(Photo | by Janno Nivergall from Pixabay)
Trends, Challenges & More in Central Oregon
The manufacturing industry of Central Oregon is ever changing, much like it is across the country. In Oregon, manufacturing companies, which are defined as establishments that mechanically, physically, or chemically transform materials, substances, or components into new products, make up 9.9 percent of our workforce, compared to 8.4 percent nationally. As a state, Oregon manufactures a higher than average amount of computer and electronic products, and wood products.
In Central Oregon, the two biggest manufacturers (in terms of employment) are BASX and Epic Aircraft. Respectively, they specialize in high efficiency data center cooling solutions, cleanroom systems, custom HVAC systems and modular solutions, and high-performance, all-composite, six-seat single-engine turboprop aircraft.
The economic side and impact of manufacturing, like many local industries, is closely watched by a nonprofit called EDCO, or Economic Development for Central Oregon. While the local industry will likely continue to see growth, the number one trend that’s being seen in manufacturing is unfortunately a workforce shortage.
According to Steve Curley, the Redmond Economic Development, Inc. (REDI) Director at EDCO, “Workers continue to be a needed element in Redmond manufacturing businesses. While the labor market has softened generally in recent months, workers continue to have options in Redmond where most of the manufacturing businesses are still hiring. This shows that growth is still happening in those businesses.”
Don Myll, the Bend area director at EDCO, mentioned that the workforce shortage has been a constant significant pressure for manufacturing companies. Myll said that the current unemployment for the industry is around four percent, whereas a “balanced” unemployment rate is around 5-6 percent. This can cause employers to scramble to achieve a match to find the right skills for the open positions, as a low unemployment rate typically means employers who actually are hiring are going to have a smaller pool of candidates; all of whom have more bargaining power than when unemployment is high.
At OMEP, or Oregon’s Manufacturing Extension Partnership, Principal Consultant Shane Steinke echoes the statement that workforce troubles are, in fact, the industry’s biggest trend. Steinke said many companies are struggling to find, hire, and keep employees, and he added that manufacturing’s aging workforce adds another factor to the trend.
“Growth in manufacturing jobs will accentuate the gap created by a retiring workforce,” he said, following it up with the point that Deloitte estimates that roughly half of the 3.8 million vacancies in U.S. manufacturing over the next ten years will go unfilled.
There are multiple ways the manufacturing industry is addressing the workforce shortage. Many companies have shifted their focus to training and cultivating talent, instead of trying to find it. From internal programs at manufacturing companies to external programs like COCC’s Center for Business, Industry, and Professional Development, the Oregon Department of Employment’s Worksource program, and internship programs offered to high school and college-aged students across the region, there are many ways that the manufacturing industry is cultivating future workers.
A factor that affects this is overall population growth, which is something that Central Oregon still has more than the national-average of. Curley said, “Population growth plays a large role in workforce availability for our local companies. Central Oregon has long been a destination for people relocating, providing a growing workforce for the region. This has benefited the local businesses by keeping the supply growing as the demand has also increased.”
Another trend seen across the industries lies within automation, and the emergence of new technologies. Myll said that tech advancements have and will likely continue to have a constant impact on the industry.
Curley said, “We are seeing continued automation of the manufacturing sector. Recently BASX opened a new 37,000 sf welding facility which will have a large robotic arm to automate some of the welding processes. As companies have experienced a workforce shortage over the last few years, they have turned to alternative methods to produce their products.”
He continued, adding how this shift towards automation doesn’t necessarily decrease the need for jobs, but instead just changes the skills required, “This shifts the skills needed in the workforce, as more programming and engineering jobs come into play.”
Steinke named new tech and automation as a large trend, as well, “This is seen in business process automation, automation on the floor to assist with repetitive tasks, and use of data analytics to identify areas for improvement. Large companies are the ones benefiting the most from the increased prevalence of advanced technologies, but as prices drop more and more small companies are finding ways to adopt automation in their own businesses.”
On the point of large companies benefitting more than smaller companies when it comes to embracing new tech, Steinke said that cost is a large barrier, but prices are coming down. He also mentioned concern that technology and automation would replace workers, but he said that in his experience working with small and medium manufacturers, “It seldom replaces a worker. Instead it usually makes their job less tedious, allowing people to focus on parts of their job that are more value-added and engaging.”
Another barrier to employment? Steinke talked about an old stigma, the idea that manufacturing jobs are backbreaking and dirty. In reality, while a small portion of manufacturing jobs will get your hands dirty, manufacturing is really just about building things. “Sometimes very cool things,” he said.
Steinke brought up how recently, the final 8 companies in the “Coolest Thing Made in Oregon” competition were announced, and two winners are in Central Oregon.
OMEP has an entire practice area dedicated to helping companies address their workforce challenges, which can be found on their website.
As far as what else is affecting Central Oregon’s manufacturing industry, Myll and Curley both point to Oregon’s state tax policy for businesses. As things currently stand, Oregon businesses pay the 2nd highest tax rates in the country. Within the manufacturing industry, Curley pointed out CAT or Corporate Activities Taxes, which does not take into consideration the profitability of the business.
“These types of taxes are regressive and have an impact at several stages of the supply chain,” Curley said.
Both Curley and Myll mentioned how Measure 118, another CAT, if it were to be passed in November, would be very costly for Oregon manufacturers, with significant long term negative impacts.
In addition, Curley mentioned how certain environmental regulations will have an impact on local manufacturers, “Another area that will have a significant impact on businesses is the push to eliminate natural gas. The Climate Protection Program that is in rulemaking will put a substantial burden and cost on businesses that use natural gas. While the intentions may be noble, there is currently not enough power available to replace all fossil fuels. There needs to be a focus on increased generation and storage of power before these fuels can be replaced. Driving up the costs only hurts businesses and catalyzes inflation, it does not solve the problem of the needed additional power generation.”
Lastly, Myll added a concern that will need to be addressed in the future, in the form of power constraints, mentioning how new advancements like AI tech will make it more difficult to meet the needs of data centers.
Still, Curley sees growth in Central Oregon’s manufacturing future, so long as we regulate responsibly, “I see Central Oregon continuing to be a destination, and therefore, continued population growth. It may be slower than in the past, but the lure of the outdoors and high desert climate appeal to many. This will bode well for manufacturers and business in general, as the workforce plays a large role in the growth of these companies. The figurative straw that could break the camel’s back lies in regulation and taxing from state regulators and legislators.”
