The state of manufacturing is strong.

A full 93 percent of Minnesota manufacturers are financially confident about the future, which is just a hair off last year's high-water mark of 94 percent, according to a recently released survey by Enterprise Minnesota.

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"There has never been as much energy in manufacturing as there is today," said the consulting firm's CEO, Bob Kill. "And that's a cool thing to say, because we face a lot of challenges."

Kill unveiled the results of the 10th annual State of Manufacturing survey Thursday morning at the Radisson Hotel Duluth to a crowd of economic development professionals that welcomed the good news but remained cognizant of the problems still plaguing the industry.

Chief among the challenges facing manufacturing and closely aligned industries are health care costs and recruiting workers to replace retiring Baby Boomers, according to the survey.

"We had to replace a third of our workforce - we hired about eight, 10 people in the past two years," said Bruce Mars, president of Conveyor Belt Service Inc. in Virginia. He said a good wage, scheduling flexibility and strong management "have been a good equation for us."

Every year more Minnesota companies have said that the labor shortage is their No. 1 issue, and it's leading some toward automation and a push for increased productivity. On the positive side, it's also leading more firms to get long-term plans in place.

"How are you going to grow, and how is your staff going to be a part of that?" posed Entrepreneur Fund CEO Shawn Wellnitz at Thursday's event.

About a third of manufacturing job openings are entry-level, and machine operators and assemblers comprise the majority of available jobs. More schoolchildren are getting turned on to those opportunities after years of schools and parents pushing high school graduates into four-year colleges.

"They are starving to do things. ... They are motivated by and driven by different things," said Brad Vieths, vocational programs director at Duluth Public Schools. "I have optimism for them."

Since the State of Manufacturing survey started a decade ago amid a global recession, nearly every indicator has trended positive among manufacturers. Most telling is the overwhelming optimism for the economy as a whole - nearly two-thirds of employers say we're headed for continued growth.

Even with the recruiting difficulty 70 percent of manufacturers report having, employment in the industry jumped more than 3 percent in the past year across St. Louis, Carlton and Douglas counties. The state as a whole grew manufacturing jobs by 1.5 percent since last April, according to the Department of Employment and Economic Development.