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Why North Dakota?

Metal Machining

Expert

David Lehman

Advanced Manufacturing Business Development Manager, North Dakota Department of Commerce

The economic impact of manufacturing in North Dakota can’t be ignored. Accounting for roughly six percent of the workforce, the industry is responsible for almost $1.4 billion in annual wages, according to Job Service ND. North Dakota also outputs $3.72 billion worth of manufacturing, according to the National Association of Manufacturers. To better understand the importance of manufacturing in the state, we asked David Lehman, advanced manufacturing business development manager for the North Dakota Department of Commerce: Why North Dakota?

Why is North Dakota such a good spot for manufacturing? 

“For one, North Dakota has great access to both the United States and Canadian markets. We’ll see Canadian manufacturers moving down from time-to-time to access that. We have a great workforce in North Dakota, so being traditionally agrarian with a very industrial workforce, it’s a great complement to manufacturing. North Dakota is also very well connected with high-speed internet and home to two research universities. North Dakota’s total energy production is six times greater than our consumption, providing a lot of capacity to fuel manufacturing. In addition, there are a number of great incentives for businesses wanting to expand or move to North Dakota.” 

Manufacturing accounts for six percent of North Dakota’s GDP. Can you expand on how important manufacturing is to the state? 

“Our largest segment of manufacturing is machinery manufacturing. Doosan Bobcat is a big one, with its headquarters in West Fargo. We do a lot of machinery manufacturing for ag equipment, trailer manufacturing and now we are expanding to include autonomous equipment production.” 

North Dakota has experienced an influx of manufacturing while the rest of the country is slowing down. Why is that? 

“We’ve had a lot of good ag years and have added energy manufacturing as well with respect to manufacturing goods to support the energy industry. In North Dakota, we’ve experienced a downturn in the ag industry so some of those manufacturers have seen a slight downtick in the last couple years. But, for the most part, our manufacturing is very strong. There’s a lot of companies that are doing expansions and adding automation.” 

The dreaded word tariffs: we hear all about it on the ag side. Is that affecting manufacturing at all in the state? 

“The tariffs were definitely impacting manufacturing. This is especially true with respect to Canada with higher steel prices impacting some of the manufacturers here in North Dakota.” 

Where’s that at right now? 

“The tariffs went away with respect to the steel coming from Canada, so there’s a reprieve there. Concerning some of the other tariffs around the globe, it’s an industry-by-industry thing.” 

What incentives does North Dakota offer for manufacturers? 

“There are three different types of incentives — tax incentives, financing incentives (an example is low-interest financing) and grants. In North Dakota, it helps that we’re the only state with a state-owned bank. The Bank of North Dakota is a very important economic development tool for us. If companies are looking at relocating to North Dakota, if manufacturers are looking at expanding their markets, buying equipment, we have an incentive to cover those costs.” “We have many federal, state and local incentives available through our economic development offices. The incentives that we utilize most would be the PACE program, from which companies can get a very low-interest loan — as low as one percent in some cases. In most cases, companies will use these funds for expansion, infrastructure and equipment. Additional resources include the Community Development Block Grant, Community Development Loan Fund program and the automation tax credit.” 

If I am a manufacturer looking to expand, where I can find this information? “Manufacturers can either contact us directly or work with their local developer. If a manufacturer is interested in expansion, we’ll walk them through the process and address items such as cost, infrastructure, workforce and incremental income. Based on their answers, we do a project scenario that will show which state and federal incentives they qualify for in North Dakota. Once we identify that, local economic developers will work with the manufacturers to help put everything in place.” 

Can you tell me the work that’s being done regarding the state and the workforce, and how that impacts the manufacturing industry specifically?

“North Dakota has one of the lowest unemployment rates in the nation. This means there are a number of jobs available, so North Dakota is a great place to dig in and grow your roots. One of the challenges with more than 30,000 open positions in North Dakota is that it impacts all industries, including manufacturing. Some of the highdemand occupations would be welders, machinists, painters and engineers. North Dakota is actively addressing the workforce challenges by recruiting out-of-state labor, automation and productivity improvements. The big picture is that we need to recruit more people into the state. So whether that’s through the universities or even after they’re through with college, that’s going to be a big piece of the puzzle.” 

Is there anything else that manufacturers should know about the work you’re doing and the work the state is doing? 

“So far this year, I’ve visited about 40 different manufacturing operations. Through these visits, I’ve learned that some of the costs associated with their improvements could have been offset by incentives. I think one of the biggest things to consider prior to expansion or improvements is to reach out to their economic development professionals as they are always willing to help.” 

Learn all about the different incentives and opportunities available through the Department of Commerce at business. nd.gov/manufacturing.

Fast Facts

According to the Employment and Wages by Industry report from Job Service ND, machinery manufacturing employed 5,582 employees in the state and is responsible for $307,037,399 in annual wages, which equals an average annual wage of $55,005. 

Community Development Block Grant: Through the North Dakota Department of Commerce, this provides financial assistance to cities and counties for loans/grants to businesses which create jobs for lowincome persons. To apply for funding, applicants must contact the regional council in their area. 

Community Development Loan Fund: This fund provides flexible financing through loans and equity investments not available from most conventional lenders and is available to any primary sector business with the exception of production agriculture. To learn more, go to business.nd.gov/ development_fund 

PACE Program: The PACE Fund helps communities expand their economic base by assisting primary sector businesses that make an investment or create jobs in their community. Learn more at bnd.nd.gov/business/ pace-program. 
Automation Tax Credit: The Automation Tax Credit allows up to 20 percent of the cost of qualified automation equipment to be used as a tax credit. Contact the North Dakota Department of Commerce for more information.

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Written by Fargo Inc!

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