BAXTER — With the workforce a key issue, Mark Phillips, the new Department of Employment and Economic Development commissioner, said a focus has to be on sectors with the highest job growth. 

Phillips addressed a group of manufacturers, city staff and elected officials along with economic development professionals during the Brainerd Lakes Area Economic Development Corp. event in Baxter. 

“Our ultimate goal is private job growth,” Phillips said. 

The BLAEDC meeting focused on manufacturing and took place in the former Stock Building Supply facility in Baxter, which now sits empty on the former Potlatch woodyard just off Highway 210. 

Phillips said he was familiar with the area, spending a third of his time in Little Falls and the region when he worked with Minnesota Power in community development for the utility. 

Phillips worked at Iron Range Resources as director of community and business development when Gov. Mark Dayton was DEED commissioner. Phillips worked on the effort to bring in the MacMillan Bloedel plant near Deerwood about 20 years ago. More recently, Phillips was working in the construction industry. 

Phillips spoke to the group about the state’s economic development programs. He said the governor’s job initiative is still in the working stages and the plan was developed after meeting with people across the state.

He said DEED is committed to public/private collaborations. Phillips said the approach for economic development plans is to be sensible and pragmatic looking for programs the business community needs. 

Phillips said the state is also working to set methods to measure how it is doing in economic development. 

“We have to focus on the sectors that are forecast that have the highest job growth,” Phillips said. “We misalign sometimes to send people to training or school or educate our workforce and sometimes not align with where the jobs are going. So we have to be better at that.”

Through listening sessions, Phillips said they’ve heard a need to open up credit markets, especially in rural Minnesota where the recession has landed a hard hit on the rural economy. Businesses that survived have balance sheets that don’t look as good as they did in 2008, Phillips said.

Even for expansion plans, he said banks don’t look at collateral the way they used to.

“We’re hearing this from small businesses,” he said.

The state is working on an access to capital program and authorization was given to establish a trust.

“We want businesses to have a conventional banking relationship,” Phillips said. “We don’t want the state to be their bank. So we are trying to fill a very small gap that sometimes exists to get the bank to extend the credit.”

The program is expected to be launched later this year and DEED has applied for federal money and, if successful, will use part of that for this initiative. Phillips estimates the state has a better than 50-50 chance. Also Phillips said the state needs to work better with the Small Business Administration and the Rural Development to leverage federal programs with economic development.

Improvements were made to the Angel Investment Program, Phillips said and they’d like to see that program extended. 

“The construction industry, which I worked in, has been hit harder than any other industry in Minnesota,” Phillips said. “Construction workers represent 4 or 5 percent of our workforce in Minnesota. They are about 35 to 40 percent of our unemployed people in the state right now.”

Getting construction workers employed again will help everyone, Phillips said. 

The governor appointed a blue ribbon panel to look at startup capital. “We think there is an opportunity for another industry similar to medical devices in biosciences and biofuels that could carry us for another generation or two and not a lot of early stage money is being seen. So work is going into organizing Angel investors. 

“You can’t have enough early stage investors,” Phillips said. Another area of work is in direct foreign investment into Minnesota. As an example, Phillips pointed to Chinese investment in Duluth, Japanese investment in Faribault and Owatonna. People from Malaysia were recently in the state to make investments in the biofuels industry. They have a lot of fiber and are looking to gain technology and are willing to invest in companies here, Phillips said. 

A third area of focus is on exports as a primary job strategy. Minnesota’s unemployment rate is below the national average. He noted a bright spot in the state’s economy has been agriculture and on exports. 

“We set a record in the fourth quarter of 2010 in manufactured exports,” Phillips said. “That’s kind of the best kept secret in Minnesota that we have a lot of really good high tech manufacturing in Minnesota.” 

While high-touch, low-tech manufacturing has struggled, Phillips said high-value added, high knowledge-based manufacturing is thriving if not expanding. 

An economic strategy to build exports and manufacturing in the state is needed, Phillips said. One effort is getting dedicated resources for economic development and offering programs to attract industry. 

But how will that be paid for? Phillips said lottery dollars have been shared with the environment and now with Legacy Act funding for the environment, there is a need to share resources so people who live here can be productive as well. 

DEED is not involved in promoting gambling, Phillips said but he advocated getting more proceeds for economic development from the lottery or potentially from a Racino. 

“We need to be competitive,” Phillips said, noting other states are giving tax incentives for data centers and investment in broad-band technology infrastructure helps other businesses. 

Phillips said in seven to eight years expectations are for 70 percent of jobs to require more than a high school education. It may be training, a two-year or four-year degree. About 40 percent of the workforce has some sort of credentials in that area now. 

“So that’s our gap,” Phillips said, adding the pipeline of students is shrinking and people leaving the workforce expanding as baby boomers retire. “So we don’t believe we can fill that gap with the conventional way we used to do it.”

The challenge is to train the adult workforce, such as the 45-year-old mine worker who is unemployed and now wants to get training in a field with growth potential.  Phillips said a Fast Track initiative is aimed at adult basic education and one-on-one consulting with the jobless, training and career planning. 

“That’s going to be the key to this whole thing and very important to Minnesota’s economy. “If we don’t have that workforce that Minnesota is so famous for, we’ll be in trouble.”

RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.