavorable business climate

35%

31%

36%

33%

36%

Attracting and retaining a qualified workforce

21%

31%

50%

26%

55%

Cost of health care insurance

20%

25%

40%

25%

31%

Increasing costs of energy and materials for your products

24%

27%

23%

Getting operations up and running

26%

14%

12%

20%

12%

Lack of clear direction forward

10%

Regulations

Coronavirus

/ ENTERPRISE MINNESOTA WINTER 2020

Attracting and retaining a qualified workforce fell considerably in issues that manufacturers named as an impediment to growth. This decline is likely due to slowing sales by some manufacturers. • Fifty-nine percent say “finding new customers” will be the primary driver of future financial growth. Next in line are “maximizing productivity” (27%) and developing “new products” (24%).

Pressing Concerns

• Half of the manufacturers interviewed cite health care costs as their most “pressing concern,” making it the top issue for the survey’s 12th year. That number

EDITOR’S NOTE: Full results of the State of Manufacturing® can be viewed at www.enterpriseminnesota.org. There you will find a full rendering of the survey’s top-line findings, a select number of cross tabulations, and edited transcripts of all focus groups.

is down, however, from 58% in 2019. (Figure 7) • “Economic uncertainty” rose from 16% in 2019 to 39% today.

Fig. 9 Even in a pandemic, manufacturers say it’s difficult to find qualified workers.

• “Developing leaders” increased from 23% in 2019 to 28% today.

Workforce Issues

• “Attracting and retaining a qualified workforce” fell considerably in issues that manufacturers named as an impediment to growth. This decline is likely due to slowing sales by some manufacturers. The workforce issue is felt most keenly by larger companies. Fifty-five percent of companies with more than 50 employees named it their top impediment, while it was the leading factor for only 26% of companies with fewer than 50 employees. • That said, 62% of manufacturers say that it is difficult to find qualified workers, even in a pandemic. (Figure 9) • Manufacturers are using more creativity in their attempts to attract new employees. Twenty-nine percent say their top recruiting priority is to create a reputation for a “great work environment.” Only 8% name “competitive salary” as a chief attribute. (Figure 10)

Succession Planning

• While the number of manufacturers with succession plans held steady at 49 percent, the pandemic has slowed those plans’ advance. Nineteen percent of companies that have plans say COVID-19 delayed them. About a quarter of companies that don’t have a plan say the pandemic has delayed their succession planning.

Government Assistance

• Manufacturers broadly agree that help from state leaders should include tax incentives (32%), direct investments in small companies (28%), and eased regulations (26%).

Fig. 10 Manufacturers want to be known as having a great work environment. Manufacturers want to be known as having a great work environment. “When thinking about attracting and hiring new employees, what does your company want to be known for?” Great work environment

29% 15%

Work-life balance Industry leader

15%

Competitive salary

Company mission

Career growth

Values employee safety

Great benefits

Flexible shifts

3% 25

Fig. 11 Manufacturers want state leaders to offer tax incentives, make direct investments, and ease Manufacturers want state leaders to offer tax incentives, make direct regulations to help businesses out. investments, and ease regulations to help businesses out. “On another topic, which of the following should the Governor and State Legislature do to support small businesses and manufacturing?”

Offer tax incentives

32%

Make direct investments in small manufacturers to help create and preserve jobs

28%

Ease/Reform regulations All of the above

26% 3%

Something else

Don’t know/Not sure

5% 30

WINTER 2020 ENTERPRISE MINNESOTA /

CANDOR

MANUFACTURERS

SOUND OFF SOM focus groups prompt frank discussions among manufacturers about COVID’s toll, lingering workforce issues.

et’s just start with the elephant in the room, which is the impact of COVID on your business. How has it impacted your ability to work profitably in 2020? • It’s a matter of our customers canceling POs early on and extending orders. We’re working three to four days a week, depending on customers, but we’ve laid no one off and orders now seem to be holding steady.

Were your customers reacting to worry about what might happen with COVID? • Their world was drying up, and their inventories were building. So, they wanted to make sure they didn’t have excess of inventory, like what happened in 2009.

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WINTER 2020

• Because of DoD markets, we were, for the most part, blessed. They told us we had to keep rolling because construction can’t stop. The only way that we would have to stop is if there were COVID shutdowns due to illness. We had a few times where deliveries had to be rerouted because someone on the job site was sick, so the entire job had to shut down. So, if you look out from the beginning of 2020 to what you’ve experienced today, has COVID impacted your bottom line or is it more about adapting your processes to circumstances? • Most of it’s been more procedural headaches, not necessarily bottom line. Moving forward, I’m a little leery on the outlook. Seems like bid lettings right now for the states have really

slowed down. It seems like some of my competitors are getting things for dirt cheap. • This has had a couple of different impacts on our business. Our leadership group took another look at our forecasting for the year. Then we got to be closer to the first part of April, and we realized that the economists we listened to weren’t right. We started to see that our business was growing at a pace that we couldn’t catch up with, and still can’t. We were planning for about a 7% growth in 2020, and right now we’re sitting at about a 33% growth, and our lead times continue to creep out on us. What was your message to nervous employees who reached back out to you? • They couldn’t see us panic. A lot of our organization went to working remotely, which made it very challenging and difficult to do business as usual. I think we transitioned very well. I don’t have all the answers for this stuff, and I still don’t to this day. I just do what we have to do and then try to keep our employees engaged so the trust factor relationship remains the same. Did you get any pushback from employees about the necessity of masking? • For sure. I would say generally people are mostly compliant, but, depending on how they view the pandemic and how they view the risk of the situation, that varies from person to person. I would say for the most part, after a bit of an adjustment period, people have adjusted pretty well to the new requirements. (To an educator): How has all of this affected the relationship between manufacturers and technical colleges? • Actually, we haven’t missed much. We have great relationships with our local manufacturers and area industries. That really helped us graduate students last spring when we were in the stay-at-home order. So, a lot of our players took on students as interns or hired them early prior to graduation. And then we converted all those

experiences back to their programs so that we could graduate many of our students despite the COVID disruption. Enrollment wise, we are one of the few schools that has pretty flat enrollment, which is good, given that average college enrollments are down over 7%. But unfortunately for us, in our manufacturing programs, we continue to see a decline in the number of students in our mechatronics, machine

