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The KettleHouse Brewery in Bonner is part of Montana's large manufacturing sector.

Guns, booze and gadgets are fueling one of the hottest sectors of Montana’s economy.

The number of workers employed in the manufacturing of alcoholic beverages, firearms and electronic instruments in the state increased dramatically from 2010 to 2016, according to Paul Polzin of the Bureau of Business and Economic Research at the University of Montana.

For example, the number of people employed in firearms manufacturing increased from 148 to 450 in that time, a 204 percent change. The number of people employed in breweries went from 238 workers in 24 firms in 2011 to 752 workers in 64 firms in 2016.

Those numbers come from the Montana Department of Labor, which hasn’t released full statistics for 2017 yet. Electronic instruments manufacturing increased employment by 182 percent over those years, according to Polzin.

Polzin spoke Tuesday at the 2018 Manufacturing and International Trade Day conference, hosted by the Montana Manufacturing Association, a subsidiary of the Montana Chamber of Commerce, at the Holiday Inn in downtown Missoula.

His message was that the manufacturing industry in Montana has made a remarkable shift over the last two decades from large factories, aluminum foundries and sawmills to many more businesses that have fewer employees. 

“Manufacturing accounts for about 16 percent of Montana’s economic base,” Polzin said. “The average employment per firm is 18 employees. But almost half of the firms with employment have one to four employees. It really is a small business sector.”

Manufacturing workers earn an average of $52,000 a year, 17 percent higher than the statewide average of $44,000 per year.

Paddy Fleming with the Montana Manufacturing Extension Center said that each of the 23,400 manufacturing jobs in the state supports an additional 2.58 jobs in the Montana economy.

“So that’s another 60,372 additional jobs,” Fleming said.

For example, beverage distributors depend on Montana’s wineries, distillers, cidermakers and craft breweries for a big part of their business.

“Alcohol manufacturing is growing rapidly in Montana,” Fleming said. “Agriculture folks like to call it value-added ag. Food manufacturing is growing, fabricated metals manufacturing and photonics (electronic instruments) manufacturing is growing. Lumber is down, but engineered lumber is up.”

There were nearly as many manufacturing jobs 20 years ago in the state, about 22,000, but only about half of the number of manufacturing entities there are now. That’s because the larger employers, like the Smurfit-Stone pulp mill in Frenchtown, have shut down while small manufacturers have sprung up around the state.

“Montana’s manufacturing sector is diverse, small, young, rural and entrepreneurial,” Fleming said. “There are 2,841 manufacturers in the state, and 81 percent have less than 10 employees and 68 percent are in rural counties. Fifty-five percent have been in business less than 20 years, and 16 percent have been in business less than five years.”

The No. 1 issue facing manufacturers is a lack of access to skilled workers here.

“We just did a survey and asked what’s the biggest problem,” Polzin said. “Last year, about half of manufacturers said finding skilled workers. This year, 75-80 percent said finding skilled workers. We are at full employment right now.”

The manufacturing firms in Montana are mostly concentrated near cities, and 75 percent of manufacturing is done in nine counties. Fleming said a major issue facing the future of the industry is that aging Baby Boomers who own businesses can’t find anyone young to buy or take over the business.

The state’s manufacturing industry would be even more robust if the wood and paper products industry hadn’t suffered dramatic downturns over the last 20 years. Employment in the manufacturing industry has risen by 12.6 percent since 2009, but minus the wood and paper products industry it has risen by nearly 23 percent.

“Manufacturing probably has a very bad image, when you hear the term manufacturing you hear these words,” Polzin said, pointing to screen displaying the words obsolete, rust belt and declining. “One thing you should take away is the way you identify manufacturing, the way you picture it, is not a big factory. It is not a smokestack. It’s something very, very different.”

But Polzin gave an ominous warning about the state of the nationwide economy as a whole. He pointed to a chart showing how long it’s been since the United States was hit by a recession. The chart also showed that most economists predicted that there was a very low chance for a recession right before a big one actually hit.

“We are in the ninth year of a recovery, the longest recovery since World War II,” he said. “Recessions are a surprise event and we haven’t had one in a long time.”

The Montana Chamber will be hosting a STEP Forward conference, focused on women in science, technology, engineering and production, on Wednesday at the Holiday Inn. For a full agenda visit montanachamber.com/wp-content/uploads/2017/05/2018-STEP-Forward_Public-Agenda-1.pdf.

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