NW Minnesota’s Manufacturing Industry Shows Resiliency & Growth Amid Pandemic-Induced Challenges
Fall has officially arrived, and with it, Minnesota Manufacturing Month. Our team at Greater Fergus Falls is proud to be part of a region with such a strong presence in manufacturing. In the spirit of Minnesota Manufacturing Month and the recent Statewide Tour of Manufacturing, we want to talk about all the ways this robust, rapidly-growing industry benefits our region and the resiliency manufacturers have shown throughout the pandemic. Get the details below!
Northwest Minnesota’s Second-Largest Industry
Manufacturing is Minnesota’s second-largest industry, and as such, it plays a critical role in Minnesota’s economic prosperity. Over 8,200 manufacturing companies have set down roots in Minnesota, including Fortune 500 companies like 3M, Cargill, Polaris, Land O’Lakes, and General Mills. Statewide, the industry accounts for 309,000 jobs and contributes over $50.8 billion to the economy.
On a local level, the manufacturing industry’s impact is just as profound. There are over 820 manufacturing companies in Northwest Minnesota, which contribute approximately 28,000 to the labor market. According to Minnesota’s Department of Employment and Economic Development (DEED):
“About one in every seven jobs in [the] Northwest are in Manufacturing, making it the second largest employing industry behind only Health Care & Social Assistance.”
One of the most interesting things about the manufacturing industry is the wide breadth of sectors it covers, especially in the Fergus Falls region. From plastic and rubber products to medical devices and more, manufacturing is one of the most diverse industries in Northwest Minnesota. The different types of manufacturing companies located directly in Fergus Falls are an excellent reflection of how diverse the industry truly is.
Our team recently had the pleasure of touring two local facilities from different sectors: TC Chocolate and Northern Contours. The former falls firmly within food production manufacturing — the region’s top-performing sector — while the latter lies within wood product/millwork manufacturing.
Crafting Stories With Chocolate
Owned by Kristin and Josh Mohagen, TC Chocolate manufactures bean-to-bar chocolate. Every bar is handcrafted in small batches right in the Mohagen’s Fergus Falls factory. While some may assume the “TC” stands for Twin Cities, it actually represents the Terroir (tare-wHAr) chocolate used to create the company’s award-winning chocolate bars. With flavors like Caramel Crack, Salty Nibber, Cardamom Krumkake, and Lavender, it’s easy to see why the couple’s chocolate is so popular.
“I was drawn to chocolate to feed my creativity, my curiosity and my need to make. My background in pastry led me to chocolate and a lifelong journey to create the best bean to bar experience that I could. Crafting chocolate our way is about patience with the process, nurturing the ingredients and celebrating the beauty of it all,” Mohagen says. “Today, my husband and I craft chocolate that is more than a simple treat, it is an experience.”
A Reputation for Excellence
Founded by Mike Rone and Duaine Miranowski, Northern Contours has been part of the Fergus Falls community for nearly 30 years. “Our primary products are formed from adhesively bonded decorative PVCs, wood veneers, and acrylics over a technically routed core of fiberboard,” explains President and COO Chad Christenson. The company also offers a broad array of complementary components to complete its product offerings. Northern Contours has grown its operations exponentially since 1992, employing more than 450 individuals and opening additional facilities in the U.S. and Canada.
The State of Manufacturing in Minnesota
While TC Chocolate and Northern Contours occupy two very different sectors of the manufacturing industry, they, like many others, have had a front-row seat to the coronavirus' impact on the economy.
Things are certainly getting back on track now that we’re well past the pandemic-induced shutdown, but they aren’t quite back to normal. Businesses across all industries are still facing significant challenges, particularly when it comes to supply chains and labor shortages. The manufacturing industry is no exception.
Kinks in the Supply Chain
Many of today’s supply chain issues were set in motion at the start of the COVID-19 pandemic. Global manufacturers who rely on Chinese plants to build and assemble parts were left in a lurch when coronavirus outbreaks forced the plants to shut down. As the virus spread across the rest of the globe, supply chain disruptions only got worse for manufacturers and logistics companies responsible for shipping, storing, and delivering goods.
An increase in demand for goods and products has only further exacerbated the already tenuous supply chain. Production has slowed considerably across many sectors, which has extended lead times and sent ripples down the rest of the supply chain.