“They couldn’t see us panic. A lot of our organization went to working remotely, which made it very challenging and difficult to do business as usual. I think we transitioned very well. I don’t have all the answers for this stuff, and I still don’t to this day. I just do what we have to do and then try to keep our employees engaged so the trust factor relationship remains the same.” tool tech and mechanical drafting programs. The welding program’s off the charts. I’m not sure why, but welding is very, very strong. The other three programs continue to struggle in terms of turning their enrollment fortunes around. Are there differences in how you approach strategic planning compared to now and the Great Recession of 2009? Back then, we heard a lot of manufac-

turing executives talk about how a recession is a terrible thing to waste. They looked for opportunities to reposition their companies for when the economy bounced back. • That’s a tough one. We kicked that around: How can we take advantage of different things? And then one of our bigger customers approached me within the last month. He’s got a big job in Chicago and needs to hit a certain level of diversity. And I am certified as a woman business enterprise. I took a look at it and said we can make some changes and adapt, maybe look at some different tooling. So, we are going to take this job. And like I said, hopefully that’s going to launch us into being able to do similar types of machining and fabricating that we haven’t done in the past. • We’ve taken the same approach as we did in 2009. We’ve increased our advertising. And we advertised strictly on this register to reach our OEMs and the engineers who are out there. We’ve positioned ourselves to reach new markets. And right now, compared to then, our RFQs are busier than ever, the engineers are having a hard time keeping up. That being said, we know that any awards we get today, we’re looking next year to be back to the 2019 level for sales because it takes that long to get tooling up and running. Any other places where you’re looking ahead, that you might be able to put yourself in a competitive advantage when and if COVID ever goes away? • We’re on a continuous lean situation here at work, and they’re always discussing how we can take in streamlined production. Being the accountant here, I can say that we’re constantly looking at how we can minimize the time from when you get your raw material until you collect it. That has continued to get shorter as time goes on. Are there opportunities to reposition your company that you didn’t foresee at the beginning of 2020? • Well, we actually saw a little bit of a slowdown starting last fall. We thought this would be a perfect op-

WINTER 2020 ENTERPRISE MINNESOTA /

portunity to get ISO 9001 certified. It was a very interesting process because all of our training from about March through the time we finished our certification here in August was all online, including our audit with the registrar. He was very cooperative and helped us get through that, even though we’d never met face to face. Was your attraction to ISO certification more from the management aspect of the 2015 standards or was it more to give you some marketing prestige with current and potential customers? • It was actually two things. One was the marketing, definitely. But the other part is that I’m in a position where I’m the owner of the company, and I anticipate hopefully getting out of the company sometime in the next 10 years. I thought this would be an excellent opportunity to bring more individuals into the management process and just get everybody onboard with how things work in our management system. Were you right? • It’s too early to tell on the marketing side. I’ve had a few of my existing customers who were excited to see that we were certified. I would definitely say that I’ve seen a lot of growth in our leadership team, just in their confidence in making suggestions and making the decisions in various aspects of their jobs, making leadership decisions. How has this impacted the availability of qualified workers? • I would say it’s more intense. And

/ ENTERPRISE MINNESOTA WINTER 2020

part of it is the stimulus that the government issued. There are a lot of people who aren’t really interested in working right now. And part of you wants to say, well, then, I don’t want you anyway. But then the other part of you says, man, there are a lot of challenges out there, such as educating your kids from home and daycare and just all sorts of issues. But that certainly has complicated things because there are people who aren’t really either ready to go back to work, comfortable going back to work, or interested in going back to work. And actually, it’s been really fun, but it’s been challenging as well to try to find those people. • One of the interesting things about Alexandria is just how diverse we are in the different sectors of business. And so, while we have some sectors that are struggling with what COVID has brought and the closings and the cutbacks on capacities, we have other businesses that are thriving right now. They’re seeing a better year than they’ve seen in several years. And because of that, they’re desperately seeking workforce, and they’re just not finding it. It’s just not out there right now. And that’s been a struggle for quite some time, way pre-COVID, and we’re not finding an answer for that, unfortunately. So, many of them are just cutting back and taking on the amount of work they can do with the existing workforce. There’s potential for growth in several of our local businesses, and it’s workforce issues that are holding them back from that.

Many of you are competing for employees in the same market. What are your attitudes toward that competition? • The challenge is to get them in the door. And one of the things that I’ve noticed since this whole thing has started, and I think somebody else mentioned a little while ago, is the stimulus and the incentives that were put out there for people to not seek employment has really hurt us. We were in a challenging job market anyway, not a lot of people to pick from. Is your ability to recruit employees different today than it was, say, a year ago? Are there different challenges? Do you have the same number of unfilled jobs in your plant? • Depends on who you are. If you’re the customer, they don’t see it that way, but our lead times have extended, and through communications and things that are going on, people are just... I mean, it’s not just us, anybody who supplies anything to the building industry right now, it doesn’t matter if it’s a window or shingles, they’re all in the same boat. Obviously, people want their stuff when they order it, and they want it in their building, but we can only do what we can do. I mean, our capacity is what it is, and our demand is way higher than that. • Yeah. I’m facing the same issues, but the people who are working are working, and the ones who don’t want to work, don’t want to work. And it’s really hard to combat that alongside the labor shortage that we all know exists. But during this tough time, I

