Enterprise Minnesota Magazine - Winter 2022

Anticipating Recession

Manufacturers describe how they will respond to a possible recession and other ongoing challenges.

32

Next Gen Success

Two siblings have steered IDC Spring to 1,000% growth while keeping an employee-friendly small business culture.

MORE HEADWINDS

Expectations of recession amplify concerns about inflation and workforce challenges.

Confidence

I’ve been impressed with the consistent optimism expressed by Minnesota manufacturers.

Exit Strategy

With proper planning, owners can leave their life’s work in good hands.

Lean, Green, and Getting Leaner

Lexington Manufacturing combines green principles with growth.

Automation Involves More Than Machines

Machine-based efficiencies are inevitable, but they require manufacturers to holistically evaluate their entire operation.

‘I

Had No Idea’

Why Minnesota’s most comprehensive and reliable industry survey achieves such remarkable relevance.

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.

Confidence

Even during Enterprise Minnesota’s first surveys during the Great Recession, manufacturers’ confidence about the future hovered in the high 70s and low 80s. By 2017, 94% of manufacturers we surveyed felt confident in the financial future of their companies.

Given this track record, it’s not surprising that while many respondents in this year’s survey expect a recession in the coming year, 88% remain confident their company can withstand it. And why not? In addition to what seems to be a persistently positive attitude among Minnesota manufacturers, they recently survived — and some thrived during — one of the most disruptive periods in American economic history.

They aren’t blindly optimistic, though. Our survey also shows that among respondents, fewer than half expect their revenue to increase next year, while less than a third say their profits will grow in that time. They also remain concerned about inflation and the perennial problem of attracting and retaining qualified workers.

I’m convinced that each of the profound business challenges executives have faced in recent years has added to their ability to face future crises. This is particularly important given the ongoing shift in ownership and leadership of manufacturing businesses to a younger generation.

I’m struck in particular by one recent conversation. In a gathering with 10 business leaders, I asked how many had previously experienced an inflationary period. Just one person raised his hand, and it turns out

his experience with inflation was during college!

Like Minnesota manufacturers, I have confidence in the future because of these leaders. They may not have widespread experience with an inflationary economy, but they’ve lived a lifetime of business challenges since March of 2020, which will serve them well as they face a new round of economic challenges, including those identified in this year’s State of Manufacturing® survey. ***

Our annual State of Manufacturing survey has become a fixture within the business community and among our stakeholders, including policymakers at the state and federal levels. We have many people to thank for their work on this important undertaking each year.

As always, we’re grateful to our sponsors, whose financial backing helps us defray the considerable costs of the overall project. Their insights and ideas help us develop relevant poll questions, and their networks help connect us with a new group of thought leaders each year.

Finally, I extend sincere thanks to the manufacturers who take time out of their increasingly busy days to respond to our pollster, participate in our focus groups, and attend the regional events where we present and discuss the results.

Publisher

Lynn K. Shelton

Editorial Director

Tom Mason

Creative Director

Scott Buchschacher

Managing Editor

Chip Tangen

Copy Editor

Catrin Wigfall

Writers

Sue Bruns

Grace Bureau

Amanda Dyslin

Suzy Frisch

Anne Kopas

Robb Murray Peter Passi

Kate Peterson

Photographer

Matt Kowalski

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I’ve been impressed with the consistent optimism expressed by Minnesota manufacturers.

Exit Strategy

Many business owners put their whole lives into their companies, working late nights and dedicating themselves to helping them thrive. So when it’s time to retire or sell, how do they ride off into the sunset?

With the proper planning, answers Steve Haarstad.

This is where businesses need a succession plan — or exit strategy — in place, says the Enterprise Minnesota business growth consultant.

It’s about more than knowing who will run the business next. It’s also about

ensuring the company’s attractiveness to potential buyers through long-term profitability. And, of course, about preparing the sunsetting business owner for the next chapter of his or her life, financially or otherwise.

This is the kind of long-term planning project that takes help and expertise. Last fall, Haarstad earned the Certified Exit Planning Advisor (CEPA) certification from the Exit Planning Institute, with the goal of guiding business owners through the exit process.

In his exit planning workshops, Haarstad

shares the story of an old friend whose father spent a decade building a small chain of convenience stores. When the father sold the highly successful business, he became an overnight multimillionaire.

But when tax day rolled around, he found himself owing half his new fortune to the IRS. Less than two years later, while facing the loss of his untimely death, his family found themselves owing half of what remained in estate taxes.

This type of nightmare scenario is avoidable with proper management and financial planning, Haarstad says.

With proper planning, owners can leave their life’s work in good hands.

Steve Haarstad, Enterprise Minnesota business growth consultant

“There are ways to be more tax efficient and to minimize the tax burden. You can set it up so that you leave a legacy for your family,” he says.

Life after retirement

Haarstad likens the exit planning process to a three-legged stool: personal planning, personal financial planning, and business planning.

The first step, personal planning, is all about helping the business owner figure out what his or her next chapter holds, once he or she is no longer running the company. Whether the next milestone is starting a new business, volunteering, or spending time with grandchildren, business owners risk feeling lost if they lack vision for the future.

For Mary Jo Harris, vice president and co-owner of Harris Hardwoods, beginning this process was overwhelming.

“What is life like after retirement? When you spend your life doing this and every day that’s your focus, it’s hard to imagine after the fact,” she says.

Harris and her husband, founder and coowner Tim Harris, partnered with Haarstad

operation, too. With Haarstad’s help, the Harrises set business goals that they revisit quarterly — goals that have increased the value of the company at an accelerated pace, according to Mary Jo.

“This is our life’s work,” she says. “This has really helped us realign and stay focused.”

More than a numbers game

A business owner’s post-retirement life plan comes with a new task, which is Haarstad’s second leg of the stool: financial planning. Once an owner has a retirement plan, he or she can determine how much income will be needed to sustain the desired lifestyle.

This is a particular concern for business owners, many of whom have invested every penny they earn back into the business, leaving them ill-prepared for retirement. In fact, studies suggest that 80 to 90% of a business owner’s wealth may be tied up in his or her business, according to Haarstad. But with proper financial, tax, and legal planning, owners can ensure they’re equipped to fund their next chapter. And they can also ensure they’re properly set up to manage and maintain the wealth gained from selling their business.

A sale isn’t only a numbers game, however. For many owners, that first personal values exercise also guides considerations for potential buyers.

business planning. The most familiar to business owners, this step can encompass any number of strategic initiatives. It covers everything from ensuring the business is efficient and profitable to determining what a sale number might look like.

Of particular concern to small manufacturers, according to Haarstad, is diversifying their customer base. If a company relies on a single customer for a large percentage of its business, a potential buyer might have concerns about the manufacturer’s long-term viability, should the company lose that customer.

“We would put strategies in place to

mitigate those risks,” Haarstad says.

Exit planning is something that can benefit a manufacturer’s customers, too. Rick Adair, owner of Bloomington-based Adair Plastics, started thinking about his eventual retirement when a customer raised concerns. Without Adair, is there someone to carry on the work?

along with another CEPA-certified advisor to develop an exit strategy. This began with personal evaluations of their psychological readiness to one day leave the business, from their values and goals to the everyday practicalities of retirement.

But even if psychologically ready, the Harrises didn’t know the true scope of what exiting the business would entail. Throughout the exit planning process, they’ve broken down the process into practical steps, and they know how to build the team required to make it happen.

They’ve now gone from overwhelmed to prepared, Mary Jo says, secure in the knowledge that there’s a plan in place once they decide they’re ready to retire.

Returning to that strategic plan on a regular basis introduced a sense of purpose and security into the day-to-day business

This was important to Brent Cochran. He’s owned R/C Machining since 2000, after purchasing it from his father, who founded the company in 1975. He had previously worked with Haarstad, so when the CEPA certification was finalized, Cochran jumped at the opportunity to collaborate on a five-year exit plan.

Early on, Cochran identified a value: He appreciates the role R/C Machining plays in his Glenwood community, keeping business and jobs local. It’s a value that can now guide any potential sale decision.

He’ll seek out a buyer who will ensure the company remains in Glenwood and continues to employ local residents. Any improvements Cochran makes now will contribute to the future viability of the company — and, by extension, those jobs.

“The sale is more than just money. What is my community going to look like after I leave?” he says.

Strategic planning

These first two steps provide the necessary insight required to complete the third step:

Customers have trusted Adair as a partner and founder since 1979, so he knows that transition must happen gently. That’s where Haarstad came in — with a training plan for Adair and his team, along with plans for a revamped web and social media presence to solicit interest in others who may one day carry on the work.

“We’re working to develop a plan that would allow me a controlled and proper exit,” Adair says.

Many of these exit strategies are improvements any business might make, even without an eye toward exit. A strategic exit might include documenting company processes for future reference. It might mean expanding the customer base or embracing automation to ensure profitability in changing markets. It might involve establishing a cadence of communication among the leadership team.

“Anything that a leader could do to help the business run more effectively, to do more with less, that would trickle down to having higher profitability,” Haarstad says.

Haarstad likens the exit planning process to a three-legged stool: personal planning, personal financial planning, and business planning.

“The sale is more than just money. What is my community going to look like after I leave?”

‘Start sooner than you think’

For Larry Van Iseghem, owner of Duluth-based Van Technologies, the key to exit strategy is to “start sooner than you think.” Though he doesn’t plan to retire anytime soon, he believes it’s a conversation best begun while times are good.

Van Technologies partnered with Haarstad on a financial assessment of the business after previously working with Enterprise Minnesota on achieving ISO 9001 certification.

“It made us feel secure,” Van Iseghem says. “Through our history and extrapolation of where we are headed, we got a good perspective of where our value is.”

It’s helped him and the company plan, both for growth and for the long-term eventuality of Van Iseghem’s retirement.

“You’ve got to start when you know your vision for the future. Plan accordingly,” he says.

Haarstad agrees, noting that exit planning is not an overnight task. He recommends at least three years to build value and plan that strategy. The more time, the better.

“You can still successfully exit a business in less time, but you are selling yourself short,” he says. “You’re probably leaving money on the table.”

A team sport

Haarstad views exit planning as a team sport. “No one individual or function or discipline out there has all the expertise needed to help a business owner exit that business,” he says.

Rather, Haarstad sees himself and other CEPA-certified consultants as the quarterback, helping all advisors align to the same plan. The rest of the team might include a financial planner, estate and tax attorney, CPA, business broker or investment banker, and a value advisor — all of whom play key roles at different stages of the process.

While the CEPA certification is relatively new for both Haarstad and Enterprise Minnesota, he sees it as a natural extension of his existing role as a strategic consultant. And it’s a need he’s seen for a long time, after years of working with business owners on other strategy projects.

After all, as he puts it: “Exit strategy is good business strategy.”

Anne Kopas

The Bohbots were among the first coffee roasters in the region to recognize consumers’ thirst for something more interesting than the hot, brown-colored water many Midwesterners grew up drinking.

THE NEW ECONOMY

Bean Counters

The challenges of the COVID economy inspired Duluth coffee maker to lean up its operation.

