Montana Economic Report 2014

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Sunday, December 21, 2014

Montana Economy A joint publication of The Billings Gazette, Missoulian, Independent Record, Montana Standard and Ravalli Republic

Economy strong in Eastern Montana

CASEY PAGE/Billings Gazette photos

Shiloh Crossing on Billings’ West End has attracted new retailers during the last year.

By ERIK OLSON Billings Gazette

“Construction has come back.

It looks like it will regain the jobs that were lost in the recession,” Rickard said.

Amundson added that planning in the Billings area has so far kept up with growth, avoiding haphazard urban sprawl.

“It’s really a good omen for our community that we’re growing fast,” he said.

Construction, along with financial and professional services, is among growing industries that pay well, according to the state.

Yellowstone County has an average wage of $41,850, seventhhighest in the state and above the state average.

Montana overall is among the bottom five states nationwide for wages, however.

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ILLINGS — With low unemployment, falling fuel prices, and growing consumer demand, the greater Billings area and most of Eastern Montana have been enjoying a good run, experts say.

They also warn that economic growth is slowing in the region, largely because the frenetic pace at the Bakken oil fields in North Dakota is finally leveling. Low wages, a graying workforce and a shortage of new labor also are impeding business expansion, regional experts say.

Despite these challenges, the overall outlook should remain positive for Yellowstone County for the next few years.

“Relatively speaking, I think we are doing better than some, especially some of the more rural areas of the state. We have a more developed economy,” said Scott Rickard, director of the Center for Applied Economic Research at Montana State University Billings.

Montana is expected to continue adding jobs in most sectors, with much of the activity driven by the eastern part of the state, according to the state’s Department of Labor and Industry.

Montana is expected to add 8,300 jobs statewide in 2015, then slow to an average of 6,600 jobs annually for the next six years, according to the state.

In Yellowstone County, where unemployment hovered between 3 and 4 percent in 2014, annual job growth remains above the state

Relief in the east

A new, massive Scheels sporting goods store in Shiloh Crossing has attracted other retailers and lots of traffic to the development.

Scheels, a sporting goods retailer, finished its massive new destination store on the West End. Developers say the store will make Shiloh Crossing a regional draw.

To tap into traffic at Scheels, developers finished the Shops at Shiloh Crossing next door — a lifestyle center of shops geared toward women. West Park Promenade on Grand Avenue is nearly full, and the Heights will welcome Billings’ Shiloh Crossing expands third Shipton’s Big R farm supply The retail sector saw a major store next year. reshaping in Billings this year.

“Retail is a huge part of our average, meaning businesses must compete for workers, labor officials said.

“Many businesses in the region are pursuing efforts to improve workforce training to reduce turnover and attract a strong workforce in their tight labor markets,” said Barb Wagner, Montana’s chief economist.

economy here, and all factors point to very positive,” said Gary Amundson, business professor at MSUB. These new stores, along with road improvements, are helping the construction industry continue to climb out of the huge hole left by the recession, economists said.

Yellowstone County had 200 more jobs this September than we did the last. Experts say they expect slowdowns during winter months, but the industry overall remains healthy.

In Eastern Montana, job growth is finally easing, which will actually start relieving the pressure on communities stressed to provide services for the oil boom, economists say. Build out of the oil wells is pushing annual job growth to below 2 percent through 2022, according to forecasters.

“Growth is expected to slow in the Bakken areas due to lower oil prices and cost controls by companies, but that means that employment growth is expected to be at a fairly strong pace, not just the neck-breaking pace seen in earlier years,” Wagner wrote.

Economic development officials said they’re seeing rising interest from industries to expand Please see East, Page 2

Facing infrastructure challenges, Bakken towns struggle to cash in on oil boom

By TOM LUTEY Billings Gazette BILLINGS — Sometimes, if you’re not ready to catch an opportunity, it lands on you just the same.

Bainville was a town of 300 when the Bakken oil boom arrived on its doorstep in 2012. An Alberta company looking for rail access for a fracking sand depot moved in, followed by a 350-person “man camp” to house oilfield workers and plans for a 400home subdivision northwest of the city limits.