“There are a lot of people who aren’t really interested in working right now. And part of you wants to say, well, then, I don’t want you anyway. But then the other part of you says, man, there are a lot of challenges out there, such as educating your kids from home and daycare and just all sorts of issues. But that certainly has complicated things.”

capitalized on letting my employees know that I truly care about them and their families as well as the community. And I did that really in two distinct ways. For a couple of months, when COVID was really hitting hard and everybody was getting laid off in terms of spouses and whatnot, we didn’t lay anybody off. But actually, our typical workweek for our shop guys is 46 hours. • And I wanted to keep the morale up, wanted guys to feel that it’s worth being at work as an essential worker. So, during a couple of months, I raised our overtime rate and I allowed them to work really as much as they wanted because we had the backlog to support it. I was making sure that we were staying ahead of things just because of the uncertainty of having to shut down or something like that. I also capitalized, in a way, by investing in the community through publicly announcing my pledge to treat my entire company, every employee, to a lunch once a week. And I rotated the restaurants in our community because they couldn’t always have people coming in their doors. I want our community to continue to thrive, and I support it by putting money back into the community. It was just word of mouth. I’m trying to invest in the fact that people in the community know we’re a quality company that takes care of our workers and the people around us. And it seems to have been paying off. Have the government unemployment payments ever worked as a disincentive

for employees to apply for jobs? • I’ve had people set up for interviews, and then the incentives went into place with the extra pay on unemployment, and yeah, they backed out last minute saying, “Yeah, never mind. I’m going to stay home.” How about revenues and profitability a year from today? Is forecasting more difficult because of the COVID economy? • I don’t think it’s that much different than it’s been in the past. It really depends on how long this lasts, as far as folks staying home more and restaurants being at half capacity. I mean, that’s really driving the demand for us. So, if that lingers, our demand will continue to be strong, as the packaged food industry continues to have a strong demand. I think we’re looking at it to continue to be strong through next year. But again, it just depends on how quickly we get back to something closer to what was normal in the past. I think for a few years, the demand will still continue to be strong for us. • Actually, it’s a little bit harder just due to the uncertainty. Right now, we’re trying to figure out a little bit about our forecast, just because two of our largest customers were both hit pretty seriously with COVID-19. Both of them had plant-wide shutdowns for several weeks. And they still have a lot of absenteeism, which was seen in the orders. So, I think that’s the only unknown for us. It depends on how long COVID-19 sticks around. How optimistic are you about your

ability to successfully plan for 2021 and to meet demand through the resources that you currently have? • I don’t feel really good at all. I have a sick stomach. No, our team did not plan nor foresee this demand coming. This demand was, I want to call it, artificially made. I’m not sure if that’s the right word. I’m not really involved in the financial part of this business, but something had to do with the pandemic, the stimuluses, people’s abilities to access funds or however they got them to do home improvement projects that they normally probably wouldn’t have done. I can say this much: Between our leadership and leaders who granted equity, they’re really looking hard at how to plan as we finish up 2020 and move into 2021, setting our operations budgets and obviously forecasting for next year. Everybody’s being challenged to say, you know what, this is fake, this isn’t real, but we’ve got to try to figure out where that takes us next year. Will we just linger for another 18 months, or will it be over soon, as some people here jokingly say at the start of some meetings, when the election’s over? I don’t know. But from an operations side, to meet that demand, the only way it’s going to happen is if we as an organization are honest and forthright about what our true capacity is. We’re also landlocked. I mean, we need to add space. And that’s been a challenge too. In 2021, we’ll likely have a building expansion. Not because of the pandemic, but because we’ve outgrown our need and have really identified it these past six months.

WINTER 2020 ENTERPRISE MINNESOTA /

Rising Leaders

Young Guns

While most manufacturing leaders are on the older side, an emerging crop of young leaders is taking over with fresh outlooks and new ideas. EDITORâ&#x20AC;&#x2122;S NOTE: This is the first in what will be a regular series on young leaders in manufacturing.

/ ENTERPRISE MINNESOTA

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Kayla Dietzmann is director of human resources and marketing for Duluth-based SCS Interiors.

hen Kayla Dietzmann couldn’t find her target audience on Facebook, the marketing and HR professional for SCS Interiors took to Instagram. Using a highly selective series of hashtags (a searching and categorization tool to help social media users quickly find topics of interest), she was able to zero in on the upper-income aircraft owners she was looking for. And it worked. A bold problem solver, Dietzmann learned years ago how to handle an older generation who didn’t always take her seriously because of her age. Jasmine Sonmor, owner of Aura Fabricators, knew the coronavirus pandemic was causing heartache and tough conversations not only for the people who work for her and their families but the greater community at large. So, she decided to do something that, in a time of global pandemic, may not have appeared wise: She instituted a plan to buy weekly lunch for her entire staff, and she bought that lunch personally from businesses in town she knew were struggling because of the pandemic-related shut-down rules. She also raised the overtime rate, knowing some of her workers had spouses who had lost their jobs because of the health care crisis. Liz Wauters and Clint Larson are a sibling team about to take over the family business, Colburn Manufacturing. Both grew up sweeping floors and mowing lawns around the shop as kids. Clint transitioned to the business right away, while Liz put her four-year degree to work in the marketing world for a few years before joining the family business. They’re a rare brother-sister executive team building on tradition while embracing innovation and insisting on providing workers with the newest technology to make them the most productive. Most leaders in manufacturing remain on the older (and male) side. Indeed, more than a quarter of all manufacturing workers are 55 and older. But a growing number of industry leaders are much younger. And they’re breathing new life, new ideas and new swagger into the industry. Eventually, every company goes through a transition, whether it’s at the CEO level or upper management. Bringing young blood into the fold can infuse a company with fresh ideas and bursts of bold enthusiasm. And that’s never a bad thing.

