A Changing Industry
Manufacturers adapt and grow in the face of workforce challenges
By Rob Swenson
For the Sioux Falls Area Chamber of Commerce
Recruiting enough good workers has been a big challenge for manufacturing companies in the Sioux Falls area for years, perhaps even decades.
"South Dakota hasn´t had enough welders since the ox carts were passing through on their way to Oregon," jokes David Owen, president of the South Dakota Chamber of Commerce & Industry.
Although the industry generally is doing well, workforce challenges have become more pronounced in recent years. Employee hiring and retention issues are among the economic forces driving the increased use of automation and technology in manufacturing, which is a deceptively large business sector in the Sioux Falls area and across South Dakota, Owen said.
Nearly a third of the manufacturing jobs in South Dakota are in the four-county Sioux Falls metropolitan area.
There are more than 260 manufacturing firms in the metro area and they employ approximately 14,000 people, according to the Sioux Falls Development Foundation. About 9 percent of all the jobs in the metro area are in manufacturing.
Dean Dziedzic, vice president of the Development Foundation, said that local manufacturers typically identify finding qualified and skilled workers as their biggest challenge, but that´s not just a local issue. "This is not a Sioux Falls problem. It´s not a Midwest problem. It´s nationwide," he said.
Manufacturing companies are investing in technology to increase the efficiency of their operations, and to make better and more productive use of their employees, Dziedzic said.
"I don´t see our local companies laying off people. It´s more that they don´t have to go out and try to hire (as many) people. They´re able to maintain current (employment) levels," he said. "As we move forward, I think companies will invest more in technology and robotics, and create more efficiencies."
With its 10 development parks – most of which are full – the Development Foundation provides some site options to new and growing companies. The park with the most open space is Foundation Park, the organization´s biggest and newest industrial park.
At 820 acres, Foundation Park has been promoted as South Dakota´s first "megasite." It was established in 2015 by the Development Foundation, in partnership with the Governor´s Office of Economic Development, the City of Sioux Falls and Forward Sioux Falls. The park has railroad access and is located near the Intersection of Interstates 90 and 29.
Foundation Park is being positioned as a good location for advanced manufacturing. So far, it has two businesses: Win Chill Cold Storage, which is open, and Dakota Carriers, which will open soon.
Pay is one of the variables that attracts job candidates, and it can vary from company to company.
In 2017, the mean hourly wage for production workers in the Sioux Falls metro area was $15.76 per hour, according to the U.S. Bureau of Labor Statistics. That compared to a national mean of $18.30. Production workers accounted for 6.7 percent of the local workforce and 6.3 percent of the national workforce.
As a member of the Chamber´s Young Professionals Network, Tommy Pollema has had the opportunity to participate in two Community Connections tours of manufacturing plants in Sioux Falls – Graco Inc. and Electronic Systems Inc. The tours changed his impression of the industry.
"Growing up, I perceived manufacturing as labor-intensive and not glorious or high-paying work. But after taking tours, it opened my eyes that they do a lot with technology and have high-paying jobs," said Pollema, manager of the Cain Ellsworth accounting firm in Sioux Falls.
"The tours opened my eyes that manufacturing had a bad rap. There´s definitely great opportunities and high-paying jobs in the manufacturing industry," he said.
Don Cuperus is a business advisor with South Dakota Manufacturing and Technology Solutions, an office in Sioux Falls that works in partnership with the Governor´s Office of Economic Development to help manufacturing companies improve productivity. His duties include coordinating peer discussion groups for CEOs and human resource directors who work in manufacturing.
"Technology and automation are two important pieces helping relieve some of the workforce issues," Cuperus said. "Technology has advanced on its own over the years, but the lack of workforce accelerates adoption of technology."
An increasing use of automation and technology is among the common threads in growing manufacturing companies in Minnehaha and Lincoln Counties. Here´s a closer look at four of them that also have new, improved or expanding facilities:
AmesburyTruth combined operations at plants in Sioux Falls and Canton, and moved last year into a new, 167,200-square-foot production facility in northwestern Sioux Falls.
The Sioux Falls plant is a branch of an Edina, Minnesota company that is owned by Tyman Plc of London, England. They make window and door hardware such as balances and counterweights. The Sioux Falls plant employs 280 people.
