Montana Manufacturing: Issues & Outlook Todd A. Morgan, CF

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1 Montana Manufacturing: Issues & Outlook 2016 Todd A. Morgan, CF

2 Montana Manufacturers

3 Montana Manufacturing Employment: ~23,430 Labor Income by Sector Petroleum & Coal Products 17% Other 18% Chemicals & Nonmetallic Minerals 13% Labor Income: ~$1.2 billion Sales: ~$11.3 billion Sources: BEA-Dept of Commerce; and BBER estimates Food & Beverage 14% Metals 12% Wood & Furniture 16% Machinery 6% Computers, Electronics & Appliances 4%

4 Changes in Montana & U.S. Manufacturing Employment 6% 4% 2% 0% 2% 4% 6% 8% 10% 12% Montana United States * Source: Bureau of Economic Analysis *2015 estimated

5 Montana Manufacturing Output Real value has increased longer term $11.3 billion in 2014; 2015 probably lower 15 Highly influenced by petroleum products Billions of 2015 Dollars Source: U.S. Census Bureau

6 Montana Manufacturing Exports Account for 8 to 10% of total output 1,200 1,000 Top export destinations: Canada 45% Korea 9% China 8% Japan 5% Mexico 5% Taiwan 4% Belgium 2% Million $ Sources: Census Bureau, wisertrade.org

Montana Manufacturing Exports 2014 total:

Machinery Petroleum prods. Transport equip.

Fabricated metals Nonmetallic Minerals 8%

Coal Products 7% Food & Beverages 10% Wood

7 Montana Manufacturing Exports 2014 total: $1.01 billion Computers, Electronics & Appliances 6% Other 7% Chemicals 31% Declining: Chemicals Machinery 12% Machinery Petroleum prods. Transport equip. Growing: Beverages Food Wood prods. Fabricated metals Nonmetallic Minerals 8% Transportation Equipment 10% Petroleum & Coal Products 7% Food & Beverages 10% Wood Products & Furniture 4% Metals 8% Sources: Census Bureau, wisertrade.org

8 Pending Trade Agreements Trans-Pacific Partnership (TPP) 11 countries + U.S. Account for about 70% of MT exports Largest: chemicals, fuels, consumer goods Transatlantic Trade & Investment Partnership (T-TIP) European Union + U.S. Account for about 12% of MT exports Largest: chemicals, high-tech instruments

2015-2016 Montana Manufacturers Survey annual survey conducted in November open-ended &

9 Montana Manufacturers Survey annual survey conducted in November open-ended & multi-choice questions current & coming year 184 firms participated cooperation rate 96%

10 Property Tax & Montana Manufacturers Which property tax class impacts your business most? 51% Class 8: business equipment 29% Class 4: land & improvements 9% don t know 5% both/same How have property taxes impacted your business? 45% significant negative impact/cost 33% none/neutral/minimal impact 13% just another expense/pass it on/plan for it

11 Property Tax & Montana Manufacturers Your firm s property tax over the past 3 years? 61% increase 7% decrease 19% same 13% don t know Property taxes for 2016? 41% increase 1% decrease 33% same 25% don t know As a result of the 2015 re-appraisal? 46% increase 5% decrease 14% same 35% don t know

12 Major Issues for Montana Manufacturers 2015 Labor, skilled workers: 36% of firms General economy, markets, competition, sales: 24% 2016 Labor, skilled workers: 25% of firms. General economy, markets, competition, sales: 27%

13 Overall Outlook by Sector All Manufacturing Wood, paper & furniture Food & beverage Chemicals, petroleum & coal Machinery All other Declining/Improving

14 Montana Forest Products 2015/2016 U.S. homebuilding growth continues Strong dollar, weaker demand from China, interest rate hike, end of SLA = challenges to U.S. wood products industry Private & public timber availability is the major constraint for most Montana mills o o o Private land ownership changes Many small, young trees in private forest inventory Federal forest management issues

15 Montana Wood Products Outlook Overall Sales Profit Production Employment Declining/Improving

16 Overall Outlook by City Helena Great Falls Missoula Billings Bozeman Butte Kalispell Lewistown Montana Declining/Increasing

Lewis & Clark County Manufacturing Labor Income by

Furniture 7% Fabricated Metals 5% Food & Beverage

17 Lewis & Clark County Manufacturing Labor Income by Sector Transportation Equipment 33% Other Nondurable Goods 24% Labor Income: $48.5 million Employment: 995 Printing 5% Wood & Furniture 7% Fabricated Metals 5% Food & Beverage 12% Other Durable Goods 16% Sources: BEA-REIS; Census Bureau; and BBER estimates

18 Million $ $50 Lewis & Clark County Manufacturing Jobs 1,000 $ $ $ $ $ Worker Earnings Employment 750 Source: Bureau of Economic Analysis

