Montana State University

Spring 2012

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Mountains and Minds

Keith Red Elk and Harold Buck Elk, production manager and CEO, respectively, at Fort Peck Tech Services, Inc., are guiding an effort to grow a reservation-based enterprise to take advantage of the region's oil and gas boom.

Making something of it April 30, 2012 by Sepp Jannotta • Published 04/30/12

An MSU-based program helps Montanans manufacture success
Surrounded by miles of wide-open Montana prairie, there is a house on the road north into tiny Opheim where the UPS truck stops nearly every day during the winter months.

From the small factory inside the attached garage, Granrud's Lefse Shack ships traditional Norwegian flatbread to homes all over the nation and to grocery stores across Montana and the Dakotas.

But co-owners Alice Redfield and Twyla Anderson said one of the most important visitors to pull into their driveway was an itinerant industrial engineer working with the Montana Manufacturing Extension Center.

MMEC, Montana State University's statewide manufacturing outreach and assistance center, had a manufacturing consultant in Opheim that day because, as new owners, Redfield and Anderson wanted to make the most of their business.

"Manufacturing is a high-wage job creator in Montana." - Steve Holland

"If we hadn't heard about MMEC before buying the business, I don't think we would have thought to talk to an industrial engineer," Anderson said of their dealings with Dale Detrick, the MMEC engineer from its Billings field office. "But Dale came in and we looked at every little detail of how our lefse was made. And by the time it was all said and done, we were a much more efficient business."

Granrud's Lefse Shack is just one of 750 clients scattered across Montana that have turned to MMEC for, among other things, help in quality management analyses and ironing out efficiency-
killing bottlenecks.

In a state known for natural resource-based industries, the statewide impact of manufacturing, and therefore MMEC, could be easily underestimated.

Montana manufacturers--from the petrochemical and oil refining industries to the state's many mom-and-pop companies--sell more than $10 billion in products annually, according to a 2012 report on Montana's manufacturing sector by the Montana Bureau of Business and Economic Research. Those businesses pay close to $1 billion in wages to nearly 20,000 workers.

"Manufacturing is a high-wage job creator in Montana," said Steve Holland, MMEC director.

Founded in 1996, MMEC has served companies in 54 of Montana's 56 counties. In the last two years, 71 surveyed clients said they have created or retained 1,172 jobs with increased or retained sales of more than $395 million, Holland said.

MMEC's five field engineers help companies become more efficient job creators with larger profits. By leveraging its position as a state-funded university extension service affiliated with MSU's College of Engineering, MMEC can offer manufacturers its services at nonprofit rates that are about 40 percent lower than those of private sector consultants, who are often located outside the state.

A 2011 Montana BBER report on MMEC's statewide impact estimated that for the roughly $200,000 in state funding that MMEC receives annually, Montana reaped $1.6 million in state income taxes, a return on investment of more than 8 to 1.

Montana reaped $1.6 Millon in state income taxes, a return on its $200,000 investment of more than 8 to 1.

Holland said the expertise of MMEC field engineers might have the largest impact on those small companies that are sprinkled across the state's rural areas. Survival can hinge on a very slim profit margin. That margin is often affected by the constraints of operating a factory in a place like Opheim, where manufacturing efficiencies are a necessity to make up for the lack of available employees.

From its beginning in 1977 under founders Evan and Myrt Granrud, the Lefse Shack was a throwback, with homemade machinery and tools assembled in the Granrud's garage. The staff has always been a seasonal crew predominantly made up of farm wives.

While the amount of lefse rolling out of Opheim each season has grown through the years, the population in this stretch of northern prairie has been declining. With Opheim's population at less than 100, Granrud's understaffed production line often bottlenecked the flow of lefse.

"We needed more automation in our production line," Anderson said, describing how one or even two of the facility's four dough-rolling machines often sat idle for lack of an operator. "We weren't able to keep up. Dale Detrick talked to us about how we might work more efficiently with fewer employees."

In 2004, on Detrick's recommendation, Anderson and Redfield contacted an engineer in Glasgow who designed a computer-controlled sensor that would engage the rotating mechanism on the dough-rolling tables only when lefse dough had been rolled flat. That eliminated the need for the converted sewing machine foot pedal that had turned each of the machines--two operators could run four stations.

Now, Granrud's whirling machines can daily transform 1,000 pounds of potatoes into 700 packages of lefse. That has helped the Lefse Shack see a 10 percent increase in sales and a longer production season, Anderson said.

Where one adjustment to a production line might help in some cases, many manufacturers enlist MMEC to help with their entire plant design, as well as to implement the waste-cutting lean manufacturing principles that came out of Toyota's automobile factories and have become the gold standard in manufacturing.

Walter Wunsch, a German-born entrepreneur who moved his sensor company, Spectec, from Arizona to Emigrant in 1989, credited MMEC for helping implement lean design in the company's 9,000-square-foot facility.

The factory Wunsch built into the side of a mountain is capable of annually turning out 80,000 high-tech sensors--speed sensors, flow-meter sensors, proximity sensors and a wide variety of custom sensors--for industrial, military and aerospace applications. For example, Spectec makes sensors for Formula One race cars, the International Space Station and Bradley Fighting Vehicles.

