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Home Enewsletters Subscribe About Us Follow Us 2 Advancing The Minnesota Tradition Of Manufacturing Innovation Changing technology and labor shortages pose challenges, but businesses continue to find solutions. by Nancy Crotti June 29, 2015 HIGHLIGHTS 50 Firsts From The North Star State June's Top Networking Spots Guy Fieri Spices Up Local Restaurant Biz Fit for Work? NEWS LEADERSHIP INDUSTRIES LISTS + RESEARCH OPINION LIFE STYLE HONORS + EVENTS MAGAZINE

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    2

    Advancing The Minnesota Tradition OfManufacturing Innovation

    Changing technology and labor shortages pose challenges, but businessescontinue to find solutions.

    by Nancy Crotti

    June 29, 2015

    HIGHLIGHTS 50 Firsts From The North Star State June's Top Networking Spots Guy Fieri Spices Up Local Restaurant Biz Fit for Work?

    NEWS LEADERSHIP INDUSTRIES LISTS + RESEARCH OPINION LIFE STYLE HONORS + EVENTS MAGAZINE

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  • What makes Minnesota’s manufacturing base stand out from its neighbors’ and the rest of the nation?

    It’s the diversity of its manufacturers, smalltown work ethic, urban cachet, embrace of technology, history ofinnovation, location, and its academic and natural resources.

    Put the words “Minnesota” and “manufacturing” together, and giants come to mind: 3M, General Mills, HormelFoods, Medtronic, Polaris and others, including the jolly green one that welcomes travelers to Le Sueur as atowering sign.

    The Iron Range might have become a rust belt if not forUniversity of Minnesota researchers who figured outhow to turn taconite into a marketable product.

    “Even taconite is a technologyrich form ofmanufacturing, and based on Minnesota innovation,”says Bill Blazar, interim president of the MinnesotaChamber of Commerce. “The reason that Minnesotamanufacturing is as healthy as it is today is that it’sinnovative and it’s made to order.”

    Other reasons include Minnesota’s proximity to Canada,which fuels exports; the state’s medical technologyindustry, which employs more than 35,000; and its

    agricultural base. Minnesota farms feed people, animals and a foodprocessing industry that ranges fromcompanies that prepare fruits, vegetables, hogs and poultry for sale to companies that make parts for foodpackaging machines.

    Current Issue

    Read this month's issue of Twin Cities Business.

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  • Although its manufacturing giants grab attention, Minnesota’s small manufacturers employ more peopleoverall, stay in families for generations, and are no strangers to innovation.

    Snaring a developing marketConsider Bolger Inc. Founded by John and Genevieve Bolger in 1934, the Minneapolis company was atraditional printer shop until about a decade ago, when the couple’s son, dik, realized that medical patientprivacy regulations could be a gold mine.

    The federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) went into effect in August ofthat year, resulting in strict regulation to keep medical records confidential.

    Somebody had to print all those documents in compliance with federal law. Bolger brought in computerapplication developers, bought a second plant and dedicated it to the privacy printing business.

    “It’s the same thing that has compelled us throughout the history of the company,” explains Bolger, who is CEO.(His brother, Charlie, is CFO.) “We listened to where the pain was with our customers and worked to alleviatethat and provide solutions in that world.”

    Eleven application developers write programs that keep clients’ private information flowing, save them moneyand give them the security compliance required by the federal government, according to Bolger. Those clientsinclude Blue Cross and Blue Shield organizations across the country, other insurers and health careorganizations whose identities he declined to disclose.

    Eight years ago, Bolger landed privacyregulated business from the financial industry. More recently, thecompany started doing secure printing for retailers. The privacy part of the business generates about $10 milliona year, onethird of annual revenue, Bolger reports. The company is growing at a pace of 15 percent a year, hesays.

    Security is tight at the second plant, located in an industrial area of northeast Minneapolis. Everyone must wearbadges that indicate their security level. Employees wheel printed materials, locked in rolling cages, from onedepartment to the next.

    “We’ve hired down there, but the real focus for me has been to create less touches and to automate it more,”Bolger says. “From a manufacturing perspective, there are a lot of opportunities to streamline it.”

    The other plant is devoted to traditional printing. Racks hung outside workers’ cubicles display colorful, glossyadvertising materials for highend clients in Manhattan. A wall display holds samples of college alumnimagazines and other clients’ brochures.

    Beyond the offices, a cavernous room holds a printer the length of two school buses, and several smaller ones.

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  • Tackling labor shortagesWhile Bolger wants to automate for efficiency, many manufacturers have turned to automation out ofdesperation. The nationwide skilledlabor shortage has a variety of causes, according to local, regional andnational experts:

    Waves of retiring baby boomers.A widely held belief that the only ticket to a good life is a fouryear college degree.An outdated yet widespread notion that manufacturing is dirty, menial work.A lack of government funding for community and technical colleges, and for their students.A failure of business and industry to engage with and support those twoyear institutions.

    “In terms of employee recruitment, I think every state has got the same challenge that we have,” says Bob Kill,president and CEO of Enterprise Minnesota, a manufacturing efficiency consultancy that studies the industry.“The more rural a state is, the more challenging it is.”

    Everresourceful Minnesotans are coming up with solutions. Traci Tapani, copresident with her sister, Lori,runs Wyoming Machine in Stacy, Minn. The sisters left successful careers in finance in 1994 to run their

  • parents’ precision sheetmetal company. They have built such a reputation for speaking out about the lack ofskilled labor in manufacturing that Tapani recently attended a White House conference to discuss her ideas on“upskilling” the workforce.

    Wyoming Machine employs 56. When the company had a job opening last year, the leadership realized thatsomeone accustomed to working with processes might be a good fit. They hired Danielle Guy, 23, who had spentthe previous four years managing a McDonald’s.

