A Sense of Community: What Makes Iowa a Great Place for Manufacturers?
Iowa has a large variety of industries scattered throughout Des Moines, Cedar Rapids and the many rural communities. That variety is at the core of what makes Iowa’s business environment so unique.
While the agricultural and renewable energy industries in Iowa rise to the top of national prominence, the manufacturing industry has carved out a large percentage of the state’s business. There are more than 5,000 manufacturing businesses in Iowa, and about 88 percent of Iowa’s exports are manufactured goods. The robust manufacturing industry in the state comes from the top-notch amenities it offers.
Des Moines has ranked among the tops of lists when it comes to best cities to live, work and start a business. But those benefits stretch beyond Iowa’s capital. The workforce around the state is educated and boasts a rugged, Midwestern work ethic. In 2017, Iowa high schools saw a 91 percent graduation rate, which ranks among the top rates in the country.
With the economy churning and Iowa businesses continuing to grow, the state is expected to see even more growth in 2018. In a survey ABI sent to board members in 2017, 80 percent of respondents expected sales to expand in 2018. About 50 percent of survey respondents expected the number of employees in their business to grow over the first quarter of the year.
With plenty of good news to go around for Iowa manufacturers in 2018, we asked some business leaders in the industry: What makes Iowa a great place to do business and live, and what are some of the challenges for the future?
IOWA VALUES DRIVE IOWA BUSINESS
Mary Landhuis fully knows what the typical worker looks like in Iowa. Landhuis, who is president of the Lisle Corp. and the company’s subsidiary EZWay Inc., based in Clarinda, has seen those Midwestern work qualities firsthand.
Iowa workers are productive, boast a strong work ethic and stay loyal. Nationally, the average timespan that an employee works for the same company is four years. In Iowa, it’s 12 years. It’s a big reason why Lisle Corp., a manufacturing company that produces automotive specialty tools, has been in business for 115 years.
“People are what has allowed us to stay in business for 115 years, there’s no doubt about it,” Landhuis said. “That’s the biggest part.”
Landhuis took over as the president of Lisle Corp. last month after serving as the president of EZWay for 15 years. She worked in Chicago before coming back to her hometown of Clarinda.
Landhuis has heard from people around the country who wondered if Lisle Corp. could have seen the same success in another state as it has in Iowa. One person she knew in Colorado said that Iowa was the perfect place for the company to plant its roots and grow for more than a century.
“He commented and said Lisle Corp. would not be able to achieve what it does if it were to locate to Colorado,” Landhuis said. “We have the people. It’s interesting to hear the great comments people out of state have about us.”
Many other Iowa business leaders agree. Because of Iowa’s agricultural background, workers are ingrained with typical Midwestern values.
“It’s kind of a general work ethic attitude and an attitude that you’ve got to earn. It’s not expected,” said Charles Sukup, president of Sukup Manufacturing. “We have this ag-centric, solving problems on your own, being self-starters, good work ethic type of attitude. I think that comes from our long history on the farms.”
Beyond the work ethic of employees, the Iowa business community at large is open and accepting of people entering the space. Fred Buie learned that when he first came to Des Moines in the late 1990s to buy Keystone Electrical Manufacturing in Des Moines. After working at General Electric for most of his career, Buie wanted to buy his own company. He was looking for a small company, and Keystone was the perfect size and fit his vision.
He officially bought the company in 1998. What struck him when going through the buying process was how supportive the business community was, from the banks to the competition in the space. After working the majority of his life on the East Coast, Buie, who is African-American, felt like he could just focus on his business in Des Moines, rather than worry about politics or any other issues.
“Coming to Des Moines as an African-American, I didn’t feel like I had to deal with that at all,” Buie said. “I would say that it was very easy for me to focus on running the business. I didn’t have to deal with a lot of social issues, political issues or any other kind of issues that you could run into in trying to get your business going.
“What I found was that the banking community and the business community in the Des Moines area was very, very supportive and that caught me a bit by surprise.”
Just as the communities provide support for them, Iowa manufacturers and businesses provide crucial benefits and give back to the cities they live in.
In most rural areas, manufacturing businesses serve as some of the top job providers in the area. Dave Zrostlik, president and CEO of Stellar Industries based in Garner, a town of about 3,000 people, said his company provides about 450 jobs across its main factory in Garner and others around the state.
Stellar Industries is also an employee stock ownership plan (ESOP) provider, giving employees the opportunity to invest in the company. Zrostlik also just retired from the school board after serving for more than 15 years. He’s as invested in his community as the community is invested in Stellar Industries.
“When we do things at the company, we always think of how it’s going to impact the community and the people around us,” Zrostlik said. “We want to make sure we’re a good citizen of our communities because we count on our community to support us.”