Lunch is On Her

Once a week, Jasmine Sonmor gets into her car around lunchtime and heads to a local restaurant to pick up some food. But instead of leaving the restaurant with a sandwich, she leaves with, say, 48 sandwiches. No, she’s not famished. She’s doing a solid for the men and women who work for her. In March, when the world began to realize the novel coronavirus wasn’t going away anytime soon and things started shutting down, Aura Fabricators made a public announcement. “Aura is fortunate to be able to continue to work in the current cli-

“We are actively involved in the community. Ultimately, that creates a little bit of a buzz between community members and my employees in general that we’re a great place to work, and we’re not just looking out for ourselves. We really care about our employees and the people around us.” —Jasmine Sonmor, owner of Aura Fabricators mate,” the company wrote on its Facebook page. “We urge the community to support local businesses as we weather the current business closures related to the COVID-19 pandemic. But please, abide by the 6 feet rule and practice social distancing as much as possible. During this difficult time, we’ll be buying take-out lunches for our employees by rotating local restaurants once a week for as long as we’re able! We’re happy to treat our employees and support our community’s restaurant scene. As a community, we WILL get through this!” That was Sonmor’s call. She says the move was sincerely altruistic. As a lifelong member of the community, she says she genuinely cares about the people who live there. But it was also a strategic move; she’s hoping to build compassion into

the company brand. When people think of Aura Fabricators, she wants images of smiling, satisfied people to come to mind. If a free lunch once a week can get people thinking in a positive way about her company, Sonmor says it’s worth it. Another factor influencing her thinking is that her business doesn’t deal directly with the “public.” She deals primarily with Minnesota Department of Transportation contractors. Still, Aura Fabricators exists and does business in the community, and Sonmor wants to be — and be seen as — a caring member of that community. “It would be easy for a company in my industry to pretty much ignore any of those types of movements in marketing because I don’t really have to market to the public. In terms of my product, it all is going to the DOT, and that’s a very selective group that I’m marketing to,” Sonmor says. “But where it does help is that I’m getting my name known, and that we are actively involved in the community. Ultimately, that creates a little bit of a buzz between community members and my employees in general that we’re a great place to work, and we’re not just looking out for ourselves. We really care about our employees and the people around us.” She says buying lunches is not necessarily something that could only have come from a young mind. But it is an example of a different way of thinking, and it’s certainly nontraditional. “We always try to think outside the box,” she says. The story of Sonmor’s rise to power is an unusual one. She learned the metal fabrication business working for her father’s company, White Oak Metals. She started when she was just 13, mowing the lawn around the plant or helping organize her father’s office. When she got a bit older, the work got more sophisticated, and she started doing internal quality audits. “I basically learned the system from the inside out,” she says. “It really helped me to problem solve when things weren’t being done quite the way we said we should be doing them.” Gaining that knowledge of the business and the industry came in handy when, while still in college, she noticed a void in certain DOT markets. So, she started her own metal fabrication company, Aura Fabricators, and started bidding on jobs in WINTER 2020 ENTERPRISE MINNESOTA /

Clint Larson and Liz Wauters are set to take over Colburn Manufacturing from their parents.

those markets. Then, while still a senior in college, her father’s health began to fail. He suggested his daughter take over his company under her newly formed company, and Jasmine was more than ready for the challenge. But right when that transition occurred, her main competitor went out of business, and she was suddenly swamped with work orders on projects that needed to be done immediately. It was a long few months of being overworked, but she came out the other end stronger. And she showed the contractors and her employees, especially those who previously worked for her father’s company, that she had the skills to run the company. “It really fast-tracked me into earning my stripes,” Sonmor says. “I had to push aside all of the existing work and basically learn the new market that I was trying to get into overnight. And essentially, we doubled in volume within those first few months. So it was extremely stressful, but it was definitely a blessing. It helped me earn respect from my fellow employees. It helped me earn respect from my contractors.”

#BoldLeadership

Manufacturers are no strangers to social media. Most have a Facebook or LinkedIn presence where they post product photos or announce job vacancies. Kayla Dietzmann tried the Facebook route, but she wasn’t able to find her target audience. “Pilots are kind of an elusive bunch on Facebook,” Dietzmann says. So, in a move you’re not likely to see often in the manufacturing industry, Dietzmann tried a different platform to target potential customers for SCS Interiors’ 34

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products (high-end seat upholstery for vehicles, mostly aircraft): Instagram. According to Pew Research, roughly 35 percent of adults use Instagram. But unlike LinkedIn, which boasts occasional use by members, most Instagram users interact with the photo-based social media platform daily. Instagram’s metrics and algorithms allow users to add hashtags that passively target the exact people they want to reach. By using the hashtag #C172, for example, you can target users interested in the Cessna 172, a four-seater aircraft typically owned by someone with a certain amount of disposable income. And a person with a certain amount of disposable income who owns a Cessna 172 would be an ideal customer for an aircraft upholstery company. “I was talking with one of my coworkers who is a pilot. I asked him which hashtags I should use and what I should do. And that just kind of opened up a whole new world of people who are super easy to find if you hashtag everything. I can do #172, #C172, #Leathercraft. I can do all these different things that get me in front of the right people.” To be clear, targeting individual pilots on Instagram is not a primary business driver for SCS Interiors. The company currently manufactures first-run upholstery products for Duluth-based Cirrus Aircraft, a manufacturer of small aircraft. SCS Interiors also works with other aircraft manufacturers, including Eclipse and Kestrel. “Job shop” type work on automobiles or boats is also part of their sales arsenal. Reaching out to pilots is an attempt to diversify the company’s business and keep its brand on people’s minds. “My ideal target customer would be a purchasing manager for a flight school.

