Economy

Robust Business Climate

The Metro MSP region supports one of the most diverse, robust economies in the U.S. The region’s healthy collection of companies and economic resilience earned it the title of “best metro center for business” in both 2007 and 2008 by MarketWatch.

Nineteen Fortune 500 companies are headquartered here. Another 15 S&P 500 firms call the Twin Cities home. Seven corporations consistently make Fortune’s “Global 500” list: UnitedHealth Group, Target, Best Buy, Supervalu, Travelers, 3M and US Bancorp.

The region also boasts the fourth highest concentration of small businesses in the county, according to MarketWatch. That’s no surprise, given its top-ten ranking as a place to grow a small business by American City Business Journals.

Metro MSP is second in the county for business expansions, according to Expansion Management – based on the region’s robust business climate and attractiveness to growing companies. Site Selection reinforced this recognition, calling the Twin Cities’ business climate one of the top five in the country in 2007. The Corporation for Enterprise Development followed suit, giving the region straight A’s in development capacity and business vitality.

Five factors give Metro MSP companies a competitive edge: a highly educated workforce; ready access to technology; excellent transportation services; low-cost energy; and available capital.

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Resilient Economy

The Metro MSP region tends to weather economic storms better than most regions of the county. Its economic stability is supported by a range of positive stats:

• Unemployment is historically low. It was 4.5% in January 2008 – nearly a full point below the national average of 5.4%.

• The region is first in home ownership among the nation’s 25 largest MSAs, with 72% of residents owning their own homes. (Cities Ranked and Rated, 2007). 

• Median family income was $66,809 in 2006, compared to $58,526 in the U.S. That puts the Twin Cities ninth among the nation’s 25 largest MSAs. Good-paying jobs and high labor force participation help explain the healthy income levels. (U.S. Census Bureau, American Community Survey, 2006) 

• The Twin Cities MSA still has one of the shortest commute times (24 minutes) among the 25 largest metro areas. (U.S. Census Bureau, American Community Survey, 2006)

• The region is 10th most affordable metro area among the 25 largest MSAs, based on home prices. 56% of its homes are considered “affordable” to a median-income family. (NAHB-Wells Fargo, Housing Opportunity Index, 3rd Q 2006).

• The median price of Twin Cities homes sold in 2007 was $225,000, a modest 2.2% drop from 2006 during the national housing downturn. (Minneapolis Area Association of Realtors, 2007)

For more stats on the Metro MSP economy, go to the Data Center.

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Leader in the New Economy

As the U.S. economy shifts its economic development model from smokestack chasing to high-value job creation, Minnesota is taking a leadership role. The state ranks first in the Midwest and 11th in the nation on the Kauffman Foundation’s 2007 New Economy Index. That’s up from 14th place just five years earlier. The top rankings recognize Minnesota’s strength as a “knowledge-based, globalized, entrepreneurial, information technology-driven and innovation-based economy.” These traits enable Minnesota-based companies “to effectively compete regionally as well as globally.”  Minnesota ranks particularly high in several New Economy indicators:

• Package exports (1st)

• Online population (4th)

• Inventor patents (5th)

• IT professionals (7th)

• Managerial, professional and technical jobs (7th)

• Industry investment in R&D (8th)

• Manufacturing value-added (9th)

• Workforce education (10th)

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Major Technology Investments

When it comes to investing in – and protecting – new technology for global markets, Minnesota is one of the most innovative states in the country. It ranks third in number of international patent applications – a telling indicator of its investment in new technology. Richard Florida, author of The Rise of the Creative Class best-seller, ranks Minneapolis/Saint Paul 11th on his national “Innovation Index,” which measures patented innovations per capita.

For current examples of extraordinary innovation among Minnesota companies, read Minnesota Technology's "The Year in Tech."