Zrostlik isn’t alone. Many other business leaders in Iowa help give back and serve the communities they live in. Lori Schaefer-Weaton, president of Agri-Industrial Plastics in Fairfield, said the company strives to make the community a better place, whether that be funding various community buildings inside the city or providing livelihoods for its about 100 employees.
“We consider ourselves an important part of the community of Fairfield,” Schaefer-Weaton said. “Both in what we do and the employees we provide livelihoods for. We’re just a big community player in terms of supporting other things behind that, like quality of life sites, things like our civic center or buildings.”
A SMALL-TOWN QUALITY OF LIFE
Bob Wersen, president of Interpower Corp. in Ottumwa, was born and raised in California. While attending the University of California-Berkley in the 1960s, Wersen started his first business to help pay for tuition. Although it was small in the large scheme of business, Wersen’s company was relatively successful — he graduated with only $600 of college debt.
As the company grew, Wersen wanted to have more control over how his products were designed and manufactured, which made California a difficult place to stay. He researched and talked with many states, but settled on moving to Oskaloosa in the early 1990s.
That move was successful as well — his business has grown about three times in total revenue since then and has remained very profitable. But while the business environment in Iowa was right for Wersen, he appreciates the quality of life the state offers just as much, particularly in traffic and drive times. In California, drive times are notoriously long, especially in the Los Angeles area. The drive from Oskaloosa to Des Moines — about 60 miles — to catch dinner and a show is usually an hourlong, cruise-control trip.
When Wersen and his wife went back to California last year to visit family, they mapped out what they thought was a 4 1⁄2-hour drive from Orange County to Fresno. About six hours later, they arrived, late for dinner.
When Wersen talks to his acquaintances in California, they can hardly believe the lack of traffic in Iowa.
“I was explaining that to a California acquaintance, and he said, ‘You’re putting me on,’ ” Wersen said. “He couldn’t believe it. The traffic is really, really an attractive thing. You can go to any place.”
The small-town feel also is a plus.
It’s safe and provides a quality environment to raise a family, away from the hustle and bustle of big cities.
Schaefer-Weaton left the state to attend Valparaiso College in Indiana. She started her career in Chicago and lived there for about 15 years before moving back to Iowa to take over her father’s business. Beyond avoiding her long commute, about 45 minutes each way, she wanted to raise her family in a more close-knit community, unlike the large suburbs of Chicago.
Her children didn’t have to choose their sport at a young age. They could essentially do whatever they wanted with school activities.
“That was the driver, getting close to family, having a good quality of life and watching my kids have a chance to do a lot of different things,” Schaefer-Weaton said. “We’re a small town. If you want to go out for tennis one year and golf the next, you can. Knowing your teachers, knowing your kids’ friends and having that connection to the community is a big deal.”
A CHALLENGE FOR THE FUTURE
The values and community-driven mindset give Iowa a leg up on other states. But because many manufacturers are based in rural locations across the state, one trend has been concerning for many: a declining workforce. Iowa’s unemployment rate fell to 2.8 percent this year, the lowest in almost two decades. That’s good news for the economy, but not necessarily for manufacturers. Iowa has slow or declining population growth everywhere except for its major cities. That causes a problem for manufacturers looking for production employees.
“It’s scary to see the polls from high school kids not looking at manufacturing or vocational jobs in Iowa that are great-paying jobs,” Sukup said. “They are great skills, and people thinking that’s not attractive enough is scary. There’s great potential.”
The trend in declining production workforce has been a nationwide problem as well, but Iowa has started some quality programs, like Elevate Advanced Manufacturing, to invest in the next generation of workers.
“Workforce will be an ongoing challenge. It’s not just in Iowa but across the nation,” Landhuis said. “Promoting more of the trades and promoting those skills for children in the state who don’t want to go on to a four-year degree is beneficial.”
One remedy some business leaders proposed is using immigration — whether that be from other states or other countries — to bolster the workforce. Buie said many of his workers are immigrants.
“We have a very, very diverse workforce,” he said. “I can’t take credit for originating this idea or looking into the future and seeing this trend coming, but that’s where we’ve been able to find most of our production workers. Embracing the immigrant community is one key thing.”
Buie said it will be tough to increase the manufacturing workforce from within. It’ll be key for companies to expand their horizons when hiring workers.
“You have to be open to all avenues of getting employees,” Buie said.
Whatever the future may hold for the manufacturing workforce, Iowa has been providing assistance and advice for its manufacturers for many years. Iowa State University has a Center for Industrial Research and Service (CIRAS), which provides low-cost assistance for manufacturers. Many leaders have credited the center with providing quality and crucial assistance at an affordable cost.
ABI also provides leaders with connections for advice and discussion, which helps their businesses grow and allows them to continue to serve communities.
“Just the resources, the assistance and having the access to a pool of people to pick up the phone and call and to talk to about an issue is very valuable,” Buie said. “Here in Iowa, I find business leaders very willing and open to doing that.”