Central Montana's vibrant manufacturing center reaches global markets.
One Lewistown business, Century Companies Inc., has about 175 employees and does everything from paving streets to building subdivisions and airports throughout the rural West and "hangs its hat" on manufacturing a raw material into a finished product, according to Century's CEO Tim Robertson. The company produces much of its own material --around 50 tons to 400 tons of hot-mix asphalt per hour out of each of its eight plants. With its fleet of "rolling stock," which encompasses more than 400 pieces of large construction equipment, the company paves airport hangers, runways, access roadways, and highways.
Just down the road is Spika Welding and Manufacturing, a company that specializes in designing and manufacturing industrial work platforms and ground support equipment for people working on military aircraft, tactical vehicles, and satellites. Tom Spika started his business as a two-person shop and has grown it into a multi-million-dollar company employing about 50 people. Last year, Spika Welding was named "Manufacturing Exporter of the Year." Spika exports his products globally to markets in Sweden, Australia, Japan, Saudi Arabia, and Israel. He also is the chairman of the Montana Manufacturing Council, a subsidiary of the Montana Chamber of Commerce.
Not far from Spika Welding and Century Companies is Allied Steel, which manufactures structural steel for malls, schools, hospitals, sports arenas, power plants, and other buildings all over the U.S. Allied Steel employs 190 people, 90 in its Lewistown shop and 100 in different locations in-state and out-of-state. Most of the manufacturing is done in Lewistown--the employees located elsewhere help with skilled detailing and overflow projects, according to Jeff Southworth, Allied Steel's president. Right now, the company has 20 active jobs, which involve 11,343 tons of structural steel and a total of 193,640 shop hours. This year, the company's president says he expects around 1,000 semi-trucks to carry full loads of product to different jobs.
Also nearby are HCR Inc. and Hi-Heat Industries Inc. HCR produces a re-circulatory air curtain door system that major food distribution centers such as Costco and Walmart use to keep products efficiently refrigerated. Hi-Heat engineers specialized heating elements to keep equipment such as ATMs warm in sub-zero weather. Spika got his start at HCR, where he worked for 10 years during the '90s.
These are just a few of the companies that are part of Fergus County's high-tech manufacturing center. From time to time, Spika's president ponders how Lewistown--"in very rural Montana where beef cattle and winter wheat are big"--could become such a business center. The town used to revolve only around agriculture, with relatively low-paying jobs.
In the late-'70s, key people --like Jack Morgenstern who started Century Companies and is a mainstay in the community--began to move to Lewistown to start companies. They were drawn in by the lifestyle--hunting, fishing, the outdoors, motorsports, and snowmobiling, said Spika. In the 1990s, several other "talented and expert business people" landed here and started what would become very successful companies, he said. "They had a bit of the entrepreneurial personality and were willing to take a little bit of a risk to get something up and going." Of course Spika and the founder of Allied Steel, Jim Southworth (Jeffs father), had grown up in Lewistown and built businesses that allowed them to stay in their hometown.
Healthy Businesses in the Heart of the State
This unique group of businesses in Lewistown that has worldwide markets and distribution is something that community leaders are committed to keeping healthy, according to Century's Roberston. Thirteen years ago, the Central Montana Manufacturing Alliance was formed with a mission of "sharing ideas, capabilities, and opportunities that lead to further development of member business and the economy of Central Montana." Dale Detrick, a field engineer for the Montana Manufacturing Extension Center, brought the group together, and they've been meeting for breakfast once a month for the past 13 years.
"There's a synergy between our companies," according to Spika's CEO. "None of us are really competitive with each other, but we have very similar challenges in running our businesses."
Collaboration and Community
As the members of Central Montana Manufacturing Alliance learned about some of their neighbors' companies, they began to figure out ways to collaborate. For example, there are some products that Spika Welding needs to powder-coat, but the company doesn't own the equipment, which would cost around $120,000 and require a suitable building for the process. HCR Inc, which manufactures the re-circulatory air doors for refrigeration warehouses, is only a mile and a half away from Spika Welding and leases its powder-coating facility to them. "It saves us a big investment and generates a new revenue stream for them," said Spika.
"It's that kind of collaboration that really pays the dividends."
Another way the companies collaborate is by sharing employees. In manufacturing, it's hard to keep an even pace all year because job orders come in at different times, said Spika. Sometimes companies are really busy and need a few extra workers, and they can "lease" them from member companies. This helps companies through tight spots and provides workers with new learning experiences. On the other hand, if times are slow, workers can do temporary work for another member company instead of being laid off. "It's a win-win for everybody," he said.
Having a peer group to discuss challenges and issues with is important, too. The manufacturing alliance came about because of the "desire to help one another, stay relevant with trends in the manufacturing industry, and solve problems the best way possible," said Century's Robertson. "We are committed to maintaining a healthy economy here in Central Montana so that our businesses are in a healthy place."
