COMPETE SMART CONFERENCE

Manufacturers Make Noise

By Evelyn Pyburn

Big Sky Business Journal

There are over 2000 manufacturers in Montana. A record number of them attended the Compete Smart Conference, in Bozeman this fall. From mandolins to toys for pets, from sausage to caramels, from furniture to fly fishing gear, from pipe squeezers to construction material, from pool cleaners to monster trailers, manufacturers from one corner of the state to the other, from the smallest of communities to the largest, came to sharpen their business skills, learn more about their industry, and about each other.

Among the things they learned is that in concert they produce more than $4 billion annually, generating about 25 percent of the state's economic base. They learned that Montana manufacturers withstood the recent recession better than those of other states, and are increasingly being focused upon as the state's best hope for future economic prosperity -- and, about all that, they were urged "to make some noise."

Given that wages in manufacturing are about 50 percent higher than other wages, "It's not rocket science to know that if you want to improve our economy, in Montana, you have to grow manufacturing," said Dave Gibson, Governor's Office of Economic Opportunity.

The sentiment was echoed by Lt. Governor Karl Ohs, "If we are going to grow -- manufacturing must grow." And, Montana has a lot of room to grow its manufacturing base, said Ohs, noting that manufacturing comprises only eight percent of the state's work force, which is only half that of other states.

The competition is stiff, said Ohs, "For every job and every business in the state, there is at least one other state trying to take them away." To the extent that Montana isn't competitive in retaining and growing business, "we will fall behind," he said.

Public policy is important in creating an environment conducive to growing manufacturing, said Ohs, telling the attendees, "There are a lot of things to talk about and a lot of things you can do. It comes down to communicating with one another, networking and learning what pit falls and successes you each have had, and communicating with the policy makers." He urged them to stay involved -- to "make a noise."

The necessity of making noise was a lesson conveyed by the event's featured speaker Ken Schmidt, former director of communications for Harley- Davidson, one of the individuals responsible for the company's celebrated turnaround.

Gliding into the luncheon on a deep rumbling, bright and shiny "Harley," Schmidt declared that it is nigh impossible for anyone to ignore the sound of an approaching Harley Davidson. "A Harley sounds like the voice of God," he said, declaring "noise is good." He went on to tell the story of "The Rise, Fall and Rise of Harley Davidson," a company that has become a national icon -- "from the brink of ruin to global domination."

The conference was co-hosted by Yellowstone Harley-Davidson and the Montana Manufacturing Extension Center. It was sponsored by First Interstate Bank, NorthWinds Publishing & Printing, Montana Dakota Utilities, Montana Department of Commerce, Montana State University, Darigold, and iPark.

During the conference, there was quite a lot of noise made about "clusters," and how their development and identification can help to grow the state's manufacturing base. "Clusters are important," said Gibson, "It's how we build collaboration and partnering." Clusters start with successful companies that are already here, he explained. Economic development efforts focus on determining what they have in common and what common needs they have. For example, "If I knew there were enough of you who used a certain supplier we would work on that company, trying to get them to locate here," said Gibson.

Companies interested in manufacturing clusters for aerospace and wood-based manufacturing attended several pre-session symposiums offered at the conference.

A unique cluster has been identified and has entered into a formal arrangement in one Montana community, Lewistown. "You can't believe the kind of effort that is coming out of some very small companies in central Montana," said Dale Detrick, a MMEC field representative, who recognized what was happening and was instrumental in helping the business owners to organize in order to capitalize upon their joint strengths. Called the Central Montana Manufacturing Alliance, it draws upon businesses in Lewistown, Moccasin and Monarch.

The catalyst to the arrangement is a company called Precision Lift, Inc., in Monarch, Montana. The company, headed by Sandra Schwartz and Chris Croff, is a developer and marketer of external load equipment for helicopters, including the Heli-Basket, an aerodynamically stable, multi- purpose carrier that is used for fire fighting, decontamination, emergency rescue and cargo transport.
Precision Lift, which started as a home-based business, draws upon the expertise, production and support of at least 13 other businesses throughout the area, in the process of manufacturing the Heli-Basket. "Montana has a lot of capabilities. We have found if you know people, you can make a living here, it's just different," said Schwartz, "We make it work. Our sales are going up every year."

"We were brought together by our diversity," said Tom Spika, owner of Spika Welding & Manufacturing, which does the bulk of the production for Precision Lift. Spika's company has grown four-fold as a consequence of the alliance. He listed the skills, processes and products that the alliance members brought to the table, saying, "If I was describing a large company, it would be the description of an impressive operation." In coming together and getting better acquainted with each other, Spika said, that they have discovered that together they can handle almost any project. From sheet metal forms to welding, CNC machinery to paving and concrete, engineering and drafting. "We can do a lot," said Spika, "but when you bring us together we can do a lot more. By joining us together it opens up opportunities."

Their alliance is a forum for sharing ideas, capabilities, and opportunities that lead to the further development of member businesses and the economy of central Montana. "It is not our intent to be an economic development organization," said Spika, "nor in 'what's in it for me?' We are in it for the benefit of the group, to try to help grow businesses."

Gibson noted that the one thing that economic development people in Montana have determined is that Montana's manufacturers are hugely diversified. "It's a group that's hard to get your arms around," he said, "It's hard to know how we can help." Working with clusters is an answer to that problem.

And, perhaps there is an innate tendency among Montanan's to "cluster" anyhow. It was noted that in other parts of the country when one approaches a business about doing something, if they can't do it they just send you on your way. But in Montana, business people demonstrate a more creative bent. They will say, "No, I can't do that, but I know a guy who can do this, and another who can do
that, and together we could do thus." And, such are how clusters are born.

Repeatedly, throughout the two-day event, the Montana Manufacturing Extension Center was lauded for their efforts in helping individual manufacturers to improve and grow, as well as for their collaborative efforts with other groups. MMEC acts as an education arm, explained Geoff Gamble, President of Montana State University, "And, I've seen their effect all over the state."

"How do we compete?" quizzed K. C. Walsh, President of Simms, about his company's stiff challenge from Asian manufacturers, "We `compete smart,'" he said in direct reference to MMEC training programs. Walsh said that Simms, a designer and manufacturer of top-of-the-line fishing apparel in Bozeman, is the "last man standing" when it comes to companies in the United States that have managed to withstand the low-cost of production in Asian countries. He credits much of their survivability to the fact that they are located in Bozeman where
they can draw upon workers who have "a passion for fishing."

Simms, especially noted for their quality waders, has grown significantly over the past 12 years, according to Walsh. They are the first private brand to be accepted by Orvis, and were named as Exporter of the Year. "Quality has set us apart from any one in our field," said Simms, adding that their motto is, "Good enough is not enough."

"We are product driven," Simms told other manufacturers at the conference. "We listen to our customers." The company secured six patents from 1993- 2000.

Mike Wier, General Manager of NorthWinds Publishing and Printing, in Great Falls, drew also upon his experience as a field representative for MMEC to turn his company around. Keeping costs down was the secret in pulling the bottom line back into the black, explained Wier, who took over the ailing company in 1998. It has since become a premier publisher of directories in the northwest. Today the company "works for about 2000 businesses in Montana."

His motto, said Wier, is "A dream changes nothing, a decision can change everything."

MMEC has signed up 497 clients and recently surpassed their 1000th project, reported Director Steve Holland. Anticipating reaching their 500th client by the end of the month, "We plan on making some noise about that," said Holland, picking up on the theme set by the keynote speaker from Harley Davidson.

"Your noise is how someone who knows you describes you when you aren't there," according to Schmidt. "When other people are talking and are describing your business; what kind of noise do you make?" he asked , "Do you make a Harley Davidson noise?

Schmidt told the story about Harley Davidson -- a company that went from being a top-of-the-line business, to one widely criticized for poor quality. The company leadership made the mistake of taking their customers for granted and of attempting to diversify into product lines about which they knew very little. "The reality is the quality loss was hugely exaggerated," said Schmidt, "but it didn't matter, because you are how they define you."

Saved from the brink of bankruptcy, with quite literally only minutes left to spare, the company was given a second chance. In 1985 they introduced a "landmark" 1340 cc Evolution Motor -- the best in 20 years. They sat back and waited for the orders to flow in. It didn't happen, said Schmidt. Their customers were still mad at them.

For the first time the company started listening to their customers and their dealers, said Schmidt -- with some amazing results. They started to make some noise, and part of that noise was in recognizing their employees and making them feel good about themselves and what they did. "We got involved with people on their turf," he said, "We de-mystified what we were all about." In the end it worked, said Schmidt, because at heart, no matter how angry their customers had been, "They wanted to see Harley Davidson succeed." It is after all, an American icon.

The leadership of the company started "making positive noise about positive leadership. They were making an effort to make people feel good and to feel valued," explained Schmidt. Everyone, he continued, "needs to feel valued, wanted, appreciated. They want to be part of something."

An important discovery made by the company -- one that had been staring them in the face all along -- was that bike riding is a very social activity. You get two bikers in close proximity to each other and they are going to speak to each other, he explained -- that's partly how the bad news about Harley Davidson had spread so rapidly and had become so entrenched.

At the same time many of the social organizations that used to serve community social needs have ceased to be, or are far less serving that need -- fraternities like the Elks, the Moose, etc. The idea was spawned that Harley Davidson clubs might be a popular social outlet. Each dealership formed a club -- membership was acquired by being a Harley Davidson owner. The success of the clubs pushed the company forward in many respects, attracting higher-income customers, who insisted on more attractive places in which to do business and in which to meet. And, they were people more willing to spend more money on accessories. Today there is a 54 page Harley Davidson parts and accessories catalogue.

The company's renewed success, concluded Schmidt, is based upon the goal of "lifting people up" -- customers and employees, alike. "If you make me feel good, I'm going to make you feel good right back," he said.