[cleeng_content id="676663234" description="Read it now!" price="0.49" t="article"]CHARLES TOWN – The business climate for manufacturers in the Eastern Panhandle is excellent, according to Mark Pugh, president of Schonstedt Instruments.
“We are very positive on the climate here,” says Pugh, whose Kearneysville-based corporation manufactures detectors capable of locating underground utility lines, surveying pins and even landmines and other unexploded ordinance.
“We’ve been very successful here,” Pugh says. “Over the years our business has grown – both on the top line and the bottom line. Our number of employees has grown. We are able to provide a wage increase every year. We are able to absorb an increase in benefits every year. Through our (employee stock ownership program), we are able to share our success with our employees over time.”
Schonstedt employs 12 manufacturing workers to build the company’s six different detector models. Most work in assembly, a position that requires a high school diploma. Four work as technicians, which requires either a two-year degree or military training in electronics.
While a recent economic study by Ball State economist Michael Hicks indicates that the state as a whole suffers from a vastly undereducated work force, Pugh said that has never been a problem for Schonstedt, which relocated to Jefferson County 15 years ago from Reston, Va.
“We were looking for a good, stable work force and a good place to build a facility,” Pugh said. “It was a state where we knew finances were stable, and we could provide good support for our endeavors. We’ve found excellent people since we’ve been up here. We’ve had no trouble at all hiring folks who can work in a fairly high-tech environment.”
Turnover has been extremely low for the company, added Bob Ebberson, director of business development.
“A lot of our people have been here for years,” he said.
Being organized as an ESOP means the company’s old stockholders slowly cede their stock to current employees in return for a portion of the company’s profits. The employees build up an ownership stake in the company over the course of their career and sell their shares back on retirement. Being an ESOP also means that Schonstedt is not required to pay corporate income taxes.
Pugh, who previously worked for other manufacturers like 3M, said he thinks state and local taxes are not a major impediment.
“It’s competitive,” he said.
Hicks’ study pointed to West Virginia’s ties to a broad range of export markets as a major strength for the state’s manufacturers. He added that exports from small manufacturers have been growing steadily.
Pugh agrees that this has indeed been a major asset for Schonstedt.
“West Virginia is especially good at helping small businesses to export,” Pugh says. “We export about 35 percent of our sales. We have found West Virginia to be extremely supportive of that.”
Ebberson said the company exported to 47 countries last year, and has exported to between 85 and 90 countries over its lifetime.
Pugh agreed that access to a broad range of export markets helps shield manufacturers from localized economic disruptions.
“Europe has been in recession for a year and a half, or thereabouts – although our business has remained pretty strong there,” Pugh said. “We’ve been very strong in some places in Africa – Mali most recently, Somalia, South Sudan. One of the things our detector can do is find unexploded ordnance. So any country that is littered with unexploded rockets, mortars, cluster bombs, land mines – they’ll typically be using Schonstedts.”
Pugh said the company has also found a good market in Australia.
“Australia’s economy did not get tied up in the global financial issues the U.S. and Europe’s economies did,” he said. “We have good business in Brazil. Their economy is still pretty strong.”
Pugh identified one intangible factor that may be discouraging to high-tech manufacturers.
“West Virginia has to overcome its perception as a coal and steel state – which it isn’t as much today as it was 25 to 30 years ago,” he says. “We are not just coal anymore.”
Schonstedt is a member of the West Virginia High Tech Consortium, which represents more that 100 companies active in technological fields.
“When you look down the list of those companies, the list of technologies they are involved in are equal to those that companies in California and Massachusetts are involved in,” Pugh says.
Ebberson said that marketing efforts to change the state’s image are vital, but will take time to become fully effective.
“To those who hold it, perception is reality,” says Pugh. “You don’t overcome 100 years of perceiving a situation one way to see it another way based on 30 years of results.”
Pugh said another intangible – quality of life – will have an equally important effect on the future growth of manufacturing and other businesses in the state.
“Quality of life attracts a lot of small companies just like us,” Pugh said. “We have to be able to attract engineers. We have to be able to attract senior managers who could live wherever they want to. Our competitors are all around the world. We have to be able to attract talent that allows us to compete.”[/cleeng_content]