They have 20 planes. I want to help them because I want to cut 20 of the same thing. That’s way easier. But at the same time, there are so many individual pilots out there, which does keep us going.” Dietzmann says the approach is to hook potential customers with a hashtag, then get them interested in everything SCS Interiors provides. “Then I can also talk about seat upholstery, right? I’m talking about one thing but then I show them what else we can do. And that really drives interest and brand awareness. They may not be ready to buy now, so it’s really passive. And I’m not even trying to sell that hard because it’s Instagram.” Dietzmann is in a unique position. As the head of both human resources and marketing, she has the latitude to engage in the marketing tactics that she deems essential. Much like Aura Fabricators, SCS Interiors hasn’t been adversely affected by COVID or mandatory shutdowns. “My boss and I have a lot of leeway and trust. So, I mentioned, ‘Hey, I’m going to start an Instagram,’ and I just ran with it. We’re not in a spot where I have to be like, ‘How many dollars did that generate?’” Dietzmann says. “I can just tell from customer comments and general interactions on our page that it works. I just haven’t monetized it because it’s a soft ad, right? It’s just keeping brand awareness up.” It’s not only awareness that’s up. SCS Interiors is booked through March 2021 on custom seat reupholstery, which Dietzmann says correlates to the company’s Instagram use. Dietzmann may be an executive at a successful manufacturing company today, but if things had gone differently a few years ago, she may have been a restaurant

owner instead. She grew up in western Wisconsin and, when she was a teenager, her mom coowned a pair of Dairy Queen restaurants with her uncle; Dietzmann worked at and managed the restaurants. When he passed away, Dietzmann and her mother considered buying the restaurants outright, but they decided against it, not wanting to take on the larger-than-life responsibilities of restaurant ownership. While attending the University of Minnesota-Duluth and afterward, she worked in the hospitality industry and workforce development before applying for her current job at SCS Interiors. Being a young leader in manufacturing, Dietzmann says she’s experienced some pushback from people who are not impressed by her age or gender. “The comment that immediately comes to mind is when I was asked how old I was in a job interview. And I just reacted immediately with, ‘That’s not relevant.’ And it was in comparison to my salary,” she says. “It was a really foundational moment of conflict. How do I respond to that? What do I do? “I think that was probably the first moment I realized I would have to advocate for myself even harder as a young professional and always understand my worth. I’m also not sure how much the male-female dynamic played into that. Because not only am I young, I am a woman.”

Unlike Clint, Liz attended a four-year school. She studied entrepreneurship and Spanish at St. Cloud State University and spent several years as an event planner. She rethought her career track after a negative experience with a supervisor. And when she quit, she thought about her father’s shop and how he was always beckoning her to come work for him. “If I was ever going to try the shop, that was the time,” she says. “My dad had

change will result in better results. So, Clint and Liz adjust how they introduce change or new technology. One thing they’ve got going for them is that Colburn has always been a place that isn’t afraid to invest in new technology if it’s in the company’s best interest. Clint left the company for a year but returned when he tired of working for people who don’t value their workers. “What I noticed is the people in higher-

Jasmine Sonmor is the owner of Aura Fabricators in Dalton, MN.

Brother & Sister

Siblings Liz Wauters and Clint Larson took very different paths to their leadership positions at Colburn Manufacturing. For Clint, the road to running Colburn Manufacturing began early. “I grew up in the shop,” he says. At eight years old, he was sweeping floors and deburring parts. As he grew older, he gradually learned to do some of the simpler milling and lathe work. The family business was ingrained in him. But by high school, he still wasn’t sure what he wanted to do with his life, and he was hearing the many calls from teachers and society saying a four-year degree was the preferred route after high school. He thought about his future and his father’s company, and he decided to go to school to be a machinist. Liz’s story is a bit different. “I spent way less time in the shop growing up,” she says. “I would help out during the summers during high school, but I really didn’t hang out there much when I was young.”

always tried to get me involved in it, saying Clint and I would be a good team and that he needed me here. So, I gave it a shot. And that was a little over three years ago. Now, we are in the process of transitioning ownership to Clint and me.” Both Clint and Liz say one of the advantages they’ve noticed about being younger is how they embrace evolving technology. Looking across their workforce, they say it’s true that younger workers tend to embrace and adapt to newer technology quicker. “We got ISO certified four years ago. And when we were going through that process of implementing it all, we got a couple of new software programs to use,” Liz says. “The younger people jumped into it more and were a little more comfortable.” That’s not to say older workers can’t or won’t adapt. It just takes a different approach. The reluctance they’ve seen by older workers isn’t a result of opposition to change; it’s because they need proof the

up positions don’t know manufacturing like they would if they had worked their way through the levels of manufacturing like I did,” he says. “We’re younger; we grew up in this industry. We value new technology and change. And being at a bigger company, I didn’t see that with the older people who were running it. They basically said, ‘You’ve got to make do with what you’ve got.’ And here we constantly are getting the newest technology to push our capabilities and to be the best that we can be as a company and make work easier for the machinists.” Like most manufacturers, Colburn has struggled to find workers. But they’re also very picky about who they hire. “A lot of people are jumping from place to place, chasing that nickel raise. I’ll look at their resumes, and if I see more than two places that they’ve worked in the last two years, nine times out of 10 I won’t even call them in for an interview. They’ve shown they are just not a committed person.” WINTER 2020 ENTERPRISE MINNESOTA /

Continuous Improvement

Tug of War Embedding a consistent ‘Daily Dialogue’ into a manufacturer’s culture will yield long-term benefits. By Greg Langfield