"We don´t make the glass. We don´t make the wood. But we make everything else," said Tim Binder, director of global supply chain. "We´re kind of a one-stop shop for companies´ window and door hardware needs."
The company´s products are shipped all over North America and beyond. The staff in Sioux Falls includes four executives, including Binder, who have corporate responsibilities that extend beyond operations in Sioux Falls. High-level executives in operations, human resources and engineering work out of Sioux Falls.
Finding new employees can be challenging, Binder said, but the company doesn´t have a problem retaining them. He expects operations in Sioux Falls to continue to expand.
"This site will continue to grow over the years," Binder said. "We´re always looking for ways to make our products better and cost less."
Gage Brothers expects to be operating in a new, 210,000-square-foot plant by February 2019.
The new plant is being built on North Bahnson Avenue in an open, industrial area east of Interstate 229. A 14,000-foot building that will house the company's offices is being constructed nearby.
Gage makes precast, concrete wall panels and other structural components. The company´s products have been used on buildings ranging from Target Field and TCF Bank Stadium in Minneapolis to the Cherapa Place office building and O´Gorman Performing Arts Center in Sioux Falls.
The new plant will consolidate the company´s manufacturing operations in one building. At its present site in western Sioux Falls, operations are scattered over 13 buildings and the outdoors.
The new plant also will be cleaner, more automated and will enable Gage to make more and better products, President Tom Kelley said. "We´ll be able to do more work with the same amount of people."
The new plant also will provide the company´s 250 employees a safer and more comfortable working environment. Work hours will become more predictable, too, Kelley said. For example, employees should never again have to wait for fresh concrete to complete a job, he said.
"We need to clear up the perception of what manufacturing is and what it isn´t," he said. "These are many highly skilled, high-tech, high-paying jobs in manufacturing right here in South Dakota, and we´re a prime example of that."
Graco Inc., which makes fluid-handling equipment, is adding 56,000 square feet to its 148,000-square-foot plant in northeastern Sioux Falls. Work on the expansion is expected to be finished by the end of March.
"Strong employee performance and a continuous improvement mindset made expanding our presence in Sioux Falls an easy decision," said Brian Callahan, operations manager at the plant.
Minneapolis-based Graco employs about 250 people at its Sioux Falls plant. They expect to add 40 more employees over the next four years. Completely filling out the building expansion with people and equipment could take four to eight years, Callahan said.
Graco is celebrating its 25th year in Sioux Falls. Finding skilled workers, such as machinists, can be challenging, Callahan said, but once the company hires them, they stick around. Nine of its local employees have been with the company since the start. Attractions include competitive pay and favorable working conditions, Callahan said.
In the eight years that Callahan has been at the Sioux Falls plant, the use of robotic pieces of equipment has increased from a "handful" to more than 50. Automation has slowed the need for hiring, but it also has created new and better work opportunities for employees, he said.
"The workforce has to have a different set of skills, in turn creating higher paying jobs," Callahan said.
Harvard Integrations of Tea might not be as familiar to the public as some other modern manufacturers in the area, but its products are sold across the United States and in some foreign countries. The company makes products such as metal enclosures for backup power generation and distribution systems for businesses and institutions.
"We don´t really build a standard product," said Adam Aasen, president and CEO. "Everything we build is to customers´ specifications."
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Harvard Integrations operates in three main buildings and three smaller buildings on about 15 acres of land in an industrial area along Interstate 29. There is room on the property for future expansion, if needed.
The company´s products can be big – the size of a trailer home – and require advanced tools and skilled employees to build. The company recently invested $1.5 million in laser-cutting equipment. Earlier this year, it added 21,000 square feet to one of its buildings to house the new tool.
"We´re expecting an uptick in business, for sure," Aasen said. "A lot of that is related to oil." In Texas, for example, the oil industry is on an upswing, and companies need backup power facilities for field operations.
Harvard Integrations is owned by the Hill Companies, a privately owned business based in Canada. The plant in Tea employs 91 people, and it´s trying to add about 10 more. However, finding good employees, such as electricians, can be challenging, said Cindy Krekelberg, human resources manager.
"We´re really happy with the people we have and get. We just struggle to get some of them," Aasen said.