State takes Missouri's manufacturing pulse

Republic-based Creative Specialties LLC opened at an awful time for a startup manufacturer.

The computer numerical control shop revved up its equipment with its founder as its only employee in January 2009, just as the recession was taking its toll on southwest Missouri manufacturers.

“The first year was absolutely horrible,” said John Turano, president of Creative Specialties. “I supported the shop, and we made less than I made when I was working full time.”

Turano learned, however, that things can change a great deal in a year.

“We beat our first year sales the second week of February this year,” Turano added.

That growth puts the CNC company on par with recovery predictions made in the 2010 Manufacturing and Logistics Report Card, prepared by Ball State University’s Center for Business and Economic Research. The report noted certain states – those with low tax rates, diversity of industry and government support – may return to prerecession production levels within one to two years.

The study, released June 21, grades all 50 states based on nine criteria: manufacturing, logistics, human capital, cost of benefits, global reach, diversification of industries, productivity and innovation, tax climate, and venture capital. Missouri ranked No. 13 overall, and No. 3 for tax climate.

“We find that, if you look across the United States, corporate taxes are typically higher than our foreign competitors,” said Rita Needham, executive director of the Southwest Area Manufacturers Association. “If Missouri is lower than the national average, that helps manufacturers.”

Turano believes Missouri’s favorable tax climate helped his business, as did a lower-than-average cost of living.

“Things are very reasonable out here, compared to the West Coast or East Coast,” he said. “I’m from New York originally, and I would never have been able to swing this there.”

While Turano declined to disclose first-year revenues, he said Creative Specialties’ sales are on track to come in just under $500,000 this year. The employee count is up to three full-time employees and two part-timers, and in May, the company invested roughly $80,000 in a Leadwell V30 Mill and a Leadwell T6 Turning Center to meet production demand from clients, including locally based companies Springfield Remanufacturing Corp. and Foster Manufacturing Co.

Creative Specialties is in the process of hiring two more full-time, second-shift employees, Turano said, and the company is negotiating the purchase of a 5,000-square-foot building in Republic.

It currently leases 3,000 square feet at 139 S. Walnut Ave.

Creative Specialties isn’t the only local manufacturer to begin ramping up production, Needham said, though many employers haven’t committed to hiring full-time employees. Instead, she said, they’re turning to temporary staffing agencies until they’re more comfortable the economy is really in a state of recovery.

Ball State’s study notes manufacturers nationwide are reluctant to grow their work forces, and companies are on the fence about physical expansions as well.

“There is a great deal of pent-up angst to expand or update existing manufacturing facilities or to simply build new ones,” Ball State’s Center for Business and Economic Research Director Michael Hicks said in a news release. “Those states with low tax rates and policies favorable to business creation will be the first to see new facilities in the next 18 to 24 months.”

While Missouri received an A in tax climate and B in diversification – which reduces volatility compared to markets that rely heavily on single sectors, such as the auto industry – the state did not fare well in venture capital per capita and productivity and innovation. Productivity, which takes into account the state’s research and development rank (23), patents per capita (28), and average productivity of the state (39), has been affected by the recession, Needham said.

“Even now, as manufacturers are bringing back workers, many are temporary,” she said, noting that temporary workers who may only be on the job a short time won’t be as effective as fully trained long-term employees.

To ensure that Missouri continues to have a supply of well-trained workers, SAMA recently announced a partnership with Ozarks Technical Community College to put together a manufacturing consortium, Needham said. The partnership, which includes Crowder College, is in its initial stages, she said.

Rolla-based Missouri Enterprise, a resource for manufacturers supported by the U.S. Department of Commerce and Missouri Department of Economic Development, also has a number of programs and services that help companies become more competitive, Needham said.

“Two very important missions of Missouri Enterprise are helping companies – particularly small and medium size manufacturing companies – improve their processes and productivity,” said Harold Zinn, vice president of corporate communications for the agency.

The latest program the group is participating in, called Buy American, helps companies that receive grants from the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy comply with the “buy American” provision in the American Recovery and Reinvestment Act.

“That’s a program that we as well as all of the manufacturing extension partnership centers are working with the Department of Energy to develop,” Zinn said. “There was a concern that there are some hard-to-find items difficult to find made in America. Of course, we’d like for it to be called the Made in Missouri program.”

The DOE will issue notices for those hard-to-find items to Missouri Enterprise and it can help match manufacturers to those products. Manufacturers can fill out a form describing products and uses at the organization’s Web site, www.missourienterprise.org.[[In-content Ad]]