Manufacturers in western Montana more optimistic than eastern counterparts

By Martin Kidston/MISSOULA CURRENT

Manufacturers in western Montana expressed more optimism heading into 2016 than their counterparts in eastern Montana, with the food and beverage sectors feeling the best about the year ahead, a new survey has found.

The survey was conducted by the Bureau of Business and Economic Research at the University of Montana last November. The results are slated for release this spring, but some findings are already trickling out.

“The state as a whole was a little less optimistic about 2016 than in 2015,” said Todd Morgan, director of BBER's forest industry research program. “The exception of that was in the Missoula and Kalispell area, where we saw manufactures more optimistic. They bucked the statewide trend in that regard.”

While the results are still been crunched by analysts, Morgan said the slowdown in gas and oil drilling likely hampered some optimism in eastern Montana. The slumping coal industry and low petroleum prices may also have influenced optimism.

The results, Morgan said, carry implications for manufacturers associated with the state's natural resource industries, particularly those in and around Billings. They include fabricated metals, pipe work, and trucks and trailers.

“We think that in part was why we saw weaker statewide optimism,” Morgan said. “The strong U.S. dollar has really started to slow down. It makes it a little tough to compete when selling to foreign markets.”

Manufacturing exports account for roughly 10 percent of the state's $11.3 billion manufacturing industry. Roughly $1.1 billion in manufactured products – from chemicals to metals – are exported to foreign markets each year, Morgan said.

While optimism sagged in eastern Montana, the survey found higher optimism in the state's western half. Morgan said the food and beverage sectors felt the best about the coming year.

“The food and beverage sectors were the most optimistic across the state,” Morgan said. “This could be due to the growth of the microbreweries and new distillers in Montana. That's a strong industry in Missoula and Kalispell.”

According to the Montana Manufacturing Center, the number of state manufacturers has more than doubled since 1996. The workforce has also added roughly 7 percent more employees, though most manufacturers claim fewer than 10 workers.

Morgan said filling manufacturing jobs has proven difficult in recent years. The issue has concerned state leaders who have reported similar findings over the past few months.

In January, Pam Bucy, commissioner of the Montana Department of Labor and Industry, said a mounting labor shortage could limit growth across a number of industries in the coming years, from manufacturing to healthcare.

Morgan said the latest survey echoed those concerns.

“One of the big concerns manufacturers expressed effecting them in 2015 was the difficulty finding enough skilled labor,” Morgan said. “It cut across the different manufacturing sectors across the state.”

Morgan said roughly 40 percent of the 186 manufacturing firms that participated in survey reported a workforce shortage over the past year. When the question was posed as open ended, roughly 36 percent named a shortage of skilled workers as their top concern.

It ranked ahead of the economy, competition and prices, Morgan said.

“As we asked people looking forward in 2016, that labor response softened a little bit,” Morgan said. “I don't know if folks are seeing more availability in labor with the slowdown in eastern Montana. That might be freeing up some labor, especially some of that skilled metalwork that seems to be in tight demand.”

Morgan expect to issue the report later this spring.