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EDSR INFORMATION #5 08-13-2012 ► 1 1 ' • UNDERSTANDING THE WORKER NEEDS OF MANUFACTURERS: ,,•- ti = he201MnnesotaSkllsa =Survey MANUFACTURING MATTERS more than ever. Percent of Respondents Indicating Moderate or The sector accounts for 13 percent of Minnesota's Serious Current Workforce Shortage, by Region private sector jobs and almost 15 percent of the private sector's output. With productivity (output a ?o P P P Y P Northwest) 410 per hour) in manufacturing growing at 36 percent over the past decade (which exceeded overall i L Northeast productivity growth), manufacturing remains one of the key sources of economic growth. In an environment of rapidly changing technology and 44®/ operations, a skilled workforce is critical to the state's future economic growth. 54–% r A HIGH-PERFORMANCE WORKFORCE was the top factor for future business success, according to a nationwide survey of manufacturing businesses { 0 Central by Deloitte and the Manufacturing Institute in 2011. 44% Twin Surveys of Minnesota manufacturers (using some 3°/®Cities similar questions as the national survey) by the Minnesota Department of Employment and Economic —1,49°7451.' j` Development(DEED) in 2007 and 2011 agree. A 1- ;rj0/p high-performance workforce was rated as the =)� � number one factor for firm success, according to Southwest Southeast 67 percent of respondents. Source"Understanding the Worker Needs of Manufacturers,"survey results, Minnesota Department of Employment and Economic Development 2011. WORKFORCE SHORTAGES BUSINESS RESPONSES • Almost half of respondents had positions unfilled • The most frequent methods used to recruit due to a lack of qualified applicants and indicated and retain employees were increasing wages moderate or serious shortages of workers. and providing health care benefits. Businesses in Northeast had a stronger reliance on flexible work • The severity of current and future workforce schedules. shortages was highest in skilled production (58 percent had some degree of shortage) and scientist • Close to half of respondents had used public and engineering (40 percent) occupations, and and private placement services. This suggests lowest in low-skilled production, management and opportunities for placement services to market administration, and customer service.These were themselves to reach more businesses, particularly similar to results in 2007 using the Internet since the third most used placement service is Internet-based job boards. • Rates of current and future workforce shortages • Slightly more than half of respondents had in Southwest and Northwest regions exceeded assessed the impact of the aging workforce on statewide rates, indicating areas with potentially more projected retirements and succession plans. demand for workforce services. (See map for details.) • Although current workforce shortages appear TRAINING AND EDUCATION to be slightly less than those reported in the 2007 • About three-quarters of respondents budgeted less survey, respondents expect the shortages to become than 3 percent of payroll for training. Slightly more more significant three years from now, and intensify than half provided company-paid training to less particularly in skilled production and scientist and than one quarter of employees,while 15 percent of engineering occupations. respondents did not provide training. s Businesses indicated that their employees would COMPARISON TO NAM RESULTS need more training in computer skills (50 percent Minnesota manufacturers appear to face a much of respondents), process improvement(45 percent), tighter labor market for qualified workers than their technical skills (43 percent) and problem solving counterparts nationwide, with larger shares of them skills (40 percent) over the next three years. reporting moderate to serious shortages across most s Community and technical schools provided the occupational groups. most effective education and training, according to s Among Minnesota respondents, a high-performance 61 percent of respondents, particularly for training workforce (67 percent) continued to be the principal students in skills for business needs. factor for business success, followed by product innovation (46 percent). Their national counterparts, COLLABORATION WITH EDUCATION however, rated product innovation as the most s Slightly more than half of respondents had important factor, ahead of a high-performance previously collaborated with the education system workforce (2009 NAM survey). . to deal with workforce issues, for example through • Minnesota respondents