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Business Growth in North Dakota and Pennsylvania Provide a Glimpse into Future Opportunities Here

 

Do you dream of opening a business and becoming your own boss? Is now the time to make your big move?

 

From all accounts, businesses are thriving alongside western North Dakota’s 6,000 Bakken shale wells and Pennsylvania’s 4,700 Marcellus wells. The drilling there is five or six years ahead of Carroll County’s oil production—enough time to help us learn from their experiences and get a possible glimpse into our future.     

 

The information in this article came from telephone interviews with more than a dozen business owners, community leaders and counselors at small business development centers. Most of the individuals live and work in Minot and Williston, North Dakota along with Washington and Williamsport, Pennsylvania.  

 

There are both similarities and important differences between the Pennsylvania and North Dakota experiences. The needs in North Dakota seem to be more acute because of the rural location and the area’s lack of infrastructure. The opportunities and challenges for Carroll County entrepreneurs may lie somewhere between the two.

 

Martin Mock, a Toledo, Ohio native, is the Senior Pastor at Williston’s First Lutheran Church. He says the growth in Williston happened too fast and the resulting problems are still years away from being resolved. 

 

“Everything the oil companies own is on wheels,” pastor Mock explained. “The companies get in and set up quickly. But, it takes the government years to build the needed infrastructure.”

 

Thousands of workers have flocked to Williston in search of high-paying jobs. Most individuals can find jobs the day they arrive, but many of them leave because they can’t find housing. The town’s two-lane roads are inadequate to carry the enormous number of trucks and automobile there now. The high demand for electricity is causing brown-outs and the water and sewage facilities are inadequate for the population that has doubled in just a few years. All those infrastructure needs are creating jobs along side the oil industry opportunities.

 

Pennsylvania towns have also had growing pains, but fewer than those in North Dakota.   

 

The building industry in Williston, the epicenter of the Bakken oil fields, is on steroids. Hundreds of homes and apartments are under construction and current home owners are waiting months to get help with routine household repairs. The need for carpenters, plumbers, electricians and other construction workers far exceeds the number available.

 

Builders of modular homes—some as far away as South Dakota—have expanded their staffs to build and transport modular living units to the area. 

 

Pennsylvania has had growth in the construction area, but mostly for commercial facilities and hotels. Officials with the home builder’s associations there say construction of single-family homes has not shown huge gains.

 

Hotel rooms in North Dakota and Pennsylvania are booked for months and years into the future. New hotels have been built and more are under construction.  

 

In North Dakota many home owners are renting out extra bedrooms for $500 to $800 per month. 

 

Owners of rental units are basing monthly fees on the number of occupants in a unit. It is not uncommon for as many as 15 individuals to share a house or apartment. Housing has been a good investment for entrepreneurs. Units that rented for $350 a month a few years ago are now commanding $2,000.

 

Job seekers have arrived in both North Dakota and Pennsylvania in campers or motor homes only to find the RV parks are full. Campground owners are expanding their number of campsites and adding amenities like laundry rooms and canteens with snacks and deli sandwiches. The shortage of campsites in North Dakota has prompted homeowners to rent backyards for motor home parking for $700 to $800 per month. Other campers are renting spaces in fields or parking in the Walmart parking lot. Tents are common, too. Those living outside camp grounds are having difficulty finding dump sites for sewage and wastewater, thus creating another opportunity for entrepreneurs.    

 

The majority of oil workers are men who work long hours and do not have access to kitchens. They line up daily to eat at fast food restaurants like McDonald’s where the typical wait time is 30 to 45 minutes. Food outlets, especially in North Dakota, have been unable to grow due to a lack of available workers. A typical job at McDonalds and Pizza Hut now pays $15 per hour, and help wanted signs are posted everywhere. But, many higher paying jobs are available elsewhere in the community, and the workers take those jobs first. Some businesses can’t open until 3:00 p.m. when kids get out of school and come to work. 

 

Freshway Food System is located in Sioux Falls, South Dakota, a 10-hour drive from Williston. The company makes subs, pizza, chicken and other deli foods for convenience stores in the North Dakota oil fields. A spokesperson for the company said that, a few years ago its North Dakotaoutlets rang up 300 deli sales in a day. That number has increased to 3,000 to 4,000 cash register rings per day.

 

All food costs more in the Williston area. Keith Olson, Regional Director at

the Williston College Small Business Development Center, reported that he often sees oil workers lined-up and paying $30 to $50 for a day’s lunch of deli sandwiches, snack food and beverages at convenience stores.


