The Recession Hits North Dakota

The economy has just become a hot-button issue in North Dakota politics. It hadn't been one; with one of the lowest unemployment rates in the nation, a state budget surplus, and continuing growth in the energy and natural resource sectors, most North Dakotans have believed the state to be recession-proof this time around.

The State Bank of North Dakota, along with the state-owned mill and elevator, came into being during the Great Depression of the 1930s, and continue to prosper (the State Bank doesn't provide services to individuals, so it doesn't compete with other banks; it does, however, buy mortgages from other banks, and unlike many banks, is financially solvent, with large reserves). Oil drilling is continuing and production increasing in the Bakken oil field in the western part of the state, and a new 800 megawatt wind energy plant is in the processing stage. Computer data storage and other services have grown here because business and industrial spaces are less expensive than in many other places, North Dakota state income tax is lower for both individuals and businesses than in most other states, and there's a large pool of well-educated potential employees who want to work.

So what happened? The Bobcat plants in Bismarck and Gwinner just announced a six-week lay-off, beginning December 15^th, 2008. The layoff will affect 2000 employees, who will be out of work through the holidays and until at least the end of January. The manager of the Bismarck plant, Dan Antrim, says he hasn't seen a suspension like this in the 17 years he's been with the company, and blames the slow economy both in the U.S. and abroad.

Bobcat, best known for its construction equipment, was founded in 1947 in Gwinner by E.G. Melroe, a Gwinner native and the son of Norwegian immigrants. The first product made by Bobcat was a windrow device that attached to combines and picked up grain from windrows. Within 10 years, the company bought the rights to a 3-wheeled loader that could make a 360 degree turn within its own length; innovations like converting the loader to 4 wheels for stability, the development of a quick change attachment allowing one machine to do multiple different jobs, and the invention of other machines rapidly moved Bobcat out of the agricultural equipment category into the forefront of construction, with its loaders and excavators. By the end of 2007, Bobcat was sold in 75 countries through a network of 900 dealerships, and Forbes magazine called the Bobcat loader one of the 100 best products in the US.

In December of 2007, the company was purchased by South Korean giant, Doosan Infracore company. Although the CEO of Doosan promised there would be no changes in the North Dakota operations, the home of Bobcat (its main US office is in Fargo, ND), they also promised to expand the company to a total of 3500 dealers worldwide, with 20 plants in the US and China.

Jeremy Bauer, the president of United Steelworkers Union, said the lay-off didn't come as a surprise to workers or the union. The economic crisis, which has focused on Wall Street and mortgages, has been inching into manufacturing industries around the country. Dan Antrim blames the credit crunch for part of the problem; since buyers can't get credit, inventory sits on dealership floors. Antrim hopes that the layoff will give time for dealers to move their inventory out, while Bobcat focuses on "next-generation products" and works toward "future success."

In an October 23^rd interview with Bismarck's KXMB TV reporter Donnell Preskey, Antrim said the "temporary layoff is necessary to ensure a future in our state." Bobcat North America President Rich Goldsbury says that the first two quarters of 2009 will be "critical indicators for Bobcat sales" - and although he didn't say it, it's clear that it will also be critical to continued employment for Bobcat workers.

Besides the economic crunch, there's a rumor floating around North Dakota political circles that a lawsuit may be pending between Ingersoll-Rand, former owner of Bobcat, and Doosan, the new owner, over inventories built up prior to the merger. North Dakota employees and union members were skeptical about Doosan's promises a year ago. Now it appears that the 2000 jobs at Bobcat, among the best manufacturing jobs in the state, may be at risk for more than just six weeks in mid-winter.