When he moved to Duluth in the 1980s, Nessim Bohbot had a hard time finding a flavorful cup of coffee. So, he set about roasting his own beans in small batches. After sharing some of that coffee with friends, they soon were clamoring for more.

Nessim and his wife, Deborah, quickly determined that coffee roasting could be more than a hobby. It could become their livelihood.

In 1990, the couple launched their own label called Alakef, borrowing a Hebrew slang they came to know when they lived in Israel that means something really “hits the spot” or is “the best.”

The Bohbots were among the first coffee roasters in the region to recognize consumers’ thirst for something more interesting than the hot, brown-colored

water many Midwesterners grew up drinking.

Alakef Coffee Roasters Inc. soon grew out of its original rented space in the basement of an old schoolhouse, buying in 2000 a 13,000-square-foot old dairy creamery, which quadrupled the company’s size.

When the Bohbots retired in 2015, their daughter, Alyza, took over, soon adding the City Girl Coffee line.

Zachary Latimore, Alakef’s director of coffee, notes that Alakef has always been thoughtful about its sourcing and building relationships with growers.

Where you buy your coffee beans matters, Latimore says. “There are so many hands that touch the product from start to finish that having a strong network is really important.”

About 85% percent of Alakef’s sales

are business-to-business transactions, largely with coffee shops across Minnesota, Wisconsin, North Dakota, and Iowa.

But the company also sells its product on a retail level, with an online direct-toconsumer business that ticked up during the COVID-19 pandemic.

Several of Alakef’s long-time clients didn’t survive the pandemic. Yet those who did seem to see business rebounding nicely, Latimore says.

Latimore adds that the COVID economy affected Alakef in other ways. For one, the loss of business meant there was less cash to buy large amounts of coffee at a time. And for another, the supply chain crisis delayed coffee shipments from producing countries. “It was very bad in 2020,” he says. The cost of coffee and the cost of shipping both doubled, forcing Alakef to reconsider its strategy, including the availability of certain beans.

“We had to be very lean in our purchasing. So, we had to balance those two aspects of managing just-in-time inventory while also dealing with frequent ‘out-of-stock’ issues from our suppliers,” Latimore says.

Alakef roasts and ships about 1,000 pounds of beans daily on average.

“It has become more and more expensive

Zachary Latimore, Alakef’s director of coffee

just to get the green coffee in the door, much less to roast it and get it out to market. We’re equally committed to great coffee relationships that work for the coffee producers and delivering great value for our customers who just want a great cup of coffee. So, that’s quite a balancing act,” Latimore says, acknowledging that profit margins have tightened.

To adjust, Alakef shook up its production model a bit. Up until 2021, Alakef offered customers same-day fulfillment. If a client called in an order by 11 a.m., the company would roast and ship the requested coffee that very day.

“But that was increasingly unattainable as we had more customers, and with the strains of the pandemic, it was no longer feasible to roast the coffee the same day, which means we had to roast a little bit extra every day,” Latimore says.

“So, there’s actually an opportunity to increase the quality and increase our capacity by going to next-day fulfillment, which is still a very tight timeframe,” he says.

Alakef’s diverse product presents certain challenges, with multiple roasts, each

offered in three different sizes and four different grinds.

“So, for every coffee blend, there are 12 different SKUs available, which means that we can’t do large runs on machinery. Everything has to be kind of one-for-one fulfillment. It has a lot more of a manual impact,” Latimore says.

Alakef has undergone a fair degree of staff churn in recent years, with Latimore joining the team of about a half-dozen employees in 2020 as the pandemic disruption began.

“My perception is that people expect to be paid more. But people are bringing a lot more to the table, as well. There are fewer and fewer people who are interested in just packaging coffee. And as an employer, we’ve focused on giving people as many opportunities as possible to use the skills that they bring. So, it’s a good value for both sides,” Latimore says.

“That allows us to pay them more. But we expect more of them, and it’s something they’re already good at and interested in doing. Hopefully, it’s sort of a win-winwin,” he continues.

He explained that the company has adopted lean manufacturing principles to improve efficiency and has switched to a four-day-a-week production cycle.

“Even though we don’t apply technology as much to our processes, everything has been carefully measured and tested to make sure that the process itself is not so cumbersome. We do have some technological interventions that we’re hoping to implement soon. But the first thing we’re going to do is make sure that the flow of information and the flow of materials is as optimized as possible,” says Latimore, who remains eager for Alakef to up its game.

Jim Schottmuller, a business development consultant for Enterprise Minnesota, says his brief introduction to Alakef shows him opportunities for the company to lean up its operations. He is also impressed by the ambitions of its leadership team.

“As a business, you always want to be continuously improving. So, you’re never done,” he says.

Peter Passi

‘Old School’ No More

Metal Services of Blooming Prairie, Inc. deploys automation and sophisticated digital marketing to expand its markets.

To say Kurt Schrom has a long history with the Blooming Prairie-based Metal Services would be an understatement.

“I was Metal Services’ first employee back in February 1984,” says Schrom. “That’s how I got to know the Metal Services family.”

He worked as a welder using a portable welding machine to do on-site repairs for farmers’ broken-down equipment. He learned that trade on the job, working for a blacksmith in Bixby, Minn.

“That gentleman taught me how it all works,” Schrom says. “And I liked it.”

Fast forward a few decades — after a 35year career in Blount/Caterpillar’s forestry division — and Schrom is now Metal Services’ chief operating officer. He’s come a long way from those early days welding farm machinery. And so has the company.

Metal Services, a multi-service metal fabrication and repair shop, has taken steps recently to enhance its growth and improve its chances of getting past some pesky labor force issues. The company is also venturing into the realm of social media. (And if you think clicks and “likes” is an unlikely environment for a metal fabrication company, you’re right. But Metal Services is getting leads from it.)

Growth

Since launching in 1984, Metal Services has grown. Today it employs nearly 40 people and has annual revenue of nearly $9 million.

Schrom says the Metal Services production line can best be described as a three-legged stool: repair division, production shop, and the millwright crew that works primarily in soybean and ethanol processing plants.

Longevity, Schrom says, is one of the company’s strengths.

“Metal Services has been around going on 40 years,” he says. “It’s a very solid, healthy, ethical company. It was built on those ethics, and we try to stay focused on those core values.”

As for challenges, Schrom says Metal Services is facing some of the same issues most manufacturers are facing. The company currently employs 11 welders and has struggled to hire the additional two needed to maintain a smooth workflow without having to pay overtime.

One of the company’s solutions has been exploring automation.

On a whiteboard in Schrom’s office is a sketch of a welding robot. It’s a rough sketch, but there’s nothing rough about

Metal Services’ plans for automation.

“Automation is a big part of our 2023 plan,” he says.

So far, Metal Services’ automation forays have been in integrating business management systems with brake presses, lasers, and other machinery on the shop floor. He says such integration has made the company more efficient, but Metal Services is looking to incorporate more automation.

“We’re looking (to automate) how we quote. That’s a part of automation. Everything we do today is manual,” Schrom says. “We’ve also just added a metrology arm. And then we’re looking at this welder robot as well.

“During our strategic planning session in 2021, we were willing to go after a robot when we got a job that looked like it would be robot compatible or a good fit for a robot,” he continues. “This year in our strategy session, we changed that. We think we need the robot first, and then we’ll go get the work.”

2023

To bolster company growth, Enterprise Minnesota business development consultant Kurt Bear led Metal Services through an exercise that mapped out potential clients within a 250-mile radius and then strategically identified which businesses to target. The company’s management team was thoughtful to not target too many potential customers from the same industry sector. For instance, having a lot of agriculture-based clients

“Automation is a big part of our

plan.”

Since launching in 1984, Metal Services has grown. Today it employs nearly 40 people and has annual revenue of nearly $9 million.

is great when farming is booming. When it’s not, it doesn’t produce a lot of revenue.

“We also wanted to be realistic about those targets,” Schrom says. “We decided to target medium-sized fabricators. Can we do large jobs? Sure. But we’re not really set up for that, so why pursue something that will strain the limits of our production capacity?”

Getting social

Metal Services is also adding improved social media strategies to grow revenue.

“We, of course, have Facebook and LinkedIn pages,” Schrom says, “but the two were worlds apart. They didn’t look the same, didn’t have the same message.”

After cleaning up inconsistencies in messaging and adding Instagram to the mix, all the company’s social media accounts are now monitored and updated by one person who understands the different platforms.

Results so far, Schrom says, are good.

“We’re not getting leads in the typical sense. We identify companies through our social media pages, and then we create the lead. We approach them. And we’ve been very successful with that. In fact, in our two largest growth activities going on right now, that’s exactly how it happened. We’re convinced it’s working.”

Robb Murray

1 Hour North of Minneapolis/St. Paul

114,000+ people in St. Cloud MSA labor forceFastest Growing Labor Force in MN - MN DEED Shovel-Ready Certified Sites ranging from 2.5 to 79-acres Named one of the “Fastest Growing US Cities” - Nerdwallet

Home to the unique Integrated Science and Engineering Laboratory Facility at St. Cloud State University used by global market leaders such as 3M

Access to over 30 programs to help your business with funding training initiative, product development, and capital expenditures

More than 2x the national average of CNC machining jobs, over 400 resident industrial engineers, and over 300 regional manufacturers

Cathy

MINNESOTA

GREATER

Despite having no knowledge of the milling industry less than a decade ago, Maverick Wood Products has become the career Frey didn’t know he wanted until the opportunity presented itself.

ENTREPRENEURS

The Big Lift

Michael Frey created Maverick Wood Products as his family removed 4.5 million trees to convert a tree farm to rentable farmland.

On Memorial Day 2012, an explosion and fire destroyed the Verso Paper Sartell Mill and killed one worker. Five months later, the Frey family — Mike Frey and his children Michael, David and Sara — closed a deal to purchase more than 15,000 acres of tree farmland from Verso that included 4.5 million trees meticulously planted every 10 feet.

“It was a big lift,” Michael Frey says. “There really wasn’t a playbook for how to do this on this scale. If you had 80 or 100 acres of these trees, you’d probably cut them all down, dig up the stumps, burn them and be done in a few weeks. Well, we had that times 120. There were some days that we thought, ‘What the heck did we get ourselves into?’”

Yet, in less than a decade, the Freys suc cessfully transformed the acreage into rent able farmland.

The family hired contractors to harvest the timber, including Dick Walsh Forest Products out of Park Rapids, which was the linchpin of the operation over the years.

Berkness Sawmills in Clotho suggested using the timber for pallet lumber. They teamed up for a short while, with Berkness custom cutting the logs and the Freys sell ing the lumber on the open market. In late 2013, the Freys decided to build their own

January 2020 to gain full ownership of Maverick Wood Products, which today is a thriving 24-person sawmill in Browerville that produces rough green lumber for pal let, crate, and skid producers across the Midwest.

“In January 2020, we finished cutting all of our own wood,” Frey says. “The last two years, we’ve been purchasing wood on the open market.”

