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State manufacturing turns corner

Minnesota exports topped $4.3 billion for the second quarter, up 19 percent over the same period a year ago, says Kathi Schaff, director of partnerships and business development for the Minnesota Chamber. She spoke Thursday to the Highway 2 West Manufacturers' Association meeting at the Sanford Center. Pioneer Photo/ Monte Draper

Minnesota manufacturers may be turning the corner from the Great Recession, but recovery will still take years, says a Minnesota Chamber official.

Manufacturing exports posted sales of $4.3 billion for the second quarter of 2010, up 19 percent over the same quarter in 2009 and approaching the sales level of 2008, Kathi Schaff, director of partnerships and business development for the Minnesota Chamber, said Thursday.

But Minnesota manufacturers, while creating 8,700 jobs since September 2009, have lost 100,000 jobs since 2000. It will take until 2015 to see the industry recover fully, and with new 21st century jobs, she said.

"A lot of those new jobs are mismatched skills," Schaff told a meeting of the Highway 2 West Manufacturers' Association, held at the Sanford Center. "We need to really work at getting a workforce that's going to be out there trained with those skills."

Training the next replacement is key, she said, as Minnesota's workforce ages and retires. New jobs in the 21st century require new skills, she added, and is a reason why K-12 reform is high on the Minnesota Chamber's 2011 legislative agenda.

"With the workers that we will need, we want to make sure Minnesota students that are coming out that there isn't the gap that there is now," Schaff said, referring to the gap in learning between white students and minority students. "We have changing demographics and the largest employment gains we're getting are with some of these demographic changes, and that's where the gap is."

Schaff said that "we really need to get all of our students coming out of there with excellence."

Manufacturers, by and large, are not having problems recruiting workers, she said, but those manufacturers seeking workers with specialty skills are having problems.

"Part of the difficulty is Minnesota's location," she said. But there are ways around that, such as the major pharmaceutical company in Baudette that advertises for workers in hunting and fishing magazines.

Basic manufacturing in Minnesota starts production here, and when it becomes marketable, usually the manufacturing moves elsewhere.

"When someone has a contract manufacturing, they'll do the product here and produce it initially," Schaff said. "When that product becomes garden variety where it's mass produced, a lot of that then is being shipped out, some outside of the United States."

With exports growing, Schaff sees that as a growing opportunity for Minnesota manufacturers.

"Companies that are recovering quicker are actually looking at global opportunities," she said. Two Minnesota companies recently attended a trade fair in Winnipeg, Manitoba, that featured 70 countries and one of those companies came back with 17 leads, she said.

High value and made-to-order products are also export opportunities for Minnesota manufacturers, she said. "We have rail equipment going to India and Singapore; we have semiconductors that are going to Japan and the Philippines. All of these international markets are looking at growth, especially where the middle class consumer population is growing."

Much of the research comes to the Minnesota Chamber through its Grow Minnesota program, where the Chamber visits with manufacturers and other businesses to help with recruitment, retention and expansion.

The Chamber visited with 876 businesses in the last year. Grow Minnesota helped 108 companies retain 1,300 jobs, Schaff said.

The Highway 2 West Manufacturers' Association began in 2003 with quarterly meetings, with about 120 manufacturers and 50 resource sources located along the Highway 2 corridor. There were nearly 60 people at Thursday's meeting.

The association networks with others in the manufacturing community in northwest Minnesota in the areas of lean manufacturing, employee benefits and assistance available from various government agencies. Meetings are held throughout the region, and tours of manufacturers are often part of the agenda.

Thursday's meeting including a presentation of a new company "home grown" in Bemidji that is a precision pipe handling specialist. LaValley Industries manufactures the Deckhand, a boom attachment that safely grabs huge pipes and off loads them from trucks, such as was seen last winter with the Alberta Clipper pipeline work in the region.

Jason LaValley, company president and CEO, said he worked the pipeline for 10 years and wanted to develop a safer way to handle the big 42-inch pipes after seeing a coworker injured.

He penciled an idea one night, faxed it to his father, and LaValley, his father and grandfather spent several years in the family garage making the attachment.

"I put all my eggs in one basket and went for it," LaValley said.

The Deckhand saw field testing in Bemidji and now the pipeline companies are eager to use the product, he said. LaValley Industries has hired six employees in the past six months and now has a manufacturing contract with Caterpillar.

"One operator can work a lot of pipe with finesse," LaValley said, adding that an operator with a Deckhand can offload trucks 4-to-1 compared to the traditional method of a boom and cable with calipers.

"People ask why a pipe company here -- there is no oil in Minnesota," LaValley said. "But there are a lot of pipelines in Minnesota."

There are four pipeline contractors alone in the Bemidji area, he said.

Nationally, there is estimated some $193 billion to be spent on pipeline projects from 2011-15 on onshore work, he said.

"We're going to be there," LaValley said of his growing company.