WESTERN MONTANA
BUSINESS SPRING 2017
MANUFACTURING’S ROLE IN THE STATE’S
WORKFORCE
TOMMY MARTINO, Missoulian
2 — Missoulian, Sunday, February 26, 2017
WESTERN MONTANA INBUSINESS
Manufacturing in Montana Gains in productivity don’t match gains in employment
to aluminum horse trailer manufacturers like ALCOM Trailers in Bonner. “One thing we do know is manufacturing tends to be very cyclically sensitive,” Polzin said. “The industry responds disproportionately when we DAVID ERICKSON have a recession. One outlook is, if we david.erickson@missoulian.com hit a recession in the next year, economists are not very good at predicting The manufacturing industry in recessions. We didn’t predict 2008 for Montana has experienced a much more all kinds of reasons. One of the real robust growth than the industry overall risks of the manufacturing outlook has in the U.S. since the Great Recession to do with the national business cycle.” that started in late 2008. Polzin said another risk manufacBetween 2009 and 2015, manufacturturers face has to do with the strong ing employment in Montana grew by dollar and the weak performance of 10.9 percent and now employs roughly the world economy. He also said there 23,000 people. In the U.S. overall, is uncertainty about how the Trump manufacturing employment has grown administration could affect the indusby 4.7 percent. try. President Donald Trump has talked Economists at the Bureau of Business about raising tariffs on imported Chiand Economic Research at the Univernese goods, and that could mean that sity of Montana send out surveys every China would respond by raising tariffs year and ask owners of manufacturing KURT WILSON, Missoulian businesses in Montana how they feel The former Stimson Lumber Co. millsite in Bonner was converted to a manufacturing on U.S. goods, which would mean U.S. manufacturers might suddenly about the upcoming year. They ask hub in 2012. find themselves with a less competitwo questions: Whether they expect to tive product. add employees in the upcoming year “Only about 10 percent of the and whether their overall feeling about output of Montana manufacturers is dramatic increase in productivity. The down in manufacturing since Christ the outlook for the year is positive exported, but that does represent a same number of workers can produce was a kid. Manufacturing continues or negative. sizable component,” he said. “One of more work, or fewer workers can proto provide fewer jobs in Montana but For 2017, 38 percent of respondents the risks is that additional tariffs that duce the same amount of work. That’s primarily nationwide. But output has said employment would increase this continued to grow. So why is that true? because of technology improvements in other countries put on the import of year, and 55 percent said the overall U.S. manufactured goods for some type productivity.” Because manufacturing has seen some outlook would be better. They got Polzin said the manufacturing indus- of retaliatory thing, depending on what of the best increases in productivresponses from 172 state businesses. our new administration does. And relatry doesn’t act the same way as other ity around.” The discrepancy results from the tively slow growth in China is affecting Polzin said manufacturers in Montana industries. fact that fewer workers are needed to everybody. Those are two non-quanti“Just because employment is going are far more optimistic about their increase productivity in the manufacdown doesn’t mean that manufacturing tative elements of forecasts.” overall outlook than they are that turing center because of technological In general, Polzin said Montana and is becoming less important,” he said. advances, according to Paul Polzin, the they’re going to increase employment. Missoula have been doing relatively well “It’s been that way for a while in the “What’s happening is we’re having director emeritus at the BBER. Polzin the past couple years. manufacturing industry.” this disconnect between employment has a doctorate in economics and led “The manufacturing industry in the Manufacturing is a diverse industry and overall profitability of manufacturthe study on manufacturing this year. in Montana, and businesses in the Mis- state, and in Missoula, appears to have “One of the things I do is distinguish ing,” he said. “That’s because of the rebounded nicely from the recession,” soula area range from wood products disconnect between employment and between output and employment,” he producers like Roseburg Forest Products he said. explained. “Employment has been going output. And that’s resulting from a
WESTERN MONTANA
BUSINESS Spring 2017, Vol. 5, No. 1
Western Montana InBusiness is a publication of the Missoulian
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P.O. Box 8029, Missoula, MT 59807-8029
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WESTERN MONTANA INBUSINESS
Missoulian, Sunday, February 26, 2017 — 3
Nonprofit: We have $80M to subsidize projects Missoula-based program seeks to help fund additional projects ERIK OLSON eolson@billingsgazette.com
BILLINGS – Dave Glaser was in Billings with a compelling offer: $80 million to help developers finance projects to improve blighted neighborhoods. “We have free money for projects that are eligible in Montana. You should call me,” Glaser, president of the Missoulabased Montana & Idaho Community Development Corporation, told a group of about 30 lenders and business leaders. Glaser was at the First Interstate Bank Operations Center to pitch his nonprofit’s newest round of funding through its New Markets Tax Credits program. In November, the group learned it is receiving $90 million worth of tax credits
from the U.S. Treasury, the largest award for a regional group in the country. With $10 million already committed, Glaser said he’s seeking additional projects to fund. The catch is that the project must meet a strict set of standards to qualify. It must be in an area designated as lowincome or blighted or employ low-income workers. It must be above $4 million and the developers must pass an extensive credit check. “Any lender, any business that works with us, knows this is complicated stuff, but worth it,” Glaser said. The development group has doled out $431 million in New Market Tax Credits for Montana and Idaho projects since 2008. It typically covers 15 to 20 percent of the total development costs. Glaser said the community development corporation can work with developers to qualify for projects in areas that don’t necessarily seem blighted. KURT WILSON, Missoulian “Don’t automatically assume that, the Dave Glaser, President of the nonprofit Montana & Idaho Community Development way a neighborhood looks, that it’s not Corporation. eligible,” he said.
