Manufacturing Industries Remain Strong & Diversified

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(Jon Stark, senior director of Redmond Economic Development Inc., presents an official proclamation to Sam Meier, general manager of Composite Approach, during the Made in Redmond tour | Photo courtesy Timothy Park)

Manufacturing in Central Oregon continues to be a staple industry in our region. While manufacturers have had to pivot and rethink business like so many others during this season, overall, the industry remains strong and diversified. Those manufacturers who create consumer goods saw phenomenal growth over the past year, and business owners who were willing to tweak what they produce have been able to slowly drive sales back up, even after suffering losses at the beginning of the pandemic.

“As with many things related to COVID impacts, it is a bit of a mixed bag for manufacturers in our region. Some are having their best year ever, while others still have not replaced revenue lost in the pandemic,” says Roger Lee, CEO of Economic Development for Central Oregon (EDCO). “Overall, employment in the tri-county area is down for manufacturing, but we’re not really alarmed — businesses have had to resize their workforce for changing market conditions and customer demand. These companies will survive and remain important employers and a source of job growth both in the short and long term.” He adds, “We also continue to field interest from manufacturers outside the region who are considering our area for expansion or relocation. It’s important to note that we have more than 500 manufacturing businesses now in the tri-county region. That in and of itself creates greater diversity, such that when one industry is down, not all businesses suffer.”

Jon Stark, senior director of Redmond Economic Development Inc. (REDI), agrees that since last year, COVID has hit hard; but overall, manufacturing has held its own for a variety of reasons. “We saw employment declines across many sectors, manufacturing included. But manufacturing that didn’t support the airlines, hospitality or bars and restaurants — those that make consumer goods — some of those went through the roof.” Lee says that a limited number of manufacturers have ceased operations permanently, but of those few, there were other pre-COVID issues at play, such as small cash reserves, change of ownership or declining revenues. Stark adds, “Aircraft parts, beer-related manufacturing, etc., were hit hard. We’ve had some decline in these areas, but in other areas, we’ve seen gains, like with Poltex (producers of organizational equipment for healthcare and laboratory settings). They have grown through this. Generally, with manufacturing in Redmond, there were some small disruptions, some right-sizing that went on, but we are back on a trajectory of growth. And, we still have new manufacturers coming into the region.”

Lee says that from an industry perspective, the sectors seeing growth include bioscience, building products, specialty food projects, tech and outdoor gear and apparel, while others such as aviation/aerospace, brewing and distilling are in a holding pattern or are contracting. “A trend we’ve seen for years is for a greater number of our projects to be smaller in size in terms of jobs and capital investment, but there are more of them. This bodes well for further industry and economic diversification, but it takes more of these projects to produce a larger total number of jobs, which are in high demand currently.”

While manufacturing in Central Oregon has both expanded and contracted during the past year, there is another phenomenon taking place: Just as individuals are moving out of larger cities to escape the higher number of COVID cases and the political unrest happening in densely populated areas, the same shift is occurring within the business sector. “We are seeing a trend: People are moving out of big cities due to COVID, riots, etc., and that scenario is happening with businesses too,” says Stark. “That migration is happening with both homeowners and businesses.” He says there are two primary reasons for this: time and money. “Capital is cheap; interest rates are at an all-time low. And, businesses that hadn’t had the time to make their move into a new area previously found the time to do so during the COVID disruption. The disruption gave them the time to make their move into central Oregon, and there is now affordability in making the move.” He adds, “Our crystal ball moving forward looks like a continuation of the rapid growth we’ve seen over the past nine years.”

Lee says that on the relocation side of EDCO’s recruitment efforts, there seems to be a strong concentration on consumer goods manufacturing currently, which, considering that consumer spending has been among the most impacted sectors of the economy, he finds interesting and perhaps counter-intuitive. “Much of that inbound interest is from established companies looking at options outside large metros.”

Within the region, Redmond continues to see the fastest growth in manufacturing. “Over the last nine years, manufacturing has grown in Redmond by 88 percent. Wages for manufacturing-related jobs are up 97 percent. That is four times the Oregon average, and eight times the U.S. average,” says Stark. “Over the past several decades, up until the last nine years, the nation as a whole had been shedding manufacturing jobs. Over the past decade, that number has been growing again, but nowhere near the pace of Redmond. Redmond is one of fastest-growing places for manufacturing, if not the fastest.” He adds, “Our mayor, years ago, dubbed Redmond the hub for manufacturing in the region. Its growing faster in Redmond than in the rest of Deschutes County.”