In Pennsylvania there has been an increase in the number of new restaurant openings. Lindsey Biddle, Management Consultant for the University of Pittsburgh Small Business Development Center inWashington, Pennsylvania reports that some of her clients have developed Tex-Mex restaurants to cater to the taste of workers from the southwest. Other clients have purchased chuck wagons to bring food to the oil production sites.

 

Matt Henderson, Business Consultant with the Lockhaven University 

Small Business Development Center, serves the Williamsport, Pennsylvania area. He also has seen the growth of Tex-Mex and barbeque restaurants and chuck wagons. Many chuck wagon owners are working with the oil companies to have their food service workers trained in safety procedures and approved to bring food to the well-pads. Other chuck wagon owners operate from parking lots on busy roads leading to drilling sites. Some have arrangements with laundries to pick up and deliver laundry to oil workers.


Several catering businesses have opened to meet the growing need for food at business gatherings and to serve the entertainment needs of the affluent land owners who are receiving royalty checks.

 

Laundry services are in high demand, especially laundromats with industrial size washers and driers. The wait time to use washers at some facilities is six hours or longer. A few budding entrepreneurs have made arrangements to “rent” laundromats during the night to do laundry for oil workers.


There has been a growth in recreational facilities—bowling alleys, movie theaters, golf courses; and bars are all thriving.


The number of attorneys, accountants, investment counselors and real estate brokers has also increased in both states.


The need for cleaning services is only limited by the ability of owners to hire staff.  New business is flowing in from apartment complexes, hotels, businesses and private homes. The constant truck traffic and damage to roads has contributed to the cleaning needs. 


Meeting spaces are needed for the growing number of business, professional and social gatherings.

 

The security business is repeatedly listed as one of the fastest growing sectors of the economy. Some companies hire, train and staff guard operations for oil service companies. Others are providing security systems for homes and businesses. It makes sense. A lot of landowners have become very wealthy. Businesses have made huge investments in property. And, a large number of strangers are moving in and out of the areas. Protection is on everyone’s mind and the security firms are meeting the needs. Further, local police departments are stretched to their limit, managing traffic and responding to an increased number of traffic accidents and crimes.

 

Medical workers have unlimited professional opportunities. Many doctors and dentists can no longer accept new patients in western North Dakota.

 

The website for Williston’s only hospital lists more than 50 job categories that the hospital is recruiting to fill. Several categories like nurses, therapists, pharmacists, custodians, clerks, cooks and housekeepers have multiple open positions. A member of the hospital’s human resources department explained that the hospital often can’t compete with the wages paid for other jobs in the area.

 

One news report told of emergency room nurses leaving their hospital positions to work as waitresses where they make $100 per hour in tips. Further, candidates for many open positions currently live outside the Williston area and can’t find housing in the vicinity. Several job candidates have their names on waiting lists at housing facilities and won’t come to work until they have housing.

 

The demand for all types of automotive workers has increased. The influx of energy companies, transport services, construction workers, engineers, as well as local residents with royalty checks, have resulted in record-setting car, truck and tractor sales. Even the purchase of automotive service warranties are up 30 percent, according to one dealer. 

 

Mechanics, especially diesel mechanics, are in high demand to service the thousands of trucks operating in the area. Body shops are busy due to an increased number of accidents and detailing shops are getting all the business they can handle.       

 

Small machine shops and welding shops are expanding to meet the growing needs. The large highway construction companies that traditionally scoop-up small and medium size contracts for county and township road projects, have moved on to handle mega projects for oil companies and housing developers. Thus, many opportunities now exist for startup road construction companies.

 

The small business development centers in Pennsylvania and North Dakota have several clients who who’ve become independent tanker truck owner-operators and make daily deliveries for oil producers. There is also a huge need for licensed truck drivers to work for a variety of oil support services.

 

Teachers and tutors are in demand. The WillistonSchool has grown from 700 to 1,300 students. They’ve brought in mobile classrooms to accommodate the classes, and when new housing developments are completed this summer, the school expects to add another 1,200 students.

 

The need for port-a-potties and refuse services has increased. Most of the sewage from well sites and the dormitory style man-camps set up for oil workers, needs to be hauled away each day.

 

There are also opportunities for hot-shots, the name given to individuals with large pick-up trucks who run for parts and supplies for well sites. The hot-shots are required to be on-call 24/7 and respond quickly to the needs of their customers.