The town wasn’t the least bit ready. Bainville didn’t have a sewer lagoon big enough to accommodate the growth or a suitable water tank or plumbing to meet demand. The community had been shrinking for decades, slowly reaching its angle of repose. It could see nearby Williston, N.D., boiling over with new oil-related growth. It assumed

at some point that growth would reach Bainville, but the town didn’t have the money to do anything to prepare for it.

“When you’re next to a town that’s set up for 15,000 people and now it’s 60,000, you get some spillover,” said Dennis Porta, Bainville’s mayor.

Bainville got its sewer lagoon worked out. The town’s new fracking sand neighbor, Procore Logistics LLC, paid $1.5 million to double the sewer system and then sold the improvements back to the community for $1. But the community has struggled mightily with other infrastructure challenges. It needs an adequate water supply and more teachers, which could cost as much as $3.5 million. The town also needs a railroad underpass because as it stands, the community’s only two crossings are sometimes blocked by mile-long

LARRY MAYER/Billings Gazette

Culbertson, just 18 miles down the road from Bainville, is also struggling to accommodate growth. The community Please see Bakken, Page 2 upgraded its utilities in April.

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12 13 16

Booze: Montana’s latest natural resource

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Time for tourism: Visitors bring $4B to state in 2014

Businesses look to capture some of Bigfork’s success

Weather, cattle prices color the 2014 agriculture economy

State set back by federal cuts in spending

University economy: MSU research sharpening emphasis on economic development

‘Better late than never’: Missoula showing signs of recovery after recession

Bozeman and Butte — Completely different animals

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Malmstrom sees growth, stability

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Natural resources in Montana have bounced back since the recession

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Leaders optimistic as commercial development springs up in Helena

Bozeman on the rebound

Tale of two economies: Kalispell sees faster growth than the rest of northwestern Montana

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Back to growing: Industrial growth boosts Great Falls economy

Businesses ‘cautious and smarter’ in the Bitterroot Valley

Bakken banks outperform rest of Montana, North Dakota

By TOM LUTEY Billings Gazette BILLINGS — It didn’t take long for the deposits of Bakken oil and gas royalties to begin piling up at Richland Federal Credit Union.

The small institution, with its headquarters in Sidney, caters to farmers. Farmers in the mostfracked county in Montana have mineral rights. Many of those rights began producing royalty checks four years ago and haven’t stopped.

The credit union’s total shares and deposits were up to $75.6 million. The institution had a problem that few post-recession institutions have — too many new deposits.

Bakken banks and credit unions have so much deposit growth it has become difficult for some to crank out enough loans and investments to protect depositors.

Year-to-year, deposits have increased more than 25 percent, compared to single-digit growth for other banks in Montana and North Dakota, according to the Federal Reserve.

Banks in the six counties along the Montana-North Dakota border that make up the Bakken reported $4.66 billion in deposits in the second quarter of 2014.

To put that in perspective, combined deposits for the rest of Montana were $20 million. Deposits for the rest of North Dakota were $15.6 million.

“We’ve heard from multiple institutions that are so flush with deposits that they’ve actually taken to discouraging new ones,” said Ron Feldman, researcher for the Federal Reserve Bank of Minneapolis.

The Minneapolis Fed oversees financial activity in six northern states stretching from Montana to Michigan’s Upper Peninsula. Bakken banks are experiencing more growth than any other in the Minneapolis Fed’s region.

A bank can’t rest on the lau-

Traffic, including oil field tankers, fills Central Avenue in Sidney as Eastern Montana experiences an oil boom.

rels of its deposits. It has to generate enough profit from loans and other investments to shield those deposits from unusual losses. If its revenue from loans isn’t growing as quickly as its deposits, that’s a problem. This causes a bank’s institutional rating to slide.

Those revenue requirements are there to protect customers from unseen disaster. There are no exceptions.

“If I grow 15 percent, I’ve got $115 million. I now have to have $11.5 million in equity and $1.5 million in revenue,” said Kevin Mayer, Richland Federal Credit Union chief executive officer Banks have even gone as far as attempting to slow deposit growth

so they have time to balance it out with loans and investments.