Despite having no knowledge of the milling industry less than a decade ago, Maverick Wood Products has become the career Frey didn’t know he wanted until the opportunity presented itself. Now his focus is on its growth and maximizing efficiency in his company. While demand plum meted from March to July 2020 due to the pandemic, the phone started ringing again the last week of July that year and hasn’t stopped since.

“It’s been two years of crazy demand,” says Frey, who distributes products as far away as Arkansas. “From August 2020 on we’ve ridden the wave of strong lumber pricing.”

mill on an 18-acre site that Verso had used as a wood yard with an equipment shed.

The family hired a Bemidji-based mill ing industry consultant, toured plants in Missouri and Pennsylvania, and did plenty of research before constructing their saw mill. They hired a plant manager and a temp staffing agency and cut their first logs in September 2014.

In March 2016, Mike Frey resigned his executive management role in the com pany. Michael bought out his siblings in

Frey connected with Enterprise Min nesota business development consultant Dave Kvasager and consulting expert Greg Hunsaker to help generate ideas that would reduce downtime and increase output.

The Enterprise Minnesota team recom mended a 2½ day Total Productive Main tenance (TPM) implementation — a rapid improvement event focusing on production equipment, including maintenance, en hancements and employee training.

“It gets the operators involved in main

“There really wasn’t a playbook for how to do this on this scale.”

taining their own equipment and emphasizing initiative-taking and preventative maintenance,” Kva sager says.

Frey says TPM will improve margins by increasing flow, pro duction, and efficiency, as well as reducing lead times.

“When you’re selling lumber, which is a commodity, there’s not much we can do to differentiate ourselves. We need to be a lowcost producer,” Frey says. “I’m always looking at how we can do better.”

Initially, Frey is focusing on the “low-hanging fruit” of growth opportunities by improving the equipment and systems already in place. He is attacking and fixing the root causes of why a particular machine center has to stop because, say, a bent framework prevents the wood from sliding down correctly.

“That could take someone maybe half an hour on a Friday to torch out a bent piece of steel. We eliminate the root cause of the downtime, and we’ve spent almost nothing

on it,” he says.

Frey envisions growth options might include adding a second shift, investing in new equipment, or even building a larger facility down the line.

“For now, I’m focused on, ‘How do we shove more wood through this place?’” he says. “If we’re at 3,000 logs per day, then how do we get to 3,300? I look at TPM as our first bucket.”

Frey also attends the monthly Enterprise Minnesota peer councils in Alexandria, where CEOs gather to introduce questions and issues they’re facing and receive help from others who have faced similar chal lenges. He recommends them to anyone in the manufacturing industry.

“Those are a 10 out of 10. I really look forward to them,” he says.

—Amanda Dyslin

“There were some days that we thought, ‘What the heck did we get ourselves into?’”

sign on a window near the entrance into the JDM Machining plant says, “We make things!” That statement is both an oversimplification and an accurate description of what JDM does. The plant, tucked into a tree-lined area just outside of Staples, produces molded, tooled, and turned parts for everything from recreational vehicles and USB ports to medical equipment.

Jeremiah Miller, JDM’s founder, learned machining skills at Albany High School and worked full time as a machinist during high school. He earned a degree in moldmaking at Central Lakes College in Staples and worked four years for a company in Baxter. When the company shut down in 2000, Miller started JDM Machining in a 1,200-square-foot shop in Staples with just a small vertical mill.

He bid jobs, took orders, produced pieces on demand — performing all aspects of the business himself for about five years and building up his customer base mainly through word of mouth. As business grew, he added more machines and started hiring help. “We were just building and tooling,” he says. “We weren’t focused on any one industry.”

Today Miller and his wife Sara, his coowner and office manager, work in a clean modern shop with 30 employees. With about 50 regular customers from across the U.S., Mexico, and overseas in China and Taiwan, as well as special orders from other clients, JDM has the capabilities to turn, mill, mold, heat-treat, and engineer any number of precision-made pieces — the “things” alluded to in the sign in JDM’s window.

Two of Miller’s first hires, production leads Mike Heller and Eric Kostreba, have been with JDM for about 15 years. Miller says both key players have helped grow JDM to where it is today. Each day begins with a “huddle,” Miller says, “to give the guys time to organize, clean areas, and review why we do what we do.” His production managers schedule specific jobs, communicate with customers, and hand off production to the leads in the shop.

The company updates equipment regularly. The Millers remodeled their shop in 2004, 2012, and 2021. Today, their 20,000-square-foot plant has separate shop areas for milling, turning, and quality control. An additional 5,000-square-foot warehouse is used for storage.

JDM gets about half its revenue from recreational vehicle companies like Arctic Cat, Polaris, Argo, GE, and Fox; tool and die work comprises the other 50%. Miller says it was simply word of mouth that brought medical clients to JDM, but high-quality production with quick turnaround has probably kept them there. Diversification has been important this year, as production for recreational vehicles, which rose during COVID, has tapered off in 2022.

While the Millers watched cheaper competition eat away at its machining and molding business in years past, they now enjoy the satisfaction of seeing their pieces show up in medical machines in China. Other JDM products can be found in recreational areas, electronics, gun parts, military, and clean energy and ship out daily.

A stack of USB ports in JDM’s shop will

Jeremiah and Sara Miller, co-owners of JDM Machining

Today Miller and his wife Sara, his co-owner and office manager, work in a clean modern shop with 30 employees.

go to Bemidji’s Nortech, a full-service electronics manufacturing service. Large rectangular aluminum structures at JDM are being machined for a university lab that conducts DNA research.

Some clients order multiples of one particular part while other customers have one-time emergency or special orders, referred to as “one-sies and twosies” by Miller and his managers. Trevor Enberg, one of JDM’s three project managers, recalls one emergency order that came in on a Tuesday morning. By Wednesday afternoon, JDM had produced the part and shipped it out Thursday.

Enberg points to a stack of boxes from Taiwan that initially had been shipped to a plant in Canada to be tooled for a part that will end up in Fox recreational machines. The Canadian company was unable to meet the production deadline, so the boxes of raw materials were shipped to Staples. JDM had a window of opportunity that allowed the company to fit in the order and meet the deadline, producing 1,000 pieces per week for the next few weeks.

In 2018, JDM earned its ISO 9001 certification. Now, with two production shifts and some weekend work, Miller says, “We try to keep the machines working as much as possible.” Miller’s team has set a production goal of 3% growth per quarter, a goal JDM has not only been meeting but exceeding several times over this year.

“We just want to keep getting better at what we do,” Miller says.

—Sue Bruns

INNOVATION

Taking the Leads

Many B2B manufacturers overlook the benefits of digital marketing.

“They throw a website out there, but they don’t do anything to attract people to it or to identify who their key client is and then target that key client via social media,” says Dawn Loberg, an Enterprise Minnesota business development consultant.

Big Lake-based Acucraft Fireplaces has become the exception over the past several years. CEO Chris Maxson has learned to appreciate the value of investing in a digital-marketing strategy while working with Augurian, a Minneapolis-based digital marketing agency. Acucraft has increased its return on investment (ROI) from $18 to $28 for every marketing dollar spent.

“The fastest way to grow our business was to identify our most profitable custom ers. Once you know who your best clients are, it’s easier to go out and attract those types of people,” Maxson says. “Leverag ing Augurian’s digital-marketing strategies, our leads grew dramatically, our market ing budget went down, and the company’s

growth was exponential.”

Acucraft’s core customers are builders, architects, and homeowners for custom gas or wood-burning fireplaces.

Even before Augurian, Acucraft’s mar keting focus was a cut above peers in the

Maxson is also a longtime member of Enterprise Minnesota’s monthly peer councils, where executives in manufactur ing discuss current issues and successes. Through collaboration, they share innova tive ideas and solutions to help resolve challenges. One of the most recent peer council topics, in fact, focused on B2B marketing and how to maximize online strategies to attract more business.

“Manufacturers are feeling the business really start to slow, especially now com ing into a recession,” Maxson says. “For a while we had a 16-month back log, and now those are shrinking. For years manu facturers haven’t been out looking for new clients or business.”

That’s where Augurian has made such a difference for Acucraft, helping to drill down into the company’s data, identify who was visiting the website, what portion of those visits were turning into business, and how to target more of those people. Josh

manufacturing industry. Maxson, who has owned the company since 1997, had a history working in international business, including at Toyota in Japan. His forwardthinking and innovation — as well as that of Missy Ramberg, director of marketing — can be seen in the company’s polished website and well-rounded social media presence.

Chris Maxson, CEO of Acucraft Fireplaces

“Our leads grew dramatically, our marketing budget went down, and the company’s growth was exponential.”

PHOTOGRAPHS BY MATT KOWALSKI

Becerra, president of Augurian, says the Acucraft website previously lacked a good way to collect traffic data or use that data, and that’s commonplace in the manufacturing industry.

“If you have a manufacturing company that is developing products for segments of industries related to consumers — like Acucraft — then digital marketing should be part of the marketing mix,” Becerra says. “The world has changed. Younger people are in positions where they’re tasked with buying, and those people are turning to what they know, and that’s the internet. That’s why B2B manufacturing compa nies should really start looking at where their digital marketing needs to be.”

Augurian implemented customer re lationship management (CRM) software that helped Acucraft track which website leads turned into sales. With paid ads placed on Google, LinkedIn and other social platforms, the CRM breaks down where the traffic came from, the percent age that resulted in filling out the “Contact Us” form, and the percentage of those

who became clients.

“The CRM tells us, ‘Here are the people who turn into business,’ and we can im port that back into advertising publishers, Google Ads, Twitter, etc. They then use

their AI engines to find more people who look like that, which turns into more business,” Becerra says. “These are the smart capabilities largely un tapped by manufacturing businesses.”

Acucraft spent 12 months assessing, planning, and implementing its new CRM system, which provided invalu able information and data for the com pany’s internal sales team and external marketing initiatives.

Within 12 months, Acucraft’s lead volume increased by 15% and order volume increased by 34%.

“Having access to the right data and utilizing it appropriately throughout your marketing efforts is invaluable,” Ramberg says.

Maxson says the investment has been worth every cent. He urges other B2B manufacturers to leverage digital marketing practices.

“It’s not going away. You need a better handshake between sales and marketing to be effective, and that’s what Acucraft has done,” Becerra says.

—Amanda Dyslin

“Having access to the right data and utilizing it appropriately throughout your marketing efforts is invaluable,” Ramberg says.

THE RIGHT IDEA

Lighting the Way

Enova Illumination provides clinicians with cutting edge medical technology, headlights, and magnification.

Enova Illumination was a bit too early to the LED party when it first brought its surgical headlights to market in 2005. Clinicians were enthusiastic about having a better source of light in the operating room than existing fiber optic technology, but three months later, customers sent the headlights flooding back. They just weren’t ready for prime time.

While company leaders focused on suc cessfully bringing other medical products to market, LED and lithium battery tech nology rapidly improved, prompting Enova Illumination to try again a decade later. This time, LED lighting was more com mon, many of the technical bugs had been worked out, and clinicians seemed ready to try the new technology once again.

In 2016, Enova returned to market with an improved headlight, giving the company a fresh conversation starter with doctors,

dentists, and other clinicians. The time away from LEDs made all the difference as Enova started selling its medical lighting once more.

