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Making it: Manufacturers confident about future of industry

Darin Sinjem preps a pressure vessel Thursday, June 15, 2017, for internal coatings at Steffes, a North Dakota manufacturer of oilfield products that also does contract work for agricultural companies. photo by Eric Hylden/Grand Forks Herald1 / 3
Dickinson, N.D.-based Steffes has been in North Dakota for 45 years and in Grand Forks for five years. It manufactures a variety of products for the oilfield and agriculture industries. photo by Eric Hylden/Grand Forks Herald2 / 3
Zach Aaker uses a grinder Thursday, June 15, 2017, to prep a pressure vessel for welding at Steffes in Grand Forks.photo by Eric Hylden/Grand Forks Herald3 / 3

Manufacturing is on an upward trend both in North Dakota and Minnesota, and regional companies say they are confident the sector has a bright future.

There were 319,000 manufacturing jobs in Minnesota as of Thursday, according to the Minnesota Department of Employment and Economic Development (DEED). A 2014 study from the department projected jobs would drop from 312,000 jobs in 2014 to 297,500 jobs in 2024, but for now, it appears Minnesota has been adding jobs in the sector.

"We actually have not seen a downturn since 2014," DEED spokesman Monte Hanson said, adding Minnesota's rate of adding jobs year over year is 0.9 percent versus the national average of 0.5 percent. "We are almost double the national rate."

North Dakota had 24,100 manufacturing jobs as of May, according to Job Service North Dakota. Though that was a slight drop from last year at that time—24,500 jobs—Job Service expects the industry to grow slightly through 2024—the annual rate should be 0.6 percent.

On top of that, manufacturers, at least in Minnesota, are confident about the future of the industry. A DEED study released in January stated 90 percent of the respondents expect production levels will increase or stay the same this year. That's compared with 86 percent for 2016.

"For the most part, the outlook is bright," Paul Eidenschink, chief operations officer for North Dakota manufacturer Steffes, said of the manufacturing industry. "I think there are lots of opportunities."

By the numbers

About one in nine workers in Minnesota are employed in manufacturing, according to DEED. The industry produced 16 percent of the state's gross domestic product in 2015, making it the second largest industry in the state, the economic department said.

On the west side of the Red River, manufacturing makes up about 5.8 percent of North Dakota's GDP, said Andy Peterson, president and CEO of the Greater North Dakota Chamber.

"It is something that North Dakota should put more emphasis into," he said, adding there is room to grow.

Manufacturing isn't as widespread as North Dakota's top industries—the energy sector, agriculture and tourism. Peterson said the state has the opportunity to change that.

Still, it's an industry that can complement the state's top sectors.

While there are manufacturing jobs across the state, the majority seem to be concentrated in the Red River Valley, with Cass County being the only one that beats out Grand Forks County for the number of jobs—Cass County had about four times the manufacturing jobs of Grand Forks County in the fourth quarter of 2016, according to Job Service.

In Grand Forks County, which on average had 2,352 manufacturing jobs last year, companies like Steffes have expanded in recent years. The company is a staple in Dickinson, N.D., where it was founded about 45 years ago.

Steffes has manufactured snowmobile skis, hopper bottom storage bins and furniture frames in the past, but as the oil boom got underway it began building products for the energy sector. In the last five years, it decided to buy two facilities in Grand Forks, where it now produces a variety of products, including oilfield skids that separate gas from oil, pressure vessels, flare equipment and agricultural products through manufacturing contracts.

Eidenschink said Steffes tends to adjust what it manufactures depending on demand. For example, in 2014, it sold its oil tank facility in Dickinson to Worthington Industries, and in 2013, it produced its first modular treater skid.

"We think of ourselves as an innovation company," he said. "Our goal, of course, is to meet the needs of our customers, to solve problems for them to make them more successful."

Challenges

The manufacturing sector has faced challenges in the past, particularly during the recession. At the low point in 2010, Minnesota dropped down to 288,300 jobs in the sector, Hanson said.

Steffes lost employees as well when the oil boom started to dwindle, Eidenschink said, but he noted growth and innovation has helped the company return to its 2014 numbers. He said the company has about 320 employees and wants to hire 35 to 40 people this year.

One challenge that manufacturers could face in the coming years is worker availability, especially as baby boomers begin to retire.

It's a concern shared by manufacturers in Minnesota as well, according to a report from manufacturing magazine Enterprise Minnesota. A poll conducted by Meeting Street Research, which is cited in the magazine, suggests 68 percent of manufacturing respondents in Minnesota found it difficult to attract qualified candidates to fill vacancies.

"There is a shift in our educational system away from the industrial arts programs," Eidenschink said. "There is a great unmet need for technical skills in manufacturing. There are some predictions that there are going to be about 2 million jobs that go unfilled in the next few years because the baby boomers are retiring."

Still, industry and economic leaders still feel manufacturing is heading in the right direction, both nationally and locally.

"I don't think it gets the bulk of the attention that does go to agriculture and energy, but it is a wonderful place to do business in because often manufacturers are supporting those industries," Eidenschink said of manufacturing in North Dakota.

April Baumgarten

April Baumgarten joined the Grand Forks Herald May 19, 2015, and covers business and political stories. She grew up on a ranch 10 miles southeast of Belfield, where her family continues to raise registered Hereford cattle. She double majored in communications and history/political science at Jamestown (N.D.) College, now known as University of Jamestown. During her time at the college, she worked as a reporter and editor-in-chief for the university's newspaper, The Collegian. Baumgarten previously worked for The Dickinson Press as the Dickinson city government and energy reporter in 2011 before becoming the editor of the Hazen Star and Center Republican. She then returned to The Press as a news editor, where she helped lead an award-winning newsroom in recording the historical oil boom.

Have a story idea? Contact Baumgarten at 701-780-1248.

(701) 780-1248
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