Partnering with Higher Education to Strengthen the Workforce
One of the challenges that Lewistown manufacturers often discuss is workforce shortages. A few of the companies are planning expansions in the next few years but anticipate a critical shortage of trained workers in the area with skills in welding, machining, electronics, and diesel technology. While the group has been able to attract students from the nearby two-year colleges (Great Falls and Havre), it is difficult to compete with the high demand across Montana and North Dakota for these students, Robertson said.
A $25 million grant from the Montana Department of Labor and Industry may help Lewistown address some of the workforce issues. The Strengthening Workforce Alignment in Montana's Manufacturing and Energy Industries (SWAMMEI) grant aims to create training programs accessible from anywhere in the state that link workers with high-wage jobs and enhance the states manufacturing and energy workforce, according to Matt Springer, director of the SWAMMEI program (now rebranded as RevUp Montana). Thirteen colleges throughout the state are participating. Through RevUp, students will be able to take "stacked credentials" to decrease their time in training and increase their financial return on educational investment.
Last fall, Springer and higher education leaders from the Montana University System met with the Lewistown manufacturers to discuss ways that they might collectively solve labor problems. One of the ideas discussed was developing some welding, manufacturing, and construction skills programming in Lewistown to attract students graduating from the local high school or for employees who need the training to go up to the next level, said Spika.
After the meeting, Springer and the team worked on figuring out a way to meet the Lewistown manufacturers' needs. Earlier this summer, an introductory manufacturing course began in Lewistown, and Springer hopes to have three comprehensive training programs available in the next few months--an industry safety program, a welding component, and an introductory electrical course. These programs also will provide industry-recognized credentials, which are critical in the manufacturing and energy industries, he said.
"Lewistown is a cool case study of what we'll be able to do if we're successful with the project overall," said Springer. "The manufacturers have done such a great job coordinating with each other and articulating their needs. They are great minds and are really entrepreneurial and willing to partner. It's a great collaboration between a group of manufacturers, the higher education community, and the Department of Labor."
Montana: A Manufacturing Powerhouse
These days, it's not altogether uncommon to see business executives from Tokyo or Tel Aviv in the local coffee shop, said Spika. "When they come to our little town of 6,500 people that's two hours from the nearest commercial airport and two hours from the nearest Walmart, they say, 'Geez this is remote."' But that's the appeal for many Lewistown residents, he said.
And according to Robertson, Montana has the potential to be a "manufacturing powerhouse in the Northwest. And if we recognize and embrace it fully, there is an opportunity to see Montana thrive."
Montana Manufacturing Outlook: Strong and Positive
The Montana manufacturing sector continued its post-recession comeback in 2014, and machinery and equipment manufacturers are most optimistic. Last year, manufacturing employment in the state increased for the fourth consecutive year and reached approximately 23,500 jobs. These gains came after manufacturing employment fell to less than 20,000 during 2010, the lowest level seen in decades.
Total earnings of the state's manufacturing workers also continued to increase during 2014 and were estimated to be around $1.15 billion. There continues to be a premium for skilled manufacturing jobs in the state. The average manufacturing worker in Montana earned $49,000 in 2014, compared to the statewide average of $40,000 across all sectors.
Some Manufacturers are More Optimistic than Others, Survey Finds
Results of the Bureau's annual survey of Montana manufacturers reflected the optimism growing from several consecutive years of improving indicators for the sector. The 2015 outlook found that 92 percent of all manufacturing firms expected as good or better conditions during 2015 compared to 2014. However, the degree of enthusiasm varied from one subsector to another. Machinery and equipment manufacturers were the most optimistic subsector, with more than 60 percent expecting better conditions, followed by chemicals, petroleum, and refining firms (Figure 1). As an aside, the survey was conducted just prior to the extreme price declines in oil and gas during late 2014 and early 2015. This shows that expectations are not always realized, especially in the context of unforeseen market volatility.
While their expectations have been improving for the last few years, wood products firms remained the least optimistic of the subsectors in their outlook for 2015. Just over 40 percent of wood products manufacturers expected better conditions in 2015. However, this compares to just 11 percent that expected better conditions in 2012, 32 percent for 2013, and 37 percent for 2014. U.S. housing starts got off to a slow start in 2015, and Montana lumber production in the first quarter was down about 7 percent from the fourth quarter of 2014. Improvements are expected as the summer building season progresses.
The employment outlook for 2015 also continued on a positive trend, with 33 percent of all respondents expecting to increase employment during the year. Machinery and equipment manufacturers were the most optimistic subsector regarding hiring, followed by food and beverage manufacturers (Figure 2).
For more information on the Bureau's annual survey of Montana manufacturers, download the full report online at http://bber.umt.edu/Manufacturing/Survey.asp.
Shannon Furniss is the communications director at the Bureau of Business and Economic Research, University of Montana. Colin B. Sorenson is a BBER research economist; Steven W Hayes is a BBER research forester; and Todd A. Morgan is BBER's associate director.
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|Comment:||Central Montana's vibrant manufacturing center reaches global markets.|
|Author:||Furniss, Shannon; Sorenson, Colin B.; Hayes, Steven W.; Morgan, Todd A.|
|Publication:||Montana Business Quarterly|
|Date:||Jun 22, 2015|
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