The increase in deposit activity can be seen in the lobby of any Bakken bank or credit union. Institutions that may have seen one or two new accounts a day before the Bakken boom are cruising.

“We’re probably up to an average four brand-new customers, when we used to have one or two,” said Garth Kallevig, president of Stockman Bank in Sidney.

Just like most other businesses in the Bakken boomtown, Stockman in Sidney has had to hire more workers to meet demand. Their “help wanted” sign has gone out just as they lose tellers to betterpaying oilfield jobs. It’s tough to find

East

Bakken

Continued from Page 1

Continued from Page 1

in Yellowstone County. The main challenge, they say, is infrastructure.

The Big Sky Economic Development Authority has been lobbying Yellowstone County commissioners to create a new targeted economic development district in Lockwood, a fast-growing suburb or Billings The goal is to create more “shovel-ready” land that’s attractive to developers, officials said.

“We’re planning for growth,” said Steve Arveschoug, president of the economic development authority.

The new district would not raise property taxes of current property owners; rather, it would earmark taxes from new developments for roads, sewer lines and other projects.

Arveschoug said the district is necessary because Yellowstone County is seeing so much activity from business.

“We’re a hub for a lot of things. … We’re a big hub for agriculture.

We’re a regional hub for health care. We’re a hub for retailers and wholesalers. That, in combination with the strength of our workforce, make a great community to expand and develop a business in,” Arveschoug said.

trains stopping at the fracking sand depot.

What Bainville and other Montana communities in the concussion zone of the Bakken are learning the hard way is that without infrastructure it’s hard to benefit economically. Mayors and county commissioners of these small communities say commerce has at times driven past them because they weren’t ready do business.

“Long before I was a county commissioner, I was a manager for Mitchell Oilfield Services,” said Duane Mitchell, commissioner in Richland County. “We met with the commission at the library and asked them to develop an industrial park. They said absolutely not. Well, it goes without saying if you can’t hook up to services, you’re going somewhere else.”

Montana communities in the Bakken footprint have been struggling with road, sewer and water projects since the oil boom started. The bills for the needed infrastructure are large.

The town of Sidney puts the cost of its infrastructure needs at $65 million. Richland County, which has contributed several million dollars to Sidney infra-

good help, Kallevig said, and if the bank hires someone from out of the area, it’s a challenge to find affordable housing once they get to town.

A two-bedroom apartment rents for about $2,000 a month in Sidney.

“We lose people at the bank for a couple reasons,” he said. “One, they and their spouses have moved here from out of the area and it seems like they want to get back to where they’re from.”

Growing pains There are deposits from oil royalties, but there’s also a tier of deposits from oilfield workers and another from businesses one or two steps removed from the fossil

LARRY MAYER/Billings Gazette

Booming Culbertson will go from 40 to nearly 400 motel rooms when construction in completed on a new project in the town near the North Dakota border.

structure projects, has $12 million to $18 million in road projects to complete in the next few years.

The challenges are myriad.

“In Fairview, the mayor said he could use $7 million to fix streets in his city. The problem with that is you don’t want to fix streets if you have a 100-year-old water system beneath them,” Mitchell said.

Like many big government issues, the infrastructure challenge is both a business issue and a political one. Bakken communities have gone to the last two sessions of the Mon-

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tana Legislature looking for help with infrastructure funding. Both times the Legislature produced nothing for a region that has provided the state hundreds of millions of dollars in oil tax revenue.

In 2013, a bipartisan agreement to help fund Bakken infrastructure needs out-ofpocket died when Gov. Steve Bullock insisted the state borrow the money instead. The cash-payment versus borrowed money debate seems to be firing up again, with some Bakken mayors, including Sidney’s

LARRY MAYER/Billings Gazette

fuels industry.

There have been growing pains for the lending industry, Kallevig said. When the boom started, housing prices in some cases quadrupled, making it difficult to find comparable sales needed for home sales and mortgages. New construction faced similar problems.

