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HomeMy WebLinkAbout02-24-12City of Lakeville Community and Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Steve Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: February 24, 2012 Subject: February Director's Report Reminder: The February 28 meeting of the EDC has been cancelled. The next regular scheduled meeting of EDC is schedule for March 27 th . The following is the Director's Report for February, 2012. Business Marketing Strategy Update The work by Arnett Muldrow on the Business Marketing Strategy is nearly complete. The current plan is to publicly launch the Marketing Strategy at the State of the City Address on Wednesday, March 21S which is being held at the Holiday Inn & Suites. Prior to that date, we are scheduled to present information on the Marketing Strategy to the School Board and Downtown Lakeville Business Association, and the City Council. I want to recognize both EDC Members Sheila Longie and Bob Brantly for their contributions on this project through their participation on the Steering Committee. EDC members are encouraged to attend and unless you plan to register through your business, please contact Penny and we will see that you get registered and take care of the fee. Development Forum Update The City Council approved a number of zoning ordinance amendments at their Council Meeting this past Tuesday. A number of the amendments where drafted based on feedback received during the Development Forum process as well as specific businesses proposing projects that did not conform to the previous ordinance provisions. This was the second round of ordinance amendments approved since the first of the year. There is a third round of possible ordinance amendments that will be reviewed by the Planning Commission and City Council in the coming months. Page 2 Building Permit Report The City issued building permits with a total valuation of $6,567,757 in January. This compares to a total valuation of $2,018,973 in January of 2011. The City issued commercial and industrial permits with a total valuation of $1,555,000 in January compared to a total valuation of $53,000 in January of 2011. The City has also issued permits for 13 single family homes in January with a total valuation of $4,049,000. This compares to 5 single family home permits in January of 2011 with a total valuation of $1,558,000. Development Update ConAgra: All of the pre -cast wall panels and roof panels have been constructed for a 27,000 square foot warehouse addition on the west end of their plant. ConAgra was required to relocate City utilities to facilitate the warehouse expansion. Genpak LLC: Work in the building primarily is consisting of doing electrical to accommodate the machines and equipment that Genpak will be re- locating in the building. Genpak plans to phase in the relocation to this facility with the first phase occurring in April and the second phase in June. Genpak closed on the purchase of the former Berry Plastics Plant located at 8235 220 Street last fall. The company will be consolidating their existing operations from the small Lakeville plant that currently has 10 employees along with their Bloomington plant that currently has 120 employees at this new location in Lakeville. Hosanna / Ebenezer Senior Housing Project: Framing work continues for the 93 unit senior housing project. Krause - Anderson is the general contractor. This project obtained housing revenue bond financing from both the Dakota County and Scott County CDA's. Walmart Project: Building walls have been going up for the Walmart store for the past several weeks. Immel, the general contractor on the project plans to turn the building over to Walmart by Labor Day and Walmart would open the store sometime in October. Foreclosure Update Attached is a copy of the December Foreclosure Update from the Dakota County CDA. There were 22 Sheriff Sales in Lakeville during the month of December. There were a total of 284 of Sheriff Sales in 2011 which is an average of just under 24 per month. The total of 284 is down from the 317 Sheriff Sales that occurred in 2010 which is a reduction of approximately 10 %. Articles "Unemployment applications drop to a 4 -year low," TwinCities.com, February 16, 2012. 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Sheriff Sales Quarter # of Sales 2010 # of Sales 2011 Percent Change January-March 545 513 -6% April June 519 554 +7% July- September 621 451 -27% October - December 462 467 + I Total 2,147 1,985 -8% Notices of Pendency Quarter # of NOPs 2010 # of NOPs 2011 Percent Change January-March 942 840 - I I April June 991 627 -37% July- September 1,016 718 -29% October - December 665 774 1 + 16 Total 3,614 2,959 - 18 fo Overall, Sheriff Sales decreased by 8 percent from 2010 to 2011. Similarly, notice of pendency filings decreased by 18 percent from 2010 to 2011. This past year was the third highest year on record for sheriff sales since the CDA started tracking foreclosures in 2007. Year 2007 2008 2009 2010 2011 Total # 1,581 2,063 1,860 2,147 1,985 Sheriff Sales Changes Coming to CDA Foreclosure Report CDA staff will continue to provide foreclosure and notice of pendency numbers and stats on a monthly basis in 2012. The monthly narrative and "In the News" sections will be included only when significant changes, updates or events are available. Dakota County Stats — December 2011 • # of Sheriff Sales in December — 164 (compared to 144 in December 20 10) • Total Sheriff Sales for 2011 — 1,985 (compared to 2,147 Jan.