“That decade was a marvel of advance ment,” says Enova president and CEO Roger Heegaard. “By that time, department stores were putting in LED lighting. It was easier to get doctors to adopt it because they were more comfortable with LEDs.”

From then on, Enova has been a growth story. The company has since branched out into designing and manufacturing head lights, loupes, microscopes, and cameras, serving the medical, dental, and veterinary markets. And to cap it off, the company moved from northeast Minneapolis into a new, larger facility in Golden Valley in 2022.

It wasn’t an easy road to land these achievements. There were plenty of dead-

end paths and iterations to get the emerging LED technology and headlights just right. But Heegaard had a reason to persevere. Born into a four generation-deep family of physicians, including his father, brother, and cousin, Heegaard knew that good light can make all the difference when caring for patients.

was something we didn’t want to

“This

The company has since branched out into designing and manufacturing headlights, loupes, microscopes, and cameras, serving the medical, dental, and veterinary markets.

Roger Heegaard, president

and CEO

of Enova Illumination

BY MATT KOWALSKI

give up on. I just believed in the technol ogy,” Heegaard says. “My dad had been a mission doctor at the end of his career. Whether you’re a mission doctor or a doc tor in Edina or at Mayo, doctors are com promised when they can’t see well. And it was haunting me.”

There was plenty of room for improve ment in its early headlights, and Enova succeeded in closing the gaps. It qua drupled the power of the devices’ light, boosted the light quality, and delivered it more efficiently, securing three patents. Now in its sixth generation, Enova’s new models are lighter and more comfortable, with battery packs that extend their usage.

Enova overcame obstacles by collabo rating with others who have expertise in LED and optical technologies. It also ex panded into new markets like dentistry in 2017, modifying its headlights for dentists and making loupes — wearable magni fying glasses — for medical and dental clinicians.

In 2019, the technology, Enova’s mar kets, and its capabilities aligned and start ed fueling more rapid growth. Growing at about 25% annually between 2012-2019, Enova sales have been increasing 40% a year during COVID and are projected to increase 70% this year, according to Heegaard.

To continue thriving, Enova identi fied a need to bring its manufacturing in house. As a long core value to provide exceptional quality and customer service, that became increasingly difficult in its tight quarters, Heegaard says. In addition, Enova has grown from 12 to 46 employ ees, and it’s on target to finish 2022 with 50 people.

Enova’s new facility in Golden Valley provides five times the space. It comes complete with a white room, a clean room, CNC machining, and precision manufacturing. The building includes a

training facility for clinicians to learn how to use its products and get comfortable enough to adopt them in the operating room or dental office.

“It brought us up to the next level,” says Jeremy Ward, vice president of operations. “We’re extremely excited about the train ing lab here. We’ll be able to bring in key opinion leaders to teach courses to medical leaders so they can learn how to use the equipment and products that they might not have had the ability to practice on.”

Recently, Enova forged a deal to supply headlights to Stryker, the medical technolo gy giant. Enova beat out many competitors thanks to its unique optics, commitments to technology and providing high-quality cus tomer service, and focus on manufacturing excellence. “That’s been a game-changer for us,” Heegaard says. “It’s validated our products in a big way.”

Stryker required Enova to become ISO certified. Enova turned to Enterprise Minnesota for expert consulting and ad vice, making the necessary changes to its manufacturing documentation and other processes, Ward says. Enova will have se cured the certification by the end of 2022.

Sales continue to increase at a steady pace, and its product assortment and new space will support that growth. Enova now has a broad menu of integrated products that work together. For example, its Futu dent HD video camera can be attached to Enova headlights or loupes to document surgical procedures. Its Zumax micro scopes incorporate high-definition video, high-end optics, and single-handed opera tion, allowing clinicians to deploy all the tools they need to provide excellent care.

By focusing on bringing the most advanced visual technologies to clini cians, Enova continues striving toward that bright future Heegaard envisioned all those years ago.

Suzy Frisch

Jeremy Ward, vice president of operations; Roger Heegaard, president and CEO

EFFICIENCIES

Lean, Green, and Getting Leaner

The story of Lexington Manufacturing, which produces door and window components, is one of continuous growth and increased production and sales. Automation and a goal of zero waste have made production efficient and green, but president Mike Dillon credits the people for the company’s success. And recent lean projects involving front-line workers are making the company even more efficient.

Founded in 1981 by George Dimke, Lexington Manufacturing started out as a job shop that made fixtures for a variety of clients. Once the business got going, says Dillon, Lexington transitioned into contract work, focusing on window components. Andersen Windows was the company’s first big client and still is, along with other top-ranked window companies like Marvin, Pella, and Jeld-Wen.

Dillon joined Lexington 28 years

ago, fresh out of college as a machine operator in the Coon Rapids plant. In 1998, the company opened a Brainerd shop that produced door cores in an old Northern Pacific Railroad building. Dillon was the first plant manager at the Brainerd operation. Today, Brainerd’s 140,000-square-foot shop produces door cores, stiles, and rails for commercial architectural doors that end up in hospitals, schools, and other buildings across the U.S., Canada, Europe, and even Saudi Arabia, Dubai, and Japan.

In 2016, Dillon became president of the company that now operates out of 300,000 total square feet of manufacturing and warehouse space at the two locations. Today, Lexington’s plants in Coon Rapids and Brainerd operate with fully automated machines to take pieces from start to finish.

In 2019, Lexington ranked in the top 100

of woodworking tech businesses, with sales totaling $75.6 million and eight consecutive years of sales gains. The company had 211 employees at the time. Lexington continues to grow and “has been on the list of the top 300 fastest growing wood industry businesses 15-20 times,” Dillon says. Jeff Morin, vice president of operations, says Lexington has doubled revenues every five years for the past 10 years. Today, the company employs 315 people.

Lexington describes its manufacturing method for door cores as “nearly 100% waste free, using ultra strong wood products and carefully calculated measurements… [W]e meld materials together to create one continuous piece of wood. It’s then cut to the exact size it needs to be.” The company’s automated door production line produces 1,000 cores per shift with little or no waste. The cores go to door companies like VT, Masonite, and Therma-Tru.

Jim Gardiepy, operations manager at the Brainerd plant, says, “We were green before green was cool,” referring to the recycling, reusing, and repurposing of scraps and sawdust, much of which is sold for pet bedding.

Gardiepy has worked for Lexington for almost 20 years. Each week, he says, 35-40 truckloads of Laminated Strand Lumber (LSL) from Weyerhaeuser are delivered to the plant, and 40-50 trucks of product ship out of Brainerd.

Lean manufacturing, Gardiepy says, is key, but the safety of the workers is equally important. Today, automated pushers, conveyor belts, rip saws, presses,

Mike Dillon, president of Lexington Manufacturing

“We

BY MATT

glue machinery, and stackers do most of the back-breaking work and do it quickly, precisely, and efficiently. Production workers do the programming, but fully automated saws, conveyors, and sanders have eliminated repetitive tasks for assembly workers, saving backs, shoulders, and time Automation has increased efficiency to the point where the entire expansive billet area can now be managed by five people.

“The goal,” Gardiepy says, “has been to get to a point where the workers don’t need to touch the product.”

With the company’s continual growth, automation doesn’t solve every problem. Morin, who joined Lexington about a year

this fall, and the Brainerd facility is in the middle of a similar improvement project.

Dawn Loberg, an Enterprise Minnesota business development consultant, says that the company’s rapid growth was outstripping the capacity of its machines.

critical. And accountability.” Loberg was impressed at the aggressive goals Lexington set — 90 days to increase machine uptime/availability by 15-20%.

The offering of a 3-day weekend shift at the Coon Rapids plant this past summer greatly improved machine uptime. For some employees, weekend work is an ideal way to schedule around anything from daycare to college classes. Dillon says, “I was pleasantly surprised when current people moved to [the weekend schedule]. That way we could populate the weekend crews with experienced workers.”

Morin says, “We’ve increased our equipment uptime from 40% to 60%, a

Four Questions

The Post-COVID Worker Shortage

Abbey Hellickson, Enterprise Minnesota business growth consultant

How do you describe the state of the worker shortage these days? Is it as urgent as it once was?

We were definitely seeing worker shortages prior to COVID, but COVID re ally disrupted our market. We had the challenge of employees who were laid off and then deciding whether to go back. COVID also resulted in a kind of “Great Resignation.” We are still seeing worker shortages, but in the past quar ter, it’s starting to ease for some of my clients, depending on their location and the kind of work they do.

As manufacturers continue to face the hiring challenges, there are a few things for them to consider. It is impor tant for them to know who they are as an organization and to make sure they find people who fit. Some compa nies have felt desperate; they’ll hire anybody. And then those “anybodys” don’t work out. I encourage our clients to take time to vet the applicants to be sure the person fits with the culture. To do that, the company needs to define its values, know what its culture looks like, and know what a good employee is. All of that will provide a good start. It is important to communicate with the team this focus and the reason why: We want our team to know that we are working to hire and we are fo cusing on bringing in the right people.

We’re reading about “quiet quitting.” What does that mean, and how should manufacturers address it?

We have been so focused on hiring that we’ve forgotten how we’re over loading our good people. “Quiet quit ting” describes employees who don’t leave a company but they’re starting to burn out; they’re fed up with the extra responsibilities and overtime required of doing more demanding jobs and often without a financial increase. They’re the ones who have to do the extras including the training; if we are churning

Abbey Hellickson is a business growth consultant at Enterprise Minnesota who helps manufacturers engage their workforce, maximize productivity, improve company culture, and strengthen their leadership teams. Drawing on a wealth of experience in talent and leadership development, Abbey enables companies to drive performance at all levels of their organizations and develop the effective leaders they need to build and sustain profitable growth.

Before joining Enterprise Minnesota, Abbey served as the director of business and workforce education at Rochester Community and Technical College and as a corporate training instructor for Fastenal. She has a bachelor’s degree in business administration from Winona State University, and a Master of Education in human resource development from the University of Minnesota.

through new hires, this training element can take a toll. Quiet quitting means that people are less engaged. They’re less likely to go the extra mile; they’re less likely to take on that voluntary overtime. Mature companies will act to make the difference in how our employees feel. They need authentic and timely recognition. We want to encourage our leaders to have a standard work, a cadence of how they go about their day. All employers spend so much time fighting fires every day that they forget about the people side. I encourage them to carve out time to check in with their teams, to do one-on-ones. The employ ers who do this are finding good people and keeping them.

Where does automation fit into coping with worker shortages? Do employers pay appropriate attention to the human resource elements of automating their operations?

I have a number of clients who are thinking about how automation fits

into their work environment. It’s not to replace people. It’s about thinking dif ferently about how to get work done. Many clients are incorporating auto mation in their facilities, and as they are doing it, they are strategic about which jobs they are looking to auto mate and the ROI they receive on the

work, but what they do instead is ro tate it. And so, it’s not like one person had to do one really tedious job all day; instead, they rotate it. Multiple people are cross-trained in this technique, al lowing them to work on this repetitive job for short segments.

