Montana manufacturing bouncing back from pandemic, report says

Despite struggling with worker shortages, disrupted supply chains and increased shipping costs, Montana manufacturers fared relatively well during the first year of the coronavirus pandemic and could see a return to pre-pandemic activity this year, according to a new report released by the Montana Manufacturing Extension Center at Montana State University.

The 2021 Montana Manufacturing Report, which analyzes the results of a survey administered by the Bureau of Business and Economic Research at the University of Montana, concludes that “Montana manufacturing bounced back relatively quickly from the deep economic drop" starting in March 2020 due to the spread of COVID-19. The report also tracks Montana's manufacturing sector against national trends in 2020 and assesses the impact of MMEC's work.

Of the 140 manufacturing firms that responded to the survey reporting their activity in 2020:

• One-third saw an increase in total sales and profits over the previous year, while 40% saw a decrease.

• 59% kept their same number of employees, 16% increased employment and 25% reduced employment.

• 58% did not reduce their production capacity.

“The strength of Montana’s manufacturing sector is a testament to the incredible hard work and commitment of our manufacturers,” said MMEC Director Paddy Fleming. “During an unprecedented and unpredictable year, they found innovative ways to keep their operations going and preserve jobs in their communities.”

The report estimates that, by the end of 2022, manufacturing employment should recover to pre-pandemic levels, but earnings "are less optimistic" and the "situation remains highly fluid" because of the continued emergence of new coronavirus variants.

“The survey confirms what we’ve all been hearing,” Fleming said. "Workforce and supply chain issues are the top challenges facing manufacturers and will continue to be the focus for our collaborative efforts to keep the Montana economy strong.”

In measuring the sector's economic benefits to the state, the report notes that Montana manufacturing in 2020:

• Grew to include more than 3,900 firms.

• Had an output valued at more than $3 billion.

• Supported jobs with an average annual wage of more than $52,000, or 11% above the state average of roughly $47,000.

• Grew at more than double the national average in terms of employment, income and output.

MMEC, which is housed in MSU's Norm Asbjornson College of Engineering, works with manufacturing companies to help them improve their operations. A team of manufacturing specialists offers one-on-one assistance with projects to assess their production processes, develop their workforce and leverage emerging technologies. The 2021 report analyzes input from 68 respondents who worked with MMEC during the previous year. Highlights include:

• 63% of respondents said they relied exclusively on MMEC to recommend improvements to their operations.

• Staff expertise was once again selected as the top reason for choosing MMEC.

• Manufacturers' average return on investment for fees paid to MMEC for their services was 82 to 1.

Survey respondents said that working with MMEC resulted in 310 new and retained manufacturing jobs and contributed approximately $2.2 million (directly or indirectly) to Montana individual income tax revenue during the previous year.

According to the report, since 2000 MMEC's work has resulted in 6,496 new or retained jobs and $1.35 billion in retained or increased sales. MMEC's work in 2020 had a return on investment for Montana residents tax dollars of 4.4 to 1.

The 2021 report can be found on MMEC's website at montana.edu/mmec/news/reports.html.