- December 20 10) • # of Notices of Pendency Filed in December— 210 • Total Notices of Pendency Filed in 2011 — 2,959 A Notice of Pendency is filed by a mortgage company's attorney as official notification that the foreclosure process has begun. Not all of these result in Sheriff Sales. Mapping Using Dakota County GIS http://gis.co.dakota.mn.us/website/dakotanetgis/ The Dakota County Office of GIS is updating the 2011 Foreclosures and Notice of Pendency layers on a monthly basis. If you need assistance using this Web page, please call Randy Knippel or Mary Hagerman with the Office of GIS at (952) 891 -7081. In The News Provided in this PDF file are a few notable foreclosure articles that were published in the last month. Among the points of interest: • TransUnion, one of the three credit reporting bureaus, predicted that mortgage delinquencies will likely increase for the first quarter of 2012, but then will decrease significantly as banks work through a backlog of foreclosures. • The Securities and Trade Commission have charged top Fannie Mae and Freddie Mac executives with civil fraud. The SEC said the executives mislead the government and tax payers about risky subprime loans that the mortgage giants held. • A feature story on how local housing counseling agencies are helping homeowners in the Twin Cities. If you have any concerns, please call me at (651) 675 -4467 or send me an email at Ihenning(&-dakotacda.state.mn.us 4J c L C �V N C L 0 H O v � a� L Q 0 LL O N L .a a7 v a O fV 0 Go O N ^ �n Ln LO N — Q� 00 I� N M M N N - - M — N O'- W N .D N Or V — Or Ln 1 O M N N M co ^ -- co N= 00 a 00 H Cb nl u _ 0� N � 1� %D %O !h %0 Lf 1.0 N l rq , 00 O %D LA N 0 M 1 M Ln Z— 1-- 1- Ln O N %D N O O 1� v LA N m O N CL N M _ M Cr N N N N_ M %0 1� LA O co y N N .. co 0% N M Co a — 'D 00 LA �D M to %a Lf 73 N N `D 00 1� N— 00 M %O qw %O — N O Do Go — N 3 N N N C� O N N N ^ 1D 01 a Ln h n N N N •O O M N 0 m � O N L O� C C — %Q !� %0 N 1� Q N Ch N 00 N u'1 'D 0� N N co m 00 _ N M O N -O 0o m co h N N N O M N— �D t2 Ln LA %O �O 1� %a U. Id N _ N _ N co Ln cV 0 0_ 1� O 1A a v to N N IA 00 .� s to O __��� °oo V 4 Do h 0 d� 0� +' O O O •£ C J N J J p, Q- i t v aL7 >ladoo .Y 0 7 E Q �ea� m W LL= c J f GC V1 W 000 r (" 4) N s N Vl u c O . 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Page 1 of 3 StarTribune TransUnion predicts sharp drop in late payments on mortgages in 2012 as foreclosures clear Article by: EILEEN AJ CONNELLY , Associated Press Updated: December 7, 2011 - 8:20 AM NEW YORK - If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion. Mortgage delinquency rates — the ratio of borrowers 60 or more days behind on their payments — will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday. Chicago -based TransUnion's forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year. Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting. Banks are still working through a backlog of foreclosures created by issues including the robo- signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order. That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates. Print Powered By : lei = Cyara�eics `, http:// www .startribune.com/templates /fdcp ?unique= 1323277438739 12/7/2011 Economic uncertainty has also contributed. But by the end of next year, it could drop to In the third quarter of 2011, mortgage 5 percent, TransUnion said. That's well off delinquencies saw their first uptick in six the peak of 6.89 percent seen in the fourth quarters, largely fueled by concerns over the quarter of 2009. economy as lawmakers were debating the U. Print Powered By : lei = Cyara�eics `, http:// www .startribune.com/templates /fdcp ?unique= 1323277438739 12/7/2011 Format Dynamics:: C1eanPrint :: http: / /www.startribune .com/business /yourmoney /13514... Page 2 of 3 w S. debt ceiling and Europe's debt crisis was unfolding. Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market. While the drop will be significant, the rate will remain well above the pre- recession average of 1.5 to 2 percent. "We have a long way to go to get back," said Steven Chaouki, a TransUnion vice president. The situation with credit cards is much stronger. Card delinquencies — payments late by 90 days or more — dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows. TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank - issued cards should fall again. One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were o pened by people with less- than - stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top -tier credit histories. "Lenders are willing to lend, but are still pursuing the best customers," said Chaouki. TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has w obbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009. The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far. Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more .. http:// www .startribune.com/templates /fdcp ?unique= 1323277438739 12/7/2011 Format Dynamics :: C1eanPrint :: http : / /www.startribune.com/business /yourmoney /13514... Page 3 of 3 �ftoi F-I T 7! 11 practical. "People were protecting their home equity," he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it's common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them. He said he expects the equation will shift again if housing prices rebound and people go back to building home equity. http:// www .startribune.com/templates /fdcp ?unique= 1323277438739 12/7/2011 Page 1 of 2 TwinCitiesecom SEC charges ex- Fannie, Freddie CEOs with fraud By Derek Kravitz Associated Press "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans and misled the market about the amount of risk." In a statement released through his attorney, Mudd said the lawsuit "should never have been brought" and said the government reviewed and approved all of the company's financial disclosures. Updated: 12/16/2011 10:08:09 PM CST The Securities and Exchange Commission on Friday brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled the government and taxpayers about risky subprime loans the mortgage giants held when the housing bubble burst. Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They are the highest - profile people to be charged in connection with the 2008 financial crisis. The federal government has faced criticism for not bringing charges against top executives who may have contributed to the worst financial meltdown since the Great Depression. The Justice Department has opened probes into Fannie and Freddie but has not charged anyone with a crime. Fannie and Freddie also entered into agreements with the government Friday, accepting responsibility for their conduct without admitting or denying the charges. The companies were not charged. The government - controlled companies also agreed to cooperate with the SEC on the cases against the former executives. Mudd, 53, and Syron, 68, led the mortgage giants in 2007, when home prices began to collapse. The four other top executives also worked for the companies during that time. The case was filed in federal court in New York City. "Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, SEC's enforcement director. "Every piece of material data about loans held by Fannie Mae was known to the United States g overnment and to the investing public," Mudd said. "The SEC is wrong, and I look forward to a court where fairness and reason - not politics - is the standard for justice." Syron's lawyers said the case was "without merit" and that the term "'subprime' had no uniform definition in the market" at that time. "There was no shortage of meaningful disclosures, all of which permitted the reader to assess the degree of risk in Freddie Mac's" portfolio, the lawyers said in a statement. "The SEC's theory and approach are fatally flawed." According to the lawsuit, Fannie told investors in 2007 that it had roughly $4.8 billion worth of subprime loans on its books, or just 0.2 percent of its portfolio. The SEC says Fannie actually had about $43 billion worth of products targeted to borrowers with weak credit, or 11 percent of its holdings. Freddie told investors in 2006 that it held between $2 billion and $6 billion of subprime mortgag Print Powered By F°�rr ,t iry annics http: / /www.twincities.com/fdcp ?unique = 1324316296236 12/19/2011 Page 2 of 2 its books. The SEC says its holdings actually were closer to $141 billion, or 10 percent of its portfolio in 2006, and $244 billion, or 14 percent, by 2008. In a May 2007 speech in New York, Syron said Freddie had "basically no subprime exposure," according to the suit. Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and then sell them to investors around the world. The two own or guarantee about half of U.S. mortgages, or nearly 31 million loans. The other executives charged were Fannie's Enrico Dallavecchia, 50, a former chief risk officer, and T homas Lund, 53, a former executive vice president. Also charged were Freddie's Patricia Cook, 58, a former executive vice president and chief business officer, and Donald Bisenius, 53, a former senior vice president. Print Powered BygF tCiyrtarrliCS http: / /www.twincities.com/fdcp ?unique= 1324316296236 12/19/2011 Page 1 of 4 TwinCitiesecom More Twin Cities homeowners with troubled mortgages find they can get help The Welles were able to save their home because of the federal government's Home Affordable Modification Program, known as HAMP, designed to h elp homeowners restructure troubled mortgages. But without the guidance of an HRA counselor, who helped the Welles navigate the program and manage the paperwork, they might not be celebrating now. Experts say similar programs in other counties might