The Future Looks Bright for Manufacturing
By Amy Smolik
Sioux Falls Area Chamber of Commerce
The Sioux Falls area is home to a unique group of businesses that produce everything from wind energy components to globally-renowned packages to water towers.
In fact, more than 200 manufacturing firms call the Sioux Falls metro area home, providing more than 13,000 jobs. These jobs represent nearly 10 percent of all jobs in the four-county metro area and more than 31 percent of all manufacturing jobs in South Dakota. Sioux Falls area manufacturing firms generate $2 billion in annual sales.
Because manufacturers play a vital role in the state´s overall economic health, the South Dakota Governor´s Office of Economic Development, along with local partners and companies across the state, is celebrating the fourth annual South Dakota National Manufacturing Week Oct. 3-7. For the second year in a row, the Chamber´s Young Professionals Network is offering tours of local manufacturing companies as part of Manufacturing Week.
In 2015, Bell, Incorporated was one of three companies that YPN members were able to tour.
"I assumed that Sioux Falls had manufacturing, but was surprised at how much and the type of products that are manufactured here," said YPN member Braden Bills, PrairieGold Venture Partners. "For example, I never would have guessed that paper boxes are manufactured here for large clients, such as McDonalds, the U.S. Postal Service, etc."
Like other YPN members who took part in the tours, Bills´ perception that Sioux Falls is only a "banking and healthcare" city was changed. For employers like Bell, Incorporated, tours of their facility can help serve as a recruiting and education tool about their company and the manufacturing industry as a whole.
The company celebrated its 100th year in business in 2015. It started as a small local provider of packaging to Sioux Falls stores and businesses. In 1976, when Bell was purchased by current owner Mark Graham, there were only two employees. Graham rapidly grew the business by expanding its capabilities and reach and working hard to gain more national accounts. Now under second generation leadership under President/CEO Ben Graham, Bell is one of the top 10 largest independently owned folding carton companies in the country, said Chief Operating Officer Ben Arndt. Today the company employs more than 250 people in Sioux Falls and more than 50 people in Columbus, Ohio. A sales and design staff is located in Chicago but Sioux Falls is the headquarters.
The Sioux Falls Metropolitan Statistical Area (MSA) has a 73.6 percent labor participation rate of MSA residents ages 16 and older who are employed. As of July 2016, the Sioux Falls MSA also had the lowest unemployment rate in the U.S. Like businesses across many industries, not just manufacturing, Bell struggles with workforce.
"I would say that workforce is one of our primary challenges in Sioux Falls, but it has been that way for quite some time," Arndt said. "We continue to focus on being an employer of choice and we have great word-of-mouth and referrals from current employees to help us fill open positions."
Long-term projections from the South Dakota Labor Market Information Center show the industry will grow in the next decade. An estimated 42,319 people worked in manufacturing in South Dakota in 2014; by 2024, that number is expected to grow by 7 percent. Bell, Incorporated has doubled in size in the last 10 years, Arndt said, and is in an industry with flat growth rates. Bell is the largest supplier of paperboard envelopes in the world and the company is gaining market share in all the packaging segments in which they compete, including packaged food and quick-serve restaurants ("fast food").
"In our competitive industry, if you´re not innovating and investing in the latest technologies to improve quality and drive down costs and lead times for customers, you simply won´t last," Arndt said. "Continuous improvement is a constant area of focus and we strive to have a culture that highly values being better today than we were yesterday. Over the next several years, you´ll see manufacturers like Bell integrating more automation into their processes – this will lead to some trade-off in the reduction of positions involved primarily in manual/repetitive tasks, but an increased need for engineers, maintenance technicians and machine operators."
Bell views their employees as the most valuable assets, Arndt said. They invest in employees with training and opportunities for growth.
"We want to show that manufacturing offers many rewarding career paths and take pride in the fact that several of our senior managers started out here working on production lines. Our employees also enjoy the fact that they get to see the products that they´ve manufactured at Bell on store shelves and in their homes every day – from food packaging to U.S. Postal Service overnight letter envelopes to McDonalds Happy Meal boxes and french fry scoops," he said.
Sioux Falls´ location provides access to a hard-working and high-quality talent pool, Arndt said. Being in close proximity to most major packaged food manufacturing and Sioux Falls´ central location benefits their customers with distribution centers across the country, he said.
The advantage of being located at the crossroads of two interstates helped boost the formation of Foundation Park, South Dakota´s first megasite. It´s located at the crossroads of I-90 and I-29 and features more than 820 acres with class 1 rail frontage. It is zoned I-2. The Park is currently under development and is owned and managed by the Sioux Falls Development Foundation. As a non-profit development corporation, the Sioux Falls Development Foundation provides a variety of professional services including industry and business-specific location assistance, as well as information on available industrial park land, buildings and sites.
The Foundation owns and operates the eight Sioux Empire Development Parks and Foundation Park. The first industrial park in Sioux Falls was established in 1970. Today the developments represent more than 2,100 acres and are zoned I-1 or I-2. The SFDF also owns the commercial development Campus Crossing near the junction of I-90 and Marion Road.
Sioux Falls´ location also played a role in bringing Marmen Energy to Sioux Falls.
"By coming to Sioux Falls we moved closer to the wind energy market and we are well-located by two interstate highways. The people are also a main reason why we chose Sioux Falls. The Minnehaha County economic development team was really good with us and the workers have great work ethics. We are glad we made this choice," said Yannick Laroche, Production Manager at Marmen Energy.
Located in Brandon, Marmen opened its plant dedicated to the fabrication of wind towers in 2013. Today the plant employs 280 people. It was founded in 1972 and is a family-owned Canadian business.
"Finding workers is not always easy when it comes to skilled trades as there are few candidates and we keep growing our number of employees. But we manage to find the right workers by offering training, among other things," Laroche said. "We are still growing and we are looking for more talented people to help us grow. There are many positions available such as supervisors, heavy lift truck operators, blasters and more. The future is bright – we are booked for the coming year and we do not expect the wind market to go down anytime soon."
Maguire Iron is one of two companies being featured in this year´s YPN tours during Manufacturing Week.
"Maguire has a great story and we believe we are a well-kept secret of Sioux Falls and add value to our community," said company President Gene Jones, Jr.
Echoing challenges faced by others, Jones said finding skilled labor is difficult but he believes the future looks bright for their industry. Maguire Iron has been in the Jones family since 1958 when Gene Jones, Sr. purchased it from Ed Maguire. Maguire started the company in 1915. They have 130 employees. They paint, repair, fabricate and erect water towers for municipalities and rural water districts throughout the U.S.
YPN member Erin Steever, Banner Associates, is excited to participate in the 2016 Manufacturing Week tours after participating in 2015. Tours are her favorite part of YPN, she said.
"The Maguire Iron tour is right up my alley. How many people wonder what it takes to build a water tower and what does it look like inside?" Steever said. "I´ve had the opportunity to design, be on site and inside a new water tower construction project and tour several others. They are pretty fascinating. Water towers are part of a town´s identity and people take pride in them. Maguire Iron is a well-known name in the water tower industry and I´m excited to tour their facility."
Limited space is available for the YPN Community Connection Tours at Maguire Iron and A-OX Welding Supply Company. For details or to RSVP, visit siouxfallsypn.com.
Manufacturing in South Dakota
The counties with the highest number of employers in the manufacturing field are as follows:
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