were much less likely job fairs, internships or contributions of space or to collaborate with the education system than equipment. Large employers were much more likely respondents to the nationwide NAM study to have had such collaborations. s Regional differences in business collaboration with FINAL THOUGHTS educational institutions were striking. Northwest Overall, these survey results present both a significant businesses had the highest rate (70 percent) of challenge and a substantial opportunity for the State of collaborations. Respondents in the Twin Cities (44 Minnesota, local governments, the education system percent) and Northeast(50 percent) were least likely to have had collaborations compared to other and other service providers to align and prioritize areas. services and support to Minnesota manufacturers. Because results sometimes varied by geographic location and size of business, workforce development GOVERNMENT INVOLVEMENT professionals and training providers could customize +► About two-thirds of respondents believed that their approaches and services to better meet the the State of Minnesota should have moderate or needs of their clients. significant involvement in assisting manufacturers to attract and retain a highly effective workforce. FULL REPORT AND APPENDICES This was more likely true for large and medium AVAILABLE ONLINE AT: businesses, and businesses in Southeast, Southwest and Northwest www.PositivelyMinnesota.com/, search "skills gap". s The preferred forms of support were tax relief for companies that offer training (41 percent) and METHODOLOGY NOTES funding for employee training at companies A stratified random sample of 2,400 Minnesota manufacturing (37 percent). businesses across four size groups received the survey in electronic or paper format,or in some cases,both.The survey SIZE DIFFERENCES yielded 511 respondents(for a response rate of 23.9 percent excluding non-deliverable addresses)for the 2011 survey. s Large and medium-sized companies tended to Overall,the survey has a confidence interval of+/-4.1 percent, experience a greater impact of workforce shortages at a level of confidence of 95 percent.Business size groups were: and use a greater variety of tactics to address such very small(5-19 employess);small(20-74 employees);medium shortages, than small companies and very small (75-249 employees)and large(250 or more employees). companies. Large and medium-sized companies had greater financial capacity for providing training and POSITIVELY collaborated with educational institutions to a greater degree to meet workforce and training needs. ?il Department of Employment and Economic Development • The Minnesota Department of Employment and Economic Development(DEED)is the state's principal economic development agency, with programs promoting business recruitment,expansion,and retention;workforce development;international trade;and community development.The agency's mission is to support the economic success of individuals,businesses,and communities by improving opportunities for growth.For more information,go to wwwPositivelyMinnesota.com. C '� inn attolorn at Em --,1 ''.54'.-A r ,.. Y'- p 'SI P _ f,$` MErnhhhliC DB,aq �'`T ;,Manufacturing Busin - g , io Survey ?R _ Contact Neal Youn 6 259 -5 6 oranar + .' -t Year End 20 ,r; Manufacturing Industry Is Optimistic for 2012 Most of Minnesota's manufacturers expect Profit levels were mixed for manufacturers— conditions in 2012 to improve or be the same as although 30 percent experienced increased in 2011. With less than 10 percent of profits,40 percent indicated declines. Increased manufacturers expecting production and productivity and increased exports for around half employment to decrease in 2012,manufacturers of manufacturers point to an upbeat outlook for appear to be optimistic about the coming year. profit levels. A random sample survey of Minnesota Slightly more than one-third of manufacturers manufacturers conducted in November by the increased investment in their plant and Minnesota Department of Employment and equipment,while one-quarter reported decreased Economic Development(DEED) and the Federal investment in 2011, similar results to those in Reserve Bank of Minneapolis reports that around 2010. Manufacturers who increased their half of Minnesota's manufacturers expect growth investments were likely among the 62 percent in orders and production level in 2012, and facing recent improved access to credit. Access to slightly less than one-third plan to increase bank credit deteriorated recently for about 10 employment. percent of Minnesota manufacturers, less than