According to Damon Runberg, East Cascades regional economist for the Oregon Employment Department, the manufacturing sector in Central Oregon had been growing at a slow-but-steady pace before the onset of the COVID-19 pandemic. In the two years prior to the pandemic, he says Central Oregon’s manufacturing sector expanded by 5.5 percent compared to a growth of only 1.3 percent statewide. “Much of the manufacturing growth coming out of the last recession was concentrated in nondurable goods manufacturing, specifically beverage manufacturing such as beer, cider and kombucha. However, the growth we saw over the last several years was more diverse, with gains in composite manufacturing, aeronautics/ aerospace and primary metals,” he explains. “Although we were seeing manufacturing growth across the county, the largest and most notable growth in this last expansion phase was in Redmond, where manufacturing job growth far outpaced Bend.”

Unfortunately, Runberg says that the manufacturing employment gains from the past few years in Central Oregon were wiped out between February and May of this year, as the sector shed 1,020 jobs, or roughly 13 percent of the workforce. “These losses were sharper than in Oregon statewide, where the sector only lost around 7.5 percent of jobs.” The good news, he says, is that through August of this year, the region had recovered 350, or 34 percent, of the jobs lost during the first few months of the pandemic.

On a statewide level, the Oregon Department of Employment reports that manufacturing lost a substantial number of jobs this spring and has not rebounded. In a press release issued on October 14, the Department reported that employment in the sector stood at 180,000 jobs in September, which was close to its level of the past five months. Since September 2019, however, manufacturing cut 18,100 jobs with losses widespread throughout most component industries. During that time, primary metals manufacturing dropped the most in percentage terms, shedding 2,600 jobs, or 28 percent. Next in line was transportation equipment manufacturing, which cut 19 percent. Two other manufacturing industries dropped at least ten percent: food manufacturing (-4,200 jobs, or -14 percent) and electronic instrument manufacturing (-600 jobs, or -11 percent). The report goes on to say that none of the published manufacturing industries added a substantial number of jobs over the past 12 months statewide in Oregon.

Runberg says manufacturing lost jobs to the pandemic for a variety of reasons. “Early on, the industry posted temporary layoffs due to stay-at-home orders and difficulty in social distancing. As restrictions eased, many of these temporary layoffs were called back, but the recovery has been incomplete, as many businesses experience supply chain disruptions, and others experience a drop in orders.” He continues, “We don’t have much information on firm openings and closures since the onset of the pandemic. But there is room for optimism more generally for the industry here in Central Oregon. Wood product manufacturing remains a large and important employer across the region. The demand for wood products due to home-improvement projects and high demand for housing have led to an increased demand for many of the wood products developed here.”

To show appreciation to the manufacturing companies in Redmond, which generate jobs and revenue, REDI celebrates National Manufacturing Day in October each year with the Made in Redmond Tour. “We do this because manufacturing contributes a ton to our economy. We want to support those manufacturers who are helping to grow our economy,” says Stark. “We’ve had state legislators, the mayor, city councilors and the general public attend over the years.” This year, the Made in Redmond Tour was a hybrid event, he explains. “We still held a tour, and we had 100 people. But we did it all by video, and showed the videos to an audience at the fairgrounds. Now, the videos are live on our YouTube channel. Because of COVID, we had the opportunity to host the tour for more people.”

For this year’s Made in Redmond tour, REDI toured Composite Approach, a composite manufacturing company; Poltex; and Risse Racing, a maker of mountain bike suspension systems. “Two of these companies didn’t exist in the great recession, and one of them was in California,” says Stark. “They didn’t exist in Redmond at all. But now they employ 55 people and occupy nearly 50,000 square feet. This is a good example of what wasn’t in existence during the great recession but has helped Redmond continue to its 88 percent growth in manufacturing over the past nine years. This is remarkable, and not found in other parts of the country. We are leading the way.” (To view the videos of the Made in Redmond tour, please visit the REDI YouTube channel at youtube.com/channel/UC90_tbVPPmgtT3PoH9ot78w.)

“Given some of the land-use constraints and inventory of industrial or light industrial land, some communities in our region are better positioned currently for manufacturing,” says Lee. “Redmond and Prineville are seeing the most activity; however there are active expansion projects in Bend and Sisters as well. We have been very impressed by the ingenuity and resourcefulness of manufacturers in Central Oregon. Some initially lost 60-70 percent of their revenue (due to the pandemic), but have still found ways to claw back to greater viability and find new ways to generate revenue. Many more have been able to pivot the business and products they produce and are on pace to exceed 2019 sales. Business owners who are applying themselves and who are willing to take some calculated risks are also seeing some market gains.” He adds, “Right now, it’s all about adaptability.”

“Our manufacturing companies have responded and pivoted well to COVID difficulties,” says Don Myll, Bend area director of EDCO. “Most our manufacturing companies have figured it out. They have been agile and are doing OK. It’s an indication of how Bend companies are team players.” He adds, “While many of our traded-sector companies suffered significant pain during the early stages of the pandemic, and some unfortunately still are, it has been inspiring to me to see the resiliency of many of our Bend companies that are successfully pivoting in this difficult situation.”

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