ROBERT THOMPSON, MINPACK: "As the economy recovers, we see more and more un-forecasted demand."

Of the 17,000 jobs the economic recession has stripped from central Minnesota in the last three years, no industries were hit harder than construction and manufacturing.

Central Minnesota—the heart of manufacturing in the state—has shed nearly 7,000 manufacturing jobs since 2008.More than 3,000 construction jobs have disappeared in the same period.

Still, the two industries currently employ roughly 40,000 workers in centralMinnesota, or 16.3 percent of the regional workforce, according to Minnesota Department of Employment and Economic Development (DEED) quarterly labor statistics. Some companies are even discovering that they are positioned to thrive as the economy recovers, mostly because they have cut labor costs.

“If you’re one of those unemployed, it’s a terrible picture,” said Les Engel, founder of EngelMetallurgical in St. Cloud and president of the Central Minnesota Manufacturers Association. “But the companies that are still around are more stable and viable.”

Manufacturing Rebound?

Parts of the manufacturing industry— including computer numerical controlled (CNC) machine tool operators, tube bending equipment operators and machinery mechanics—are experiencing labor shortages now, according to Cameron Macht, DEED regional analyst for central and southwestern Minnesota.

“There’s no doubt that manufacturing is among the industries that bore the brunt of the crisis,” said Randy Olson, Initiative Foundation vice president for economic opportunity. “But we see some of our loan clients making a fairly dramatic rebound, and that’s a good sign for the region. Manufacturing brings in new money. It’s like a shot of caffeine that tends to wake up the economy.”

But many manufacturers will rely heavily on temporary staffing until they’re sure the economic picture has significantly improved. Pine City-based MINPACK, Inc., an Initiative Foundation business loan client that converts film and paper, has capitalized on the fact that temporary and contract labor have always been a part of their business strategy. The company even created its own temporary staffing agency, called 4staffing, in 2007 to ensure a good supply of labor.

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"Manufacturing brings in new money.
It's like a shot of caffeine that tends to wake up the economy."
-Randy Olson, Initiative Foundation vice president for economic opportunity

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As customers reduced their inventories and turned in-house for work they had previously contracted out to MINPACK, the company was able to capitalize on their flexible staffing model. Now that the industry is emerging from the recession, the company anticipates some possible growth in the near future. “As the economy recovers, we see more and more un-forecasted demand,” said owner Robert Thompson. “Our flexible workforce and strong relationship with 4staffing allows us to scale up new products on a fast track.”

In other parts of the industry, federal stimulus bill hiring incentives— including on-the-job training wage reimbursement and payroll tax cuts—have helped motivate some manufacturers to start hiring again. Businesses that have expanded into international markets are doing the best, according to Tim Zipoy, workforce development adviser for Central Minnesota Jobs & Training Services in Monticello. “That’s the way you’ve got to look at it now, on a global scale,” he said.

Manufacturing in food and agriculture, metal fabricating, biomedical, energy and other specialized areas are, according to Zipoy, rebounding faster than manufacturing related to the construction and housing industry.

Construction Blues

Experts estimate that 80 percent of the region’s licensed contractors were directly impacted by the recession. The construction professionals who survived did so by accepting that the housing boom of the previous decade—spurred largely by exurban growth and seasonal housing construction—is gone for good. “The ones who are still working diversified and took advantage of every opportunity, no matter how small,” said Cheryal Hills, executive director of the Region Five Development Commission in Staples.

But many companies that expanded throughout central Minnesota’s construction heydays of the 90s and early 2000s were not able to shrink fast enough to stay afloat when the boom went bust. And the economic recovery is going to take longer than in many other industries. “What we used to think would take 12-24 months, now we’re hearing projections that it’s going to take three to four years to come back,” said Hills.

Today, the prospects for many construction workers are sobering. “Too many people are chasing too few jobs in the industry right now,” said Steve Northway, chairman of Brainerd-based Northway Construction, which survived with few layoffs by diversifying and keeping a low overhead.

And that’s changed the dynamic of the industry. “Four years ago, you couldn’t find a contractor to build a deck for you,” said Hills. “Now, everybody will do a small project because they need a lot of them to keep going.”

Companies and contractors are using their skills to take on new lines of work, including energy audits for utility companies and building and rehabilitating low-income housing, according to Hills.More contractors are training to meet a growing demand for “green” buildings and low-impact developments.

The segments of the industry that show potential for growth in the coming years include existing home renovations and hospitality and health care construction, according to Scott Kuehl, vice president of marketing and sales at Baxterbased Nor-Son Construction, whose field staff is down 40 percent from its 2007-2008 peak of 120 workers.

The company is also taking on projects in places outside central Minnesota, including Bismarck, N.D. and San Antonio, Texas. “The recession has taken us out of our comfort zone and out of our backyard,” said Kuehl. “But we’ve had to grow in some cases to keep up with our existing clients and find new ones.”

Future Outlook

	SCOTT KUEHL, NOR-SON: "The recession has taken us out of our comfort zone and out of our backyard."

While older construction workers may not return to the industry, there will be more jobs in the future, according to DEED long-term industry projections. From less than 10,000 jobs today, projections from the agency’s Labor Market Information employment outlook call for up to 16,000 construction workers by 2016.

The manufacturing industry is projected to rebound as well, although not to pre-recession levels. DEED estimates show up to 42,000 people employed in manufacturing in central Minnesota by 2016, up from the roughly 30,000 employed at the beginning of 2010.

In the meantime, experts have concerns about the future workforces in both industries. Necessity is forcing many would-be construction workers to train for other industries, which could result in a labor shortage down the line, according to Hills.

Training tomorrow’s workers is also a challenge for manufacturing. “Developing the workforce and getting people trained for the higher-skill jobs goes down all the way into high school and junior high,” said Engel. “If you lack the basic skills needed to learn and adapt, you can’t just go off and get training in these more advanced skills.”

Experts agree that workers need to remain flexible and find ways to learn the skills that are necessary to adapt to the changing needs of both industries. Nor-Son has recently hired less traditional staff, including architects and even a nursing home administrator as the company moves into design, consulting and branding duties. “I don’t think that’s limited to the construction industry,” said Northway. “It’s more important than ever today to add skills and be able to move from one specialty to another, especially if you’re unemployed and looking for work.” IQ