Dickinson Manufacturers Rise in Wake of Oil Bust
Post Date: Mar 03 2016
By The Dickinson Press
Though the oil industry tends to be more visible, Dickinson’s manufacturing sector has historically been a significant driver of the town’s economy.
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Gaylon Baker, executive vice president of the Stark Development Corp., said there are more than a dozen manufacturing businesses in the immediate Dickinson area that collectively employ about 1,500 people.
Baker said the diversity of the sector — which makes goods ranging from learning and instructional kits for the schoolroom to metal fabrication bound for coal mines — is the “great thing about it” and protects against failure of any one trend.
Another benefit of the Dickinson manufacturing scene is the “organic” nature of the companies that make it.
“This is home to them,” Baker said. “And as they grow and expand, this will continue to be home. We’re seeing Dickinson-based companies putting operations in other towns, which is good for them and also good for us.”
Baker said the oil boom years, as a whole, had a mixed impact on the city’s manufacturers.
While the Bakken economy was hot, it was also an unusually bright spot in an otherwise cool national landscape still struggling after the recession and wary of purchasing new manufactured goods.
Additionally, the draw of the oilfield during the boom was a “burden” for staffing in that period, Baker said, as businesses not related to the energy industry were forced to compete with high oil money wages.
However, he said the flipside of that burden in the post-boom years is a larger pool of educated workers brought fresh into the area by the promise of oil and settled into the city’s expanded stock of available housing.
Baker said Dickinson’s manufacturers have, on the whole, withstood some turbulence and could be poised for “an awful good year.”
“They’ve held their own, got through it OK and are ramping up to meet increased demand,” he said.
‘We’re taking better care of our people’
Dickinson baked goods manufacturer Baker Boy was one such business that struggled to compete with big oil.
Baker Boy President Guy Moos said the last five or six years have been “challenging” in terms of finding an adequate workforce, but that the situation has shifted “dramatically” within the last year.
“We went through a time there when we could not staff adequately and could not fill customer orders — that’s all changed,” Moos said.
Though the company is now nearly fully staffed at 210 workers, Moos said, the past scarcity of labor had negatively impacted production at the plant. Difficulty filling customer orders resulted in the company selling off a portion of the bakery’s business to a company in Texas last year.
“If we had a crystal ball and it would have told us that things would change so dramatically, that would have been great,” he said with a laugh. “But I think even today, we did the right thing. We’re really positioned well for taking care of our customers and have been filling orders really well for the last year.”
Moos said the upswing at Baker Boy has manifested itself in what seems to be a “very good” year ahead in terms of sales and growth.
He said the company added a new salesperson in the Denver area last fall and is in the process of placing a distributor there as well. Baker Boy also recently added distributors in Kansas and Missouri, he said.
Moving forward, Moos said the company has requested participation in a flex PACE loan with Stark Development Corp. to add on infrastructure and automation at the Dickinson plant through a capital investment of about $3 million.
“We wouldn’t be doing that if we couldn’t staff our company,” he said. “ … We really think that we’ve got just a small window of opportunity here to increase the automation so we can pay our people more so that, when oil does come back, we can retain our valued employees.”
Moos attributes increased personnel security to upward adjustments made to the plant’s starting pay more than a year ago.
He said the increase had a “nice effect, immediately” and believes it continues to support the company’s development in the face of a more slowly growing national restaurant and food-service market.
Moos said he believes Baker Boy is “doing better today than well before the boom,” in part due to the re-investment in personnel.
“I think we’re taking better care of our people, and that’s making a difference,” he said.
TMI sees upturn in Bakken’s downturn
Maybe more than Baker Boy, Dickinson laminate casework manufacturer TMI Systems Design could serve as a case-study of the city’s unique position in the national economy.
TMI President Dennis Johnson said the company is “very busy” at the moment with backlogs up 40 percent on a year-over-year basis.
Johnson said TMI, which largely produces cabinets, countertops and millwork, is currently benefitting from subsequent trends of recovery in the national construction sector and sustained loss of competition within its marketplace.
The survival of TMI is due in part, he said, to growth sparked by the oil boom.
“Because of Bakken development, we had a strong local market,” Johnson said. “Western North Dakota, eastern Montana, Wyoming — these were part of what we consider local market and they were quite strong. Even though national market declined dramatically, our local market actually grew.”
Despite that strong local market, the national construction crash was a trial for the company.
Johnson said TMI’s employment dropped from 400 workers to nearly 210, and that sales fell about 40 percent by the time TMI bottomed out.
But throughout the last year, the fortunes of oil and the national economy inverted and the company began adding staff, a trend Johnson said should increase the TMI workforce by up to 30 people. Among the number of employees gained are former staff members who left during the boom, he added.
Johnson noted that oil prices had fallen by more than 60 percent from their peak around the time TMI began hiring.
“Our downturn coincided with the Bakken upturn and now our upturn is coinciding with the Bakken downturn,” he said. “ … That’s just kind of luck, in a sense.”
Johnson said he’s hopeful the company could possibly get back to pre-recession employment levels within four to five years.
Beyond adding on personnel late last year, Johnson said TMI also made its first major equipment investment in about six years.
Johnson expressed optimism on the direction of the business, which he said has some “positive momentum” going for it.
“I actually feel TMI is, a lot of respects, a stronger company today than it was five or six years ago,” he said. “A lot of that has to do with weathering and experiencing the adversity of downturns like we did.”
Medora Corp. banks on innovation
The Medora Corp., producer of mass-quantity water treatment machinery and the SolarBee brand, differs from both TMI and Baker Boy to the extent it was able to capitalize on the oil boom as it was happening.
Medora Corp. President Joel Bleth said the company located north of Dickinson lost only about five people out of a total workforce of 70 to the oilfield. Still, he said it’s now “much easier” to get applicants for open positions than it was during the boom.
While it brought some challenges, Bleth said the boom has been a plus for the company in terms of hiring and product development.
“We maybe lost a couple people, but we also picked up some great people who were spouses of those who came up with the oilfield,” Bleth said. “In some ways, the oilfield brought one-half of a couple and we got the other half.”
Most Medora Corp. products aren’t related to the oilfield, but Bleth said the company has developed “a few” with oil industry applications that “had a much greater potential” before the oil slump.
Those applications include mixers for fresh water tanks used for fracking and oil well injections, as well as some other work done with extractors looking to clean produced water for use in fracking operations.
“The oil industry was starting to present some opportunities for our company — it’ll be there someday, but potential has slowed down,” Bleth said.“ … We have some products that, as oilfield picks up, we’ll be in a good position to start an effort to market them.”
Bleth said Medora Corp. has machinery in 20 different countries and has restored nearly 400 lakes struck with algae blooms and other water-quality issues.
The company has recently developed a skid-mounted trihalomethane removal system for potable water sources that Bleth said can be used to treat water on a localized level.
Moving through this year, he said the company’s gameplan is one of sustained product growth.
“We believe with the world changing so fast, we need to constantly innovate, even if it means we’re our own biggest competitor,” he said.
Baker predicts continued rise of manufacturing
More than a year after oil prices began to fall, Baker said he believes local manufacturers will continue to rise.
The potential, or hope, for recovery in the oil business could potentially draw interest in products for that industry, but ultimately Baker said the human talent brought in for oil will be one of the biggest spurs for the manufacturing sector.
Though sluggish oil prices hurts, Baker said the city’s economic outlook is otherwise positive.
“If we blanked out the oil industry and looked at everything else going on, this would be a wonderful year for Dickinson, N.D.,” he said.
Dickinson Manufacturers Rise in Wake of Oil Bust - The Dickinson Press