Why Manufacturers Are Betting Big On Iowa

From Cedar Rapids to Des Moines, manufacturers are putting hundreds of millions of dollars into Iowa manufacturing facilities and expansion projects. The investments are creating hundreds of jobs and suggesting that manufacturers see great value in putting down roots in the state.

The state’s strong manufacturing workforce, easy access to transportation and energy, and central location make it a hot spot for companies to expand.

Sub-Zero — a Wisconsin-based high-end kitchen appliance manufacturing company — is investing more than $300 million in Cedar Rapids to build two large facilities
and bring more than 500 jobs to the area. Bacon production factory Fair Oaks Foods recently opened a $134 million, 150,000-square-foot-facility in Davenport, while Amazon opened a new last-mile delivery station and Robotics Fulfillment Center.

Robinson, a custom metal manufacturer headquartered in De Pere, Wisconsin, is on track to open a 640,000-square-foot-facility in Altoona this January, and Algona-based Kinetic Technologies is opening a second facility in Des Moines this fall.

One big reason companies are choosing to grow in Iowa is its strong manufacturing base, company leaders said. Manufacturing accounts for 17% of Iowa’s Gross Domestic Product, contributing $35 billion annually to its economy and making it the state’s largest industry, according to the Iowa Economic Development Authority (IEDA). What’s more, the state expects manufacturing employment to grow significantly over the coming decade.

“We cast a wide net,” said Sam Thomas, president at Robinson Inc. “We looked at several states, mostly in the Midwest, but across the country. We felt like Iowa was a good fit for us,” he said. “That labor data piece was a pretty important part of our decision. The manufacturing base is pretty sound there.”

The facility will employ about 100 people at first, but Mr. Thomas said he believes it could easily add 400-500 jobs in the next five years.

“This is a big step,” he said. “It’s our first venture out of Wisconsin and we’re very excited about that. We want to take care of our people. People spend a lot of time at work and it should be fun.”

Iowa’s central location and easy access to major interstates is also a big selling piece for manufacturers looking to expand.

“We transport large, heavy units that are expensive to ship. Logistically, Iowa made a lot of sense,” Mr. Thomas said. “This is the first green space we’ve built since 2000,” Mr. Thomas added. “This facility will be far more efficient than other spaces we’ve moved or expanded into. It’s built for optimal flow and efficiency.”

That existing workforce and industrial infrastructure can make expansion easier for companies that already operate in the state. Instead of building an entirely new supply
chain, manufacturers can work with established suppliers, transportation networks and communities experienced in industrial production.

Kinetic Technologies, a systems integrator for robotic welding, has been in business for about five years. It will keep its mechanical design and production in Algona and will use its new Des Moines facility for technology development.

“When you need to automate the welding process, there are several components you need,” said Mark Barglof, president and owner of Kinetic Technologies. “You don’t just buy a robot and bring it into the facility. The robot and system need to work together to position the part.”

The Des Moines facility will be a place to bring customers to run test cases with the robot, troubleshoot problems and then send out the final product. It plans to keep manufacturing in Algona but will work on product development in Des Moines, Mr. Barglof said.

“We’ve got easier access to customers in Des Moines,” he said. “We ship our cells all over the country, and most of our customers aren’t in Iowa."

But both Mr. Thomas and Mr. Barglof said a key to keeping manufacturers investing in Iowa is for the state, educational institutions and companies to continue investing in the future workforce. “As boomers retire and younger people come into the workforce, the math doesn’t work,” said Mr. Thomas. “We’re fighting an uphill battle to get the labor we need.”

Automation, robotics and AI will certainly help fill some of those gaps, he said, but skilled, qualified workers will always be needed. In recent years, Robinson has developed the Robinson Training Academy, which gives students and entry-level employees the chance to learn how to work in the company’s different departments and use the new technology before being matched with a mentor on the shop floor. It gives employees the chance to advance in their careers, he said, and has worked great as a retention tool.

“There are lots of machine shops here,” Mr. Thomas said. “We’re not competing for revenue or customers but we are competing from a labor standpoint"

Iowa is doing a great job in focusing on STEM in the classroom and helping students understand what manufacturing jobs look like, Mr. Barglof said.

Iowa is also trying to address one of manufacturing's biggest challenges: finding workers with the right skills. In June, the state announced a $4.7 million federal grant for its Advanced Manufacturing Pathways Development initiative. The program is designed to help employers train workers in advanced manufacturing and prepare employees for increasingly automated and technologically sophisticated factories.

As manufacturers modernize their factories and build new capacity, the state's challenge will be making sure there are enough skilled workers and infrastructure to support continued growth.

“There are a lot of people who don’t understand the current state of manufacturing and what the future of it looks like,” said Mr. Barglof. “With automation and AI, we are extremely productive, facilities are fantastic and have amazing capabilities and technology inside of it. As manufacturing continues to evolve, I hope we see more interest in manufacturing.” ABI