What do you advise manufacturers to do to retain quality employees?

investment. There are some situations where automation isn’t a solution yet.

I just visited a manufacturer that has some processes that are highly labor intensive. They are a job shop and get a very small amount of custom work, and the end of arm tooling isn’t there yet for automation to become a solu tion. They know that they will have to deal with the challenges of repetitive

People need to know there’s a pathway for them to grow within the organization, both in terms of skill set and pay. Mature manufacturers who have tackled retention and engagement have created internal development pro grams that create pathways. So, when employees start, their first experience is positive. They’re given a mentor or a partner who provides the training needed from the start. Employees know there is a way to grow. It helps the company, too. Good development programs will ensure that companies can better endure economic downturns and then come out of them faster.

More Headwinds

By Kate Peterson

Expectations of recession amplify concerns about inflation and workforce challenges.

The same Minnesota manufacturers who have navigated the challenges of a COVID-era economy, unprecedented disruptions in their supply chains, and dwindling numbers of available workers are now preparing for yet another marketplace headwind: The likelihood that increased inflation will require continued interest rate hikes culminating in a full-blown recession.

The number of manufacturers who fear an upcoming recession has more than doubled over last year, according to the latest edition of Enterprise Minnesota’s State of Manufacturing® (SOM) survey, now in its 14th year. Since 2008, the SOM survey has kept a finger on the pulse of the state’s economic engine, interviewing hundreds of owners and executives in Minnesota’s manufacturing firms.

While just 18% anticipated a recession

in 2021, 43% of respondents expect a recessionary economy in both 2022 and 2023. “That’s a big jump,” says Bob Kill, president and CEO of Enterprise Minnesota. “Even in 2020, in the midst of the pandemic, only 36% of respondents expected a recession.”

Kill suspects that the poll might actually understate manufacturers’ fears of recession because of the increased economic data released since the survey was conducted between mid-August and mid-September. “A lot changed in three to four weeks,” he says.

Pollster Rob Autry and his team at Meeting Street Insights, a research company based in South Carolina, interviewed a random sample of 400 Minnesota-based executives. Respondent titles included owners, CEOs, CFOs, COO, presidents, vice presidents and managing officers. The survey has a margin of error of +-4.9%.

In addition to fear of recession, manufacturers’ top concerns are inflation and attracting qualified workers. While maintaining a quality workforce is a perennial heartburn issue for executives, inflation entered the manufacturing world like a severe pop-up storm.

Despite pessimism about the broader

economy, fully 88% of respondents say they are somewhat or very confident their company can withstand a recession. Confidence has been a hallmark of poll respondents since its inception.

Autry added an “oversample” of 50 manufacturer interviews in each of the six Minnesota Initiative Foundation regions (shown in Figure 1). As in other years, Enterprise Minnesota

conducted focus groups in-person and via Zoom with manufacturing leaders across the state.

Kill says these additional components of the State of Manufacturing research have been particularly helpful to understanding the results of this year’s survey. “Different regions of the state and different sizes and types of manufacturers are experiencing these challenges differently,” he says. “The regional oversample helps us understand those differences, while the focus groups tell us why manufacturers feel the way they do.”

The number of manufacturers who fear an upcoming recession has more than doubled over last year.

Fig. 1 Minnesota Initiative Foundations

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

Northwest Minnesota Foundation Northland Foundation Initiative Foundation

West Central Initiative

Southwest Initiative Foundation

Cost concerns

• This year inflation led the list of worries for manufacturers, with 55% of respondents citing it is a concern. Inflation did not make the list last year, when supply chain issues were the top concern, with 67% listing it as a worry then. Supply chain issues fell 19 points, to 48% this year.

• Respondents outside the metro area expressed the greatest con

cern about inflation, with 72% in the northwest region and 65% in the west central region listing it as their top issue.

• Smaller companies — both those with lower revenues and fewer employees — expressed the most concern about rising material costs. When asked to list the one or two biggest challenges facing their company, 50% of those with less than $1 million in revenue

Southern Minnesota Initiative Foundation

listed increasing material costs, as did 48% of those with fewer than 50 employees.

Storm clouds brewing

• Only 19% of manufacturers say 2022 will be a year of expansion, while 43% expect recession and 35% predict flat growth for the year. Looking ahead, the num bers are equally pessimistic, with 43% anticipating recession, 34%

expecting flat growth and 19% predicting expansion.

• Fears of recession rose dra matically from last year, when just 18% of respondents saw a recession on the horizon, 35% predicted economic expansion, and 44% anticipated flat growth. Perhaps more telling, just 36% of respondents in the 2020 survey expressed a fear of recession.

• Respondents also indicated less

While maintaining a quality workforce is a perennial heartburn issue for executives, inflation entered the manufacturing world like a severe pop-up storm.

optimism about future revenues, profits and capital expendi tures. While not falling back to 2020 levels, these key business metrics fell considerably from the 2021 survey. Only 39 percent of respondents expect increased revenue for 2022, dropping from 51% in 2021. Those who think profits will increase this year fell to 31%, from 41% last year. Respondents anticipating growth in capital expenditures fell from 44% to 30% this year.

• At the same time, manufactur ers are still confident about the future, with 85% reporting confidence in the financial future of their companies. Smaller com panies are less optimistic overall, with 75% reporting confidence, while 96% of respondents from larger companies say they are confident about their firm’s future.

Workforce worries

• Attracting qualified workers remains a pressing issue to all respondents. While down from last year’s figure of 61%, 53% of respondents continue to name it as a top concern.

• More than half of companies currently have open positions or

“As you think about 2022 as a whole, do you think this year will be one of economic expansion, a flat economy, or a recession?”

Recessionary fears are on the rise.

Most manufacturers feel confident in their ability to withstand a recession, even those who expect one.

Most manufacturers feel confident in their ability to withstand a recession, even those who expect one.

Fig. 4 The percentage of manufacturers who think the business climate has gotten worse is unchanged since last year. “Thinking about the business climate in Minnesota compared to say five years ago, would you say the business climate has gotten better, gotten worse or stayed about the same?”

Fig. 2 Recessionary fears are on the rise.

Fig. 3 Most manufacturers feel confident in their ability to withstand a recession, even those who expect one.

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

are hiring, and of those, 84% find it somewhat or very difficult to attract qualified candidates.

• The difficulties in hiring are impacting metro area and Greater Minnesota companies equally, but larger companies — measured by both revenue and number of employees — listed attracting and retaining a qualified workforce as their top concern by wide margins.

• Among manufacturers with more than $5 million in revenue, 69% listed attracting and retaining quality employees as their top concern, and those with over 50 employees (64%) said attracting and retaining good employees was a top concern.

• The largest companies also have more vacancies and are having more difficulty filling them. Fully 91% of those with more than $5 million in revenue are looking for workers and finding hiring difficult. Of those with more than 50 employees, 89% report they are hiring, and 85% of those are finding it difficult.

• Being known for a great work environment overall is a top prior ity for companies of all sizes, but offering competitive salaries and providing a safe work environ ment is more important to large companies.

• After years of health care costs ranking among top issues of concern, this issue fell to fifth, with 41% of respondents listing it as a worry.

Challenges to growth

• Workforce challenges and in creasing costs tied as the biggest challenges to growth for respon dents. Both issues were listed by 44% of manufacturers as one or two of the biggest challenges to growth.

• Cost issues combined to round out the rest of the five issues, with inflation at 25%, increasing costs of wages at 13% and the cost of health insurance at 12%.

• The percentage of manufactur ers who say the state’s business climate has gotten worse over the

Looking ahead

• A stunning 63% of those sur veyed expect to increase invest ment to manage costs due to inflation. Respondents who plan to invest in growing revenue and profitability totaled 54%, while those who plan to invest in maxi mizing productivity hit 51%.

• Respondents who plan to invest in growing revenue and profit ability totaled 54%, while those who plan to invest in maximizing productivity hit 51%.

• The percentage of manufacturers who have a formal strategic plan is down to its lowest level since 2016, dropping from 55% last year to 48% this year.

• On the other hand, more manu facturers have a succession plan for senior leadership in place, up from 43% who had such a plan last year.

• Among small manufacturers — those with less than $1 million in revenue — just 26% have a

formal strategic plan. This num ber goes up to 50% for those with $1 million-$5 million in revenue, and for companies with more than $5 million in revenue, 75% report having a formal strategic plan.

Cybersecurity

• Manufacturers continue to be relatively unconcerned about cy bersecurity, despite nearly a fifth reporting that they, or a company they work with, have experienced a cyberattack of some kind.

• The largest companies — those with more than $5 million in revenue — are the most likely to have experienced a data breach, with 29% reporting a hack.

Among those with less than $1 million in revenue, only 9% have experienced a hack.

• Among all respondents, 88% say they are confident their company is secure from hacking, data breaches and other technologi

cal threats. At 94%, the largest companies are most likely to report confidence that they are secure from a breach; 79% of the smallest companies share that confidence.

• For companies that have taken action to protect against cyber threats, the most common step, for 64% of respondents, was upgrad ing technology. In addition, 38% have added employee training to prevent hacks, and 26% report having insurance policies that cover a cyberattack.

EDITOR’S NOTE: Full results of the State of Manufacturing® survey can be viewed at www.enterpriseminnesota.org. They will include the survey’s topline results, a selection of crosstabulations, and edited transcripts of all focus groups.

Our advisors understand the lower middle market, serving $10 million–$150 million companies looking for liquidity event options. We advise our clients by providing M&A and strategic advisory services to find the right solutions that support vertical and horizontal integrations, roll-up strategies and value creation.

At True North Mergers & Acquisitions, we execute time-tested tactics to discreetly find you the right buyer for your manufacturing business at exit — the kind of buyer who closes quickly on the right deal and values YOUR employees, YOUR brand, YOUR customers and YOUR legacy.

FOCUS

GROUPS

ANTICIPATING RECESSION

Manufacturers describe how they will respond to a possible recession and other ongoing challenges.

How optimistic are you about the next 12 months? Do you see yourselves being more profitable, less profitable or is it difficult to predict?

• We’re very optimistic as far as growth, as far as profitability. We have some internal developments bringing on new product lines, but we also appear to be picking up business from other similar suppliers that couldn’t keep their cus tomer service levels up.

• We’re pretty optimistic about the busi ness environment. We’ve come off two really, really big years. Probably like a lot of folks, we don’t have all our roles filled, so that may be one element that kind of holds us back a little bit. But we’re pretty optimistic about the future.

• I’d say we’re very optimistic about the future. We’re having a record-setting

• I’m not optimistic or pessimistic. I think business seems to be pretty good. I think if you have the labor, you’re able to pick up a business from other locations. However, I do have concerns about the economy. There’s just uncer tainty in that area. Doesn’t take much.

How do you plan for two or three years out in this kind of a world?

• Most of our suppliers right now are asking for a 2023 forecast, and some of them are asking for a 2024 forecast, which I don’t have a crystal ball for, and I don’t know if anyone here does. So, it’s been a very difficult challenge to try to project what our growth is for even just next year on top of thinking about years after that.

