Rural manufacturing leads Minnesota rebound after years of contraction

CEO Chris Carlson of Sportech is headed toward a record revenue year, with nearly 200 full-time and temporary employees at two plants operating round the clock six days a week.

"We're hiring like crazy," Carlson said. The Elk River manufacturing company makes thermo-formed plastic windshields, panels and other parts for customers including Polaris, Honda and John Deere.

"Our people are proud of what they make,'' Carlson said. "We've been very fortunate to have access to a good workforce around Elk River. We have a good mix of high school and great graduates from St. Cloud, Anoka and Hennepin [technical colleges]. I probably have 30 job openings."

Carlson, who started the company with his wife, Debbie, in 1994, pays up to $16 per hour plus benefits for first-year production employees.

Farther north, aluminum-fabrication manufacturer Alexandria Industries has doubled sales since the Great Recession, partly through acquisitions, and grown from 500 to nearly 600 employees over the past year thanks to a growing customer list that includes lighting companies, solar energy equipment makers and military contractors.

"Through strategic acquisitions … and adding complementary services, including machining, injection molding, high-level assemblies and welding, we have experienced steady sales growth," said CEO Tom Schabel. "We invested in equipment to meet future needs … and we made investments in our valuable employees through training opportunities, and a leadership-training program."

But the success of these two central Minnesota companies belies the fact that manufacturing employment remains in a 12-year decline. Minnesota manufacturing jobs declined by 22 percent — from 395,519 jobs in 2000 to 305,585 jobs at the end of last year, according to the Minnesota Department of Employment and Economic Development. And while Minnesota has recovered the jobs lost since the Great Recession in 2008-09, manufacturing jobs remain significantly below their prerecession levels.

That said, rural Minnesota — and particularly nine west-central counties — boast a fast-growing cluster of about 30 manufacturers of at least 100 employees that are benefiting from a well-trained workforce, competitive wages and an efficient transportation network.

"In west-central Minnesota, we are back to prerecession manufacturing employment," said Brad Finstad, executive director of the Center for Rural Policy and Development. It projects that outstate Minnesota will add 12,000 manufacturing jobs, a 9 percent increase, by 2020, while the higher-cost Twin Cities area barely will tread water.

"Central Minnesota is the region that stands out in the data," said Rachel Vilsack, an employment analyst at the Department of Employment and Economic Development. "Manufacturing represents 18 percent of the job openings in central Minnesota compared with 7.4 percent statewide, or 5.7 percent in the Twin Cities. We've also seen more than doubling of manufacturing industry job vacancies [in central Minnesota] over the last year."

There are several reasons, say Finstad and other analysts.

• Rural Minnesota communities and companies, often working in partnership with employment-and-training programs at Minnesota State Colleges and Universities, have access to a better-trained workforce at modest wage rates who can operate advanced-technology factories.

• Some Minnesota manufacturers are benefiting from the North Dakota energy boom that requires specialized equipment and fabricated metal for pipelines, refineries and transport systems.

• Some U.S. companies have backed away from Chinese manufacturers — particularly for short-order, high-value production.

• Low natural gas prices and reasonable electrical rates have helped Minnesota manufacturers manage costs.

"In the Twin Cities you have more corporate offices and research-and-development facilities,'' Finstad said. "And in rural Minnesota we've got a lot of good worker bees.

"A lot of rural communities have room to grow, and manufacturing is a bedrock of these communities," Finstad said. "Take 3M Co. and Kraft plants in New Ulm. You open the paper and see tributes to 40-year employees. We also have an aging population in rural Minnesota. Minnesota State Colleges and Universities and others are helping with specialized-education programs. We're seeing more advanced, computerized manufacturing that requires specialized skills. That also will help us keep young people in our communities.''

Fred Zimmerman, a veteran industrial engineer and retired manufacturing professor at the University of St. Thomas, isn't convinced that Minnesota will return to 1990s manufacturing numbers anytime soon. But he's encouraged when he visits companies such as Sportech.

"We have to be more specialized and efficient because we're a long way from major end-product manufacturers such as John Deere or Caterpillar or Boeing or the car manufacturers," Zimmerman said. "And we need to strengthen K-12 education, particularly in the inner cities and less-prosperous suburbs. More vocational education. Employers need more welders and skilled laborers."

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com