 

One new business owner converted a truck into a mobile hardware unit and he travels to worksites with a variety of parts and tools.

 

Clothing stores specializing in fire retardant clothing, steel-toed work boots and heavy winter clothing are opening and thriving.

 

Jewelry stores have seen an increase in sales. Oil workers are purchasing jewelry for wives and girl friends. Local residents, who are receiving royalty checks from oil and gas wells, have increased their jewelry purchases, as well.

 

Storage facilities are very popular and in high demand since many workers have limited living space and a storage unit is less expensive and more available than additional rooms.

 

The opportunities seem endless; but starting a small business requires a lot of skills, research and planning. Fortunately, help is available locally for those interested in taking the plunge. 

 

Carroll County is served by the Ohio Small Business Development Center (OSBDC) for District 10. It is located on the Kent State University Tuscarawas Campus and its mission is to help accelerate Ohio’s economy by helping people start, sustain and grow their businesses.

 

“Our counselors are available to assist new business owners as theymove through all stages of business development—from their idea for a business, through start-up, development and into growth and expansion,” says Steve Schillig, the OSBDC District 10 director.

 

The best way to get started is to attend one of the OSBDC new business start-up seminars and then to schedule a free one-on-one business consulting appointment. For further information, call the District 10 OSBDC office at 330.308.7522.


Gas and Oil Boom Sets off a Chain of Business Expansions

 

The area’s oil and gas boom has prompted several northeastern Ohio manufacturers to make multi-million dollar investments in their facilities and to create hundreds of new, good paying jobs. 

 

The expansion announcements have popped up like jack-in-the-boxes over the period of several months—each a joyful and welcomed surprise.  They brought news of increased production of steel, trucks, heavy duty trailers, machinery, pipe, and refining capacity. Take for example the announcements by:

·        MAC Trailer to manufacture liquid tank trailers at its Kent, Ohio facility.  MAC expects to employ an additional 250 workers in the next 18 to 24 months and have a  $6 million payroll

 

·        Marathon Oil to expand it’s Canton, Ohio refinery to accept daily deliveries of Utica oil


·        Republic Steel to invest  $85.2 million in its Lorain, Ohio facility to provide steel for both oil and gas exploration and the auto industry.  Republic expects to create 450 jobs


·        U.S. Steel to invest  $100 million to upgrade its Lorain, Ohio tube plant to make pipes for natural gas companies


·        V & M Star Steel to invest  $650 million in an addition to its Youngstown, Ohio mill to make the seamless steel pipe used to transport natural gas from well sites to compression stations and main lines. The expansion will create 350 jobs.

  •  The Timken Company to invest $225 million in the company’s Faircrest Steel Plant. 


On January 28 the Canton Repository reported, “Timken is making nearly as much steel as it can to meet blistering demand for specialty steel that’s used in equipment to search for and extract oil and natural gas. Sales to the oil and gas industry surged 80 percent last year.

 

The investments in these facilities will continue to reverberate through the economy as they trickle down through a multitude of large and small businesses.

 

“For every manufacturing job there are between five and seven ancillary jobs created within the community that support those manufacturing jobs,” Lorain Mayor Tony Krasienko told the Wall Street Journal.

 

The Carroll County economy will get a boost from the large investments oil companies and support businesses are making in this area:

·        Chesapeake Energy has invested about  $2 billion to lease 1.5 million acres in eastern Ohio Chesapeake employs more than 150 employees in Ohio and is participating in local job fairs with the intent to hire more workers.  The Plain Dealer reported that Chesapeake will need approximately 400 workers to drill each well and they plan to have 40 wells by 2014.

·        Select Energy Services, a Texas-based company that serves natural gas and oil companies, held a job fair in January to find Class-A drivers, welders, laborers and staff for office positions. The company is expected to hire a couple hundred workers.

·        Schlumberger Ltd, an oil field services provider, is currently offering jobs that pay between  $40,000 and  $50,000 per year.  The company is working with SOS Staffing at The Employment Source offices in New Philadelphia

·        Hodges Trucking, an oil field hauling service, is also interviewing candidates for jobs

 

What will all of this mean to Ohio?  In September, Forbes Magazine reported on a study by the Ohio Oil & Gas Energy Education Program that contained an analysis of the near-term economic impact of the Utica Shale formation in Ohio.  It was concluded that by 2015 Ohio will see an increase of:

·        200,000 jobs

·        $12 billion growth in overall wages

·        $22 billion increase in state economic output

 

“On top of that, many farmers, businesses, landowners and even some communities are sitting on land that will yield to each of them tens of millions of dollars in annual royalty payments,” Forbes reported.

