Industry Watch

Robert Musgrove (with scissors) at the incubator’s ribbon-cutting ceremony, with state leaders looking on

Incubator beckons manufacturing startups to Pine City, Minnesota

Connected to rural technical college, Pine Innovation Center offers ventures unusual levels (and kinds) of business support

By Caitlin Hill

Launching a startup is difficult in any industry, but it’s particularly challenging in manufacturing, where equipment costs alone can spook entrepreneurs. But what if from day one a manufacturing venture had ready access to workspace facilities, conference rooms, mentors, and business consultants?
That’s the idea behind the Pine Innovation Center, a new business incubator for manufacturing startups willing to be based in Pine City, Minn., almost halfway between the Twin Cities and Duluth. Not only will fledgling businesses get the support and resources they need, but they’ll also, it’s hoped, become stable enough to provide high-wage manufacturing jobs for the local economy.
Opened in April at Pine Technical & Community College, the center features 7,800 square feet of industrial space that will house and support one or multiple new ventures in high-tech and light manufacturing. At the same time, the incubator will provide students with access to internships and practical experience in the industry. 
Robert Musgrove, the college’s president, started looking into the concept about 10 years ago. The original idea was proposed to Minnesota State Colleges and Universities for bonding opportunities, but it sat on the back burner until about four years ago, when they had the chance to apply for federal economic administration grant money that would cover 60 percent of the cost to build the incubator. About two years ago, PTC was awarded federal funds to complete the project and broke ground on the facility in May 2013. The center is now evaluating potential tenants.     
But why build a manufacturing incubator in a small rural city like Pine City? The center was conceived as a way to help alleviate the poor economics in the community — and surrounding areas — through developing businesses. “It all had to do with regional economics,” Musgrove says. “This part of the state is average in income and has a higher unemployment rate than most of the rest of the state, with a few exceptions. And it’s always been part of the college’s mission to help grow the local economy.” 
The ultimate goal of the Pine Innovation Center is to help create high-wage jobs by stimulating the location and growth of young manufacturing companies. Musgrove says the preliminary benchmark for job creation is 20 high-wage jobs per year through companies using the incubator. 
But the center doesn’t just provide the workspace and equipment for new manufacturing companies. It also offers them a network of support services. “When you look at statistics, more than 50 percent of startups fail in the first three to five years,” Musgrove says. “But if they are incubated, more than 80 percent of them survive, and 87 percent of those stay in the community they were incubated in.” 
Startups at the center will have access to a network of advisory committee members providing pro bono services in law, marketing, manufacturing techniques, and business planning. “What’s different [from other incubators] is that we are located on a college campus where we have manufacturing faculty in areas like precision metal, plastics, and automation,” Musgrove explains. “They can help the incubator companies solve production or design or material problems in the actual core business of what they’re making.” 
The center takes it one step further by also providing the startups with access to faculty expertise in areas such as accounting, computer science, and networking. “It’s a richer set of consulting services than you will find other places,” Musgrove says. 
Startups won’t be able to stay in the incubator indefinitely. The goal is to get the new companies up and running successfully in three to four years. Whether they’re ready to move out will be determined partly by their balance sheets. Unprepared companies won’t be kicked out, but “after four years there’s no reason why they shouldn’t be ready if they are following the program,” Musgrove says.
Harry Moser, a manufacturing expert and president and founder of the Reshoring Initiative, an industry-led effort to bring manufacturing jobs back to the U.S., believes the new incubator will be helpful, especially with a strong apprenticeship program. “I believe that strong apprenticeships and similar types of programs have greater payback because they provide the skilled professionals to staff, start, and run the incubator companies — and also to staff and run existing small and large manufacturing companies.” Without a skilled workforce, he notes, new products developed in incubators are likely to wind up being produced offshore, thus taking the high-paying jobs away.
If it succeeds, the center could make a significant impact on the local and even regional economy, while also introducing fresh ideas and talent. Says Moser: “We need to have new manufacturing companies starting to replace those that fall, and to bring new ideas and technology to bear.”