Building An Upturn
Business slowed down for Nexen Group Inc., a Vadnais Heights-based manufacturer of motion controls, at the beginning of the recession. It was a speed bump, but it didn’t last. After a rough couple of years, “we’ve been in a growth mode ever since,” says Dan Conroy, Nexen’s vice president of human resources. “We’re as busy as can be, and working all kinds of overtime.”
Nexen’s plant is located in Webster, a small Wisconsin city about 65 miles south of Duluth. The plant employs 90, and nearly all of them are highly skilled. Machinists who work with CNC (computer numeric controlled) tools are key employees here.
“So the tech colleges matter a ton to us,” Conroy says. And the school that Nexen has long depended on for training workers is Lake Superior College in Duluth. It recently announced it was expanding its manufacturing program due to student and industry demand.
Lake Superior College’s expansion is evidence of the potential for greater manufacturing employment in northeastern Minnesota, as well as a strong interest by residents to fill those jobs.
The college’s program, which currently has 167 students, began about three decades ago with an emphasis on machining. It later added mechanical drafting, which has evolved into CAD (computer-aided design). A few years ago, the program added welding. “That segment has grown very fast,” says Gary Kruchowski, the college’s director of public affairs and advancement. “We’re running multiple sections and we have a waiting list.”
The college draws students from around the state as well as northwestern Wisconsin, though many come from Duluth, the North Shore, the Iron Range, and the I-35 corridor south of Duluth. The demand for welders runs across a variety of industries. Local companies seeking welders are finding it difficult to recruit them, Kruchowski says. At the same time, he adds, “we’re seeing some growth in manufacturing,” particularly in the aviation sector in the Duluth-Superior area.
Statewide survey: 40 percent project profit growth
Minnesota manufacturers are feeling momentum building. The state’s Manufacturing Business Conditions Survey showed that 91 percent of respondents expect their businesses to grow or remain steady during 2014. Forty percent of the companies reported they anticipate their profits will increase during 2014, while 21 percent expect a decline. The remainder predict their profit levels will be the same as in 2013, according to the recent survey, which is conducted by the Minnesota Department of Employment and Economic Development (DEED).
Northeastern Minnesota manufacturing statistics present a complicated picture. The December 2013 numbers that DEED compiled for the region (comprising Duluth, St. Louis County and Wisconsin’s Douglas County), show manufacturing employees at 7,130, or 5.4 percent of the region’s total nonfarm employment. That’s down 1.2 percent from a year earlier. The recession was tough on manufacturers everywhere. In the northeastern Minnesota region, manufacturing employment was 8,726 in 2007.
The overall 21st-century trend hasn’t been promising. In 2000, the region’s manufacturing employment hit a 20-year peak of 10,200. It’s been largely declining since then—a drop that parallels the state as a whole.
Retirements boost openings for welders
But while manufacturing employment hasn’t been rising, anecdotal evidence shows demand for welders has increased. Kruchowski cites two reasons: baby boomer retirements and the lure of better pay in the booming Bakken oilfields in North Dakota.
There also seems to be a healthy demand for other skilled workers. Nexen’s Conroy points out what he calls a paradox of advanced manufacturing. While overall employment has decreased, technology has grown more sophisticated. That means that “the need to hire skilled help has actually increased,” he says.
Still, Lake Superior is being cautious. Instead of making space on campus for the expanded offerings, it’s leasing a downtown building that once housed the Duluth operations of trade publisher Harcourt Brace Jovanovich. That company once employed about 1,000 people in the city. Now, as part of California publishing company Advanstar, it operates with a much smaller crew.
The new facility, which will open this summer, will include a fabrication lab with CNC machines and 3-D printers that can be used not only for students but for entrepreneurial people looking to create prototypes. These entrepreneurs, Lake Superior College President Patrick Johns says, have the ideas, but they lack the resources to make models.
Kruchowski notes that while student demand has been strong the past couple of years, there certainly was a downturn during the recession. A case in point is Northstar Aerospace in Duluth. Before the recession, the company had more than 120 employees, with Cirrus Aircraft serving as one of the largest customers buying Northstar’s parts. It also hired Lake Superior College manufacturing grads as recently as 2005. Now the company employs 44. Northstar President Gary Corradi says the company still looks at the school’s grads, “but we’re still recovering from the recession of 2008.”
Workforce volatility reflected in companies like Corradi’s helps explain why leasing space is a better option for the school rather than new construction, Kruchowski says.
Minnesota manufacturers may be optimistic, but it’s uncertain whether that optimism will translate into more jobs. There’s still talk about a skills gap, and manufacturers are always looking for more ways to operate as lean and as automated as possible. What’s more, jobs for unskilled labor are evaporating in what were once considered solely blue-collar industries. For example, there are fewer iron mining jobs, but they are more sophisticated and better paying.
The rise of 3-D printing and rapid prototyping offers new opportunities for a type of cottage manufacturing—small shops with highly skilled employees who love working with their hands as much as with computer keyboards. A program like Lake Superior College’s could inspire its students—and banks and other funders—to start (and back) such entrepreneurial endeavors. At the same time, they could help fill the skills gaps that many established manufacturers like Nexen are striving to close.
Should we expect a new Northland manufacturing boom? If there’s enough entrepreneurial vision, why not?
Gene Rebeck is TCB’s northern Minnesota correspondent.