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ll manufacturers face a daily managerial tug of war about how to communicate what’s important to efficiently and profitably move their business forward and — just as essential — whether they’ve clearly communicated the details of those priorities to everybody involved, from the leadership team to the manufacturing floor. Consider the overwhelming lesson learned from manufacturers in the early days of the COVID-19 pandemic, the importance of ongoing, timely and consistent communication to customers and employees. Few executives will disagree that they are better served when all employees clearly understand what they are supposed to be doing and why, in precise terms. What they need to discover is the art of getting it done. A company’s leadership team can solve this challenge through what I call “Daily Dialogue,” a formal communication process providing clarity and purpose for everybody in the company. Companies that live by Daily Dialogue won’t be surprised by rampant inefficiencies throughout the plant caused by employees or managers who are unclear about the company’s priorities. Before I get into the details, I urge leadership teams to first consider how a formal approach to continuous improvement will help them in the long haul. Too often continuous improvement is thought of as an initiative — with a defined beginning and end. This will yield some short-term results, without making any long-term progress toward sustainability. The maximum value comes from embedding continuous improvement into your company’s culture, thus making Daily Dialogue a permanent fixture in your management routine. Second, always remember that Daily Dialogue is about leaders developing their people. Lean expert and author John Shook defines it like this: “Get the job done and develop your people.” This is excellent advice. Most of my clients are skilled at getting the job done, in other words keeping their customers happy. They know that’s why they exist. They know the value of responsive customer service and why they need to get it right the first time. But they frequently struggle with the second half of Shook’s mantra. That’s where Daily Dialogue becomes essential. It focuses on leadership skill development to support employees in improving their processes to

get the job done. Manufacturing guru George Koenigsaecker is even more precise when he describes it as “continuous improvement through people.” He means the connection through people is the only model that sustains continuous improvement in an organization. This places the emphasis on skill development within leadership to engage those employees to make a difference in how they think about their work and think about their day-to-day interactions. There is a direct connection between leaders developing their skills in Daily Dialogue, which then connects to the skill development in employees to get the job done through improved processes that make their work easier, better and faster.

DAILY DIALOGUE: INFRASTRUCTURE

This article is about building the necessary infrastructure to conduct a Daily Dialogue. When we talk about building infrastructure, this is meant to mean constructing a process around a 4-feet by 6-feet white board that is located where the work is being done, such as engineering, customer service and on the production floor. To support the building of the Daily Dialogue infrastructure, we will be asking and answering three questions. 1. What matters — today? 2. What is being learned — today? 3. What actions am I taking — today?

WHAT MATTERS TODAY?

The foundation of Daily Dialogue consists of the leadership team’s clear sense of the company’s identity, purpose and direction. Think of this as establishing the company’s “True North.” The True North points the way forward and provides clarity through organizational alignment of what is truly important. For most organizations, this is expressed through their vision, mission and values. Most companies with strong clarity around their True North realized the value of this as they first confronted the myriad challenges of the COVID-19 pandemic. About eight weeks after the government declared a national emergency, I visited with one executive about how well his company was dealing with these challenges. He said that while the company experienced an immediate loss of business, they leaned on their clear sense of vision, mission and values to guide them through some difficult

decisions. It didn’t make the decisions any easier, but it did provide clarity to know that they were making the right decisions. Every organization has a True North, but what matters is how leaders communicate and live the vision, mission and values, thus providing organizational clarity about “what is important” through all levels of the organization. This means that, to be effective, the application of True North needs to cascade through the different organizational levels so every employee finds purpose in his or her daily work. Within the application of Lean Thinking, five categories define this purpose and direction in terms of supporting employee and customer satisfaction. For employee satisfaction, this is identified through defining safety and employee development measures. For customer satisfaction, it is defined through quality, delivery/lead time and cost/ productivity measures. Once we establish strong employee and customer satisfaction, it can naturally be expected that business satisfaction will occur. This connection of True North to the five Lean Thinking categories provides the structure for all employees to know “what matters today.” In the building of Daily Dialogue through the use of the white board, True North is at the top, with the placement of the five Lean Thinking categories underneath.

WHAT IS BEING LEARNED TODAY?

We need to think in terms of goals, which within the context of Daily Dialogue are the critical few activities that must be accomplished today. Lean Thinking provides the framework for establishing goals based on activities that define a good day in terms of employee and customer satisfaction. This connection to having a good day supports the sense of accomplishment everyone experiences when their day felt productive. However, Lean Thinking doesn’t stop there. It strives forward with the goal of going from a good day to a better day. This then becomes the goal of what must be accomplished today to “make a good day into a better day.” To be effective in achieving that goal, the first question (“What matters today?”) needs to be answered at the highest organizational level to provide the necessary alignment and connections. As discussed previously, this provides the alignment through the organization to support accomplishing those daily activities that will support the WINTER 2020 ENTERPRISE MINNESOTA /