Loan problems have been minimal. In September, less than 1 percent of mortgages issued by Bakken banks were having severe problems, according Federal Reserve data.

Commercial and land development loans at Bakken banks increased 26 percent in the second quarter of 2014, while loan growth in the rest of Montana was 5 percent.

Rick Norby endorsing Bullock’s plan to issue bonds to pay $45 million of the expenses. The Republican-controlled Legislature, citing the $355 million excess in tax collections, still wants to pay cash for the operations.

Many of the communities are beyond caring how the money is raised.

“Our last initial estimate, everything we would like to do to bring everything up to speed and repaired nicely, was about $24 million,” said Bryan Cummins, Fairview mayor.

Fairview’s population has increased from 700 at the beginning of the Bakken boom to 1,200. There are no places to rent. The town’s streets are chewed up by the 8,000 cars and trucks — mostly trucks — that rumble through town daily.

There are plans for an industrial park and housing development in Fairview that could bring the border town a slice of the Bakken business that for now mostly passes through it on the way to somewhere else.

There are sewer lines to replace and roads to fix before businesses start putting down roots in the town.

“Right now, I think there’s a better chance of something closing than something opening,” Cummins said.

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Sunday, December 21, 2014

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Montana Economy

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Sunday, December 21, 2014

Bozeman on the rebound

Traffic flows through downtown Bozeman. From more babies being born to an improved housing market, The town has reasons to feel good about its economy.

By LINDA HALSTEAD-ACHARYA For The Billings Gazette BOZEMAN — Bozeman’s economy took a thrashing during the recession — at least compared to most of Montana. But by many measures, it’s bounding back with enthusiasm.

A sure sign of optimism can be gauged by the number of precious bundles carried out of Bozeman Deaconess Hospital.

And Connie Martin, director of marketing communications there, reports that births are back on the rise.

“That’s probably one of the best signs, when people are feeling comfortable again,” she said.

Soon after the recession struck, Bozeman residents put the brakes on the size of their families. Between 2007 and 2011, live births dropped by 12 percent. But, within a couple of years, they were trending up-

ward again.

“We are on track to surpass last year’s numbers,” Martin added. “Typically, we have more than 100 babies born each month.”

With more babies born and the recession fading into the rearview mirror, nearly every sector of Bozeman’s economy reports reason to cheer. Real estate and construction, two key

JAMES WOODCOCK/Billings Gazette photos

Bozeman realtor Joyce Miller shows a home she has listed at 802 Flanders Creek.

Please see Bozeman, Page 5

It’s bigger

than banking.

It’s being there to lend a hand, to make sure things get handled.

Banking you can count on.

It’s you and together.

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© 2014, Forbes Media LLC. Used with permission.

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JAMES WOODCOCK/Billings Gazette photos

Work is underway for the new addition to Bozeman Deaconess Hospital. The hospital saw a rise in births in 2014.

Bozeman Continued from Page 4 indicators, have surged back in the past couple years — though they have yet to match the heady boom days. Mike Basile, broker and owner of Prudential Montana Real Estate, reports that home sales have shown a slow but gradual march out of the 2008 doldrums.

“It really started to take off in 2012,” he said. “Now, one of our biggest problems is lack of decent inventory.”

Basile said the residential market enjoyed a 1 percent increase each month in 2013 and is up 1.5 percent per month this year. Commercial sales are up, too, with some properties being swooped up and renovated, like the old Safeway that’s been revamped into Ashley Furniture and a Boot Barn, he said.

“Plus, there are new commercial stores being built across from the mall,” he said.

Joyce Miller, president of the Gallatin Association of Realtors, reports that roughly 97 percent of properties in the $350,000 range are selling for the asking price.

Likewise, the number of dayson-the-market has shrunk from a high of 114 to 84. And median home values, which dove to a 2011 low of $252,250 (from 2006’s high of $340,851), have bounced back to $324,500.

“Big Sky properties are probably double the sales of two years ago,” Miller added. “And our high-end properties are selling at a good clip.

And a large percentage of them are being purchased with cash.”