help explain why foreclosure numbers have dipped across the Twin Cities metropolitan area. By Elizabeth Mohr and Sarah Horner Pioneer Press Updated: 12/19/2011 11:29:53 PM CST Just a few weeks ago, Sara and Bryan Welle were trying to figure out how to tell their kids they were losing their home and didn't know where they would be for Christmas. But thanks to the work of the Washington County Housing and Redevelopment Authority, the Oakdale family has something to be grateful for this holiday season. "We were two weeks away from losing it and got a letter in the mail saying we were eligible for the (mortgage) modification," Sara Welle said. "Not only are we not going to lose our house, the payment is going down and we don't have to tell our kids we're moving out .... We couldn't have asked for a better Christmas Dresent at all." In Washington County, foreclosures are down 23 percent compared with the same period last year. Neighboring counties are showing similar trends: Ramsey County foreclosures are down 25 percent; Anoka County's, 15 percent; Dakota County's, 11 percent. The numbers seem to mirror what's happening statewide. A HELPING HAND Industry experts say that among the myriad reasons for the drop in foreclosures, mortgage- restructuring programs and the guidance from local housing resource organizations are helping. Though these programs aren't new - HAMP was signed into law more than two years ago, and the Washington County HRA has been around since 1974 - people seem to be noticing them more, said Melissa Taphorn, deputy executive director of the HRA. http: / /www.twincities.com/fdcp ?unique= 1324392214529 12/20/2011 Sara and Bryan Welle of Oakdale and their family Tycen, 5 (foreground from left); Caine, 3; and Gianna, 9 avoided foreclosure with the help of the Washington County Housing and Redevelopment Authority and a federal mortgage modification program. (Pioneer Press: Richard Marshall) Page 2 of 4 TwinCitiesecom "Before, (struggling homeowners) didn't want to seek Anoka County Community Action has seen about a help because they didn't 50 percent success rate helping families avoid or delay foreclosure, estimated Jan Backlin, director of Home Ownership Programs for the organization. Foreclosure trends in east metre Foreclosure numbers are dipping in The programs lay out options, she explained. Washington, Dakota, Anoka and Ramsey ANOKA Sometimes, a lender may agree to postpone a counties this year, after Increasing DAKOTA foreclosure or restructure a mortgage to make it last year. Some hope this Is the RAMSEY more affordable. Counselors can get lenders and beginning of the end of the crisis. homeowners together on conference calls to walk 3,000 . WASHINGTON through the often confusing and hard conversations. Z5O0 Other times, homeowners may discover they are out 2,000 of options, but even that harsh truth can be softened by the advice of a counselor, Backlin said. 1500 "It can be a saving grace to have someone say, 'I 1,000 ; ; know this is something you've been fighting 1� + ¢ against, but now you're here and you have six 500 months to save and come up with a new plan and you can do this,'" Backlin said. "When you tell a 0 2003 2010 2081« " homeowner there can still be a plan, it gives them * Through October, 20D hope." Smnmsi Sheriff safes in awh munty PIONM PRESS IT'S NOT OVER YET want to acknowledge the situation they were in," Taphorn said. "But now, people are more willing to acknowledge it because there are more people going through the same thing." The HRA holds monthly foreclosure - prevention workshops and offers free counseling to anyone who needs it. Each county has a similar program, and several nonprofits across the state also offer free services. The programs typically contact homeowners after being notified that foreclosure is imminent, giving them ample time to explore options with foreclosure prevention counselors before their home ends up in a sheriffs sale. Counseling for homeowners isn't the only factor causing foreclosures to decrease. Experts say several other factors are likely also behind the year -to -year decline. Lenders, they say, are postponing some foreclosures for a variety of reasons, making arrangements with homeowners to reclaim homes without sheriffs sales, accepting more short sales and working directly Taphorn said the counselors can be a critical lifeline. "It's your home, it's so essential to your life, and you're in such an emotional state when faced with the possibility of losing that," Taphorn said. "Any red tape can be a potential roadblock. So anyone who knows the process and can help you with that process is a potential life saver." http: / /www.twincities.com/fdcp ?unique= 1324392214529 12/20/2011 Page 3 of 4 TwinCitiesecom struggling homeowners more often. Housing market experts caution that the decreased foreclosure numbers - whatever the reasons - are still at all -time highs. doesn't involve giving up their home. 