The Minnesota manufacturing industry has been a stronghold in the state’s economy for many years. Playing a significant role in the gross domestic product in Minnesota gave manufacturing a place among the top industries in the state. Prior to COVID-19, the data was showing a high acceleration of growth for the manufacturing industry in Minnesota. While the market hasn’t bounced back yet, the data is promising a strong return.
Minnesota Manufacturing and the Role it Plays in the State Economy
Manufacturing in Minnesota comprises over $52.7 billion a year to the state economy and accounts for 14% of the state gross domestic product. This is the second largest share in the entire state, making the manufacturing sector the second largest contributor to the state economy.
With over 9,000 individual manufacturers in Minnesota, there are a wide variety of manufacturing markets being served. The top producers are food production, computers, electronics, metal machinery and medical devices. Each market itself has seasons and economic trends.
In addition to contributing largely to the state’s economy, manufacturers also employee over 300,000 Minnesotans to work. This totals 13% of all private sector jobs in the state. It also comprises of 15% of all wages paid in Minnesota. The manufacturing industry plays a significant part in not only the state of Minnesota economy but also in the daily lives of Minnesotans.
While most of the Minnesota manufacturing world is made of large manufacturers, the state ranked in the top 20 across the nation for venture capital investments from 2013-2015, with over $1 billion in investments. It’s through these venture capitalists that small and medium size manufacturers can carve out a large sector for themselves. It’s the small and medium size manufacturers that effect the commercial real estate market the most. As they grow, so does the commercial real estate market.
Trends in Manufacturing Nationwide
To understand how the Minnesota manufacturing market is shifting, we must first explore how the industry is fairing nationwide. Technological advances are dramatically changing the way many manufacturing plants operate. However, there is a nationwide shortage of people who want to work in the manufacturing industry and have the right technology skillsets. This shortage puts the industry at a stalemate for growth.
The annual Enterprise Minnesota State of Manufacturing report found that the number of manufacturers in the state having trouble hiring skilled workers has doubled since 2011. This isn’t a problem only Minnesota is facing.
The US manufacturing industry is predicted to see high growth in the next decade. Predictions indicate up to 3.5 million jobs to become available in manufacturing across the nation. Given the high growth and the shortage in skilled workers, we can conclude there is soon to be high investment in creating a new skilled workforce. This investment can indicate even more growth and dedication to the manufacturing industry.
Real Estate Manufacturing Market and COVID-19
The Minnesota manufacturing industry was on a path for great growth, leaving the secondary industry of manufacturing real estate also seeing a large boom. However, the recent events of the coronavirus pandemic have shaken every industry around the globe and have resulted in high unemployment rates and stalled performance.
Not every manufacturing market has been hit the same. Medical supply manufactures have seen a huge spike and many companies are temporarily starting to produce medical supplies. This is a combination of companies doing their part in helping the nation during a pandemic but also from the aid of government programs to offer incentives to help production.
It’s hard to predict when the market will turn given so many factors are unknown during this time. The federal government may finalize a second relief bill and give many manufacturers the help they need to get back to full production or we may resume lock downs again, and factories will temporarily close, if the infection rates continue to rise.
Minnesota Manufacturing: How the Market is Shifting?
Prior to COVID-19 the Minnesota manufacturing was experiencing high growth over the last decade. This in return was creating positive effects to the secondary manufacturing real-estate market. The worldwide pandemic threw a curveball to the industry but it’s faring well and adapting. Once the world resumes some normalcy and the economy bounces back, the Minnesota manufacturing industry is expected to resume its growth trajectory through technological advancements, investments in a skilled workforce and continued venture capitalism.