Today’s market is not back to the “mania” it once was, but in some respects that’s not all bad, Miller said. She mentions a few remaining vestiges of the tough times — the occasional foreclosure, the tough condo market and the fact that property values have yet to reach their pre-recession highs.

“But prices were just beyond where they should have been,” she says. “Income in our valley did not substantiate those prices. I’d have to take first-time home buyers to Three Forks to find something.”

Bob Risk, Bozeman’s chief building official, arrived on scene just as the sun was setting on 2008.

“There had been a lot of layoffs,” he said. “It was about as slow as it could get.”

But then things began to turn around. And during the past three years, the office got so busy that they had to expand the skeleton crew from three inspectors to five and in-office staff went from one to three.

“The last three years have been crazy busy with a healthy blend of commercial and residential,” he said. “Nothing spectacular, just busy with lots of small businesses, banks, restaurants, hotels, houses, condos — pretty much everything.

It hasn’t slowed down, even during the winter.”

Risk notes that builders are even building spec homes again.

“In fact, an entire (spec) subdivision was platted and built in the last few years,” he said.

Nathan Albrecht, owner of Pro Builders and president of the Southwest Montana Building Industry Association, sees a shift in the industry. Today’s market is defined more by multiplexes — a 300unit complex is going up north of Bozeman just as a 500-unit building is under construction west of the university — and residential homes that are trending slightly smaller.

“People have reined themselves in,” he said. “They want to own the house rather than it own them.”

People walk though downtown Bozeman.

Stuart Leidner, executive director of Prospera Business Network, a Bozeman-based economic development organization, sees new construction throughout the area and points to data on housing starts.

Last year’s 943 new home permits have far surpassed the 764 permitted in 2007. In fact, 2012 saw a 123 percent jump over 2011 and 2013 continued the trend by surging 112 percent over 2012.

Oddly, the number of construction firms and workers just don’t jive with the number of housing starts. In fact, even by 2013, the number of construction workers was still down by 38 percent from its 2007 high. Albrecht thinks many in the industry are taking a more conservative approach to hiring.

“At the downturn they had to lay people off and some are hesitant to hire them back,” he said. “Plus, there’s a lack of qualified people for jobs.”

Similarly, real estate employed 21 percent fewer in 2013 than 2007.

Those two job sectors reveal how, despite a rebounding economy — the Bozeman-area unemployment rate hit a rock-bottom low of 2.3 percent in 2006, shot to 6.5 percent in 2010, and dropped back to 4.4 percent in 2013 — the shape of the workforce has changed.

According to Barb Wagner, chief economist with the Montana Department of Labor and Industry, most of the jobs gained are in health care (up 40.5 percent between 2007 and 2013) and professional services.

Meanwhile, some Bozemanarea landmarks forged ahead in the face of the downturn. While others were hunkering in, Bozeman Deaconess doubled the size of its emergency room complex. And just this fall, the hospital broke ground for its fifth medical office building, started digging on its $20 million acute care hospital and clinic in Big Sky and celebrated the opening of its brand-new expanded cancer center.

“I don’t think things ever really slowed down that much,”

Crews work on the new addition to Bozeman Deaconess Hospital.

“The last three years have been crazy busy with a healthy blend of commercial and residential (construction). Nothing spectacular, just busy with lots of small businesses, banks, restaurants, hotels, houses, condos — pretty much everything. It hasn’t slowed down, even during the winter.”

— Bob Risk

Bozeman’s chief building official Martin said.

West of the city, Bozeman Yellowstone International Airport took advantage of recession-low building costs and proceeded to more than double the size of its terminal.

“We took a leap of faith,” said airport director Brian Sprenger. “A lot of our growth would have been real challenging if we hadn’t responded when we did.”

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proach to air service development.

In 2000, Sprenger said, passengers could fly direct to three outof-state destinations: Salt Lake, Minneapolis and Seattle. By 2014, that choice is up to 14 destinations, including a direct flight from Bozeman to New York. Delta’s flight into Bozeman from LaGuardia represents the carrier’s longest, nonstop flight in the nation.

“They could have flown to any city in the country, and they chose Bozeman,” he said.

