Manufacturing in Montana.

• Author: Keegan III, Charles E.
• Position: Statistical Data Included

Both nationally and in Montana, the manufacturing sector includes traditional heavy industries as well as a broad array of other activities ranging from the production of very complex and sophisticated high technology equipment to cottage industries producing handmade items like jewelry or sporting goods. In contrast to the national trend of declining employment in manufacturing over the past decade, Montana's manufacturing employment has increased by about 15 percent in the 1990s.

The state's manufacturing sector:

* Produces approximately $5 billion in output annually,

* Directly employs nearly 30,000 workers earning more than $900 million in annual labor income,

* Includes over 2,000 entities such as factories and plants, logging companies, and at-home cottage industries.

* Accounts for 20-25 percent of Montana's economic base (see page 10 for more information.)

Current Market Conditions

Market conditions in 1999 were substantially better than in 1998 due to a continued very strong U.S. economy and improving conditions in much of the world. Prices for most goods produced in Montana declined substantially in the last half of 1997 and through 1998, as economic problems in Japan and other Asian countries worsened and spread to other parts of the world. Montana's manufacturers experienced some layoffs and curtailments during 1998 due to lower prices.

The feared large-scale declines of 1999 did not materialize, and with much better than expected domestic and global economic conditions, virtually all of Montana's manufacturing sectors reported higher prices in 1999.

Sales value of all products manufactured in Montana was up several hundred million dollars to approximately $5 billion in 1999. Although there were some layoffs--due to conditions specific to individual plants or to other factors such as declining national forest timber availability--overall manufacturing employment was up slightly.

Earnings of manufacturing workers were about $910 million in 1999, down from $960 million in 1998. However, the 1998 figure included a one-time $65 million dollar payment to Columbia Falls Aluminum Co. workers settling a labor agreement (Figure 2).

Outlook

Market conditions should remain favorable in 2000, and we expect manufacturing activity to continue to increase in Montana.

Major capital expenditures or new facilities are underway in almost all sectors.

Some factors that give rise to risk, or at least uncertainty, and bear watching are:

* Declining...