From marketers to manufacturers, AI is helping small firms in Minnesota fill workforce gaps and grow

After years of just breaking even, the owner of Backdraft Manufacturing and Automation thinks he’s found the secret to shift the Luverne, Minn., company to profitability: AI.

This summer, owner Tyler LeBrun toyed with Microsoft Co-pilot AI and another AI application while trying to figure out how to help a gun-parts manufacturer with a solution to lower noise levels.

The AI tools analyzed 30 million data sets of gunshot recordings in about two hours, LeBrun said. Normally, that would have taken weeks of his employees’ work time.

Technology like AI and advanced automation are coming at a critical time for small manufacturers, which are struggling mightily with President Donald Trump’s changing tariff strategies, inflation and labor shortages. Smaller marketers and service providers also are growing more quickly because of AI tools.

The discovery proved a game changer for the already highly automated seven-year-old Backdraft in the southwest corner of the state.

That one Co-pilot project for the gun manufacturer saved $6,000 in payroll costs, led to the design of a product for the customer and resulted in $20,000 in new contracts, LeBrun said.

LeBrun now expects his company, with $3 million in annual sales, to post a solid profit this year as he applies the AI tools to more customers and projects.

“AI just helped us get to the market quicker,” he said. “And there are different opportunities that will snowball from this. We’re going to keep using it.”

The Manufacturers Alliance Foundation recently reported that 93% of U.S. manufacturers have started using AI tools inside their plants to help solve everything from labor shortages to production bottlenecks. This year, factories are expected to spend $7 billion on AI, a number anticipated to grow by 40% by the end of the decade.

In Minnesota, companies are using AI to detect wasteful practices and improve factory and supply chain efficiency.

One big thing factories are doing is using AI to extract data from factory machines to develop other AI processes that automate tasks and find efficiencies to save money, said Brenda Hawley, spokeswoman for the Minnesota Precision Manufacturing Association.

Once installed, AI can help factories increase profits and revenue by 10% to 20% and cash flow by 50%, said Vivek Saxena, CEO of FactoryTwin in Hopkins, which was founded in 2017 with help from a National Science Foundation grant. Today, it helps small manufacturers imbed AI tools and automate plants.

“It’s cutting-edge technology,” especially for small firms that don’t have large software and engineering staffs like Boeing Airline or Caterpillar, Saxena said. Demand has grown so much the company now has a three-month backlog.

Artificial intelligence — be it the software coding that automates factory robotics or high-speed data analysis — can be built for factories of all sizes, Saxena said.

Sometimes the AI tools help win new business, like Backdraft did.

Sometimes, they help a company expand without a raft of new hires that can be hard to find. That was the case with Delkor Systems, which has struggled for years to hire enough robotic engineers and programmers at its massive shop in Arden Hills.

Two years ago, the maker of packaging machines and equipment was so desperate for workers, it posted a huge billboard on Interstate 694 begging Minnesotans to apply for jobs paying $100,000. The billboard was only marginally successful.

The company, by necessity, turned to AI software to help write tons of code for its automated packing machines.

Last Monday, Delkor engineers ran a full day of tests on new AI systems embedded in the $1.5 million packaging robot they just built for a major candy maker. The AI software records, analyzes and uploads to the cloud every inch of machine data in real time.

The new technology recently won Delkor several industry awards and a few new contracts. Officials expect more to come as they work the AI tools into more of the $100 million worth of packaging robots they make and ship annually.

“For us, AI is a terribly important investment and allows us to be cutting edge,” said Delkor CEO Dale Andersen. Delkor’s tools are among “the most advanced human machine interface technology on the market.”

The tools help customers forecast mechanical problems and conduct timely maintenance on previously unseen issues, said Rick Gessler, vice president of engineering for the company. In turn, customers can then prevent shutdowns that can cost them millions of dollars.

Beyond the AI in products, Kevin Weiss, Delkor’s operations head, uses AI in his office to help write legal contracts, draft marketing exhibits and generate post-meeting task lists.

AI is also helping Delkor with language translations of instructional videos, technical manuals and marketing materials in Mexico, South America, Germany, Quebec and Turkey.

“With this new AI translation technology we’re greatly expanding our use of marketing materials into several languages with great results,” Andersen said.

Several of Minnesota’s bigger companies also have introduced AI tools for both internal operations and for interactions with customers.

Eden Prairie-based logistics giant C.H. Robinson has boosted productivity by 35% with AI tools. More than 30 “AI agents” run a host of tasks in the ordering process. For example, one reads 10,000 emailed orders a day and extracts necessary information to process them. Another quotes prices.

C.H. Robinson’s AI relies on data from its 37 million annual shipments and operates day and night with no need for extra staff.

“This is the future of premium logistics service,” said Jordan Kass, president of managed solutions for the company.

The Minneapolis-based check printer and small-business services firm Deluxe Corp. uses AI to help small-business clients find their next customer. It uses the technology internally to reconcile mismatched bill-payment information among millions of monthly bills.

As Deluxe continues to move from a check-printing company to a fintech firm, it processes electronic payments and generates a huge cache of data that can be mined by AI systems for marketing insights and to help small -business clients grow.

It also uses the technology internally to reconcile mismatched bill payment information. For Deluxe CEO Barry McCarthy, the last use alone has delivered “a fantastic cost improvement.”

In Edina, Camp Digital just added 30 of its 83 workers this year after new AI tools from Google Lens boosted client growth for the digital marketing agency.

Evolving AI tools now let homeowners upload pictures of their broken pipes or water heaters to Google Lens, which in turn can highlight solutions or video instructions by Camp Digital plumbing and heating firm clients.

Clients like this AI technology because it gives them greater visibility, said Camp Digital CEO Katie Donovan.

Back in Luverne, LeBrun is now looking for other ways AI can help the 11-employee Backdraft Manufacturing, whose customers run the gamut of industries and include Bobcat and Toro and medical device makers.

He’s hoping to hone the data analytics process he discovered with the gun manufacturer client so he can duplicate it for other customers, saving resources, time and perhaps the need to hire new statisticians.

“That is just something that we wouldn’t have been able to do [before],” LeBrun said. “We wouldn’t have the capital” to fund the labor hours.