Yes, passenger numbers

dropped off during the tough times of 2008-2009, but the airport’s 2.5 percent fewer passengers was minor compared the 10 percent hit nationwide. And since then, the expansion project has more than compensated for the blip.

By May 2013, Bozeman Yellowstone International Airport eclipsed Logan International Airport in Billings to become the busiest in the state.

Daryl Schliem, CEO of Bozeman’s Chamber of Commerce, credits a broad base of support for Bozeman’s climb out of the doldrums. Realtors, builders and business owners put their heads together. Local government, the university and the airport came to the table.

“So we had a solid group all pulling in the same direction,” he said.

Looking back, he remembers working with business owners as they fought to survive the dismal economy. What was draining then has been replaced by a different kind of tiredness, he said. With Bozeman on the rebound, he sees his next challenge as workforce development.

“We just don’t have the numbers (of trained workers),” he said.

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Montana Economy

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Tale of two economies Kalispell sees faster growth than the rest of northwestern Montana

MICHAEL GALLACHER/Missoulian

The economic outlook for the woods products industry in 2015 is “guardedly good,” says forecaster Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research.

By VINCE DEVLIN Missoulian KALISPELL — There are two economic forecasts for the northwest corner of Montana — one for Flathead County, which remains one of the state’s fastest growing, and one for everywhere else.

“The story is pretty good” in Kalispell and surrounding communities according to Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research. “They’re seeing faster growth than the rest of the state — it’s not leaps and bounds faster, but it’s still faster.”

In the nearby, and more rural, counties of Lake, Lincoln and Sanders, the picture isn’t as rosy.

Lake County fares best with an outlook of “much weaker growth” than the Flathead.

For Lincoln and Sanders counties, “It’s a lot harder to find good news,” Barkey said. The two counties that border the Idaho panhan-

dle often rank last, and next-to-last, in Montana unemployment percentages.

Barkey emphasized that, at the time he was interviewed for this story, he was still working on his 2015 economic forecasts.

“When you’re doing a forecast, you spend most of your time talking about recent trends,” he said, “and then calibrate what people can expect.”

The calibrations were yet to be done, but Barkey was familiar with many of the trends at which he’d be looking.

“We’re bullish on manufacturing, we’re bullish on energy, we’re bullish on agriculture,” Barkey said, “and we’re optimistic for the tourism economy.”

All but energy are important players in Flathead County.

There, Barkey said the most recent figures available show construction in the county up 13.1 percent from the year before, manufacturing up 8.1 percent, health care up 5.5 percent

Visitors bring $4B to state in 2014

and retail up 2.2 percent.

“The retail growth is pretty restrained,” he said. “Retail is driven by tourism up there, and, like every place, is being challenged by people buying on the Internet.”

The construction numbers don’t match Montana’s other fastestgrowing county, Gallatin, “but it’s still double-digit growth,” Barkey said. “The health care numbers are OK — it’s more than the overall economy is growing, but that’s the same as everywhere. It’s not really news.”

Key to the positive projection for Flathead County is its payroll — wages, which total $1.3 billion annually, showed a 4.3 percent increase.

Annual payrolls in the nearby but more rural counties are a fraction of Flathead’s — $241 million in Lake, $155 million in Lincoln and $70 million in Sanders.

Lake County’s numbers reflect a modest 1.2 percent growth. Sanders County’s fell by half a percent,

while Lincoln payroll was down 3.4 percent.

However, Barkey notes, what those payroll numbers don’t include is people who commute to other counties for work but bring their paychecks home to Lake, Lincoln or Sanders counties. Lake County in particular has residents who commute to either the Flathead Valley or Missoula for their jobs.

Growth’s other side A downside for fast-growing counties like Gallatin and Flathead, Barkey said, is that they can also be hardest hit during bad economic times.

“They dug themselves a mighty deep hole,” during the recession, according to Barkey, and “dove a lot deeper” than more stable counties.

“But their growth has been good, and their prospects are up.”

