Manufacturing in Montana.

• Author: Keegan III, Charles E.
• Position: Industry Overview - 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 hand made items like jewelry or sporting goods.

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.

* Pays high wages, with labor income per employee averaging about $30,000 per year, as opposed to an average of about $23,000 per year for all Montana workers.

* Accounts for 20-25 percent of Montana's economic base.

Trends in the Last Decade

In contrast to the national trend of decreasing manufacturing employment, Montana's manufacturing employment and labor income have increased over the past decade by about 11 percent. Not all of the sectors have followed this trend, though (Tables 1 and 2). For example, the machinery, equipment, and instruments sector has doubled in size, increasing its share of manufacturing employment and labor income. However, the wood, paper, and furniture products sector--the largest sector--has dropped from 47 percent of manufacturing labor income and 44 percent of manufacturing employment in 1990 to 39 percent of labor income and 36 percent of employment in 2000.

Market Conditions

Market conditions facing Montana's manufacturing industries were quite mixed in 2000. For many firms, in particular the machinery, equipment, and instruments sector, the continued strength of the U.S. economy meant stable or increased sales, profits, and employment. For others, however, the economic picture was much more bleak. Faced with the lowest inflation-adjusted lumber prices in a decade (see Figure 1, page 34), high energy costs, and increased timber availability problems due to the 2000 wildfires, the forest products industry experienced decreases in production, and subsequently, employment, and labor income. For manufacturing firms heavily dependent on electricity, the extreme increases in electricity rates raised input costs and decreased profits, resulting in some temporary shutdowns and curtailments.

Estimated sales value of all manufactured products in Montana, employment, and labor income remained stable from 1999 to 2000, with...