Investigation: COVID impact on manufacturing could be worse this year


ST. CLOUD, Minn. – The two most pressing concerns of Minnesota manufacturers won’t surprise you: supply chains and attracting skilled workers. You’ve probably heard about it in the papers, at the dinner table, and just about everywhere.

The results of the 2021 State of Manufacturing Survey were released this month, detailing information on how manufacturers are recovering amid the pandemic, what manufacturing executives think of the economy and what prevents them from sleeping at night.

Opinion research firm Meeting Street Insights conducts the survey for Enterprise Minnesota each year, and this is the 13th year that the survey has been conducted.

That alone was its own challenge, as manufacturers appeared to be busier than ever this year, Meeting Street Insights founder Rob Autry said when publishing the survey. Over the past 12 years, most interviews have been carried out during working days. Last year, interviewers spoke to manufacturing executives three times outside of office hours.

This year, 1/3 of interviews were conducted outside of office hours, such as in the evenings or on weekends, Autry said.

He said the results of the investigation indicated that the impact of COVID-19 on manufacturers was as great, if not more, than last year, the St. Cloud Times reported.

Supply chains and the attraction of skilled workers are currently buzzwords nationwide as employers grapple with labor shortages and supplies find themselves in dumpsters. ‘Shipping outside flooded US ports was high on manufacturers’ lists of concerns, Autry said.

This is the first year the survey has asked Minnesota manufacturers about their concerns about supply chains, Autry said, and 67% of manufacturers ranked it between 8 and 10 on a scale of 1 to 10 (with 10 indicating the highest concern).

Just behind that, 61% of manufacturers also ranked attracting skilled workers as a top concern. That’s a 25 point increase from last year’s survey, Autry said.

Robots and employees work together in the Rotochopper manufacturing plant on Tuesday, April 13, 2021, in Saint-Martin.

According to the survey, 62% of these manufacturers are currently hiring for vacancies. Of those who held vacancies, 87% said it was either quite difficult or very difficult to attract qualified candidates to manufacturers like them. And 50% of manufacturers indicated that hiring new employees was one of the two or three most important drivers of future growth for their business, just ahead of rising material costs for products.

These workforce challenges are felt most keenly in larger companies, Autry said. Among manufacturers with more than 50 employees, 84% said they were hiring and that it was difficult to find the workers they needed, according to Autry. 67% said it was very difficult. Autry said it was “pretty dramatic”.

Conversely, smaller manufacturers are the ones feeling the impact of COVID-19 even more this year, Autry said.

More manufacturers than ever, 46%, believe the business climate in Minnesota has deteriorated over the past five years. COVID-19 clearly had an impact on that opinion, he said.

“In the five years we’ve asked in this survey, this is by far the highest level we’ve seen,” Autry said. “It was 11 points higher than a year ago.”

This year, 94% of manufacturers believed COVID-19 was having a modest or major impact on Minnesota’s economy and business climate. (That’s up 2% from last year.) The other response options were minor impact or no impact.

While regionally, there isn’t much of a difference in how manufacturers feel on this point, 78% of small manufacturers – those with sales of less than $ 1 million – estimated that COVID -19 had a major impact on the economy and the business climate of the state. That’s an increase from last year, when in comparison, companies with more than $ 5 million in revenue were less concerned about this than last year (61% felt the pandemic had a major impact on the economy and the business climate of the State).

“Now you have this big gap between those making less than a million and those making $ 5 million and more,” Autry said.

Nonetheless, the manufacturers responded that they were confident in the future of their business from a financial standpoint. This confidence has not returned to pre-COVID-19 levels, but 87% of manufacturers surveyed said they were confident about their company’s future from a financial standpoint.

“These are still extremely high numbers in terms of trust,” Autry said.

Again, however, small manufacturers in Minnesota reported a smaller confidence rebound than large companies.

When it comes to key business metrics, manufacturers polled indicated rebound expectations for gross revenue, profitability, and capital spending for the year.

In 2019, 59% of manufacturers expected their gross revenues to increase that year. That figure fell to 21% in 2020, but rebounded to 51%. 41% of manufacturers expect their profitability to increase in 2021 (up 17 points from last year’s survey).

But 44% of manufacturers have indicated they expect capital spending to increase.

Historically, “we’ve never come close to that level” in the past 12 years, Autry said.


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