Ed Newell says hard work and a strong work ethic helped his wood products business grow since it opened in 1996.
Newell Wood Products started with four employees and $480,000 in sales, Newell said. The business now has 14 employees and posted $2 million in sales over the past year. He said he relies on committed employees.
“It’s hard work. It’s physical labor,” Newell said.
It’s also the type of work that could help drive Muskogee’s growth, a team of industrial site selection experts say.
Muskogee has a strong appeal for manufacturing and distribution centers, said representatives of Site Selection Group. The Dallas-based business conducted a competitive positioning analysis for the Muskogee City-County Port Authority last summer and recently presented their findings to the Authority.
Site Selection Group ranked Muskogee 63rd out of 940 industrial markets across the United States on such benchmarks as labor availability, labor cost and logistics.
However, Site Selection Group Senior Vice President David V. Brandon said Muskogee’s comparatively small population inhibits its ability to attract large industries. He said the 940 markets ranged in size from New York and Los Angeles to areas with populations between 40,000 and 100,000.
“It’s not large enough to attract a Toyota plant or a Ford plant,” Brandon said.
Muskogee would be better positioned to attract a manufacturing plant hiring 200 to 250 or a distribution center hiring 50 to 100, he said.
Muskogee earns high marks
Researchers ranked Muskogee against eight regional markets — Sherman-Denison, Texas; Fayetteville, Little Rock and Fort Smith, Ark., as well as Tulsa, Bartlesville, Ponca City and Durant — on their strengths and weaknesses for attracting manufacturing, distribution or call centers.
Port Director Scott Robinson said the group’s study validates what many in Muskogee already are doing.
“We’ve always known we were strong in manufacturing,” Robinson said. “But we were really surprised we were ahead of all other markets for distribution centers.
Muskogee ranked first of the nine markets in potential for a distribution center and third out of nine in potential for a manufacturing project. Fort Smith and Ponca City scored better for manufacturing project potential. Muskogee did not fare as well in potential for a call center or back office type industry — ranking fifth out of nine markets.
Researchers scored the nine markets in three major categories:
• 50 percent for labor availability — age and income demographics, education level, major industry presence and supplemental labor sources.
• 30 percent for labor cost — recommended ages for target occupations, cost of living, median household income and per capita income.
• 20 percent for business environment — state and local tax burden, workers compensation, construction cost index, average state electric rates and unemployment insurance.
A score of 100 is considered average.
Muskogee posted an overall score of 121 in desirability for a distribution center, the study indicated. Its strongest areas were in labor cost, a 142 score, and business environment, with a 128 score. Labor availability was slightly below average, with a 97.7 score.
According to a PowerPoint presentation by the group, industries seeking potential distribution center sites look mostly at logistics, labor availability and labor costs, in that order. Top site selection drivers for manufacturing plants are labor availability, labor cost and logistics.
Location, location, location
Transportation could be a strength when it comes to logistics, said Brien Thorstenberg, director of business and economic development for the Muskogee City-County Port Authority. He said Muskogee has prime access to barge, rail, air and highway transportation.
“And the cheaper the logistics are, the better it is for a company,” Thorstenberg said.
“It’s not surprising this is a fairly low-cost place to do business,” said Josh D. Bays, Site Selection Group vice president. “One challenge Muskogee might have is availability of labor and scalability of the labor force — population, unemployment, age, education, the presence of that industry in the marketplace.”
Muskogee is a convenient location, Newell said.
He said Newell Wood Products serves a 150-mile radius, with much of its business in Tulsa, Coweta and Wagoner.
Steve Thompson, owner of P & H Supply Inc., said he’s able to ship his heating, air conditioning and ventilation supplies all over the area. He said Muskogee is easily accessible to Tulsa International Airport, where it can ship with air freight companies.
Bays said an area’s unemployment rate also is taken into consideration.
Muskogee County’s unemployment rate for September was 5.8 percent, down from 7.5 percent for September 2011. The county had the 18th highest September 2012 unemployment rate out of 77 counties.
The Muskogee area labor market showed an unemployment rate of 5.7 percent in September 2012, down from 7.2 percent for September 2011.
However, Brandon said an unemployment rate “isn’t always a positive factor” in labor availability.
“Employees might have baggage from a previous employer,” Brandon said. He said prospective businesses “look at wage-benefit history. They look at labor-management relationships.”
Dan Morris, chairman of the Greater Muskogee Manufacturers Alliance, said Muskogee has a “really good business climate, but we have some limitations.”
Size is one limitation, he said.
“Businesses like other businesses,” Morris said. “If there’s more to do, people think it’s more sophisticated.”
He said the main things drawing businesses to Muskogee are the port, a financial incentive and “if there is some sort of local tie.”
“If one of these three doesn’t exist, chances of them coming here are pretty slim,” he said.
But, coming business trends could tip the scales of industry in Muskogee’s favor. Brandon said industries are beginning to look at small-town markets, particularly those near larger markets, such as Tulsa.
Reach Cathy Spaulding at (918) 684-2928 or email@example.com.