    “She did have a lot to offer,” Traci Tapani says. “She just needed more skills.”

    Guy is obtaining those skills on the job and from classes at Pine Technical and Community College in Pine City.She takes the classes in the company break room, via interactive TV. A U.S. Department of Labor grant is payingher tuition.

    Guy can receive a national certification after completing each of the series’ four classes on manufacturingbasics, according to Heidi Braun, contract training program manager at the college. Companies will hirestudents with these credentials on the spot, Braun says.

    The program has trained 1,379 workers since October 2014 through four postsecondary institutions, she notes.

    Apprentices in manufacturingThe AFLCIO recently began working with a handful of Minnesota manufacturers on an apprenticeshipprogram that the union and business associations developed in Wisconsin.

    Funded by a different federal grant, the Industrial Manufacturing Technician program provides about 2,800hours of onthejob training and 300 hours of coursework, taught in the workplace by technical collegeinstructors.

    Jerome Balsimo, the union’s manufacturing coordinator for the Wisconsin Regional Training Partnership, sayshe expects 18 apprentices enrolled in Minnesota by midyear.

    “This program has been a great partnership between the unions and employers,” adds Todd Dahlstrom,organizing and growth director for the Minnesota AFLCIO. “It really has increased the loyalty and morale inthe plants where this program is up and running.”

    Tennant’s innovationsOne of Minnesota’s oldest manufacturers, publicly traded Tennant Co. works closely with Dunwoody Institute inMinneapolis and other technical colleges to train employees, according to company spokesperson KathrynLovik. The industrial cleaning equipment manufacturer also used current and retired employees to train theroughly 65 employees it hired in 2014.

    The 145yearold company headquartered in Golden Valley continues to innovate. It recently added advancedcleaning technology to its machines, some the size of Zambonis. It has launched ecH2O NanoClean, atechnology that electrically converts water into “nanobubbles” that can clean as well as or better thanchemicals, Lovik says.

  • A company that makes equipment as large as Tennant’s needs a strong local supply chain. Proximity tosuppliers offers short lead times, simplifies research and development, and gives the company a competitiveadvantage, according to Mark Morrison, vice president of Tennant’s global supply chain.

    The company sells within the U.S. and exports to Canada, Europe and Asia. It employs 2,800 worldwide, withother plants in Kentucky, the Netherlands, the United Kingdom, Brazil and China.

    Tennant is one of 74 Minnesota manufacturers that employ more than 500, according to Kill.

    Manufacturing challengesBesides the skilledlabor shortage, Minnesota manufacturers face other challenges, according to the experts.Minnesota levies higher business taxes than some other states do, needs more road and highway funding, andmust conquer the achievement gap in education, they say.

    Professor Ernie Goss of Creighton University in Omaha, Neb., a regional economist, argues that employers andgovernment should siphon some of the money provided to fouryear schools and funnel it to technical andcommunity colleges to help close that gap.

    Goss conducts monthly surveys of Upper Midwest manufacturers, valueadded producers and rural bankers. Hethinks Minnesota’s large food processors have recovered well from the recession, while rural manufacturers maylose some of the jobs they added due to falling energy and agricultural prices.

    In a June 1 report released by Goss, he noted that “firms linked to energy and agriculture are experiencingpullbacks in economic activity” in a ninestate midAmerica region.

    “Minnesota’s economy has expanded in 2015, but at a slower pace than for the same time period in 2014,” Gosssays.

    “Our surveys over the past several months point to even slower, but positive, growth in the months ahead for thestate,” Goss adds. “Despite the strong dollar making Minnesota goods less competitively priced abroad, durablegoods manufacturers, including metal producers, expanded for May and for 2015. Growth for the heavymanufacturing, or durable goods, will slow in the months ahead, spilling over into the broader state economy.”

    Minnesota’s hightech, computer and electronic component manufacturers, which together employ about45,000, set it apart from other states, particularly its neighbors, Goss says. Chad Moudray, chief economist forthe National Association of Manufacturers, calls the strong dollar a “huge headwind” for exporters.

    Goss emphasizes Minnesota would benefit greatly if Congress gave President Obama the authority to negotiatethe TransPacific Partnership.

    Obama has argued that the pact, which would ease trade with Asian countries, would lead to thousands of newAmerican manufacturing jobs.

    The 2.3 percent tax on medical equipment sales, part of the Affordable Care Act, will continue to hurtMinnesota’s med tech sector, these experts agreed.

    Now the labor shortage is taking the spotlight, as manufacturers realize they can’t find the employees they need.

  • Although many Minnesotans are working hard on the problem, “there are just as many who are throwing theirhands up and saying, ‘There’s nobody available,’ ” Tapani says.

    The Tapani sisters want others to know that owners of companies like theirs are more than manufacturers.They’re entrepreneurs.

    “We’re problem solvers,” Traci Tapani says. “An entrepreneur is not going to say, ‘I can’t grow my companybecause I can’t find anybody.’ We’ll try anything.”

    Blazar, of the state chamber, cited companies such as Bolger as emblematic of Minnesota ingenuity.

    “The printing industry, not just because of the recession, but because of the changes in the usage of printing andpaper, that industry is sort of a shadow of its former self,” Blazar says. But “thanks to innovation and creativity,a lot of those companies are finding new futures, and that’s Minnesota manufacturing.”

    He argues that the expanding global economy will be critical to the future of Minnesota’s manufacturing base.He cites the growth of the middle class in India and Mexico as a reason for optimism.

    “When a country gets a middle class, people start going to the grocery store,” Blazar says. “We make a lot of stuffthat gets sold in grocery stores.”

    Nancy Crotti is a St. Paulbased freelance writer and editor.

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