University of Minnesota is one of the primary feeders of innovation. As one of the top-ranked research and teaching institutions in America, it spent $595 million on science and engineering R&D in 2006. In fact, it ranks 10th nationally in R&D investments among public universities, according to a 2006 report by the University of Florida. U of M also excels globally in the area of biotechnology transfer and commercialization. A 2006 study by the Milken Institute placed the University in the world’s top echelon in several categories:

• Licensing income (3rd)

• Technology transfer and commercialization (6th)

• Licenses executed (7th)

• License income per patent (8th)

• Number of start-ups (10th)

The University has more than 250 centers, institutes and interdisciplinary graduate programs. Its Institute of Technology, for example, encompasses 12 departments and 24 research centers. Its programs rank among the best in the nation, “ensuring that Minnesota will be in the vanguard of emerging technologies and groundbreaking scientific research.”

The Twin Cities campus enrolled nearly 51,000 students in 2007. It has a long tradition of partnering with businesses throughout the state, providing research, technical assistance, start-up support, and other resources to help businesses compete globally. 

Minnesota companies also benefit from the intellectual capital of the Minnesota State Colleges and Universities system.  MnSCU’s 32 universities, community colleges and technical colleges educate 62% of the state’s undergraduates – more than U of M and the state’s private colleges combined. The system provides customized training to more than 140,000 employees annually and serves more than 6,300 employers each year. Through its four Centers of Excellence, MnSCU colleges collaborate with businesses to create a more competitive workforce. The Centers focus on health science, manufacturing, engineering, and information technology and security.

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Life Science Leadership

The Metro MSP region has a large and growing medical device industry built around Medtronic, Boston Scientific, and St. Jude Medical. Leveraging this concentration of businesses and the state’s legacy of healthcare excellence, the region has launched several initiatives designed to stimulate the growth of the bioscience sector. 

• The Minneapolis LifeSciences Corridor is the largest, entirely urban medical corridor in the nation. Stretching 1.5 miles along Chicago Avenue between downtown Minneapolis and uptown, it encompasses three large hospitals, 16 health and medical institutions, and 61 research and clinical labs. Members of this brainpower concentration are collaborating “to advance health, improve research and technology, increase educational and economic development opportunities, and develop strong community-business partnerships.”  Financial incentives are available to companies which locate in the Corridor.   

• Another bioscience corridor straddles the borders of Saint Paul and Minneapolis. It focuses on bioscience applications in agricultural, industrial and drug/device combinations and draws upon the unique assets of the University of Minnesota and Mayo Clinic. University Enterprise Laboratories is located on the Saint Paul side of corridor. This collaborative research center promotes advances in biology and biotechnology by providing incubator space for start-up bioscience companies.   

• A third Biotech Center is planned in the southwest metro area along Highway 212.

“This region has developed into a laboratory for innovation due in part to the symbiotic relationship among area business leaders, the venture capital community and academic centers of excellence,” according to William Hawkins, president and CEO of Medtronic. (NWA WorldTraveler, November 2007)  

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Fast-Growing Exports

Minnesota’s stature as an export state is climbing at a fast clip. It exported more than $24 billion in goods and services in 2006 to almost 200 countries.

• Exported services topped $7 billion.

• Agricultural bulk commodities and intermediate goods hit $1.9 billion.

• Manufactured exports soared to $15.2 billion, growing by more than 10% that year. They accounted for 1.6% of total U.S. manufactured exports, boosting the state to 19th largest manufacturing exporter in the nation.

One reason for Minnesota’s strong growth in manufacturing exports is China. It became Minnesota’s second-largest manufacturing market in 2006, displacing Ireland, which dropped to third. Three other countries gained more than $100 million that year: Canada (consistently Minnesota’s largest market), the Netherlands and Thailand.

Minnesota companies sold most of their manufactured products to three regional export markets in 2006.

• The European Union represented 31.5% of all Minnesota exports.

• Asia accounted for just over 30%.

• North America (Canada and Mexico) represented just over 27%.

Transportation equipment, the fourth-largest manufactured export industry, led the state’s 2006 export gains with an increase of $400 million (almost 29%). Computer and electronics exports gained $282 million (almost 7%).

Minnesota’s über-efficient transportation network accommodates companies that serve global markets. About half of the state’s manufacturing exports was transported by plane in 2006*. Land was the second most common mode of transportation, with 28% of exports sent by road or rail. Another 20% was sent in ships from one of Minnesota’s five port areas.

*Minneapolis-Saint Paul International Airport ranks among North America’s top ten airports in Air Cargo World’s 2007 Air Cargo Excellence Survey.

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