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Acclaimed economist highlights issues facing Dickinson manufacturers

As the The Consumer Price Index (CPI), a key inflation index, hit its highest rate in more than 40-years, increasing 8.5% over the past 12 months, the highest rate since December 1981, Chad Moutray, chief economist for the National Association of Manufacturers, and Baker Boy President Guy Moos spotlight challenges facing the Western Edge.

Baker Boy factory line
Workers handle garlic bread slices at Baker Boy’s Dickinson plant. The plant employs 240 people but is competing to fill 15 open spots.
Dickinson Press file photo
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DICKINSON — Several major manufacturing giants, across various industries, call Dickinson home. From Killdeer Mountain Manufacturing, Steffes and Fisher Industries, to Baker Boy and TMI Systems, manufacturing remains a keystone of the southwest region's economy.

Dickinson State University Business Professor Debora Dragseth highlighted how manufacturing remains a crucial component of a vibrant local economy and addressed some concerns the industry is facing.

“Manufacturing is a linchpin. It’s a key part of the southwest North Dakota economy, Dickinson in particular. We’re really blessed by having such a diverse economy here. So if one part of the economy isn’t doing well, we can balance it off with tourism, energy or agriculture,” Dragseth said.

This month, acclaimed economist Chad Moutray, of the National Association of Manufacturers, visited Dickinson and presented a thorough economic outlook to executives of the five leading manufacturers during their bimonthly meeting.

Most dire was the forecasts Moutray shared, where he predicted a 50% chance of recession in the next 12 months.

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Challenges in the manufacturing sector

Baker Boy manufactures wholesale bakery products for a variety of businesses. It was founded in 1955 by Marvin Moos in Hebron, North Dakota, and continues under the leadership of his son, Baker Boy President Guy Moos. He explained the struggles his industry is currently facing in no uncertain terms.

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“Right now there’s a a shortage of cream cheese. In the food industry it seems like almost every week there’s a delay or lack of availability. And the same holds true whether it’s plywood materials for TMI, and steel or controllers for Steffes and Fisher,” Moos said. “The supply chain is a little weak these days throughout the entire world.”
Moos said he recently ordered automation equipment which he says would have usually taken approximately 26 to 30 weeks to arrive. But now the expected waits have climbed to 45 weeks to a year as parts and labor are increasingly becoming harder to come by.

Inflation impacting costs

Driven by increased energy and food costs, the year-over-year Consumer Price Index is up 6.4%, the highest since 1982. Year-over-year growth in consumer prices is 9.1% which is a fifty-year high. Wage growth in manufacturing nationally has increased 5.2%. Simultaneously, wage increases in service sectors have increased by double digits. Real wages have fallen in the last two years and Moutray cautioned that America will not see the Federal Reserve’s traditional goal of 2% inflation anytime in the near future.

Troubling as these figures may be, statistics can at times feel abstract and tough to fully conceptualize. Moos said the impacts of inflation on his operation are tangible and swift.

“Commodities or components that we all use are going up in cost at an unprecedented rate, so it’s very difficult to get a handle on that right now. It’s moving almost daily,” he said.

The Consumer Price Index (CPI), a key inflation index, hit its highest rate in more than 40-years, increasing 8.5% over the past 12 months, the highest rate since December 1981.

High fuel costs

Moos pointed to record high fuel prices as a root cause of inflation that has devastated millions of Americans.

“I think a fair amount of it is being caused by energy prices. Obviously, when you look at food inflation there's two things that are affecting that: higher cost to commodities, in part because of the Ukraine situation and also freight, because energy costs have skyrocketed. Freight is a big part of shipping food products too,” Moos said.

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He also offered a piece of advice to President Biden.

“If I could wave a wand I would suggest that the President come visit North Dakota and Texas, as opposed to Saudi Arabia. Let's get our oil & gas industry revved up like it was pre-pandemic,” Moos said. “Let’s create American jobs. Our oil & gas industry produces cleaner energy than they do in Russia or Saudi Arabia… Look what it does for our community, our state, our region, our country if we can buy our own energy as opposed to importing it. Good Lord, you have to ship it. That's more greenhouse gas on top of it all.”

He reiterated the point that reasonable fuel prices are essential to the success of a modern economy.

“When you think of the Consumer Price Index, over a quarter of it is measured by energy. Well if we can get energy back under control, all of a sudden our cost of living moderates and maybe it'll even come down. We hope it does,” he said. “Because let's face it, right now it’s eroding the earnings of everybody.”

According to the National Price Index, 2021 went down as the worst year for inflation since 1981. Today, fuel is up 48.0%, used vehicles are up 35.3%, hotels and motels are up 29.0%, airline fares are up 23.6%, car and truck rentals are up 23.4%, food is up 20.4% and baby food is up 10.8%.

While supporters of the Biden Administration argue that the inflation is being fueled by heavy demands and an unprovoked invasion of Ukraine by Russia. Opponents of the current administration argue that instead of addressing the root causes of inflation, out-of-control government spending, the Biden Administration and House Democrats continue to push Far-Left Socialist agendas, exacerbating America’s current economic crisis.

Workforce shortages

Moutray said moving into this summer, 45% of manufacturers could not fulfill demand due to a lack of workers. The national unemployment rate is currently 3.6%, the lowest it’s been since 1969. Declining U.S. birth rates, retirements and lower labor force participation rates are concerns that will not be solved any time soon. For every 100 job openings there are only 52 people available.

Yet, Moos feels fortunate compared to many of his industry counterparts.

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“In our case, we've got about 240 employees currently. And we'd like to add about 15 more. Fortunately, I don't need all 15 right away,” he said. “Business has been really good. And we've been set this fall, it's going to be outstanding, and we'll have more demand than what we could currently produce. That's why we're staffing up.”

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This year alone, Choice Bank has supported 12 North Dakota childcare providers with $100,000 in grant funding aimed at easing the strain of daycare shortages in rural areas.

Related Topics: DICKINSON
Jason O’Day is a University of Iowa graduate, with Bachelor’s Degrees in Journalism and Political Science. Before moving to Dickinson in September of 2021, he was a general news reporter at the Creston News Advertiser in rural southwest Iowa. He was born and raised in Davenport, Iowa. With a passion for the outdoors and his Catholic faith, he’s loving life on the Western Edge.
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