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Ray Oscegueda operates a CNC plasma cutter as he works on a component for a silencer in March at Innovative Exhaust Solutions Inc. in Lincoln.

October is Manufacturing Month in Nebraska, but the state actually hit a major industry milestone a couple of months earlier.

The state Labor Department reported last month that Nebraska had 102,932 manufacturing jobs in August, a 4.7 percent increase over the past 12 months.

The more significant statistic, however, is that that's the highest number of manufacturing jobs in the state in more than 10 years.

It actually matches the amount of manufacturing jobs reported in March 2008, which was when the Nebraska manufacturing industry started to lose jobs due to the national recession. By March 2009, the state had shed 7,300 manufacturing jobs.

Just 21 months later, in December 2009, Nebraska's manufacturing workforce bottomed out at 91,100 workers, a loss of 11,800 jobs, or more than 500 a month since March 2008.

The rise in the state's manufacturing sector hasn't been quite as swift as its decline, but it has been impressive.

The 102,900 jobs in August was a nearly 4,700-job increase over August 2017, and the 4.7 percentage increase was triple the overall statewide increase in jobs over the same period.

According to the September edition of the "Nebraska Economist" report from the Omaha branch of the Kansas City Federal Reserve, that is the highest manufacturing job growth rate in the state since August 1995.

The state's manufacturing sector has been growing for the past two years, but the growth has greatly accelerated in the past year. For example, from August 2016 to August 2017, Nebraska only added about 1,300 manufacturing jobs. And between August 2015 and August 2017, the state actually lost about 800 jobs in the sector.

So why the rapid growth over the past year? Economists cite a number of reasons.

Ernie Goss, a Creighton University economist, cited four reasons: tax cuts, tariffs, deregulation and higher interest rates.

The 2017 tax reduction in corporate income tax rates, "has stimulated robust investment for manufacturers in the U.S., the Mid-America region and Nebraska," Goss said in an email.

The imposition of tariffs has helped by encouraging "our trading partners to advance purchases of U.S. and Nebraska products before tariff retaliation adds to the price of U.S. exports," he said.

Deregulation has improved the economic outlook for the state's manufacturers, which has made them more confident and spurred investment, while the pace of that investment has been accelerated by rising interest rates, because the higher interest rate outlook "has pushed manufacturers to advance borrowing and investment at the current lower rates," Goss said.

All of those factors have stimulated growth for manufacturers of both durable and non-durable goods, he said.

Eric Thompson, director of the Bureau of Business Research at the University of Nebraska-Lincoln, agreed that tax cuts and deregulation have played a big role in spurring manufacturing growth in the state. He also credited state and local economic development efforts.

Nebraska for two years straight has won the Governor's Cup from Site Selection Magazine for the most economic development projects per capita among the states, and many of those projects have involved manufacturing companies.

Mardon Quandt, president and CEO of Malco Products Inc., the Minnesota-based company that bought the former Vise-Grip plant in DeWitt, said state officials have been "very helpful" in helping the company with paperwork and other aspects of navigating Nebraska's tax-incentive program.

Malco, which has spent millions of dollars refurbishing and equipping the factory in DeWitt, is one of dozens of manufacturing companies across the state that have either started or completed large expansions in the past couple of years. That list includes Kawasaki, Garner Industries, Nature's Variety, Zoetis and Becton Dickinson.

Many of those physical expansions have included workforce expansions as well.

Nature's Variety, a St. Louis-based company that makes organic pet food, currently has about a dozen job openings after opening its new 26,000-square-foot freeze-dried pet food manufacturing facility last month at 235 S.W. 32nd St. in Lincoln, and its chief operating officer said it's likely to have more openings in the future.

“As Nature’s Variety continues to grow, we are excited to expand in Lincoln," CFO Aaron Grimm said in a news release. "Bringing this manufacturing capability in-house is the first phase of what we expect to be more to come."

Other Lincoln-based manufacturers have added jobs over the past year. Lincoln Industries said it has added about 50 positions this year and plans to add about 50 more.

Lincoln has not seen the level of growth in manufacturing that the state has. As of August, there were about 13,600 people employed in manufacturing in the Lincoln metro area, 300 more than a year ago.

Though that number is about 1,200 higher in January 2010, when Lincoln's manufacturing job numbers bottomed out, it's still below the post-recession high of 14,100 reached in August and September 2014, and is well below the pre-recession high of 15,400 in November 2007.

The growth in manufacturing employment is likely to continue as long as the economy remains strong, but there are factors that could put a damper on hiring.

Both Goss and Thompson agree that tariffs on Chinese imports are a potential threat.

"Tariffs would make our state's manufacturing sector less efficient and competitive and would tend to reduce manufacturing employment," Thompson said in an email.

Goss cited other factors, including higher interest rates, higher inflation, slower global growth and labor shortages, that could put a damper on manufacturing growth going forward.

Those factors "will cut growth to a slower but respectable pace in the next three to six months," he said.

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Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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