Firms try to find room in the boomOil is the resource that makes western North Dakota boom, but parts of east North Dakota are trying to attract a piece of the west’s activity by promoting resources that are increasingly scarce in the west: workers and homes.
By: By Christopher Bjorke , Forum Communications, The Jamestown Sun
Oil is the resource that makes western North Dakota boom, but parts of east North Dakota are trying to attract a piece of the west’s activity by promoting resources that are increasingly scarce in the west: workers and homes.
“We would be located in the west if we could find housing or people,” said Rodger Pearson, Grand Forks division manager for the Steffes Corp.
Steffes is a Dickinson, N.D., manufacturer that began making steel products for the oil field in 2007 and had its business double since then. But when it needed to expand its production, it purchased a building and equipment on U.S. Highway 2 west of Grand Forks rather than try to recruit and retain workers in the west.
“The workers come, they survive, live, make some money and go back home,” Pearson said about labor market around Dickinson. “Just around the time they’re getting productive, they go back home.”
Steffes plans to employ 25 in Grand Forks by the end of the year to make oil tanks and other steel products for oil companies in the west.
It is trading proximity to its customers for a more stable labor and housing markets, and it is a choice that Grand Forks regional leaders hope more companies make as the boom puts more pressure on Oil Patch towns.
“Companies need facilities, they need employees and they need access to the Bakken outside of the Bakken,” said Grand Forks City Council President Hal Gershman, who is an organizer of the Bakken Initiative to attract companies doing business in the Oil Patch in the Bakken Formation. “Many of these companies are selling everything they can produce but they can’t produce enough.”
The focus of the initiative is not to steal business from western towns, he said, but to market the region to growing companies like Steffes that are struggling to expand under the constraints of a boom.
Steffes specializes in steel products for well sites, including tanks, platforms, stairways and equipment to treat the oil pumped from the wells. On Thursday, Pearson was in the Grand Forks facility overseeing workers producing cattle guards and water knock-outs — devices that separate water from oil. The company purchased a building and equipment owned by Pribbs Steel.
A company working in a similar market is Diverse Energy Systems of Grafton, N.D., which was Lean Technologies until its purchase by the Houston-based company.
“The growth potential we’re envisioning is being driven by the people we can find,” said spokesman Scott Muster. “Right now, I’m looking for 50 welders between now and Jan. 1.”
He said the company should have 100 employees in Grafton by the end of the year and possibly 200 by 2014.
According to the company’s application for a state economic development loan, the jobs Diverse will create will pay between $12 and $35 an hour with an average wage of $17 an hour. That is less than what workers could earn in the west, but Muster said Grafton offers more affordable housing and even a $20,000 incentive for new home construction.
“In Williston (N.D.) and that area, you’re going to pay $300,000 for a house and 1,500 square feet,” Muster said.
Western North Dakota’s job opportunities have attracted thousands of workers from across the country, but the boomtown atmosphere has produced a transient workforce that tends not to put down roots, according to Pearson and Muster.
“In western North Dakota, it’s just wild and woolly. It’s very tenuous and temporary,” Muster said.
According to Job Service North Dakota, the number of job openings in Williams County, an epicenter of oil activity, is 1,702, while the number of unemployed workers is 240 and the unemployment rate is 0.7 percent.
The Grand Forks City Council voted to contribute $75,000 in May to start the Bakken Initiative, and since then Gershman said it has raised another $39,000 from public and private sources with a goal of reaching $125,000 in total funding. The money will mostly be used for marketing efforts through industry conferences and advertising.
Keith Lund of the Grand Forks Region Economic Development Corp., an initiative partner, attended the Williston Basin Petroleum Conference in Bismarck a month ago as part of the effort.
“We had over 300 people stop by the booth,” he said, and made contacts with manufacturers, engineering firms and logistics companies.
Initiative organizers also plan to inventory available facilities and land. In Grand Forks, city officials plan to reassess zoning along Gateway Drive and Highway 2 to accommodate development along the corridor.
The Grand Forks region could face the some of the same constraints in labor and housing found in the Oil Patch. Muster said he has been building relationships with Job Service, Northland Community and Technical College and area high schools to create a “funnel” for skilled workers drawn from a wide area.
“Draw a circle around Grand Forks by about 200 miles,” he said.
Housing could also limit companies’ growth plans. Shortages in Grand Forks’ housing supply were an issue in the city’s recent mayoral election and something Mayor Mike Brown has said he would address in his new term. It could also become scarce in other places.
“In every little community from Casselton to Carrington, to Cooperstown … housing’s getting to be a key issue in the state,” said Keith Reitmeyer, customer service area manager for Job Service in Grand Forks.
Christopher Bjorke is a reporter at the Grand Forks Herald, which is owned by Forum