half the percentage (23 percent) of a year ago. The Manufacturing Industry in 2011 Many Minnesota manufacturers experienced a Outlook on the Manufacturing Industry better 2011 than 2010. At least half saw growth Minnesota manufacturers expect growth over the in orders and production levels and slightly more next year to be similar to 2011 levels, or better. than one-third hired new employees. However, Around half foresee growth in orders and employment data in manufacturing for the first production levels;the diffusion indices for these half of 2011 indicates a conservative 2.9 percent indicators are 70 to 71, exceeding the 50 increase. One respondent noted, "We had to make threshold that indicates expansion. While 30 a lot of cuts, costs have gone up, and we have had percent anticipate increasing employment,more a very hard time." (62 percent) intend to maintain current levels. Outlook on Economic Performance for Outlook on Economic Performance for Minnesota's Manufacturing Industry— Minnesota's Manufacturing Industry— 2011,Compared to 2010 2012,Compared to 2011 70% 70% ■Up Same DDown ■Up aSame ❑Down 60% 60% 50% 50% 40% 40% s� 30% . I- 30% � 1 �� t1 L I .-1 1 20% _t s 20% 4 $. _ . . , x N 1030 ' 4 - n w - 10% y � � i i Orders Produc-Employ- Invest- Prices Profits Produc-Exports Orders Produc-Employ- Invest- Prices Profits Produc-Exports tion merit merit tivity tion ment merit tivity Continued productivity growth is expected by spending, suggesting they are all expected to almost one-half of manufacturers. While 41 expand. However, manufacturers' optimism is percent expect profits to rise, 42 percent expect slightly more subdued for the state economy than them to be flat. One respondent cautioned, for their own business. "Prices are very competitive and it's tough to Outlook on State Economic Indicators for 2012 break even on projects."About one-third will 70% increase investment in plant and equipment but 60% ■Up 13 Same °Down about one-half will maintain current levels. 50% 40% -- it Outlook on the State Economy , �t 30% —;-:7&,. t .. 4_ , Manufacturers in Minnesota are also somewhat ,—- ¢_ - optimistic about growth in the state economy over a _ the next year State diffusion indices in 2012 are 0% above 50 for business investment, employment, Business Employment Consumer Inflation Economic Corporate investment spending growth profits economic growth, corporate profits and consumer 2011 Minnesota Manufacturing Business Conditions Survey Results Diffusion Diffusion Compared to 2010,in 2011 your location's: Up Same Down Index*,2011 Index*,2010 Number of orders 56% 19% 26% 65 64 Product/service production level 50% 31% 19% 66 65 Employment level_ 35% 46% 19% 58 56 Investment in plant/equipment 34% 41% 25% 54 52 Prices 36% 49% 14% 61 50 Profits 30% 31% 40% 45 50 Productivity 47% 41% 12% 68 66 Exports 50% 39% 11% 70 56 Decrease 0% 1-2% 3-5% 6-9% >10% Wages per worker 3% 37% 30% 25% 2% 3% Benefits per worker 9% 45% 16% 20% 5% 4% Compared to 2011,during 2012 you expect Diffusion Diffusion your location's: Up Same Down Index*,2011 Index*,2010 Number of orders 53% 35% 11% 71 71 Product/service production level 48% 43% 9% 70 72 Employment level 30% 62% 8% 61 63 Investment in plant/equipment 34% 48% 18% 58 58 Prices 40% 53% 7% 67 62 Profits 41% 42% 17% 62 59 Productivity 47% 46% 7% 70 71 Exports 44% 47% 9% 68 61 Decrease 0% 1-2% 3-5% 6-9% >10% Wages per worker 2% 30% 39% 28% 0% 1% Benefits per worker 5% 46% 28% 13% 6% 2% What is your outlook on the following state Diffusion Diffusion economic indicators during the next year? Up Same Down Index*,2011 Index*,2010 Business investment 23% 55% 22% 51 52 Employment 30% 54% 16% 57 60 Consumer spending 28% 47% 25% 52 55 Inflation 66% 31% 3% 82 78 Economic growth 27% 45% 28% 49 57 Corporate profits 32% 42% 25% 54 53 Improved Improved Not Has your company's access to bank credit Yes a lot Yes some No chap le some a lot a'i licable deteriorated over the past three months? 6% 4% 12% 56% 6% 15% In what areas,if any,has the change in Capital Inventory access to bank credit affected your firm's Hiring Expenditures Expansion Levels future plans?Check all that apply. 18% 40% 28% 21% *A diffusion index greater than 50 indicates expansion,less than 50 indicates contraction. Notes:Based on responses from 191 Minnesota manufacturing businesses,for a response rate of19.1 percent. The sampling error is plus or minus 7.04 percentage points at the 95 percent confidence level. Percentages may not add to 100 percent due to rounding. Prepared by Analysis and Evaluation,Minnesota Department of Employment and Economic Development,December 2011.