That means any one of a dozen different sensors are moving through the process at any given time. That's where the lean design theory has added efficiency, Wunsch said. Now, each step in the process is laid out so that workers can move a product forward without any item in the production line impeding the progress of another.

"We're a small specialty manufacturer," Wunsch said. "And the thing we have going for us is a versatility that bigger companies don't have. And 'lean' coupled with the sophistication we have built into our facility makes that possible."

With a track record of putting companies on their best competitive footing in a tough global economy, Wunsch said he hopes MMEC will remain fully engaged in Montana's manufacturing scene.

"The profit margin increase we saw after going through the lean process also helps us offer our employees health benefits and an IRA," he said, pointing out that MMEC's help has real consequences economically because the jobs created typically offer higher wages than the state average.

On the Fort Peck Reservation in Poplar, where unemployment is a persistent problem, Harold Buck Elk knows about economic consequences.

As CEO of Fort Peck Tech Services, Inc., an evolving government procurement contractor, Buck Elk is trying to leverage the contract metal fabrication work the company does to build the Pentagon's portable fueling stations for use in the U.S. war in Afghanistan. With 28 employees and room to grow within its existing facility, Buck Elk said Fort Peck Tech Services is seizing a chance to capitalize on a rare economic opening--a regional oil and gas boom.

Buck Elk used funding from a federal community-building grant to hire MMEC to study the feasibility of Fort Peck Tech Services venturing into the oil-field services industry, specifically pipe machining and refitting. With high stakes and the potential for long-term growth, Buck Elk said having MMEC involved in the game plan at its inception was money well-spent.

"We know the Bakken oil field is moving this way," Buck Elk said of the oil-and-gas development that has so far yielded some 6,000 wells in North Dakota and around 750 in Montana. "So we want to be ready and in position before it really starts here. In the end, we're just looking for our piece of this pie so we can create a few jobs, make some money and reinvest and grow."

With the FPTS board signing off on the feasibility study in December, Detrick said MMEC would likely continue to play a role in consulting on the new venture, especially in the area of branding a recognizable name. That work will go to Leesa Kennedy Nopper, MMEC's staff marketing and business development consultant.

"They can make it happen, I don't have any doubt," Detrick said. "The market is there, and they just need to get some training and continue to pursue that goal."

The effort to move away from sometimes-fickle federal contracts in favor of more sustainable private sector revenues is a familiar story to Larry Hall, president of S&K Electronics in Ronan. While S&K Electronics still sells air heaters to the U.S. military for use in Abrams tanks, the larger share of its business comes from major corporations.

Hall said MMEC helped S&K Electronics earn a quality management systems certification that better positioned it to deal with major companies like General Dynamics and Raytheon.

"At that point we didn't have any engineers on staff so MMEC's input really allowed us to be more successful," Hall said. "That put us in position to have an opportunity to bid projects that we wouldn't have been able to before."

The result, Hall said, is a company that went from roughly 40 employees in the 1990s to more than 100 now.

"...The most exciting part of all of this is taking an idea and seeing it come to life and feeding nine families along the way." - Patrick Miller

Other companies have used MMEC's services to help get their plants certified, putting them on a more competitive footing in the global market. Semitool in Kalispell, one of the most notable success stories from MMEC's client roster, leveraged its success in semiconductor manufacturing into a 2009 sale of its operation to Applied Materials for $364 million.

A Townsend inventor/entrepreneur and MSU grad named Patrick Miller landed another big fish with help from MMEC, pulling in a deal with defense contractor Lockheed Martin to market his extraordinarily tough all-terrain amphibious vehicle, the Land Tamer. Miller and his company, PFM Inc., closed the deal despite making the pitch in a rented garage.

Getting Miller positioned to receive a visit from a team of Lockheed Martin executives was at the heart of MMEC's work on the Land Tamer.

"We blew their socks off with all the technology we brought to the process," Miller said, referring to a computer-aided design presentation he gave the Lockheed Martin group illustrating the possibilities of using the company's six-wheeled vehicle as a remote-controlled military platform.

MMEC connected Miller with Mil-Tech, a technology-transfer collaboration between MMEC and MSU's TechLink, specializing in putting new technology from researchers and entrepreneurs into the hands of the U.S. soldiers.

"CAD helped give Lockheed Martin a look at the kind of design capability PFM had, but more than that they also had a look at the kind of consulting power PFM could bring to bear to analyze this potential operation," said Todd Daniels, an MMEC field engineer who worked with Miller.

Miller said the defense industry giant is marketing the Land Tamer as a remote-controlled combat support vehicle and there is potential for sales of 5,000-10,000 vehicles if the U.S. military and its allies integrate the system into their forces. Four of the vehicles are currently being tested in Afghanistan.

In the meantime, PFM is producing as many as 48 of the vehicles per year for nonmilitary buyers in ranching, mining, forestry and assorted other industries. PFM employs nine people, including Miller's son, Patrick Jr., a 2003 graduate of the MSU College of Business, in a new 11,600-square-foot production facility Miller built based on MMEC's lean manufacturing design.

"Who'd have thought there'd be something like this coming out of Montana and shipping all over the world?" Miller said. "And the most exciting part of all this is taking an idea and seeing it come to life and feeding nine families along the way, all while helping people solve problems in a lot of different applications. It still amazes me."

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