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Worker shortages hurting manufacturing growth, profits, Minnesota survey says

Dee Depass, Star Tribune (Minneapolis) on

Published in Business News

Minnesota factory officials -- especially those in rural areas -- say severe worker shortages are increasingly impeding their growth and profits.

Nearly 50% of factory managers surveyed in March by Enterprise Minnesota said their inability to find qualified workers had hurt growth. That's up 14 percentage points from 2017, according to the survey results released Tuesday.

In a sign of more trouble, 76% of manufacturing executives in rural parts of the state said "the worker shortage made things more difficult." Factory heads in western Minnesota reported greater pessimism about the worker dilemma and economy than in other parts of the state, the report said.

Enterprise Minnesota CEO Bob Kill noted that manufacturing executives generally acknowledged feeling economic uncertainty but said that most felt confident about their firm's future. Still, "the biggest factor casting a shadow on that enthusiasm is the ongoing worker shortage which has no end in sight," Kill said.

He added that the producers that were most likely to succeed "will be the ones that have leveraged the appropriate combination of automation, productivity strategies, effective leadership, team development and strategic planning."

Kill said most of the companies surveyed were small to medium-sized manufacturers with customers in the United States, followed by Canada and Mexico. While many companies didn't do large amounts of business with China, the recent trade wars and skyrocketing tariffs escalating between the United States and China are believed to have been a factor in the less optimistic outlook for the 2019 economy.

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The survey found sharp reductions in the number of companies expecting an "economic expansion" and sharp increases in the number of firms expecting a flat economy or a recession.

Kill noted that rising trade tariffs were a concern some executives mentioned during several focus groups conducted in March, before the trade war between the U.S. and China escalated. However, at the time the topic wasn't front and center for most of the 500 producers surveyed.

"You can't escape the trade tariffs. The impact is indirect in some cases," Kill said Tuesday. "You will see there is a little bit of drop off in the economic (outlook for 2019). I think that has some relationship to the trade tariffs."

The results of the overall survey generally mimic recent findings reported by national, regional and statewide economic groups.

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