“The supply chain issues have been challenging in terms of random outages of material, freight disruptions, and heavy inflation,” says Christenson. Dealing with supply chain disruptions left and right has revealed how much industries and consumers have taken the ready availability of materials and goods for granted. “It has been an eye opener to see how many layers can be affected when there are disruptions in shipping raw materials as simple as cocoa beans or even paper,” Mohagen notes.
Despite setbacks in the supply chain, many local companies have found successful ways to pivot and limit disruptions, including Northern Contours. Although the company sources most of its materials from the U.S. and Canada, a large chunk comes from overseas, which Christenson says has its own risks.
“We have had to become more flexible, shifting production or materials between our locations to cover shortages and at times extend lead time. Increased costs have created urgency for us to understand impacts and focus on countermeasures,” he explains. “Our extensive and complex offerings are of increased risk in this environment, however it has provided an opportunity for us to leverage items that have repeatability. In certain circumstances, it has called for us to hedge inventory buys that incur added costs, but provide protection.”
Addressing Labor Shortages
As an entire generation of workers gets ready to retire, labor shortages have been on manufacturers' minds for a while. However, the pandemic has left even more gaps to fill. Last year, many companies were forced to downsize their workforce to accommodate reduced business, and, in some cases, total closures. In Northwest Minnesota alone, nearly 14,000 jobs were cut during the second quarter of 2020.
“Since then, the region has steadily built employment back up,” says Cameron Macht for DEED. Manufacturing has been one of the biggest job contributors in Northwest Minnesota. By the first quarter of 2021, the industry saw a 5.1% increase in employment, regaining 1,375 jobs since the second quarter of 2020.
However, manufacturers are still in need of skilled laborers. Data compiled by DEED’s Job Vacancy Survey show Northwest Minnesota had nearly 1,200 job openings in manufacturing as of 2020's fourth quarter — the region’s second-highest number of manufacturing openings on record.
“Jobseekers who are considering a career bath or looking to get back into the labor market in Northwest Minnesota will find a tremendous amount of opportunity in the manufacturing industry,” Macht notes.
Still, finding workers has continued to be a challenge — not just in hiring, but also in retaining current employees. Christenson reveals that that extended absenteeism among workers has caused additional shortages from week to week. Manufacturers statewide are experiencing the same issues. Combatting workforce shortages has required companies to start getting creative in how they attract and retain employees.
“As we are beginning to experience improved workforce availability, our focus is to ensure we have competitive wages and benefits that correlate to hiring talent at appropriate levels. We are also complementing this by incentivizing our established workforce with incentives on attendance.”
When it comes to employee recruitment and retention, manufacturers have a range of resources available to them. MN’s Dual Training Pipeline, for example, has been a big draw on both fronts. The grant program allows companies to bring in new employees and uplevel their existing workers’ skills by combining hands-on training with post-secondary education.
Events like Minnesota Manufacturing Month and the Statewide Tour of Manufacturing are also valuable resources for the industry. They do a great job of shining a light on all that manufacturing has to offer and exposing students to different types of jobs in the industry.
Manufacturers are also filling workforce gaps by:
Offering apprenticeship programs
Investing in employment-based education
Offering competitive pay, benefits, and non-financial perks
Prioritizing employee growth with advancement opportunities
Fostering community and pride in the workplace
Hiring companies to create recruitment videos
Showcasing their facilities with virtual tours
Offering sign-on bonuses and/or company-wide bonus programs
A willingness to adapt to new workforce demands and foster a new generation of workers will go a long way in manufacturers’ ability to attract and retain employees.
Continued Growth on the Horizon
Even with supply chain disruptions and workforce shortages, the manufacturing industry is expected to keep growing. Industry projections suggest it will grow by 6.6% with 1,885 new jobs in Northwest Minnesota by 2026. Northern Contours hopes to contribute to those available jobs.
“We have experienced month-over-month growth for the past year and a half, and do not plan on slowing down,” Christenson says. “We will continue to invest in technologies that automate processes and increase capacity, while providing further capabilities and solutions to our customer base, in turn opportunities for new employment.”
For local businesses looking for assistance with workforce attraction, retention, and development, Greater Fergus Falls can help. Our team can connect you with the various financing and resources available in the region. Get in touch today to learn more!