Check Your Progress

achievement of the orgainsight into starting with Answers to these questions will determine how well you are nization’s goals. Stated “good” measures and communicating continuous improvement in your operation. another way, this is how then continuing to refine the organization’s stratethem. What this means gic direction is cascaded for Daily Dialogue is that What matters today? down to the lowest level, we need to define the What is important to our employees and customers? making the connection measurements around Our leaders communicate the mission, vision, values, and strategies with employees about the five categories based to help employees understand how they are connected to the how their day-to-day on measurements that organization’s success. efforts support achieving are readily known and the larger organizational applicable by those What’s being learned today? goals. in the work area. This With the goal estabmeans stay out of the What must be accomplished? lished to “make a good ERP system and go with We have metrics and goals that are simple and clearly aligned, day into a better day,” the measurements commudriving the right behaviors to achieve our organizational vision. next step is measuring nicated through red or Where are we now? the goal. Measurements green marks. Based on We track and visually post measurements in departmental/ show manufacturers how the goal “to make a good functional areas that are used daily for open discussion and well their businesses are day into a better day,” performing and, just as a safety goal is to have feedback. important, how well their everyone work safely. processes are supporting When this occurs, it’s a What actions am I taking today? the overall organization. “green” day. When we What are the obstacles? While measuring is esuse visuals of red/green, Our managers and supervisors are seen regularly in the work areas sential, it is not without it clearly communicates engaging with employees to understand their day-to-day reality challenges, pitfalls and if employees are having better. traps. Author W. Bruce good days, and what What is the first step? Cameron is credited with opportunities there are the idea that not everyto have better days. This We have processes in place that encourage employees’ input to thing that can be counted visual communication of problem solving, safety and employee well-being. counts, and not everyDaily Dialogue provides thing that counts can be the answer to the second counted. Our information question — “What age enables us to pull lots of data from an customer expectations. Just like in geomis being learned today?” When we have enterprise resource planning (ERP) system, etry three points make a plane, using three “green” days within our five categories of yet what are we learning? Likewise, there measurements around a singular theme such Daily Dialogue, we learn we can celebrate are just some things we can’t measure, such as customer satisfaction will provide leaders success! And when we have some “red” as trust between the employees and leaders. with valuable insight into their organizadays within our five categories of Daily With this paradox around measures, the tion’s performance. Dialogue, we learn we have opportunities to right path forward is not always obvious. Likewise, an owner of another manufacmake today a better day. I once had a client Let me explain through two examples. turer described a different kind of measuretell me he never realized how simple and I was waiting in a client’s lobby not long ment. He likes looking at the parking lot powerful communication could be through ago when I noticed a wall plaque declaring to see how many cars there are, and how the use of red and green dots as part of their the company had achieved 100% on-time new they are. Through this measurement, Daily Dialogue. Don’t believe him? Give deliveries the previous year. That’s perfeche was stating it was important to him that it a try! tion! And then I saw another plaque, to the his company provides meaningful wages, In constructing our Daily Dialogue right of the first one, that proclaimed the that the employees are able to afford new process through the use of a white board, company had also achieved 100% on-time vehicles, and that the wages and vehicle we now get to add our goal “to make a good deliveries in the previous year. Wow! That’s purchases supported the greater community. day into a better day,” which is represented exceptional, and it clearly communicated This owner conceived of a measure that by having a goal for each of the five categowhat was important to the company. But clearly communicated what was imporries of Safety, Quality, Delivery/Lead Time, as I got to know that client better, I realtant to him along with the organization’s Cost/Productivity and Employee Developized that their product lead time was 25% intrinsic impact on the community. This is a ment. To make sure everyone knows the longer than their competitor’s lead time. very simple measurement, yet it tells a very status of achieving the goal, the use of red/ The measurement trap was relying on one powerful story. green dots is used to clearly communicate measurement to tell the story of their ability These two stories reflect that while measuccess and opportunities for improvement. to meet customer expectations. A better apsurements are often not perfect, they can proach would be balancing on-time delivery be meaningful when painting a complete WHAT ACTIONS AM with additional measurements, such as picture. The temptation may be to wait I TAKING TODAY? lead time and schedule attainment, to tell a until the perfect measures are identified and The final question is a personal one. As a comprehensive story of their ability to meet then roll them out. Lean Thinking provides leader, are you seen by others as someone

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who lives continuous improvement through actions? Sometimes forgotten is that continuous improvement is about our actions first, and then the actions of others. Through Daily Dialogue, continuous improvement actions from the leader are necessary to support actions in others. It is through actions that true learning occurs, allowing further actions to be taken. There are no short cuts. The good thing is that within Daily Dialogue, continuous improvement actions are seen as small, incremental steps. Little steps may seem insignificant, but they will make a difference. For example, a little step could be an action that would save two seconds in a process step. By the time you read that sentence, those two seconds are gone. Two seconds seem so insignificant and hardly worth the effort. But the focus of this question is actions. And through those actions, learning occurs. Therefore, those two seconds mean the employee used his or her knowledge and skill to make the process better. That will lead to other actions to further improve the process, and now we have compounded seconds of learning that lead to minutes, hours and then to a day’s worth of improvements. So, if all we must do is take action through little steps, what obstacles get in our way from doing it? The big obstacle is time. Every day we are challenged to somehow find time for those things that are important. Remember that we started with our first question — “What matters today?” If continuous improvement is down on the list of priorities, the day we find time to support continuous improvement will never come. As leaders, our words and actions speak to others about what is important every day, no matter what may be written on our bulletin boards or put in our employee handbook. If continuous improvement is important for the organization, the excuse of not having time for it can be a symptom of conflicting priorities. If this is the case, success will depend on going back to “what matters” and having agreement and alignment throughout the organization. The next major obstacle is having the necessary skills in problem solving. Most organizations, in my experience, think they are good at problem solving. But we must consider that critically. You don’t solve a problem by merely creating a workaround. Thankfully, Lean Thinking provides a customer-focused methodology that supports developing employees’ skills in problem solving. All we have to do is focus on processes.

I always assume every employee shows up every day to be productive. The challenge is that, across many manufacturing organizations, we have an overabundance of poor processes. For example, how common is it in your organization for you to rely on tribal knowledge to make all or portions of a process work? Another example is the amount of verbal communication necessary to specify what needs to be done next or who needs to go where. These are symptoms of processes that do not support employees being productive. Within Lean Thinking, the focus is on those process steps that add value to the customer. Stated another way, Lean Thinking teaches us to think our processes exist to satisfy customer requirements. Therefore, it is natural that only the customer determines what value is. Those process steps that transform information or transform raw materials into something the customer values are considered value add. Lean identifies “wastes” as those process steps that don’t add value or that consume resources without adding value. A thought-process tool in lean called D.O.W.N.T.I.M.E. helps companies analyze these obstacles. From the employee’s perspective, he or she feels these “wastes” every day through rework, missing information, waiting and excessive motion, to name a few. For example, if I create a defect, I feel bad for how it might affect others. At the same time, if I’m fixing somebody else’s defect again and again, I’m starting to get frustrated. If it continues to happen, especially after making a leader aware of it multiple times, I start to get angry. Then really angry. These “wastes” create tension in the workplace due to frustration, finger pointing and an “us against them” mentality. They consume valuable time and keep employees “busy” rather than productive. For this reason, skill development of employees in seeing value add steps and non-value add steps in their process is the foundation for problem solving. When employees are aware of these wastes through what they feel and what they see, opportunities exist to build skills to take actions to eliminate them. This is the skill development Lean Thinking provides, not only to the employees but to all leaders within the organization. This skill development is commonly called “learning to see,” and it is so powerful not only in the workplace but in everyone’s life. So far, we have addressed the lack of time and the lack of problem-solving skills as obstacles to continuous improvement. It may seem like they are two separate

