Trail King among SD businesses struggling to find workers; low wages a factor

• Trail King welder

Otis Keith welds a bracket to a trailer Thursday afternoon at Trail King Industries in Mitchell. While other parts of the country are struggling with job shortages, Trail King is looking to hire skilled workers. (Chris Huber/Republic)

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The painter who taught Trail King Industries President Bruce Yakley to wield a spray gun, the welder and the metal worker are all laboring around the clock.

That’s not enough to keep pace with demand at the truck trailer maker’s plant in Mitchell. Employees plan to assemble 1,700 units this year, up from 1,350 last year.

As the rest of the country struggles to create jobs for the long-term unemployed, South Dakota businesses are looking for 10,000 accountants, information technicians, engineers and welders to help fill millions in lost orders. The thriving agriculture industry also needs employees.

“It keeps me up at night,” Yakley said during a tour of the 230,000-square-foot plant, where the smell of burning metal permeated the air. “It’s once in a lifetime, once in a career, to really be able to grow a company as fast as I think we could, and we’re being throttled by the employment situation here regionally.”

But wages that rank among the nation’s lowest don’t help to attract workers, said Bill Adamson, an associate professor of economics at South Dakota State University.

South Dakota was behind only Mississippi for its average weekly wage in the third quarter of 2011, paying $684. That was just over half of the figure for the highest, Connecticut, at $1,118 a week, according to the Bureau of Labor Statistics.

Greater competition for workers isn’t enough to lift wages that have been kept down for decades because of low union membership, a small population and a modest cost of living, said Reynold Nesiba, an associate economics professor at Augustana College in Sioux Falls.

“People in South Dakota don’t do much protesting or organizing. Instead, they get second and third jobs to pay their bills,” Nesiba said.

At 4.3 percent in February, South Dakota’s unemployment rate was about half the national average and was the nation’s third lowest, behind North Dakota and Nebraska, according to the Bureau of Labor Statistics.

South Dakota ranked ninth from the bottom in economic health from the third to fourth quarter of 2011, one of only 13 states to show a decline during that period, according to the Bloomberg Economic Evaluation of States. Yet the state posted the second-best gain in employment among all states during that time, the index found.

The labor shortage is forcing some companies to choose between options that bode ill for South Dakota’s economy: automating assembly lines, permanently eliminating jobs or moving to a state where more workers are available.

The biggest recession since the 1930s spawned a mismatch between workers’ skills and companies’ needs when industries such as construction sharply curtailed operations while others, like manufacturing, started to improve, said Michael Brown, an economist at Wells Fargo Securities.

“The skills among the labor force today are not up to the degree or the level of competency that firms are demanding,” Brown said. “There is literally a skills disconnect between skills in demand and skills in the labor force, between supply and demand.”

In January, first-term Republican Gov. Dennis Daugaard said in his state-of-the-state address that the Department of Labor and Regulation is juggling 10,000 jobs with fewer than 100 people to fill them.

Daugaard is employing unusual tactics to find workers, including approving a $5 million contract with Milwaukee-based recruiter ManpowerGroup, which this month started a nationwide job hunt for 1,000 employees.

“We just don’t have enough young people and enough population to keep pace with economic growth,” said Daugaard. The shortage is slowing recovery from the recession by preventing companies from expanding and increasing sales, which would boost tax revenue.

Just 182,984 people — about the population of Knoxville, Tenn. — moved to South Dakota between 1993 and 2010 according to the Tax Foundation. South Dakota is home to 11 people per square mile, compared to 87 for the United States, Census Bureau statistics show.

Daugaard hopes to reverse the outward migration with a plan to entice South Dakota natives to move home, and initiatives to train high school and college students for careers in fields with good job prospects.

The state’s firms are trying to ramp up manufacturing goods to fuel North Dakota’s oil boom and the Midwest’s growing agriculture industry.

“The cattle market is at an all-time high,” said Scott Rysdon, chief executive of Sioux Falls-based Sioux Steel. “The demand for equipment like gates and chutes and corrals is at a premium all over the nation and we’re losing orders.”

Rysdon’s 90-year-old company, which manufactures metal enclosures for ranchers, is out of options after an intensive six-month search for 20 welders turned up few candidates.

“We’ve been through every program under the sun, from reference dollars where you refer a friend and we’ll give you so much after 90 days, to advertising trade shows, fairs and carnivals with balloons,” said Rysdon, who lost $2 million in orders last year because his staff couldn’t make products fast enough. “You name it, we’ve done it.”

Yakley, of Trail King, is also considering expanding elsewhere. The company needs 200 more welders to cut a seven-month backlog, the longest in its 38-year history, prompting some customers to take their business elsewhere.

But relocating isn’t feasible for farmers and ranchers. Hilltop Dairy owner Olga Reuvekamp wants to add 1,500 cows to her farm 70 miles north of Sioux Falls. She’ll need to increase her 30-person work force to care for the current herd of 2,000.

Her milkers, herdsmen and animal scientists hail from around the world, forcing Reuvekamp to spend hours processing work visas and forms required by the federal government.

“We’ve tried the long-term unemployable and this is way beyond what they’ll ever be able to do,” she said. “Migrant workers aren’t afraid to get dirty and they have a sense it’s not a 9-to-5 job.”

And in 2014, a $100 million Bel Brands cheese factory, owned by a unit of Paris-based Fromageries Bel, expected to employ 400 workers is to open in Brookings, down the road from her dairy.

“Several cheese plants in that area aren’t currently able to operate at their full capacity because there are not enough cows to supply them,” said Blair Dunn, director of policy at the South Dakota Department of Agriculture. “We can take the cows and the people as soon as they’ll come.”

In the past, teens left because there weren’t enough jobs, said Mitchell Area Chamber of Commerce Executive Director Bryan Hisel. A rural planner for 30 years, Hisel says his third time emerging from a recession provides a rare moment for South Dakota industries to grow and to keep residents at home.

“We either fix this problem for our industries and companies, or we’re not going to have a next chance,” he said. “Once the impression is out that there aren’t enough workers in an area, we hit a wall with CEOs, and that impression may last through the next expansion.”

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