All four counties should be happy to hear that Barkey’s assessment of the wood products industry in 2015 is

“guardedly good,” an assessment he makes while aware that F.H. Stoltze Land and Lumber in Columbia Falls laid off 8 percent of its workforce this fall, citing a lack of access to logs.

“There are a few uncertainties,” Barkey said, “but nonetheless we think it will be better.”

That does not, he noted, mean as much to communities where mills have closed for good.

“Like a lot of nonurbanized counties, if your economy is natural resource-based, and the resource has not been doing well, you’ve got to find some other way to grow,” Barkey said. “That’s hard to do.”

His “pre-forecast forecast” — our words, not his — does depend on many things happening outside the four counties.

“The U.S. economy is doing better than most of us thought it would, so maybe we’re being too pessimistic,” Barkey said. “But Japan has gone into a recession that could negatively affect us too — there’s still a lot of moving parts to this.”

Montana’s time for tourism

By VINCE DEVLIN Missoulian MISSOULA — If you could get every person on earth to spend just 50 cents in Montana once a year, you would pump more than $3.5 billion into the state’s economy.

We get more than that, from a significantly smaller pool.

Out-of-state visitors to Big Sky country came close to spending $4 billion here in 2014, according to the University of Montana’s Institute for Tourism and Recreation Research.

“And that’s direct spending,” said Norma Nickerson, the institute’s director. “It doesn’t include the economic impact using multipliers.”

The figure is closer to $3.97 billion and that’s still $300 million more than 2013.

“It’s nothing to sneeze at,” Nickerson said. “It’s all new money coming into the economy in Montana — it’s not just us spending our money here.”

Preliminary numbers Preliminary projections are that more than 11.2 million nonresidents will have visited Montana in 2014, up approximately 2 percent from 2013.

That’s every out-of-stater who was in Montana for any reason — business, pleasure or necessity — and for any length of time. Stays could be a month-long vacation, or it could be a few hours spent mostly, if not entirely, behind the wheel of a vehicle while passing through the state to get someplace else.

A significant majority of visitors have been in Montana before, Nickerson said, which is why she likes the new slogan — “It’s time” — the state’s Office of Tourism is attaching to its national ad campaigns for at least the next year and a half.

“I think it’s brilliant,” Nickerson said. “When I travel and tell people I’m from Montana, the response I often get is, “I’ve always wanted to go there.’”

That’s exactly who the slogan targets, according to Daniel Iverson, spokesman for the tourism office — people who have mulled a trip to Montana, but never pulled the trigger on making it happen.

First-timers to the state are important to the tourism industry, Nickerson said, because the institute’s research shows that once

TOM BAUER/Missoulian

A Glacier National Park road crew dumps snow from the Going-to-the-Sun Road during the annual plowing of the road to get get it open for tourists. Out-ofstate visitors to Big Sky country came close to spending $4 billion here in 2014.

they come, many tend to return again.

“We get a lot of repeat visitors,” she said. “The majority of our nonresident visitors have been here before.”

In 2013, 61 percent of nonresident travelers were in groups where everyone in the group had been to Montana before, and 76 percent were in traveling in groups where at least one of the people was a repeat customer.

Following trends As goes the nation, so goes Montana when it comes to tourism. Nickerson said the state historically comes close to matching whatever national projections are for the industry.

In 2015, 2 percent growth is forecast for the U.S., and Nickerson expects that’s about what Montana will see. If gas prices continue to fall, Nickerson said, it could be more.

That the $4 billion in new money is important to the state’s economy is a given; just how important is difficult to measure.

Agriculture is generally ac-

knowledged to be the state’s leading industry, but Nickerson said there’s no way to compare it and tourism.

“It’s an apple-and-orange thing,” she said. “In agriculture there are a lot of subsidies — I’m not saying that’s bad; we all need food — but in the tourism world, there is no such thing. They’re just way different industries.”

It’s also difficult to gauge the effect tourism has on retail, food and beverage businesses in the state since stores, restaurants and bars don’t necessarily track who’s spending money in them, residents or non-residents.

The Institute for Tourism and Recreation Research does a lot of work to fill in those blank spots, fanning out across the state at different times of the year to question non-resident travelers in airports, gas stations and rest areas.