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4 — Missoulian, Sunday, February 26, 2017
WESTERN MONTANA INBUSINESS
Made in Missoula
Manufacturing company builds furniture for places all over the US
TOMMY MARTINO, Missoulian
Chad Espinoza works at Ironwood Manufacturing in Missoula’s Westside neighborhood recently. Ironwood creates custom-built furniture for schools, offices and libraries around the world.
WESTERN MONTANA INBUSINESS
Missoulian, Sunday, February 26, 2017 — 5
DAVID ERICKSON david.erickson@missoulian.com
I
n a massive 69,000 square foot warehouse tucked away on Missoula’s Westside near the railroad tracks on Turner Street, Ironwood Manufacturing in Missoula creates custom-built furniture for schools, offices and libraries all over the world. Because it sells wholesale, most people in Missoula aren’t even aware it exists. The company was founded in 1984 by Edward and Carol Knudson, and now their son Brandon Knudson is at the helm. The company employs about 25 people year-round, but it hires more workers in the summertime months when most orders come in. Ironwood is an example of how important manufacturing is to the Missoula economy, and how sometimes it often is overlooked because the company ships its products out-of-state rather than having a retail store for local customers. “A lot of people don’t know we’re here,” Brandon Knudson acknowledged as he gave a tour of the massive factory floor. “But all that furniture in schools and libraries, it has to be made somewhere. This is where a lot of it comes from.” The company gets much of its raw particle board and metal from Roseburg Forest Products and Pacific Steel in Missoula. Then, inside the warehouse, workers use complicated computerized machinery to do everything from punch holes in drawer tops to powder-coat the metal legs of desks. Knudson can’t even begin to estimate how many pieces of furniture the company pumps out every year, but it’s in the thousands. The low unemployment rate in Missoula that hovers right now at about 3.4 percent makes it hard for all businesses to attract and retain workers, and Knudson needs employees to stick around awhile because it costs the company money to constantly retrain workers on the complex systems and machinery. “It’s not hard for us to find employees, but the tougher thing I think we find is finding younger people with the job skills that we’re looking for,” he said. “The market itself, overall, I think we’ve been able to find employees when we’ve needed them. I don’t think we have an abundance of applications during the season peak periods, but we’ve been able to find workers. The bigger
Above: “A lot of people don’t know we’re here (in Missoula’s Westside neighborhood),” said Ironwood President Brandon Knudson. “But all that furniture in schools and libraries, it has to be made somewhere. This is where a lot of it comes from.” Left: Ironwood Manufacturing employee Andrew Mitzel uses a machine to powder-coat metal legs of a desk. TOMMY MARTINO PHOTOS, Missoulian
thing that comes up is finding them with the job skills that we need.” Knudson said he’s worked with officials at Big Sky High School to develop programs that are more like the classic shop classes that are slowly fading away. “Chris Jacaruso, at Big Sky High
School, I’ve worked with him and the programs he’s running help bring kids into fields that are more hands-on and manufacturing-based,” he said. Knudson said that many schools over the past 20 years have tried to push students toward the technology sector. “They’ve changed a lot of the focus
away from manufacturing,” he said. “I hear a lot of schools don’t have shop programs like they used to. But some work we’re doing in bigger cities, they are putting in career technology programs with STEM and the computer and electronic side of things. That will start bringing people along for manufacturing-type jobs.” The problem, Knudson has found, is that his company requires the skills of both the older generation with their hands-on woodworking, metalwork and shop skills and those of the newer generation with their skill at technology and computers. His company needs workers that bridge both generations. However, the best way to compete in a tight labor market is to ensure that employees like the job they have so they’ll stick around. Knudson said it also helps that Missoula has a reputation as a great place to live. “What we really try to do is create a culture here where the employees are happy,” he said. “That’s the best way to keep workers that we’ve found. And it works for us.”
