Program helping rural Minnesota manufacturers will likely disappear with its federal funding

Enterprise Minnesota might have to cut its rural manufacturing programs because of federal cuts.

Two weeks ago, the U.S. Department of Commerce told the agency not to start its traditional funds renewal process.

“We have been told not to apply until further notice,” said Enterprise Minnesota Vice President Lynn Shelton. “We are concerned.”

The $3.2 million in federal funds is 45% of the group’s budget and losing it would force Enterprise Minnesota to contract, serving 12 counties instead of 82, said CEO Bob Kill.

Enterprise Minnesota in Minneapolis is a manufacturing extension partnership (MEP) program. There’s one of these in every state plus Puerto Rico.

The Department of Commerce sent a letter April 1 to MEP program heads in 10 states, including those in Iowa, North Dakota and Kansas, saying their grants would not be renewed.

Commerce also sent the letter to Congress, explaining that the department was stopping funding and instead “reprioritizing its programmatic activities to ensure that the U.S. secures its position as a leader in critical and emerging technologies such as artificial intelligence and quantum.”

That decision has angered hundreds of factory owners, machine shops and rural suppliers, prompting a nationwide lobbying campaign, including in Minnesota.

“We’re going to do whatever we have to,” Kill said. “We’re going to fill [congressional members’] inbox with emails and voicemails from manufacturers calling. We’ve moved to that point. It’s urgent. It’s terrible.”

Enterprise Minnesota’s funds help 510 small and rural manufacturers, plus critical suppliers, expand, slash waste and get the industrial certifications required to enter new markets such as aerospace and cyber security.

The money helped the factories grow, according to Enterprise Minnesota. According to Commerce’s own records, Enterprise clients across the state added $696 million in revenue and 6,600 workers over the past five years.

“These small companies are going to be the ones most victimized” by any federal funding cuts, Kill said.

The small companies do not have resources to pay full price for high-tech factory consulting that takes these businesses to the next level, he said.

“It just makes no sense,” said John Norris, the owner of Atscott Manufacturing Co. in Pine City, which has gotten help from Enterprise Minnesota to grow its business tenfold over 30 years.

“This is the biggest punch you can give in the belly of manufacturing in my view,” he said.

The agency helped Norris’ equipment fabricator and metal parts maker relocate from an old creamery building into a new 40,000-square-foot plant. Kill’s staffers laid out the equipment to maximize efficiencies.

Norris said he has reached out to U.S. Rep. Pete Stauber, the Republican who represents northeastern Minnesota. He also sent letters to Democratic Sens. Amy Klobuchar and Tina Smith and Rep. Betty McCollum, the east metro Democrat.

Carrie Hines, CEO of the American Small Manufacturers Association, said Norris is far from alone.

“Among manufacturers, there is shock and concern,” she said. “They did not see this coming, especially right now with such a focus on small manufacturing and bringing manufacturing back [to the U.S] and all the impending tariffs.”

Klobuchar said she sent a letter to Secretary of Commerce Howard Lutnick, urging him to continue supporting the MEPs.

The program “helps manufacturers compete, grow and create good-paying jobs,” she said.

The MEP program connects small and medium companies to 1,200 technical experts nationwide each year, Klobuchar said.

Klobuchar’s letter stressed Enterprise Minnesota’s success stories, including those with Midwest Metal Products in Winona, SNX Precision in Sauk Rapids, Wyoming Machine in Stacy, CardSource in Eagan, Voyager Industries in Brandon, Seacole Specialty Chemical in Plymouth, Enova Illumination in Minneapolis and HED Cycling Products in St. Paul.

Kill said he worries that without MEP funding factory improvements could lag in Greater Minnesota. It can be challenging getting top-notch expertise in far flung regions such as Rosseau, Hibbing or Worthington.

Nationwide, MEP grants, which are typically $3 million to $5 million a year to each state, helped 36,000 small manufacturers generate $4.3 billion in new sales, according to Commerce audits and reports, Norris noted.

Norris, through Atscott and his other company, Tower Solutions in Mendota Heights, has 65 employees combined making steel and copper aerospace parts, assembly systems, glue gun components, cellphone drone towers and more for defense contractors, Honeywell, 3M, Toro, U.S. boarder patrol and scores of other customers. The companies generate roughly $12 million in sales a year.

The companies couldn’t have gotten there without Enterprise Minnesota, Norris said, noting the agency sometimes paid up to half of their $8,000 to $30,000 consulting costs on projects designed to generate millions in new sales.

In 2022, Enterprise helped Atscott earn the hard-to-get AS9100 Quality Management certification required to take on aerospace customers. That led to new business from Honeywell, Collins and General Dynamics and others. Now Enterprise is helping Atscott earn a cybersecurity certification.

The new certifications just helped Norris gain two new customers with $2.5 million in contracts.

Mike Jensen, CEO of Gauthier Industries in Rochester, said without Enterprise Minnesota’s guidance over the years, “I’d be in some trouble.”

Hearing that Commerce could cut its funding “made me numb because working with Enterprise Minnesota and its Business Council was one of the most important decisions for me in my business career of 29 years,” Jensen said.

He has reached out to U.S. Rep. Brad Finstad, whose district covers southeastern Minnesota, to ask for his help.

“This just really bothers me,” Jensen said.

Enterprise Minnesota helped him write the strategic growth five-year plan that led to a 30% increase in Gauthier’s metal-fabrication sales, which are now $15 million.

Enterprise Minnesota, he said, pushed the small firm to expand to more agricultural customers and hire more staff. Today, Jensen has 89 workers newly making enclosures for rooftop generators, tailgates for farm utility vehicles and parts for fertilizer sprayers that use sensors and cameras.

Enterprise also helped Gauthier get a 1% equipment loan from the state of Minnesota so it could buy two new brake presses and a new laser worth $500,000.

“Now, if [Commerce] takes that away? If they start to cripple Enterprise Minnesota’s outreach to the state? It’s going to have a nasty effect on manufacturers,” Jensen said. In rural areas, there’s worry the small ones will close. “This is the big concern.”