'WE GET TO STAY HERE' The call to the Washington County HRA made the difference for the Welles, the family said. "Even with the reductions, year -to -date, that number is still 400 percent over where the number was in 2005," said Ed Nelson, spokesman for the Minnesota Home Ownership Center. "We are seeing some improvements ... but I also don't want to diminish the fact that these are still dramatic, drastically high foreclosure numbers by historic standards." While the foreclosure crisis was brought on by bank's lending practices, the continued crisis in Minnesota is linked directly to unemployment, Nelson said. Counselors have seen that in Anoka County, Backlin said. "More than ever, we're hearing from families that used to make $50,000 a year that now make $30,000 and they can no longer afford their house payment ... or they've been out of work for over a year and... now it's at a point of, 'Do I pay my house payment or do I pay for food?'" Backlin said. Until the job market shifts, foreclosures will continue in big numbers, experts said. Nelson, however, is cautiously optimistic. "More than likely, what we're seeing is the beginning of the end of the prominence of the foreclosure crisis," Nelson said. John Patterson, research director of Minnesota Housing, said his organization is seeing a decrease in delinquent mortgage payments that might indicate a downward trend in foreclosures. But, he said, lenders have a backlog of homes awaiting foreclosure. "We have a long process to go through before we're out of the woods." Patterson said. The Minnesota Home Ownership Center's Nelson stressed homeowners should reach out for help as soon as their mortgage payments feel out of reach. The more time and help families have on their side, the more likely they'll be able to find a solution that After taking on a mortgage, Bryan Welle lost one of his two jobs; then he found himself needing surgery for an injury. Rehabilitation put him out of work for longer than expected, medical bills mounted and the disability payments the couple anticipated weren't approved. Bills and groceries became a priority, to keep things as normal as possible for their three kids. "it was scary. It was tough to think of the children.... It was tough at times to see my husband, who obviously wants to do the best for his family, you could see he was upset and embarrassed. He couldn't do anything. You know it's the manly thing to take care of your family," said Sara Welle, a stay - at -home mom. Sara Welle said the county's HRA was a tremendous guide through the application process, which involved heaps of paperwork and was at times confusing and daunting. "With (counselor) Nick (Boettcher) being there and understanding what we were going through and knowing what we should do and what to send them, it was so helpful," Welle said. "It just made me feel like we had someone on our side, finally." The experience has brought new meaning to being http: / /www.twincities.com/fdcp ?unique= 1324392214529 12/20/2011 Page 4 of 4 TwinCitiesecom "home for the holidays" this year, Sara Welle said. "We're very, very grateful... Last year was a really rough ride," Welle said. "The kids actually understand now that we get to stay here. They may not get a lot, but we get to stay in our house, which is the most important thing." Elizabeth Mohr can be reached at 651- 228 -5162; Sarah Horner can be reached at 651 - 228 -5539. FALLING FORECLOSURES Seized: Lenders foreclosed on 30 percent fewer homes nationwide in the first half of 2011 compared with the same period last year. The numbers: Banks seized 421,212 homes from January to June, down from 529,633 during the same period in 2010. Why? Among other factors, lenders are taking longer to move against homeowners who fall behind on mortgage payments. Source: RealtyTrac Inc. RAMP: WHO'S ELIGIBLE? Eligibility requirements for the federal Home Affordable Modification Program: -- The homeowner is experiencing a financial hardship because of reduced income, job loss or added expenses. -- The home is a primary residence. -- The loan is for less than $729,750 and was taken out before Jan. 1, 2009. HOW TO GET HELP Interested in talking to a foreclosure counselor? Contact the Minnesota Home Ownership Center, which can connect you to a service organization in your county: 651 - 659 -9336 or hocmn.org http: / /www.twincities.com/fdcp ?unique= 1324392214529 12/20/2011 Page 1 of 2 TwinCitiesecom Unemployment applications drop to a 4 -year low 243,000 jobs, the most in nine months. And the unemployment rate dropped for the fifth straight month, to 8.3 percent. The economy has added an average of 201,000 jobs per month for the past three months. By Christopher S. Rugaber Associated Press Posted: 02/16/2012 12:01:00 AM CST Updated: 02/16/2012 07:48:11 AM CST WASHINGTON - The number of people seeking unemployment benefits fell to the lowest point in almost four years last week, the latest signal that the job market is steadily improving. The Labor Department says weekly applications for unemployment benefits dropped 13,000 to a seasonally adjusted 348,000. It was the fourth drop in five weeks and the fewest number of claims since March 2008. The four -week average, which smooths out fluctuations in the weekly data, fell for the fifth straight week to 365,250. The average has fallen nearly 13 percent in the past year. The consistent decline indicates that companies are laying off fewer workers, and hiring is likely picking up further. When applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate. In January, the economy added a net Faster economic growth is spurring the additional hiring. The economy expanded at an annual rate of 2.8 percent in the final three months of last year - a full percentage point higher than in the previous quarter. Most economists expect growth to slow in the current quarter, because companies won't need to rebuild their stockpiles of goods as much as they did last winter. But there are signs that the economy is still expanding at a healthy rate. Factory output got off to a robust start this year, and it ended 2011 with the fastest growth in five years, the Federal Reserve said Wednesday. .• -r i ow = C "Im vi http: / /www.twincities.com /fdcp ?unique= 1329402356189 02/16/2012 Page 2-of 2 1 Factories are adding jobs to keep up with higher demand. Manufacturers added 5 0,000 jobs last month, the most in a year. In addition, retail sales rebounded last month after a sluggish holiday season. The gain suggests that the recent job growth is supporting more consumer spending. Still, the job market has a long way to go before it fully recovers from the damage of the Great Recession. Nearly 13 million people remain unemployed. And 8.3 percent unemployment is still painfully high. One reason the unemployment rate has fallen for five straight months is that many people have stopped looking for work. The government counts people as unemployed only if they are actively looking for a job. ent http: / /www.twincities.com /fdcp ?unique= 1329402356189 02/16/2012 Contact: Lynn Shelton Enterprise Minnesota Director, Marketing & Communications 612- 455 -4215 Lyn n. shelton (cDenterpriseminnesota.org Chronic Shortage of Qualified Workers Looms for State's Manufacturers Though executives reveal solid industry projections for the second consecutive year, worry over finding qualified workers has doubled since 2011. Minneapolis (February 21, 2012) — Minnesota's manufacturers remain confident in their firms' futures, as solid revenue, profitability and capital expenditure projections hold steady for the second year in a row, according to The State of Manufacturing®, a major survey research project sponsored by Enterprise Minnesota and partners. From a financial perspective, 82 percent of executives say they are confident about the future of their firms. This high confidence level is remarkably consistent with data from 2011's survey, and spreads across companies of all sizes, locations and revenues. However, there are some signs that last year's optimism has subsided a bit. When asked whether they anticipate an economic expansion, a flat economy or a recession, 32 percent of executives say they expect an economic expansion, down from 40 percent in 2011. Meanwhile, the percentage of executives who anticipate a flat economy has increased from 49 percent in 2011 to 55 percent in 2012. On key projections for their own firms, executives continue to exhibit much more confidence than they did three years ago, when 32 percent of executives expected their gross revenues to decline, 34 percent expected their profitability to decline, and more than one in three (37 percent) expected their capital expenditures to decrease. This year, only 8 percent of executives anticipate a decline in gross revenues, and only 13 percent expect a decline in profitability. Less than one in four (24 percent) executives expect their capital expenditures to decrease. However, projections on these three indices are less rosy now than they were a year ago. Where 51 percent of executives anticipated an uptick in gross revenues and 32 anticipated an increase in capital expenditures in 2011, 47 percent anticipate increased gross revenues and 27 percent expect an increase in capital expenditures in 2012. The starkest contrast is seen in profitability projections. While 39 percent of executives expected their firm's profitability to increase in 2011, only 31 percent expect it to increase in 2012. The full results of The State of Manufacturing® will be revealed at a series of briefings with manufacturers, business leaders, and policymakers throughout Minnesota Feb. 21 -28 in Minneapolis, Rochester, Faribault, Mankato, Redwood Falls, Alexandria, St. Cloud, and Eveleth. Pollster Rob Autry from Alexandria, Va. -based Public Opinion Strategies (POS) conducted phone interviews with 400 manufacturing executives, representing a geographically proportional cross - section of Minnesota, over two weeks in January. The poll has an error rate of +/- 4 percent. The research was complemented by 20 focus groups of manufacturing executives conducted throughout Minnesota. Statewide sponsors for the State of Manufacturing include: Baker Tilly Virchow Krause, LLP; Granite Equity Partners; Gray Plant