Program helping rural Minnesota manufacturers will likely disappear with federal funding

Enterprise Minnesota might have to stop 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 about 82, said CEO Bob Kill.

Enterprise Minnesota in Minneapolis is a manufacturing extension partnership (MEP) program, and the only one in the state. There‘s one MEP in every state plus Puerto Rico.

The Department of Commerce sent a letter on 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.” A follow-up decision from Commerce said it will terminate funding starting Sept. 30, the end of the fiscal year.

“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 and critical suppliers expand, slash waste, and get the industrial certifications required to enter new markets such as aerospace and cybersecurity.

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 federal funding cuts, Kill said.

The small companies don’t have resources to pay full price for high-tech factory consulting that can take their business to the next level, he said.

“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 move from an old creamery building into a new 66,500-square-foot plant. Kill’s staffers placed 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 Coalition, 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.”

The program “helps manufacturers compete, grow and create good-paying jobs,” and connects small and medium companies to 1,200 technical experts nationwide each year, she said.

Klobuchar‘s letter also emphasized Enterprise Minnesota’s success stories, noting companies such as 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 specialized expertise in places such as Roseau, Hibbing or Worthington.

Nationwide, MEP grants, 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.

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

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 Aerospace, General Dynamics and others. Now Enterprise is helping Atscott earn a cybersecurity certification.

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

Mike Jensen, CEO of Gauthier Industries in Rochester, said that 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, a Rpublican whose district covers southeastern Minnesota, to seek help.

Enterprise Minnesota helped him write the five-year plan that led to a 30% increase in Gauthier‘s metal fabrication sales, 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, 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 an equipment-loan at 1% interest from the state of Minnesota so it could buy two new brake presses and a 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.