Rural Minnesota factories spend big on perks, even buy companies to find workers

Spiraling retirements and shrinking unemployment in rural Minnesota are driving worried factory owners to get creative so that current workers stay and future workers come. After years of chronic worker shortages, plants statewide are taking aggressive action.

With operations in the western Minnesota cities of Morris and Hancock, Superior Industries recently bought a $300,000 apartment building and now spends another $250,000 a year on housing and plane tickets so 40 to 47 workers can migrate from Mexico to work at its concrete plant seven months each year.

In central Minnesota, Alexandria Industries' business grew 20 percent last year at the same time that 26 percent of its workforce neared retirement age. So the company scrambled to add 60 workers and is now converting part of a strip shopping mall into a $300,000 employee health clinic one block from its aluminum extrusion plant. It is also paying workers' tuition for degrees in engineering and machine tooling and automation.

South of Alexandria sits Glenwood, a town of just 2,500 people and lots of cornfields. That's where the airfreight equipment firm WASP Inc. took drastic measures to get more workers. It bought another company.

Last year WASP — which makes massive conveyors, cargo dollies, stairs and containers for airplanes, FedEx, UPS and Amazon — paid more than $10 million for FAST, a maker of crop sprayers in Windom that fell on hard times amid depressed crop prices. WASP gained FAST's 100 workers, factory and product diversity.

"We were really happy to add workers," said WASP CEO Dane Anderson, who renamed the merged entity Fast Global Solutions. The deal closed last spring. Now the 100 workers in Windom are being trained to make the conveyors.

The outcome is a relief. WASP struggled for two years to get up to 375 workers in Glenwood. It dangled $1 million in incentives such as employee stock, double overtime pay and quarterly bonuses, and still "we could not add more workers," Anderson said. "Without this acquisition, we would have been short. Our customer demand levels exceeded our capacity."

These days, manufacturers say the name of the game is creativity as desperate factories around the state are trying to combat Minnesota's worker shortage problem. With state unemployment at 3.7 percent (and with some towns closer to zero), manufacturers are aggressively opening purses to boost staff retention and help recruitment get a little easier.

Running job fairs, ads, partnering with technical colleges and raising average wages to $61,000 a year haven't been enough to feed the swelling demand for workers at bustling factories in outstate Minnesota. The Minnesota Department of Employment and Economic Development (DEED) reports that the state's manufacturing wages are now $10,000 to $15,000 higher than wages in most other industries.

Yet factory owners still are fighting the incorrect perception that today's modern factories are dirty places to work, said Bob Kill, CEO of the manufacturing consulting firm Enterprise Minnesota.

"We've been admiring this worker-shortage problem for a long time. But finding ways to address it has been difficult," Kill said. "Some of the more innovative manufacturers are throwing off any kind of blinders and saying, 'We need to do something different.' They need to make sure they invest enough to make sure these employees really want to stay."

DEED Commissioner Katie Clark Sieben said such moves are smart. The problem might only get worse because 25 percent of manufacturing jobs in Minnesota are held by people over age 55.

In 10 years, the state "will have nearly 53,500 total openings — just for production occupations, not to mention other manufacturing-related occupation groups like engineering, transportation and material moving, management, and installation, maintenance and repair," she said. "Filling these jobs will be a challenge for manufacturers."

You don't have to tell that to Harmony Enterprises. The southeast Minnesota company makes bailers and trash compactors for big-box retailers and factories. It recently increased staff from 54 to 78 employees, but needs more.

"We're competing for employees, and it's hard," said Harmony President Steve Cremer. "The Mayo Clinic is 45 minutes away [and] sends buses to pick up employees [near our factory] … and there are a lot of small manufacturers up and down Hwy. 52 that are also competing with us."

To stand out from other employers, Harmony spent $500,000 converting a factory into a day-care center for 100 children. It opens this month. Employees get a 30 percent discount.

"Day care is always our employees' biggest issue," often causing staff to stress, leave mid-shift and drive 20- plus miles to collect kids when day-care arrangements fall through, Cremer said.

"If I can provide the job and provide day care just across our parking lot, then [employees] don't need to drive all over the place or move someplace else," he said. "Our day care will be most important for [employee] retention, but of course it will definitely help us with recruiting, too … It is just not easy to find people."

Some manufacturers are forced to automate more because of the worker shortage, said Lynette Kluver, organizational development director for Alexandria Industries.

When there aren't enough job candidates, "the issue of retention becomes huge," she said.

Alexandria is hoping its new clinic for employees and their families, which opens in June, will help staff feel valued — and perhaps recommend that their friends work there, Kluver said.

In Morris, "we joke there are more cows in the county than there are residents," said Scott Arndt, human resources director for Superior Industries.

The city has 5,300 residents, and 2,000 of those are college students. Unemployment is often near 2 percent. So recruiting has meant combing other states and even Mexico for workers. Half of Superior's 1,600-person workforce is employed in Morris and nearby Hancock.

Orders for Superior's concrete culverts, sewer pipes and road aggregate have been soaring, Arndt said. "We've been blessed that way."

With U.S. construction surging again, "our hiring could not keep up with the demand. So we had to get creative just so we could fill customer orders."

Three years ago, Superior bought an apartment building next to its Hancock Concrete business so it could house seasonal workers from Mexico under the H-2B Visa Program. Superior also pays employee tuitions, offers computer classes and built a $250,000 welding training center so workers could earn industry certifications.

Like Alexandria Industries, company officials hope the extras make people like their jobs so much they don't want to leave. The company hired 350 workers last year but needs 100 more, he said.

The worker shortage "affects our ability to grow locally because you have the baby boomers starting to retire and there are a whole bunch more yet to come," Arndt said. "Who is going to replace them? Candidly, for the 20-something-year-olds, manufacturing is not the first career they think of."

Dee DePass • 612-673-7725