Mooty; M &I, a part of BMO Financial Group; RJF, a Marsh & McLennan Agency LLC Company; Trusight; and Xcel Energy. "The value of manufacturing to a healthy economy cannot be stated strongly enough," said Enterprise Minnesota President & CEO Bob Kill. "We saw manufacturing lead the way through the economic recovery in 2011 and the 2012 State of Manufacturing® poll results validate that. Through innovation and investment, Minnesota manufacturers are growing, and they are adding high quality jobs." Other results: Health care dominates concerns For the fourth year in a row, health care remains by far the top concern among a list of 11 different factors. Almost seven out of 10 (68 percent) manufacturing executives now say the cost of health care coverage is a concern for their firm. Health care also rises to the top of the list when it comes to important factors for recruitment. Fully 50 percent of executives report that affordable health care is an important factor in attracting workers to their firm, up 11 percentage points from our first survey four years ago. Interestingly, the importance of salary and wage expectations as a recruitment factor has decreased over time: where 43 percent of executives ranked it as important in 2009, only 22 percent of executives feel the same way in this year's survey. Qualified worker shortage Though it ranked fourth on manufacturing executives' collective list of concerns, worry over finding qualified workers has doubled over the past year. Thirty -one percent of executives say this issue is a concern for their firm, up from 14 percent in 2011. Firms of larger size and revenue are most likely to rate this as a concern. Executives' own experiences with recruitment echo their worries on the issue. Nearly six out of 10 (58 percent) executives say it is a challenge to attract qualified labor to their companies. This is a noticeable increase from 2011, when 45 percent reported difficulty in attracting qualified labor. The majority of firms across all sizes and locations appear to share this challenge. However, it is the larger companies in terms of revenue (more than $1 million) and size (more than 50 employees) that say it will affect their bottom line. These larger firms are also more likely to have added to their workforce over the past year. It appears that companies going through the hiring process are the most likely to report difficulty in and concern over recruiting qualified talent. Shipping more internationally The state's manufacturing industry has hit a new high in the percentage of companies who say they ship internationally. Fully 47 percent of manufacturing executives now say their firm ships outside the U.S. Nearly one in five respondents (18 percent) says their firm ships more than 11 percent of its product overseas. Just three years ago, only 10 percent of manufacturers reported doing so. Of those who do export, nearly one - quarter (22 percent) report they are exporting more than they did one year ago. Bob Kill, president of Enterprise Minnesota is available for media interviews. Interviews can be arranged through Lynn Shelton of Enterprise Minnesota at (612)455 -4215. NOTE: Full top -line results and cross tabulations are available at www.stateofmanufacturing.com Public Opinion Strategies is a survey research company specializing in corporate, public policy and litigation research, with offices in Washington, Denver and Los Angeles. Since its founding in 1991, it has completed more than 10,000 research projects and interviewed more than 4 million Americans across the United States. The poll briefing schedule: Minneapolis Tuesday, February 21, 2012 4:00pm - 6:30pm Minneapolis Convention Center 2nd Floor, Rooms 20OA -J 1301 2nd Avenue South Minneapolis, MN 55403 Rochester Wednesday, February 22, 2012 8:30 AM -9:30 AM DoubleTree by Hilton Hotel Rochester -Mayo Clinic Area 150 South Broadway Room TBD Rochester, MN 55904 Faribault Wednesday, February 22, 2012 11:00 AM - 12:00 PM South Central College - Faribault Campus 1225 3rd Street SW Teleconference Room Faribault, MN 55021 Mankato Thursday, February 23, 2012 9:00 AM -10:00 AM South Central College - North Mankato Campus 1920 Lee Blvd. Conference Center North Mankato, MN 56003 Redwood Falls Thursday, February 23, 2012 1:00 PM - 2:00 PM Redwood Area Community Center 901 Cook Street Room 2 Redwood Falls, MN 56283 Alexandria Monday, February 27, 2012 9:00 AM - 10:00 AM Alexandria Technical & Community College 1601 Jefferson Street Rooms 209/211 Alexandria, MN 56308 St. Cloud Monday, February 27, 2012 1:00 PM - 2:00 PM Central MN Small Business Development Center SCSU - Welcome Center 355 5th Avenue South Room 120 St. Cloud, MN 56301 Eveleth Tuesday, February 28, 2012 9:00 AM - 10:00 AM IRRRB 4261 Hwy 53 South Mesabi Conference Room Eveleth, MN 55734 Enterprise Minnesota helps Minnesota manufacturing enterprises grow profitably. Chartered by the Minnesota State Legislature in 1987, Enterprise Minnesota is an affiliate of the Department of Commerce, National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP).