Manufacturing Packs Punch in Iowa’s Economy

September 11, 2023 | Manufacturing packs punch in Iowa's economy Emery Styron, Corridor Media Group,

Iowa’s reputation as a major national producer of agricultural commodities such as corn, soybeans and pork may cause some casual observers to overlook the potent economic impact of manufacturing in the Hawkeye state. Humming factories in Iowa — many of them utilizing advanced technology — accounted for $38.56 billion in output in 2021 — 17.14% of the state’s total GDP — while employing 225,000 people, nearly 14.5% of the state’s workforce at an impressive average annual compensation of $79,356, according to figures compiled by the National Association of Manufacturers.

Those figures may surprise some people, but not ABI members involved with manufacturing. They are well aware of the importance of making things to the state’s jobs picture and GDP. And they’re bullish on the future of manufacturing in Iowa, with high praise for the state’s workforce, location and business climate.

‘Overwhelmingly Good’

“Each year, the business climate continues to improve for employers and manufacturers in the state,” said Dave Zrostlik, president of Garner-based Stellar Industries, an employee-owned manufacturer of high-quality work trucks and trailers, along with service truck and van accessories.

“We started here, so we didn’t have to move here,” said Mr. Zrostlik, who believes the word on Iowa’s business-friendly climate is spreading, motivating companies across the U.S. to relocate to Iowa.

One of many multi-generation manufacturers in Iowa, Stellar roots date back to 1961 when Mr. Zrostlik’s father, Francis, began retooling tire molds for the retreading industry in a Quonset hut behind his home. His company, Iowa Tool Molding, became Stellar Industries in 1990 and has grown to five locations in Iowa, Nebraska and Pennsylvania, employing more than 800 team members and serving a global market.

“I think it’s fantastic, what the current legislature has been doing. It’s overwhelmingly good for a start-up manufacturing business in Iowa,” said Mark Barglof, who launched Algona-based Kinetic Technologies in the fourth quarter of 2021. One of Kinetic’s main product lines is robotic welding fixtures and positioners that allow manufacturers to weld bigger, more complex parts and increase production capacity. The company, which employs 12, also provides design and fabrication services.

Mr. Barglof praises Gov. Kim Reynold’s pro-business leadership and various supportive programs the state offers, including 260E, 260F and Industry 4.0 grants. The governor and legislature “are doing a lot of really, really good things, and they have through the pandemic,” he said. 

Along with a supportive state government, rural economic activity is impressive, Mr. Zrostlik said. He praised North Iowa Area Community College at Mason City and local groups such as Kossuth County Economic Development Group and the Algona Area Economic Development Corporation for their efforts to make rural communities attractive to manufacturers and their employees.

ABI Executive Vice President Nicole Crain concurs with Mr. Zrostik and Mr. Barglof on Iowa’s support for manufacturers. “We have a great climate in Iowa for manufacturing and manufacturers,” she said.

“A few things have really helped multi-generational companies and companies looking to automate.” She listed grants that helped small manufacturers, continuing reductions in workers’ compensation insurance rates and a favorable tax climate. 

“We are fortunate to be in Iowa. Local governments work together with industry to make communities stronger and businesses stronger.”

The trio also agree that business conditions are improving in the state. The numbers back that up, said Ms. Crain. “A few years ago, we were trying to get to $30 or $32 billion (in state manufacturing output). Now we’re at $38 billion. We have a ton of small manufacturers in rural Iowa. They are really helping the sustainability of rural communities. We definitely see the manufacturing economy strong in Iowa.”

Workforce Challenges Remain

Business is never without challenges, however, and the workforce is at the top of the list for many Iowa manufacturers and other firms.

“Just finding housing and daycare in rural Iowa is hard,” said Mr. Zrostlik. Availability of daycare is key “to attracting young people to come join our factories.” 

Partnerships with Iowa State University, the University of Iowa and University of Northern Iowa, along with Northern Iowa Community College, have been helpful in recruiting younger workers, he said. “People come in for summer internships and many stay as well,” he said.

Supply chain issues have eased over the past few years, but some components are still issues, he said. Having been spoiled by long-term suppliers with stable pricing until the pandemic upended relationships, Stellar has developed secondary suppliers to improve resiliency in the future.

“Workforce, workforce, workforce,” is the big challenge, said Ms. Crain. Elevate Advanced Manufacturing, a 10-year-old program to educate junior high and high school students, and their parents, manufacturing careers, is one part of the solution, she said. The state’s emphasis on training workers is helping manufacturing, as is the adoption of technology. “Automation is helping upskill current jobs and helping companies stay in communities,” she said.

Mr. Barglof said his company has not yet had trouble finding workers and is fortunate to offer a product that helps solve workforce problems. “There is help through technology for workforce solutions.”

Iowa is one of the top five states in the country for adopting workforce technology, but it will have to get even more creative with workforce solutions to attract people to rural areas.

Iowa’s Strength: ‘It’s Iowa’

Iowa’s core strength in manufacturing lies in the people and culture of the state and its central location, all agree.

“The people” are Iowa’s indispensable asset,” said Mr. Zrostlik. “That’s been the key for us to be successful all these years. The workforce understands what it’s like to come and put in a hard day’s work. We’re 100% employee owned. They understand that if a company is profitable, it’s going to be felt in their ESOP accounts.”

“There’s a real sense of community” that extends to the relationship between companies and team members, adds Ms. Crain. “We have the ability to speak, to contact legislators. Everyone works together.”

“It’s Iowa,” said Mr. Barglof. Logistical costs are fairly manageable with access to air, train, truck and river transportation. “The administration makes it easy to do business. At the local level, economic development people do a great job. We have the best work force in the world. They are smart, entrepreneurial and hard workers. That makes it a fantastic place to do business.”