• We had a really good strategy go ing into 2022, and then the war with Ukraine started. Our products are en tirely based on a plywood material that comes from the Baltic region, which neighbors Russia. So as of March, that material is no longer coming out of the Russian ports because all the shipping companies stopped going there. Every thing that we had planned for the year has changed. Now we have to stockpile this material, put all of our cash into that and then start figuring out what to do if we can’t get it anymore. Planning right now is really hard.

where it makes sense for us. Our industry is really kind of labor intensive anyways, just for the material that we’re working with, but where we can, we try to automate as much as possible. We’ve been looking at where it makes sense for cobots, that sort of thing.

Last year, the State of Manufacturing® for the first time in its history revealed the number one issue for manufacturers was attracting and retaining talent. Is that your experience?

year this year, in part because we have had other competitors who haven’t been able to fulfill customer needs, and so we’ve been able to shift some business our direction, and that is serving us well. And we’ve had some early suc cesses in staffing, an area where a lot of other companies have been challenged. We have seen very large growth this year and are anticipating growth over the next 12 months.

• We’re anticipating an uptick in the next 12 months. We’re strong on where we’re going because of the work we’ve done this year, such as developing new customers. We’ve been staffed appropriately since 2020. One of the initiatives that came out of our strategic review was automation. We’ve been waiting for a customer to come to us with the product and then we’d invest in automation, but we have to flip that around. We have to invest in automa tion and then go get the work is what we’re thinking.

Has there been any business lost due to price increases or inflation?

• With some of our customers, it was easy to pass on those price increases. With others, it’s been a battle. It’ll be interesting to see what the future holds with our customers who we are not able to pass price increases onto.

• I would say we’ve had a very small group of customers who have pushed back hard on price increases. I think part of that is just being a good buyer. A good buyer is always going to challenge those price increases in any market.

• We increased what we refer to as our strategic inventory, or our protective inventory, probably 25% this last year. It’s good inventory. It’s not going to expire, we’re not at risk of the customer not wanting it anymore. It’s allowed us to keep running every single day. And it’s really allowed us to grow our sales because we’ve got this stuff.

• We’ve been purchasing equipment

• For us, retention has been good, as of late. We bought the company last No vember and up until that point retention was a definite issue, certainly through out COVID. I would just say that the rules have changed. I’ve led many manufacturing businesses for a couple of decades. Flexible schedules, variety of benefit packages, apprenticeships or intern programs, not just with colleges, but with high schools, pulling out all the stops to get people and being complete ly flexible in how you approach those relationships as an employer is the new norm. Such things are no longer consid ered going above and beyond. They are the baseline expectations. And whether we blame COVID or millennials or both or something else, I don’t really know what the driver is, but I think our successes in retention have been from doing all of those things. Pulling out all of the stops and just being, in my opin ion, almost ridiculously flexible. That is the new workforce.

• We’re pursuing all of that as well. And regarding automation, that’s why we’re looking at it. Not because we haven’t previously considered it for efficiency, but because now we’re concerned that we won’t have the bodies we need. We’re looking at what jobs are hardest, the jobs that people don’t want to do,

Editor’s Note: Enterprise Minnesota conducted nine focus groups to provide subjective context to the objective data from its 2022 State of Manufacturing® survey research project. This is a highly edited transcript from in-person conversations in Hutchinson (Sept. 14), Pine City (Sept. 15), and Mankato (Sept. 27).

“We’ve had a very small group of customers who have pushed back hard on price increases.”

and seeing if we can figure out how to automate those. So we’re doing all the same types of things — trying to create a great workplace culture, an interest ing place to work in the manufacturing industry, offer flexibility. But you can only stretch so far. I do know that the state of Minnesota needs to get better at recruiting people to come live in this state. I don’t know exactly how that gets done, but our business and our state are in competition with everybody else. From my perspective, we have to get more people interested in coming into our universities, our schools, our communities. Otherwise, we are in trouble.

• We’re limited not by machinery but by people, as far as our growth goes. We currently have about 12 people on our night shift, so that’s really where we are trying to grow, but it’s very difficult to add people to that shift. So, we have to be creative with the ways that we attract people, and that’s always ongoing. To be an attractive employer, you have to offer good benefits, be creative in wages, and it has become very competi tive in the area for wages. I’m hearing some employers are giving a 10% boost right off the bat. And just trying to retain employees is really important to us. We do that through our profitsharing program, which is going to be important for us going forward so that we continue to grow and be competitive in our industry and keep our lead times at three to four weeks or less.

Given that it’s costly to replace employees, could you be doing even better if you didn’t have to be on the chase for new people?

• I do think that payroll and personnel costs are going to be a big driver of our overall cost of business. We made pretty aggressive changes in wages last year, and we anticipate pretty aggres sive changes in wages this year. We an ticipate we will pass that on in pricing, but someday that pricing opportunity is going to get much, much harder. So, I do think the cost of people — as we look forward into the future — is going to be a fairly significant pressure point on overall operating profits.

• The approach that we’re taking is that we believe we have premium products, and we want to attract premium people. To do that, we need benefits that are in line with that. So, we’ve improved a number of our benefits already and more will be rolling out the first of the year, which has a price tag to it. But just like the approach we’re taking with inventory: If you don’t have the people, or if you don’t have the inventory, you also don’t have the sales.

• There’s a subcontractor of ours in the metro area that has gone to a model of nearly 100% of employees on work visas. They work with a broker and bring the employees up from Mexico and house them. They do pay them a significantly lower hourly wage as part

becoming more of the norm for a lot of manufacturers that work with us. I think the role of HR, too, has changed tre mendously in the last few years. It has become more important than ever. And it has a high burnout rate, as well. I read an article that 18 months is the standard timeframe for HR professionals. So just looking at who’s taking on what tasks and what’s their workload capacity, making sure that employees can stay productive but aren’t drowning. I think we see a lot of that too.

What are you doing to pay attention to cybersecurity issues?

• We were in a ransom situation in Sep tember of last year. Basically, Russians hacked nine companies in a week. We

of that housing program, but they have staffed their entire facility, which is a nearly fully automated facility. That is the only way that they say they can be competitive, from a cost standpoint.

• For retaining, we do similar stuff to what everyone else is doing — the four-day work week, there’s some days they’re at home and some days they’re in the office, the luncheons and the little picnics, we just have to get some type of team cohesion. We try to stay competitive with our benefits package. We do a 401k match. We also do profit sharing on a quarterly basis. But it does come down to hourly wages. And like I said before, we’re having a difficult time passing on those wage increases to some of our customers.

• The four-day work week feels like it’s

didn’t pay the ransom, and thankfully they didn’t corrupt our systems. They did, though, take lots of data. Thank fully none of the personal data has been used so far. We learned that up until that point, we were trying to prevent hackers. We’ve switched our approach to expecting we are going to be hacked, and asking how do we protect our business so that we can operate the next day? We’re putting firewalls and multifactor authentication and all these other pieces in place, but we are antici pating that someone’s going to hack us, and we want to be able to operate the next day. It’s a completely different approach as it relates to protecting your systems. Don’t get me wrong — we’re trying to keep people out. But we think the hackers are faster than the software

“We believe we have premium products, and we want to attract premium people. To do that, we need benefits that are in line with that.”

security suppliers. We’re phishing test ing our employees every 30 days, and then those who fail the phishing test go through training. We have about 10% of our employees who we’ve trained over and over and over, and they keep mak ing the same mistakes. We are working really hard to try and not get hacked, but at the same time, we’re just assum ing we’re going to get hacked.

• We have some phishing testing through our security provider. We have some old computers, so they do a quarterly review to see if they can get into our systems or not. I’m grateful to Enter prise Minnesota for connecting us with people who help us do that. And then of course the other side of that is the NIST SP 800-171, which is if you do business with the federal government or their employees that are subcontrac tors, you have to be able to secure your networks. And that’s quite aggressive. So that’s what we’re doing.

• We are doing multiple authentications, but we are also asking what can we do to protect our data? We have backups,

whether it’s internal or external. So, if somebody does corrupt our servers or whatnot, basically we can toss those out, put new ones in, resecure and download our data. We might lose an hour or two worth of input, but we’re

on ourselves to do it. We have a firm that manages probably 90% of related things. I’ve learned in the past that these firms have a person or two who is just 100% focused on cybersecurity. I don’t know if the company we’re working with is the best, but I definitely agree it’s the right approach to go with somebody like that.

What did COVID teach you and your organization? How do you plan on applying that going forward?

• Adapt and adapt quickly.

still up and running relatively quick.

• We’ve done some training here, but I don’t know how effective it was. I passed, but I think the biggest thing that we’re doing is we’re not relying

• We tried being very responsive. As a manager, as a leader, you have to try and listen to all your employees, and that was very challenging. But I don’t see it as that much different than right now. You still have to listen to the em ployees’ needs, what they want, what they’re thinking, even though hopefully we’re beyond that crisis. Now we’ve got an employment crisis. Tomorrow there will probably be some other crisis. So, it’s more of listening and doing the right thing as a leader.

“We are working really hard to try and not get hacked, but at the same time, we’re just assuming we’re going to get hacked.”

Before taking the reins at IDC Spring, Jodi Boldenow and Jeremy Sizer learned the business from the bottom up.

Next Gen Success

By Grace Bureau

orty-eight years after Jodi Boldenow and Jeremy Sizer’s dad started installing commercial garage doors, IDC Spring is gliding into a new age of manufacturing.

Founder Gerry Sizer expanded into spring manufacturing just seven years after he founded Industrial Door Company (IDC), originally a local garage door installation service. Today, his legacy has split into two separate companies: idcAutomatic and IDC Spring.

Since Sizer’s two children joined the family business in 1996, IDC Spring has boomed into one of the largest industrial spring manufacturers in the Midwest. The company has increased revenue by 1,000%, added IDC plants in two other states, and started serving customers in Central America, South America, the Middle East, and Europe. Its springs support overhead garage doors as well as the doors of UPS trucks, Amazon trucks, tractors, fire stations, snowplows, and even Zambonis.

But perhaps most impressive is how, through it all, the company has maintained the friendly, people-focused feel of a much smaller business.

“It really feels like a $1 million company run out of someone’s garage,” Enterprise Minnesota business development consultant Jim Schottmuller says. “When [Boldenow and Sizer] first told us they were about to hit $100 million, we were shocked. They’re such down-to-earth people, you just feel ‘small company’ all over them.”

Out of a garage

After he had served a hitch in the U.S. Navy in Vietnam, Gerry Sizer was set on starting his own business.

With a pickup truck and $8,000 borrowed from his father, 28-year-old Sizer relied on his earlier experience as a garage door estimator for Johnson Newman Company and founded Industrial Door Company in 1974. A few years later, IDC moved from Sizer’s garage into a newly

remodeled building in Coon Rapids, and orders ramped up. He didn’t enter industrial spring manufacturing until 1981, when he acquired a friend’s company.

By 1996, Sizer was a little “burnt out.” IDC had developed and pitched its own standardized safety labeling, Sizer had helped draft garage door safety legislation for Minnesota, and the Coon Rapids site had added 23,000 square feet

“We actually thought it was kind of a raw deal, because while our friends were laying around and going to summer camp, we had to act like grown-ups!”