19 Helena Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

21 Cascade County Manufacturing Labor Income by Sector Food & Beverages 42% Labor Income: $75.5 million Employment: 1,355 Furniture & Wood Products 8% Other Durable Goods 19% Other Nondurable Goods 29% Printing 6% Sources: BEA-REIS; Census Bureau; and BBER estimates

22 Cascade County Manufacturing Million $ $80 $75 $70 $65 $60 $55 $50 $ Worker Earnings Employment Jobs 1,400 1,300 1,200 1,100 1, Source: Bureau of Economic Analysis

23 Great Falls & Havre Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

Missoula County Manufacturing Labor Income

9 million 2014 Employment: 2,415 Chemicals

25 Missoula County Manufacturing Labor Income by Sector Wood & Furniture 18% Food & Beverage 19% Other Nondurable Goods 6% Labor Income: $108.9 million 2014 Employment: 2,415 Chemicals 16% Other Durable Goods 41% Sources: BEA-Dept of Commerce and BBER estimates

26 Missoula County Manufacturing Million $ $130 $120 $110 $100 $90 $80 $70 $ Worker Earnings Employment Jobs 2,600 2,500 2,400 2,300 2,200 2,100 2,000 1,900 Source: Bureau of Economic Analysis

27 Ravalli County Manufacturing Million $ $39 $38 $37 $36 $35 $34 $ Worker Earnings Employment Jobs 1,250 1,200 1,150 1,100 1,050 1, Source: Bureau of Economic Analysis

28 Missoula Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

3,955 Other Durable Goods 15% Food & Beverage 9% Other Nondurable Goods

29 Yellowstone County Manufacturing Labor Income by Sector Petroleum Products 55% Chemicals 4% Labor Income: $319 million Employment: 3,955 Other Durable Goods 15% Food & Beverage 9% Other Nondurable Goods 4% Fabricated Metals 13% Sources: BEA-REIS; Census Bureau; and BBER estimates

30 Million $ $350 Yellowstone County Manufacturing Jobs 4,000 $300 3,800 $250 3,600 $200 3,400 $150 3,200 $ Worker Earnings Employment 3,000 Source: Bureau of Economic Analysis

31 Billings Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

Gallatin County Manufacturing Labor Income by Sector

Goods 9% Non-Metallic Minerals 10% Wood & Furniture 6%

Fabricated Metals 15% Other Durable Goods 33% Computers,

33 Gallatin County Manufacturing Labor Income by Sector Plastics & Rubber 4% Food & Beverages 11% Other Nondurable Goods 9% Non-Metallic Minerals 10% Wood & Furniture 6% Labor Income: $152 million Employment 3,436 Fabricated Metals 15% Other Durable Goods 33% Computers, Electronics & Appliances 13% Sources: BEA-REIS; Census Bureau; and BBER estimates

34 Gallatin County Manufacturing Million $ $160 Jobs 4,000 $140 3,500 $120 3,000 $100 2,500 $80 2,000 $ Worker Earnings Employment 1,500 Source: Bureau of Economic Analysis

35 Bozeman Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

1 million - 2014 Employment: 724 Beverages 13% Food 3% Fabricated

37 Silver Bow County Manufacturing Labor Income by Sector Printing 2% Other Nondurable Goods 4% Wood Products 1% Labor Income: $44.1 million Employment: 724 Beverages 13% Food 3% Fabricated Metals 3% Other Durable Goods 75% Sources: BEA-REIS; Census Bureau; and BBER estimates

38 Million $ $50 $45 $40 $35 $30 $25 $20 $15 Silver Bow County Manufacturing Worker Earnings Employment Jobs Source: Bureau of Economic Analysis

39 Butte Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

41 Flathead County Manufacturing Wood & Furniture 45% Labor Income by Sector Other Durable Goods 30% Labor Income: $176 million Employment: 3,277 Computers & Electronics 6% Other Nondurable Goods 7% Food & Beverages 4% Fabricated Metals 10% Sources: BEA-REIS; Census Bureau

42 Flathead County Manufacturing Million $ $200 $180 $160 $140 $120 $100 $80 $60 $ Worker Earnings Employment Jobs 3,400 3,300 3,200 3,100 3,000 2,900 2,800 2,700 2,600 Source: Bureau of Economic Analysis

43 Kalispell Area Manufactures Outlook Overall Employment Sales Production Profit Declining/Improving

45 Fergus County Manufacturing Million $ $16 $15 $14 $13 $12 $11 $ Worker Earnings Employment Jobs Source: Bureau of Economic Analysis

46 Lewistown Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

47 Hill County Manufacturing Million $ $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $ Worker Earnings Employment Jobs Source: Bureau of Economic Analysis

48 Havre & Great Falls Area Manufacturing Outlook Overall Employment Sales Production Profit Declining/Improving

49 Thank you!

Montana Manufacturing & Forest Products: 2014 Outlook. Todd A. Morgan, CF

Montana Manufacturing & Forest Products: 2014 Outlook Todd A. Morgan, CF U.S. Manufacturing 2013 estimated over 12.6 million workers. Annual worker earnings are rising. Value of output per worker is increasing