Montana manufacturing continues to be one-fifth of the state’s total economic base, according to a new report released by the Montana Manufacturing Extension Center at Montana State University.

The 2023 Montana Manufacturing Report provides a wide variety of data about manufacturing, shows the results of surveys given to manufacturers and displays how MMEC’s services provided help the industry. The Bureau of Business and Economic Research at the University of Montana conducts the annual economic analysis and develops the report. This report marks the 27th year of collaboration between MMEC and BBER.

The report covers the year 2022. According to the report:

* Manufacturing makes up 21% of Montana’s economic base.

* Careers in manufacturing pay about $57,180 in earnings, which is above the state average.

* Over 4,400 manufacturing firms are in operation in Montana, including sole proprietors

* Manufacturing employs more than 22,500 employees

*Manufacturing accounted for 5.5% of total state earnings at $1.95 billion.

* Manufacturing made up 6.6% of the gross state product at $3.3 billion.

* Employs 4.4% of Montana’s nonfarm workforce, with about 22,700 employees.

* Produced 6.6% of Montana’s inflation adjusted output with a value of $3.3 billion;

* Montana manufacturing employment and output growth was a little under double the national average in 2022.

“This year’s report confirms that manufacturing is a robust sector within the Montana economy,” said MMEC Director Paddy Fleming. “We continue to see strong increases in employment and earnings for Montana workers. Moreover, manufacturers are optimistic about starting new businesses here, with the total number of manufacturing firms growing to more than 4,400. In particular, there is large growth among companies that produce food and beverages, transportation equipment and advanced technologies such as photonics.”

The report states, “Montana’s manufacturers face different challenges than the nation as a whole because the composition of manufacturing production is different and is primarily concentrated in non-durable production – the Bureau of Economic Analysis defines nondurable goods as goods that have an average life of less than three years. The two largest manufacturing sectors in Montana, petroleum and coal, and wood product manufacturing, are not among the seven largest sectors nationally, demonstrating how the Montana manufacturing sector differs substantially from the experience of the country.”

In the aftermath of the 2020 COVID-19 recession, Montana manufacturing employment, particularly durable manufacturing, bounced back relatively quickly from the deep economic drop in the second quarter of 2020. Last year, we predicted that durable manufacturing would be higher than pre-COVID levels within a year or so. Employment in this sector returned to pre-pandemic levels in 2021.

Montana manufacturers are active in global markets as well. The three largest export sectors for Montana in 2022 were: chemicals, machinery and transportation equipment. Food, beverages and tobacco fell out of second place during the pandemic. By far the largest export market is Canada, accounting for almost 30% of Montana’s manufactured exports. In 2022, the remaining large export markets were: China (2), South Korea (3), Mexico (4), and  Belgium (5).

Manufacturing in Montana remains predominantly driven by small businesses. According to the U.S. Census Bureau, Montana houses 1,415 manufacturing firms with employees, and a significant 68% of Montana manufacturers employ less than ten individuals. There are no manufacturers with 300 or more workers in the state.

In 2022, about 48% of manufacturers saw increased sales and production, though profits declined, with 33% of durable and 42% of nondurable manufacturers reporting lower profits than a year ago.

A year ago, 55% of nondurable manufacturers increased their capital expenditures. In contrast, in 2022, this proportion decreased to 42%. Durable manufacturing, on the other hand, saw no significant decrease in capital investment.

Two-thirds of firms had a stable workforce size compared to 2021. Less than half, particularly 49% of nondurable firms, reported worker shortages in 2022.

A growing number of Montana-based manufacturers are adopting a more optimistic outlook despite facing challenging economic conditions. Specifically, 32% expect improvements in their supply chains in 2023, which is a notable increase from the 8% who ssexpressed the same sentiment last year.