6 — Missoulian, Sunday, February 26, 2017
WESTERN MONTANA INBUSINESS
A Missoula match Missoula College aims to match grads with jobs DAVID ERICKSON david.erickson@missoulian.com
Montana’s shrinking workforce is one of the main economic issues facing the state, according to many experts and state officials. Montana’s unemployment rate is hovering around 4 percent right now, which is relatively low. But Missoula’s unemployment rate is extremely low, at about 3.4 percent, which has both good and bad side effects. A low unemployment rate means workers who want jobs don’t have a difficult time finding them, and employers must raise wages and O’Brien offer attractive benefits packages to lure and retain workers. However, when the labor market is too small, businesses often have a hard time filling open positions, especially for jobs that require a high degree of knowledge or specific skills. That can hamper businesses’ expansion plans, which in turn can stall economic development. The manufacturing industry is a key cog in Missoula’s economy because a wide variety of businesses in that industry employ thousands of workers. Shannon O’Brien, the dean of Missoula College – University of Montana, is uniquely qualified to speak on both the topics of workforce training for manufacturing jobs and labor demand from manufacturing businesses. As the head of a technical skills college that trains workers to get real-world jobs in the manufacturing industry, she also speaks to many employers in the area to find out exactly what they’re looking for. That way, she can tailor the curriculum at Missoula College so graduates are ready to step in and start earning a paycheck the day they leave school. “Primarily, two sources help direct our priorities for programming at Missoula College,” O’Brien said. “One is direct discussions with employers. And
TOMMY MARTINO, Missoulian
Kristle Ellis works the front desk at Allegiance’s Brooks Street location. The company is a third-party administrator of self-funded health insurance plans, and its clients include all employees of both the city of Missoula and the state of Montana. undoubtedly, we hear from employers in the manufacturing industry that there’s a need. Students get hired sometimes before they graduate.” She said the college hosts job fairs specifically geared toward industrial technologies like welding, precision machining and diesel mechanics. “These are programs that are very popular with employers and they speak very highly of the job fairs,” she said. “There is simply a high need.” The Montana Department of Labor
and Industry and the Office of the Commissioner of Higher Education created a report on labor market outcomes for Missoula College. “What this analysis essentially does is a fabulous job looking at Missoula College programs that we offer and job projection needs with in this region for each industry,” she said. “It analyzes how many we graduate in each industry and how many jobs there are. It’s essentially a gap analysis. It tells us what programs we should consider offering.”
O’Brien said the report showed there are big needs for skilled workers in the manufacturing, carpentry and building industries. Other professions where graduates are likely to get work easily include the health care industry – especially nursing – and tourism, culinary arts and hospitality. “I use that document in many ways as my marching orders,” O’Brien said. “It shows me the likelihood that our students will find a job. It’s helping students match with employers in those very
WESTERN MONTANA INBUSINESS high-demand areas.” O’Brien said the Montana Department of Labor and Industry has won national awards for its level of accuracy in predicting labor market demand. “They are within 99 percent accuracy in these projections of workforce need,” she said. “So we are just making sure we are offering the right courses and making sure students have the right tools from our limited resources.” Montana is forecasted to add 7,000 jobs per year over at least the next five years, she added. “The problem with that is we will have people who are poorly trained in jobs,” O’Brien said. “When you’re looking at health care positions or highly-skilled positions in precision machining, those are high-risk issues to be dealing with when you have poorly-trained workers. So we have our work cut out for us for sure.” When the unemployment rate is at 4 percent or below, there are fewer people considering going back to school. “Prospective students aren’t going to be coming to us in the traditional way,” she said. “They aren’t going to be filling
TOMMY MARTINO, Missoulian
Missoula College students can take a 21-credit course to become a medical claims service specialist that includes paid on-the-job training in the Allegiance call center. Allegiance Benefit Plan Management currently has around 300 employees in four different locations around Missoula. out college applications. They are going to get a job. So we have innovative ways of delivering the education that’s needed,
the training that’s needed.” Missoula College has been ramping up its apprenticeship programs, meaning
Missoulian, Sunday, February 26, 2017 — 7
students can get work at local employers like Allegiance Benefit Plan Management while they take courses that directly pertain to the work they’ll be doing. “We have eight different apprenticeships that are either in place or in formation,” O’Brien said. “Students earn college credit while they are working using the apprenticeship model. Students can get industry-recognized credentials and certificates and become apprentices and gain the knowledge and skills they need and get college credit. It’s work-based learning. It’s really exciting, and kind of a no-brainer for us.” O’Brien said it’s much better than the traditional internship model, because students are actually getting paid and have a chance to move up at the company once they complete their college coursework. In many cases, the employer actually pays the apprentice to study 10 hours a week. “It’s an investment on the employers’ part, because that schoolwork is time away from work,” O’Brien explained. “But employers are finding it’s worth their while because it’s solving their problem. It’s a win-win.”
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