Worker shortage sparks Minnesota businesses to think outside of the box

A manufacturer of commercial heating and air conditioning units in Faribault, Minn., is so hard-pressed to fill jobs at the booming company that it is considering busing workers from the metro area to its facilities 40 miles south.

Down Interstate 35 in Owatonna, an insurance company is so desperate for new employees that it has invested in a 54-unit downtown apartment building, hoping to attract job candidates.

And in the nearby city of Lonsdale, a local cabinetmaker started purchasing homes to rent to potential employees in the hope of luring them to town.

All across Minnesota, employers are taking steps to address a deepening statewide worker shortage. Job vacancies are near record highs, and the number of unfilled positions now exceeds the number of people looking for work, forcing employers to think outside the box to attract employees.

It's a good problem to have, economists say, reflecting a robust economy. But the risk? A continuing job shortage could limit the state's economic growth.

"We used to have a stream of daily applicants, but we're not seeing that nearly as much," said Matt Alexejun, senior human resources director at Daikin Applied, the Faribault heating and air conditioning unit manufacturer. "It's a challenging hiring environment. So we have to look for creative and unique ways to attract talent."

The worst-case scenario: Businesses leave Minnesota for places with more workers.

"This is the issue of the moment," said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development. "Workforce shortages inhibit growth. And economies have to keep growing for wealth to increase. You either increase production through automation or increase it from additional workers and workforce growth. If we don't do that, expansion will happen elsewhere."

From Warroad to Winona, the shortage has forced businesses to compete tenaciously for workers who are in more demand than ever.

Current data shows 136,917 job openings statewide, which is up from a year ago and has crept up steadily since the Great Recession of a decade ago.

The shortage is felt most acutely in manufacturing. For example, there are now just under 500 students enrolled in two-year manufacturing degree programs at state technical schools. But on Indeed.com, more than 1,100 job postings are available statewide for those students.

Several factors have contributed to the worker shortage: the retirement of more and more baby boomers, a lack of affordable child care and a decadelong national economic expansion that has resulted in record-low unemployment.

Five years ago, Park Industries, a St. Cloud company that makes large machines that cut granite countertops, realized it had to rethink the way it finds workers. Many potential applicants thought of manufacturing work as dreary and dirty with little potential for career advancement. So the company updated its logo and marketing materials and launched a social media campaign to attract employees. It also partnered with NASA and St. Cloud's Apollo High School to design a curriculum based on what local employers need, and it began to geotarget job advertisements.

One of its recent hires was Bryan Rademacher, 32, who had been working for years at a manufacturing company in St. Cloud but was antsy to move on.

"I hated going to work," he said.

Rademacher eventually landed work in shipping and receiving at Park Industries, where he is much happier. The company's owners remember his children's names, he said, and he frequently gets together with co-workers' families, taking their kids bowling or to movies.

"I've never had that at any other job," Rademacher said. "It's just been a totally different atmosphere."

An aging population is the most frequently cited reason to explain Minnesota's worker shortage.

More Minnesotans — 285,000 — have turned 65 this decade than in the past four decades combined. The numbers will only increase as the baby boomer generation continues to age, and by 2030, more than one in five Minnesotans will be 65 or older.

"We're just not having the number of babies we used to have," said Susan Brower, the state demographer. "The employers are saying they need more people, and we can't just produce people out of midair."

A shortage of day care options for prospective employees has added to the problem. More students also are pursuing college degrees in place of vocational training.

"When I was in high school, they started removing shop classes and technical programs," said Blake Kolquist, marketing director at Duluth-based industrial slurry-pump manufacturer GPM Inc. "Now we're faced with a retiring workforce, especially when it comes to machines and welding and fabricating."

In Bemidji, the high school started the Bemidji Career Academies program three years ago to address the worker shortage. It has since exploded, with nearly 600 students and 40 business partners this year. Students get on-the-job training in 18 careers, from manufacturing to health care.

Housing pressures, especially in greater Minnesota, also make it difficult for companies to attract workers. The robust economy in Rice and Steele counties in southern Minnesota, where more than 2,000 jobs have been added in the past decade, has fueled a demand for housing that local municipalities can't meet.

In Faribault, four apartment buildings totaling nearly 400 apartment units are planned to address the housing demand. "But that just scratches the surface of what we need," said Deanna Kuennen, the city's community and economic development director.

In Owatonna, Federated Insurance invested in a new downtown apartment building.

In Faribault, Daikin Applied is considering busing employees from the south metro to its manufacturing facilities in Faribault and Owatonna as it fills 200 new positions in the coming year. Along with a competitive wage — around $23 an hour — it's enticing potential workers with the option of flexible scheduling.

"That's what it takes to compete in this marketplace," Alexejun said.

Even then, many companies are finding it difficult to recruit skilled, experienced workers. So some hire applicants without requisite skills and wind up doing more on-the-job training than ever. The strategy: Hire an employee with promise — a good attitude and work habits — and teach them the trade.

That's what happened to Tony Satnik, a 28-year-old from Maplewood who had worked in a small electric motor business for six years but felt stuck in the job.

A few years ago, Machining Technology, a contract manufacturing company in Fridley with 43 employees, hired Satnik for a shipping and receiving position but dangled the opportunity for advancement, saying that if he proved himself a hard worker, they'd train him to become a machinist. Today, he's making metal endplates on a massive PUMA 400 lathe machine and earning about $7 more an hour than when he started. He's planning to go to Anoka Technical College for his machinist certification and hopes to stay at the company for the long haul.

Which was the company's plan all along.

"It doesn't help us right away," Laurent Deconinck, Machining Technology's CEO, said of training an employee without experience. "But usually those people are more committed and they're learning, and we can shape them into our culture. If you have a good attitude, you want to learn, we say, 'Hey, we're going to teach you — and then we will pay you more.' "

Reid Forgrave • 612-673-4647