Survey: Most Minnesota Manufacturers Expect More Than Six Months for Return to ‘Normal’

Survey: Most Minnesota Manufacturers Expect More Than Six Months for Return to ‘Normal’

New survey finds many expect continuing Covid issues in 2021.

A new survey from the Minnesota Department of Employment and Economic Development and the Federal Reserve Bank of Minneapolis found that state manufacturers expect Covid-19 to continue to affect business in 2021.

Only 22 percent of manufacturers expect to see business return to normal within the next six months. A majority of respondents – 52 percent – expect that it will take longer than six months. But not everyone thinks business will bounce back: 13 percent said that they don’t expect business to return to normal; 1 percent said that they were going out of business.

Looking ahead to 2021, 53 percent of respondents said that they expect to see an increase in orders. Everyone else expects the numbers to stay the same or decline. Only 32 percent expect to see an uptick in profits this year.

The study also documented the pain that many manufacturers felt in 2020.

Over the previous four quarters, 60 percent of respondents reported a drop in the number of orders, 57 percent reported a drop in profits, and 53 percent saw a decline in production levels.

The study also underscored the uneven effects of the pandemic economy.

While some manufacturers saw little change during the year, some actually saw gains. For example, 24 percent saw an increase in the number of orders received and 17 percent saw an uptick in profits last year.

A few selected comments from the survey underscored the issues faced by Minnesota manufacturers:

  • “Due to social distancing we’ve had to spread employees out more thus decreasing productivity.”
  • “Supplies are no longer reliable to service materials. Starting to see significant delays on raw materials and prices up.”
  • “Sales down 30 percent, without PPP [Paycheck Protection Program] money we would not have made it.”

The survey is based on responses from 250 Minnesota manufacturing firms.

According to DEED statistics Minnesota has nearly 324,000 jobs in manufacturing, which represents 13 percent of all private sector jobs. The total payroll for those jobs is $22.1 billion.

At the same time, Creighton University’s Mid-America Business Conditions Index found that manufacturing was off to a good start in 2021. The Creighton study surveys a nine-state region that includes Minnesota.

“Since bottoming in May of last year, manufacturing employment in [Minnesota] has expanded by 10,500 jobs for a 3.2 percent gain. Creighton’s surveys over the past several months indicate that this rate of growth will continue in the months ahead for the state’s manufacturing sector,” said Ernie Goss, director of Creighton University’s Economic Forecasting Group, in a statement.