obstacles, but in actuality they are joined at the hip. When we devote a small amount of time to Daily Dialogue, we receive this time back through small improvements in our processes. From the employee’s perspective, he or she will have fewer daily frustrations, know what is important to make informed decisions, and become more productive. This is the return on investment of time that provides the framework for employees to accomplish more through easier, better and faster processes. The challenge comes with how to take the first step and overcome the inertia of the daily grind, doing the same old thing day after day. This is where Daily Dialogue focuses on leaders’ daily actions. Leaders at all levels of the organization need to be seen as change agents. They need to take a chance on making a change. Their examples in making small changes to improve processes will provide the path forward for employees to also take a chance on change. As mentioned above, continuous improvement is a personal commitment first, then we focus on others. To support the building of the infrastructure in this section, examples of the eight wastes using a story board approach are posted on the white board. By answering the three main questions, we now have constructed the Daily Dialogue board, starting at the top with “What matters today?” and ending at the bottom with the eight wastes. Through this visual connection of True North to the eight wastes, the focus is to lead through small daily actions to support the goal of “making a good day into a better day.” Congratulations, the building of Daily Dialogue is complete. Now it just needs to be sustained.

CONCLUSION

Manufacturers face change and uncertainty ahead. Perhaps what we learned so far about the need for a strong communication process is one piece to reduce the risk of this uncertainty. Thankfully, Lean Thinking provides a structure through the application of Daily Dialogue as one important piece of the communication process. What we’ve learned through answering the three questions is that Daily Dialogue needs connections to be effective — connections to how the business is managed through defining what is important, having daily goals that are visual, and taking action, all within the role of being a leader. So, the path forward may not be all that clear, yet as leaders, we can take a chance on change and start implementing Daily Dialogue. WINTER 2020 ENTERPRISE MINNESOTA /

Final Word

Rising to Meet the Challenge Like manufacturers, Enterprise Minnesota adapts to the times.

even months after the start of the global pandemic, it’s gratifying to see so many Minnesota manufacturers adapting to the COVID-19 landscape. It’s also gratifying to see that Enterprise Minnesota has successfully adapted right along with them. Prior to COVID, Enterprise Minnesota had a steady schedule of workshops across the state. These workshops put on display some of the best work by our world-class consultants in strategic planning, continuous improvement, leadership development and other areas. The well-attended events were among our best tools for engaging with manufacturers, listening to their concerns and learning more about the issues they’re

What the health care crisis has taught us is that we, like many manufacturers, are resilient. When adversity enters our world, we do what it takes to get the job done, even if it means completely rethinking how we do part of that job. facing. At the same time, workshop attendees were able to network with rooms full of like-minded manufacturers. After COVID, we put our heads together and tried to come up with a plan. With the world moving to the virtual environment, it seemed our only option was to move our manufacturing workshops to the virtual environment as well. This was uncharted territory for us. Would manufacturers respond favorably to a Zoom workshop with the same enthusiasm they had for the in-person version? Would our consultants roll with the new COVID reality and adapt to their audience 40

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Lynn Shelton is vice president of marketing at Enterprise Minnesota.

being on a flat computer screen versus being spread out comfortably in a banquet room? The answer to both, of course, was YES. In sort of an “if you build it, they will come” moment, we built virtual manufacturing workshops — and manufacturers came. In fact, the virtual environment actually made it easier for busy manufacturers to attend. Instead of taking a full morning out of their busy workweek, the Zoom version only took an hour and a half. And there’s no commute! Our consultants, meanwhile, have heroically risen to the challenge. Steve Haarstad, David Ahlquist, Abbey Hellickson, Greg Langfield and Michele Neale have delivered flawless virtual versions of their consulting specialties. Consultants Keith Gadacz, Penny Hanson, and Ally Johnston will soon do the same. Would we all rather be doing these workshops in person? Of course. Beyond the fact that the workshops are a great educational

opportunity, they were also a great gathering opportunity. Seeing the smiling faces and shaking the hands of hard-working manufacturers is something we’re eager to get back to. What the health care crisis has taught us is that we, like many manufacturers, are resilient. When adversity enters our world, we do what it takes to get the job done, even if it means completely rethinking how we do part of that job. As we continue to navigate the choppy waters of the COVID economy, that resilience has confirmed for us what we’ve known for years about the state of manufacturing in Minnesota: Whatever speed bumps or curveballs come our way, the spirit, drive and perseverance of Minnesotans — and Minnesota manufacturers — is the X-factor that will help get us through this crisis. When the pandemic passes, we look forward to seeing you in person again, and moving on to a brighter tomorrow.

Your trusted manufacturing advisors. For over 30 years, we’ve been helping Minnesota’s small and mid-size manufacturers achieve sustainable profits and growth. Despite the unknowns in today’s changing marketplace, you can rely on our experienced manufacturing consultants as a resource to help your organization adapt and thrive.

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

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701.765.8005 Mike.Angland@Widseth.com 507.206.2135 Greg.Bohl@Widseth.com AIA

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507.206.2135 Dana.Hlebichuk@Widseth.com