As Jeremy Sizer was getting a degree in biology, Boldenow was finishing law school but had hit a rough patch in job hunting. Discouraged, she called her dad, who invited her to join the family business. The two siblings decided to finish their education and then try out IDC for a few years to see if it was a good fit. Their dad would be there to answer questions, and while he reserved the right to take back control if the company tanked in those first few years, the siblings would be largely on their own.

“In some ways, we were naïve about what we were getting into,” Boldenow recalls. “We didn’t know what we didn’t know. And we didn’t want to disappoint him.”

Gerry Sizer wanted his kids to learn about the company from the ground up, so they spent the first few years bouncing from department to department about every six months. After learning sales, service, operations and purchasing, “we just fell in love with the business,” Jeremy Sizer says.

The full transfer of ownership began in 2000, four years after Sizer had first pitched the idea to his kids. At first, they struggled to assume mental ownership over their father’s company.

to its footprint. Sizer had also introduced automated procedures for coiling and painting.

He was ready to retire to Florida. But before searching for prospective buyers, Sizer felt that his now-grown son and daughter, who used to spend their summers helping dad around the plant, deserved first dibs.

“Dad would bring us to work [as kids],” Boldenow says. They did yard work, pulled weeds, swept the plant, and sorted nuts and bolts. They also washed the company trucks and even repainted company trailers.

“We had to realize that this was going to be our business, not our father’s,” Jeremy says. “That was hard. Making that mental transition was difficult.”

In the beginning, Boldenow and Sizer aspired to double IDC’s revenue from $10 million to $20 million.

“The biggest we could fathom to grow by was 100%,” Boldenow remembers. “And then we did that within a relatively short time period and we realized that the sky was the limit.”

In some ways, that turning point opened their eyes to IDC’s real potential.

“My dad always used say that our minds are self-limiting. And I think that because

“When [Boldenow and Sizer] first told us they were about to hit $100 million, we were shocked. They’re such down-to-earth people, you just feel ‘small company’ all over them.”

—Jim Schottmuller, Enterprise Minnesota

the company came out of our parents’ garage, it took us a while to see it for what it was versus what it could be, and to recognize that it could be scaled way beyond that,” Boldenow says.

From then on, Boldenow and Sizer were setting their targets higher and dreaming bigger.

A new century

Today, IDC Spring’s corporate headquarters sit on the same land Gerry Sizer purchased back in 1977. Expansions into Tempe, Ariz. (2007) and Piqua, Ohio (2013) have extended the company’s reach across the country and to the rest of the world, reducing shipping costs and making IDC one of the most cost-effective spring suppliers in the U.S.

Although running a family business across three states can be challenging, Boldenow and Sizer work hard to maintain the values-driven approach that has helped IDC succeed through the years.

“When you have just one location, it’s easier to shape the culture,” Boldenow says. “It’s in how you show up every day and the conversations you have. It’s definitely harder when you’re not there fulltime. So, we’re really intentional about it.”

“We want to know our employees,” Sizer agrees. “One of the reasons Jodi and I travel is to know our people as well as we can. We want to keep that family feeling even as we get larger.”

Modern technology has been a real asset in the effort to preserve connections across state lines. IDC’s Facebook page enables 3,000 customers, employees, and their families to follow company barbecues, trade show information, employee birthdays and anniversaries, and more. TV monitors in Minnesota, Arizona, and Ohio cycle through employee Facebook posts and photos.

“People get excited about seeing themselves with their coworkers because we’re all really close,” IDC Spring’s digital marketing specialist Kelli Golembeck says. “It’s another way to connect us and get everyone involved.”

A tradition of stewardship

Boldenow says IDC Spring’s commitment to its employees and customers goes back to its founding. Her dad’s time in Vietnam exposed him to horrible poverty: “People didn’t have jobs, medical care, the basic necessities of life. And a lot of it was because of high unemployment, oppressive

government, no commerce.”

He was inspired to start a business when he got home. “He truly believed that job creation is what lifts up families, and ultimately communities. And we continue to believe that. We believe in providing opportunity for people to advance,” Boldenow says.

Today that commitment takes the form of tuition reimbursements, wellness programs, an additional 40 hours of PTO for volunteerism, financial planning, legal counseling, and more.

“Jeremy and Jodi definitely encourage people to grow within themselves and within the company,” says Jenny McGrath, the company’s director of sales and marketing. “Beyond making springs, people feel good about coming to work and knowing that someone has your back. You feel that at all levels.”

So far, it seems those efforts have paid off. IDC Spring made the Star Tribune’s Top Workplaces list in 2019 and 2021.

IDC Spring invests in its communities as well, annually donating between 1019% of its profits to charity.

“We want to be good stewards of what we’ve been given,” Jeremy Sizer says. “We owe it to the company, and we owe it to our people.”

A culture of improvement

Besides building relationships via social media and redesigning the IDC website for a more user-friendly experience — which now includes blog posts, product brochures, professionally produced videos, and more — IDC Spring’s physical spaces are getting an upgrade too.

Manufacturing floors are getting big windows and air conditioning. Workers are getting locker rooms and complimentary laptops to use during lunch breaks. And every year, IDC Spring invests in new automation to offer workers higher-skilled, better paying jobs.

As the company has grown, Jodi and Jeremy have continued seeking opportunities to hone their own skills. Once COVID-19 restrictions started to ease, Boldenow sought out one of Enterprise Minnesota’s peer councils based on a

recommendation from a friend.

“There’s so much power in learning from peers,” Boldenow says. “There’s also comfort in hearing other people’s challenges. And of course there’s a lot of value in building trusted relationships over time.”

Her peer council, which meets monthly at the Monticello Community Center, is composed of 12 manufacturing executives from a variety of industries. At one of her first meetings, someone suggested that IDC Spring seek out a lean assessment from Enterprise Minnesota. After all three of IDC’s locations underwent the assessment by business growth consultant Ally Johnston, the Coon Rapids plant

a job outside of [IDC], and there had to be a needed position open before they could come back. And the kids are doing amazing.”

“Yes, there were some pre-entry requirements,” Boldenow says. “It was totally different for us. Our dad just kind of threw us in. The company was a lot smaller then, so it was different. But now there’s a more formalized plan; we can’t just wing it like we did before.”

Perhaps the biggest change around the IDC halls came a few years ago, when the two Sizer siblings sold idc-Automatic, the garage door installation company.

“It was very difficult, but it was the right move for both businesses,” says Jeremy Sizer.

“They’re two very different businesses,” Boldenow says. “And they were often competing for resources, which was doing idc-Automatic a disservice. And eventually we had to look in the mirror and realize that we were trying to be the best in two very different areas, and it just wasn’t working.”

with a family business background. “He had the interest, and he had the skills, which is kind of rare,” Boldenow says. “And he’s doing a fantastic job. The company’s doing far better without us, now that it has an owner who is exclusively focused on giving that company what it needs. It was the best thing we ever did.”

Not many brother-sister duos could carry on a family legacy as successfully as Jodi and Jeremy. The partnership works for a few different reasons, they agree, but at the end of the day, it’s because they respect and complement each other well.

“He and I are very like-minded,” Boldenow says. “We have very different styles and different skills, but we believe the same things. So when push comes to shove, we really don’t argue about anything. I think he respects my strengths, and I respect his.”

moved on to a facility layout project, which was well timed with the site’s upcoming renovations.

“IDC’s leadership is constantly willing to learn and improve,” Johnston says. “And continuous improvement is a big part of the company’s strategic plan. From updating equipment to increasing capacity and reducing quality defects, IDC is working hard to communicate its mission and values to its employees.”

“When I walk the plant floor, I realize there’s always more to be done,” Boldenow says. “We really want IDC to be a place people want to come to and stay, and where they see an exciting future.”

Another new generation Decades after Gerry Sizer brought his kids to work during their summer vacations, the third generation of IDC is getting involved.

Boldenow’s oldest son, Cullen, now works in the IT department and just helped implement a new ERP system; her other son, Connor, is a CPA and joined IDC’s accounting team about a year ago. Jeremy Sizer’s kids are a bit younger, so it will be a few more years before another of Gerry Sizer’s grandchildren possibly joins the team.

Of course, the entry process for this newest generation was a bit more structured than the last.

“For one, [Jodi and Jeremy] were pretty strict about their kids graduating college,” Jenny McGrath says. “They had to get

They sold the company to an employee

“We’ve had a special bond since we were very young,” Sizer agrees. “And I think that really helped us become great business partners.”

In banking and business, relationships matter more than ever. Talk to a Bremer banker today. Understanding is everything.

We look at banking from a different perspective: yours.

IDC Spring’s commitment to its employees and customers goes back to its founding 48 years ago.

Productivity

By Robb Murray

When it comes to automation, Tyler LeBrun gets it.

As president of Luvernebased Backdraft Manufacturing, LeBrun and his team help manufacturers implement automation solutions to create efficiency and become more profitable.

But he also recognizes that automation must confront a roadblock of reality that can constrain it from truly improving production, performance and, ultimately, profitability.

“You can go buy a robot, but you’re not ready for it 99% of the time,” he says.

He advises small- and medium-sized manufacturers looking to add automation to think beyond just plopping a robot somewhere on the production line.

“If you’re looking at spending X amount on a robot, you’re going to need to spend about X amount on the upstream process side to make sure that you’re ready for it,” he says. “We all want to hop in and just put in a robotic cell, but for most cases it doesn’t work that way.”

LeBrun points to a custom fabrication company in South Dakota that approached Backdraft for help taking a 30,000-foot view of its process and figuring out if and how automation could help.

“They said, ‘Can you guys do all the manufacturing engineering work?’” LeBrun recalls. “To start, we’re going to get them fixturing and tooling and figure out how to make their flow lines work.”

From there LeBrun describes how his company will assess the current operators, where to scale up, and how to remove and rearrange them to make room for a robot.

In short, it’s about planning. But, if done right, automation can transform a manufacturer. It can modernize your operation, improve productivity and efficiency, solve workforce issues, make the shop floor safer and, if executed thoughtfully, make you more profitable.

The fear that once accompanied automation — that it kills jobs — is all but gone. Most manufacturers understand its power, and any company that is considering incorporating automation into its process and is serious about growth should listen to the ones who have already taken those steps.

“It isn’t going away,” says LeBrun, “and it is the future.”

Whirltronics

If you’ve pushed a lawn mower in the last few years, there’s a good chance the blade underneath was manufactured by Whirltronics of Buffalo. The company produces about 11 million blades annually for OEMs such as Toro, Honda, John Deere and Ariens.

“We’re shearing, sharpening, heat treating, painting and packaging blades,” says Neil Bengtson, Whirltronics’ director of engineering.

Over the past 10 years, Whirltronics has

PHOTOGRAPHS

BY MATT KOWALSKI

Neil Bengtson, Whirltronics’ director of engineering

moved its machine building in-house. The company’s engineering team is designing new production equipment, as well as the automation of existing equipment.

