Survey: Minn. manufacturers optimistic, but concerns loom

A new survey found that Minnesota's small and mid-sized manufacturers are feeling optimistic about their future, but their concerns about health care and tight credit have grown.

A lean consulting group, Enterprise Minnesota, released the survery results Tuesday.

"My overall assessment of this is that manufacturing executives see this as sunshine on a cloudy day forecast for their businesses," said Rob Autry, the pollster who conducted the survey.

Autry surveyed 400 small to mid-sized manufacturers around the state for the report. The group also held 13 focus groups with manufacturers from around Minnesota.

"And what we saw in this data is that despite a year of bad economic news...manufacturing executives were for the most part pretty optimistic about the future of their own firms," Autry said.

A majority described themselves as "somewhat" or "very" confident about their own firms-- nearly 80 percent of respondents.

But the results also brimmed with caveats. Seventy-two percent of the executives surveyed said they expected the economy to remain flat or stay in recession in 2010. Only a quarter of them said they anticipate economic expansion. Still, that was up 18 percent from last year. And to Autry that means the overall picture is more sunny than cloudy.

"When you look at the key business barometers, gross revenue, profitability, they're more likely to believe it's going to be higher this year than it was last year," said Autry.

Last year, nearly a third of executives anticipated decreases in revenues, profits, and capital expenditures for 2009; that number dropped to 15 percent. In last year's poll, 23 percent of executives surveyed expect the coming year to bring boosts to their gross revenues. Twice as many had such an expectation this year. The survey also found that a third of respondents expect their gross revenues to jump in excess of 10 percent this year.

Barb Schultz, a senior vice president at Ideal Aerosmith in East Grand Forks is optimistic. The manufacturer's products include test systems for the airline industry.

"Our projections are up for next year. We do feel that things are looking better," Schultz said.

Schultz did not participate in the Enterprise Minnesota poll, but the results are consistent with her own growth projections, as well some of her worries. Health care costs topped the list of respondents' concerns. Some stopped offering health care.

And when surveyed in January, 60 percent of respondents said that the health care plans under consideration in Congress were a bad idea. A similar percentage said the plans would raise costs. Schultz agrees with them.

"It did appear that small businesses or businesses in general would have been paying higher health care, and that, obviously, was not acceptable to us," Schultz said.

Schultz says her company has not had any problems getting credit. But more than a third of survey respondents said they or their customers experienced tighter credit credit this past year, nearly triple the level from the year before.

Enterprise Minnesota President Bob Kill took special note.

"The pain at the tight credit continuing, even today, was a little surprising," Kill said.

A spokesman for the Minnesota Bankers Association, Brad Ruiter, points out that banks represent only 30 percent of the lending market. And, he says, commercial bank lending has increased incrementally during six of the past seven quarters, in the midst of our current recession.

But Ruiter said those banks have a lot of pressure on them right now.

"It's tough for the minority of the lending sources, when their lending is just incrementally increasing in the midst of a recession, to make up for some of those non-bank sources, whose lending is drastically down," Ruiter said.

Regardless of where the problem lies, Kill still asserts that tight credit will limit job growth among the state's manufacturers. The survey did not address hiring plans.

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