Minnesota manufacturing is looking up despite supply chain concerns

Fridley-based Colburn Manufacturing is on track to double its footprint next spring and add new equipment to keep up with runaway demand. It just might take a few months longer than usual to get those new machines given widespread supply chain disruptions.

"The work is here for us — we're busier than we've ever been — it's just been a learning process to overcome the issues that have arrived due to the pandemic," said Liz Wauters, director of operations for the family-owned machine shop that makes parts for a variety of industries. "It's mainly supply chain and attracting qualified workers."

Colburn's experience is similar to many manufacturing companies across Minnesota that expressed increased optimism in a survey this fall despite a host of pandemic-era problems.

The report paints an overall conflicted picture of the mood among Minnesota's manufacturers.

Nearly half of respondents said they believed the state's business climate is worsening, compared to a third who said so last fall — and just 15% in 2019.

However, recession fears — which last year jumped to their highest level in a decade — fell sharply, with more manufacturing executives anticipating the overall economy will improve, or at least stay the same, in the year ahead.

Unsurprisingly, supply chain was the top concern for two-thirds of the 400 company leaders surveyed, while concern over attracting workers topped health care costs for the first time in the survey's 13-year history.

"This year's version [of the report] really illuminates how the COVID economy and the government's attempts to deal with it have affected a number of manufacturers," said Bob Kill, president of Enterprise Minnesota, which released its annual State of Manufacturing report this week.

The state's largest manufacturing companies were nearly twice as likely to say recruiting and retaining staff is the biggest impediment to growth compared to smaller firms — though larger companies have seen confidence levels rebound to pre-pandemic levels while smaller shops have slightly less confidence in their future.

Wauters said Colburn Manufacturing, which has 18 employees, has had its share of problems trying to hire qualified workers, who were in short supply even before the pandemic. The company has been able to hire someone who focuses specifically on supply chain issues, like identifying different suppliers, however.

"Our biggest issues in supply chain is stocking raw materials — lead times have increased," she said. "Passing price increases along has also been a difficult issue."

"Hopefully that sorts out at least a little bit next year."