For Whirltronics, automation has been one solution to stubborn workforce issues.

“We have a severe limitation on labor resources,” Bengtson says. “It’s not that we’re replacing people, it’s that we don’t have people. We’ve got more equipment than we can run with our labor pool, and that definitely has accelerated our steps towards automation.”

Bengtson says utilizing automation has made the company leaner. They’ve improved efficiency by identifying parts of their process that can be automated and by using in-house engineers who understand their mission and process.

Ten years ago, Whirltronics was producing about 4 million blades annually. The 11 million figure of today represents about 10% average annual growth. Labor issues, Bengtson says, are part of what’s holding them back from realizing more robust growth. The hope is that adding to their already-substantial automation — nearly every part of their production process includes automation — will consistently keep annual growth at or above 20%.

“Anytime we build something new now we build it either fully automated or automation ready,” Bengtson says. “Our last line that went in is producing at approximately twice the rate of what we did previously, and it uses half the amount of labor to do the same task.”

In addition to requiring less manual labor, Whirltronics set up its automated lines to eliminate the need for human expertise, freeing up skilled employees to work in other areas.

“Rather than having highly skilled people with lots of experience setting it up just right, we rely on the automation through servo-driven adjustments to make sure that even somebody with limited experience is able to set it up correctly,” he says.

While the Whirltronics shop is certainly full of modern tech, it’s also got some old-timers.

“Take a walk through our facility,” Bengtson says. “You can see equipment from back in the ’50s and ’40s even. It’s like taking a walk through time to see the progression from where we started to where we currently are.”

That older equipment isn’t just there to show the passing of time.

“I wish it was,” Bengtson says. “It’s still

in use today, it’s still very functional.”

While Whirltronics has deftly infused its process with automation and made use of old and new tech, Bengtson says the company has struggled a bit with allocated resources post-automation. It’s not always as simple as replacing a worker with a robot and then putting that worker someplace else. Often, that replaced worker must still spend some time with that machine. Filling his remaining eight hours, though, can be tricky.

“We try to use those labor resources wisely, and it’s a little bit of a struggle for us,” he says. “Typically, in the past you would put a person on a machine and that was that; there was no management required after they had to make sure that the machine continued to run.”

“But we’ve really had no problem finding other uses for the people. And typically, we’re not displacing people,

we’re making their job easier, and then making them more efficient as well,” he adds. “So, we end up getting a return on both the automation and increase production based on the operator having additional time to be able to carry out some tasks. We’ve never let anybody go because of automation. If anything, we’ve added to our engineering and maintenance teams. These automated pieces of equipment require some expertise and ongoing maintenance to keep them running.”

Bengtson says the efficiencies gained by Whirltronics’ substantial investment in automation pay for themselves in about a year.

Dalsin

Imagine a 42,000-square-foot metal fabrication facility with only four on-site employees.

That’s the situation with Dalsin Industries. The company’s main facility is in Bloomington, but they’ve just opened another in Lakeville that is almost completely automated.

“It’s extraordinary,” says Keith

You won’t find that many facilities in the country that are set up similar to that.”

Dalsin’s automation journey began long ago.

The company implemented robust automation systems in the early 2000s that use robotics for material handling and lasercutting systems.

Automation took certain parts of Dalsin’s process and made it “lights out,” as they say, meaning they could run machines all night long with no one watching and dependably produce high quality parts.

Eventually, Dalsin wanted a more comprehensive automation set up. They didn’t just want cut parts. They wanted finished product.

“We ran that system for a number of years and then when we took our next step forward, as far as laser cutting automation, we looked at it with different eyes,” says Bob Borgerding, vice president of production operations. “At that point in time laser cutting was becoming more of a commodity, and automation became a higher component of throughput. So, prior to automation they would talk about how fast the machine would cut. And we were more interested in throughput.”

Dalsin analyzed its production, wanting

Diekmann, Dalsin’s vice president of technical operations. “I don’t know that you’ll find any facilities like that in the metro area.

Eventually, Dalsin wanted a more comprehensive automation set up. They didn’t just want cut parts. They wanted finished product.

Keith Diekmann, Dalsin’s vice president of technical operations

to know how it could incorporate the concept of “throughput” into its process. After that analysis, the company switched platforms from Mazak to Mitsubishi.

“That was really the company’s first and most extensive look at what automation could be doing for the company — producing flat blanks in a fully automated way,” Borgerding says. “We’ve deployed similar thinking in punching areas and robotic welding. And then we’ve got the plant down in Lakeville, which really takes all that to a whole new level.”

Borgerding says the Lakeville plant is sort of a peek into manufacturing’s future.

“People talk about the next industrial revolution, industry 4.0, ‘lights out manufacturing,’” he says. “Our new Lakeville facility is really leveraging all those concepts to an extreme. It is kind of the future in a tangible way. It’s a game changer for us.”

Most manufacturers, Borgerding says, will use automation to optimize a particular function such as laser cutting, robotic welding or brake work. Dalsin has taken the next step and linked multiple processes together.

Diekmann says no one has been automated out of a job. The opposite has occurred. They’ve created jobs because of automation, he says. And the increased efficiency has led to more work, more than what is humanly possible.

“There’s no way humans can weld that much, that long, that fast and that repeatable,” Diekmann says. “It’s always been a capacity play. And that’s really what it will continue to be, especially in this labor market.”

When automation replaces a human at Dalsin, that human might move to running the machine.

Diekmann says automation doesn’t cost jobs. “We probably create more new jobs because people need to be able to program robots. The work isn’t the same. It’s different work. But there’s still work, right?” he says. “The more efficient you become, the more attractive your pricing looks, the more work you get — it’s the cycle that every business wants to be in.”

Investment

Getting into automation won’t be cheap. LeBrun says it’s possible to get your feet wet in the automation game for around $100,000. To get a more involved setup, with several work stations set up with robotics, you’re more likely looking at the $200,000-$300,000 range. Most of the projects Backdraft helps people with are in the $300,000 range. And if you’re deploying automation at the level of Dalsin, likely millions of dollars.

This is where small- and medium-sized manufacturers need to make decisions. Are you ready for automation? Does your process lend itself to the kind of help automation can bring? Can you handle the additional work enhanced efficiency is likely to produce?

One thing is certain: Automation isn’t going away.

“Nobody can look into the future, but in talking with different people in the automation realm, a recession may be coming up. But people have been bitten

pretty hard already by not being ready for upswings,” LeBrun says.

Manufacturers are growing weary of supply-chain and workforce issues dragging down productivity. LeBrun predicts that many manufacturers who aren’t already making use of automation will begin doing so in the next few years.

And LeBrun isn’t alone. According to Grand View Research, the North American global industrial automation and control systems market size for 2020 was $146.8 billion. By 2028, that number

is expected to increase by 8-10% annually.

“I think we do a really good job once we get somebody on board. We start to train them to move them into a more skilled position,” says Dalsin’s president and CEO Tom Schmeling. “But it’s that entry level where we have a lot of turnover still. I think automation is going to continue to be part of our strategy moving forward.”

Says LeBrun: “I don’t see automation going away. What will be interesting to see is how much easier it gets to implement automation. Robots cost $40,000 to make in 1990. They cost $40,000 in 2022. Robots are way cheaper to produce, and the knowledge it takes to program them is getting easier and easier. It’s going to be very interesting to see where that goes in the next 10 years.”

Dalsin’s executive team

Manufacturers are growing weary of supply-chain and workforce issues dragging down productivity.

Tom Schmeling, Dalsin’s president and CEO

‘I Had No Idea’

ne of our priorities at Enterprise Minnesota is to help ensure that policymakers and community lead ers understand the value of their local manufacturers. They may know what the company makes, how many employees work there, and the names of its leaders. But after we broker a personal tour, they have a much better sense of the sophis tication of the business, the reliable and high-quality careers provided within its walls, and its considerable economic im pact on the local communities.

Most of the time, they leave absolutely wowed. “I had no idea,” is a common reaction.

Someone then suggested that Enter prise Minnesota should pull the curtain back from our annual State of Manufac turing® (SOM) survey of manufactur ing executives, one of our most prized operations. After 14 years of conducting this comprehensive survey, many readers

look forward to seeing the results. But you might benefit from knowing what goes into each aspect of the poll — how we develop topics, identify and question participants, analyze the results, publish the findings, and share them with the industry’s many stakeholders around the state.

The center of the SOM universe is pollster Rob Autry, founder of Meeting Street Insights, one of the top polling firms in America. His firm has more than 50 years of combined experience con ducting and analyzing polls. They work with us to develop a questionnaire by combining ongoing benchmark questions with new challenges or opportunities

that are starting to appear on the manu facturing radar. Rob’s intuitive attention to detail is one reason our poll predicted the impact of Minnesota’s workforce challenges a good three years before we started reading about them in the newspa pers. He’s revealed similar insights about the COVID economy, worldwide supply chain issues, cybersecurity, and the de veloping recession that may be confront ing us today.

Rob selects a random list of statisti cally representative potential participants from databases at Enterprise Minne sota and the Minnesota Department of Employment and Economic Develop ment. His team interviews more than 400 manufacturers statewide and then oversamples in each of the six Minnesota

Initiative Foundation regions in Greater Minnesota.

Digging into the data, they get a read on how issues are affecting all manufac turers, as well as those of different sizes, locations, and industries. Bob Kill and I use that initial information to conduct focus groups around the state to obtain a more intimate understanding of the is sues and how manufacturers are address ing them. While polling tells us what is happening, the focus groups reveal why From this combination of information we develop analysis for the magazine, web site, and live events.

We have placed a high priority on giv ing a voice to Minnesota manufacturers by publicizing the data to relevant audi ences. Bob Kill, for example, frequently testifies about the results to both houses of the state legislature and has even ap peared before a committee of the U.S. Senate. He speaks frequently to industry groups and chambers throughout the state.

Each year we host a huge event in Minneapolis where more than 500 people gather to hear Rob describe survey results and to watch as Bob Kill participates on a panel with our consultants and clients as they react to the survey. It’s not lost on us that the event provides an excellent venue for networking. We take that show on the road with regional events in No vember, December and January, in each of the Initiative Foundation regions.

The combination of quality data and strategic visibility gives the survey an extraordinary shelf life. Our stakeholders include public policymakers at the state and federal levels, business “thought leaders” representing a variety of in dustries, grant organizations, local and state economic development experts, educators, media, and of course, manu facturers. They rely on this information to make decisions that keep Minnesota manufacturing strong, and we couldn’t be more delighted to provide it.

Lynn Shelton is vice president of marketing and organizational development.

Why Minnesota’s most comprehensive and reliable industry survey achieves such remarkable relevance.

The combination of quality data and strategic visibility gives the survey an extraordinary shelf life.

GROWING COMPANIES ENHANCING COMMUNITIES

Granite Partners is a private investment and holding company founded in 2002 in St. Cloud, Minnesota, with a mission to grow companies and create value for all stakeholders. As trusted partners, innovative leaders, and responsible stewards, we are committed to 100-year sustainability, and we aspire to world-class wellbeing for all people in and around the Granite community.