Something For Everyone

 

Imagine Filling Up for $1.85 a Gallon

And Possibly Doing So in Your Own Garage!

  

Would you like to fill up your car’s fuel tank for $1.85 a gallon? That could happen in just a few months; that is if you are driving one of the new generation of vehicles fueled by compressed natural gas (CNG).

 

As gasoline prices continue to climb to a projected $5 a gallon by summer, it is reassuring to learn that, in the not-too-distant future, we may have the option of paying considerably less to fuel our cars, and we may be able to fuel-up in the comfort and convenience of our own garages.

 

Those are the promises that accompany the development of cars and trucks fueled by CNG. Wikipedia, the online information resource, reports there are nearly 13 million CNG-powered vehicles worldwide, with approximately 115,000 of them in the U.S. Most are buses and trucks in company-owned fleets with company-owned fueling stations. The technology is in place and once we have fueling stations, the market is expected to grow quickly.

 

Recently, Chrysler announced its plan to produce the Ram 2500 bi-fuel, heavy-duty pick-up truck that will run on both CNG and gasoline. It will have a 4X4 crew cab, 5.7-liter HEMI V8 engine and a tow rating of 7,650 pounds. It is expected to sell for $48,495. Initially it will only be available to fleet buyers.

 

And, later this year General Motors will offer the Chevrolet Silverado and the GMC Sierra that run on either gasoline or CNG. Existing gasoline-powered vehicles may also be converted to allow the use of CNG. 

 

“Compressed natural gas vehicles offer several advantages,” says John Furey, owner of Furey Chrysler in Malvern. “Natural gas is an abundant, clean alternative to other fossil fuels, and the price of natural gas is at a 10-year low due to robust production and current low demand. Equally important, natural gas is a domestic fuel and 98 percent of our need for CNG can be produced inAmerica.”

 

“CNG is less corrosive and wears the parts of an engine less rapidly than gasoline,” Furey says. “It is reported that natural gas vehicles often rival diesel-engine mileage, such as over 500,000 miles,” he says.

 

According to Furey, “We expect to offer natural gas-powered vehicles on our lot in the near future. The major factor limiting availability now is the lack of fueling stations; but significant efforts are being made to seize this new opportunity and meet the growing demand for CNG fueling stations.” 

 

Clean Energy Fuels Corporation, the leading provider of natural gas fuel for transportation in North America, has 257 fueling stations across the country. They’ve recently announced the planned route for the first phase of 150 new fueling stations for what the company leaders are callingAmerica’s Natural Gas Highway. Seventy of those stations are expected to open in 33 states—including the one that opened in Seville, Ohio on February 10 of this year. Many of the stations will be located at Pilot-Flying J Travel Centers.

 

Marc Klein, Vice President of Clean Energy Fuels, says, “CNG fuel is approximately $1.50 less expensive than gas or diesel fuel. It’s abundant because we have 110 years worth of proven natural gas reserves and that supply will keep fuel prices down.”

 

On Monday, March 12, Chesapeake Energy and General Electric announced plans to deploy “CNG in a Box” units at service stations and convenience stores. The units will dispense CNG and the first of the 250 planned units could be in place by fall.

 

Ken Wilkinson, Vice President of Natural Ventures for Chesapeake Energy, projects even bigger savings for consumers. He is quoted in West Virginia’s The State Journal, saying that when gasoline sells for $3.79 a gallon, the equivalent in natural gas sells for $1.85.

Perhaps the most exciting news for consumers is Wikipedia’s report that, “Natural gas vehicles can be refueled anywhere from existing natural gas lines. This makes home refueling stations that tap into such lines possible. A company called FuelMaker pioneered such a system known as Phill Home Refueling Appliances, which they developed in partnership with Honda for the American GX model.” The home refueling units cost approximately $4,500 and can be viewed at: www.wisegasinc.com/wg-phill.htm

 

The huge reserves of natural gas trapped in the Marcellus and Utica Shale formations in this area may play a major role in helping Americans move to cleaner fuels, reduce our dependence on foreign energy sources, and help improve our economy. 

   Look at These

Diane Walker Evans

Financial Adviser

 

200 N Market Street

Minerva, OH 44657

 330-868-3484

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