Issue Brief Finds Mixed Responses On Effects of Global Business in Minnesota

While wider market opportunities have led to increased exporting and lower costs for business operations in some Minnesota companies, others are facing difficult operational challenges as a result of the rapid integration of global business practices, according to a new Issue Brief from the Minnesota Department of Employment and Economic Development (DEED) and Minnesota Technology, Inc.

The two agencies jointly released Gearing Up and Going Global: Experiences of Minnesota Businesses in order to better understand the global business experience in Minnesota and its impact on the state's economy. The survey details global business practices, motivations and the impact on business operations and employment was administered to 252 small, medium and large-sized companies. Findings therein offer a preliminary view of Minnesota business experiences in the global marketplace and are expected to help the legislature, economic developers and education system improve efforts to facilitate business, worker and community adjustments.

The survey explores current and projected global activities and trends on businesses over the years 1998-2003. Two-thirds of the respondents involved were from the manufacturing sector, which has a greater tendency to import and export goods and outsource production to non-U.S. locations. Other sectors surveyed include the service industry, information technology (IT), and non-IT professional services. Some of the key findings include:

• 74 percent of respondents reported no impact on employment trends as a result of global business practices in IT services and non-IT professional, technical and business fields. However, they reported a 37 percent decline in production jobs. Manufacturing businesses indicated a decline for 44 percent of businesses.
• Businesses of all sizes throughout the state reported effects of globalization on operations, although most indicated stable or increased wages in employment.
• 35 percent of respondents indicated that they will offshore goods production by 2008, representing a slight increase over 2003 levels.
• One-third of manufacturing respondents are optimistic about new jobs through 2008, while one-third anticipate decreased job opportunities.
• Health benefits and employment taxes are the most commonly cited compensation costs, among factors having a high impact on outsourcing decisions.

Gearing Up and Going Global: Experiences of Minnesota Businesses is the second of a two-part series studying the global impact on businesses in Minnesota. The first issue brief, Globalization: Pressure Points in a Competitive World, was published in March 2004 and covers background research and findings from a roundtable discussion with businesses and policymakers in Minnesota. Both reports are available from DEED at: http://www.deed.state.mn.us/