In 2013, where final data is complete, non-residents spent an estimated $3.62 billion in the state. Data compiled by Kara Grau from the institute’s research shows 32 percent of that total went to purchase fuel, 19 percent was spent on retail purchases, 17 CYAN

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percent was in restaurants and bars and 10 percent was spent on lodging. Grocery purchases accounted for 8 percent, followed by money spent on outfitters and guides (4 percent), licenses and entrance fees to places like Glacier and Yellowstone national parks (2 percent) and car rentals (2 percent).

One percent or less was spent on cabin and condo rentals, vehicle repairs, campgrounds and RV parks and gambling.

Almost half the spending by out-of-state visitors — nearly $1.8 billion — occurred during just three months, July through September.

With summertime an easy sell, the state works hard to lure outof-state skiers and snowboarders in the winter, and several Montana communities have launched off-season events specifically in hopes of attracting outside money at times of year when tourists are not as plentiful.

Kalispell, for instance, started a popular outdoor pond hockey tournament last winter. Nearby Polson has a wintertime film festival.

Two million people were visiting family or friends, 1.3 million were here on business and 264,000 came to shop.

Most of the shoppers were Canadians who have become important to retailers across the northern tier of Montana and as far south as Great Falls, which attracts a sizable number. They also spend money on fuel, food and lodging while shopping in the Lower 48.

The exchange rate affects how many opt to cross the border to shop, and after a couple of years where the loonie — the Canadian dollar — was on a par with the U.S. dollar, its value has been slowly dropping for almost three years.

In late November, its purchasing power was worth only 89 cents in the U.S. On the upside, Nickerson noted, a lower gas price not only encourages more people to travel; it leaves them more to spend on other things once they arrive.

And while travel is projected to increase by a relatively modest 2 percent, “Spending is going up quicker,” she said. “Everybody likes to hear things like that.”

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Technicians demonstrate the start of the harvest of the nearly pure polysilicon at REC Silicon plant near Butte at Silver Bow. REC is one of Butte’s largest manufacturers.

Montana Standard

Bozeman and Butte — Completely different animals

By MATT HOFFMAN Montana Standard BUTTE — Southwest Montana is anchored by two metropolitan centers — Butte and Bozeman — and the economic outlook for the region is a tale of two cities.

Bozeman, hit hard by the recession, has experienced some of the strongest growth in Montana during the past few years. Butte, which weathered the recession relatively well, looks to remain steady but missed out on a similar economic boom.

Gallatin County is a “completely different animal,” said Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research.

“Every place looks bad compared to Gallatin County.”

Bozeman’s boom has spurred growth in Gallatin County of around 6.5 percent in earnings from workers — a statistic Barkey finds more useful than simple employment numbers.

Comparatively, Butte-Silver Bow saw 0.6 percent growth in the same category in 2013.

“They’re really completely different economies,” Barkey said.

The 2013 growth in Butte-Silver Bow slowed compared to the past couple years, caused in part by dropping copper prices, which impacted mining wages. While Barkey said that the county has diversified in past years by bringing in manufacturers like Seacast, a precision casting company, and REC Silicon, it wasn’t enough to keep the county’s economy growing significantly — neighboring

Anaconda-Deer Lodge County saw 2.8 percent growth and Beaverhead County experienced 3.2 percent earnings from workers growth.

A report from the BBER said that a previously projected 2 percent growth rate in Butte-Silver Bow between 2014 and 2017 “may be optimistic.” The same set of reports estimated a 4 percent or higher growth rate for the same time span for Gallatin County without hesitation.

That’s because Gallatin’s growth, unlike many other economically explosive areas of Montana, isn’t predicated upon natural resources.

“They have legs,” Barkey said.

“They’re not at the mercy of oil commodities.”

Part of the reason the Bozeman

area has experienced so much growth is because it was hit hard by the recession.

“Gallatin dug themselves into a very deep hole,” Barkey said, but has more than dug themselves out.

Galatin County trailed only Yellowstone County in total housing starts in 2013, and had a higher rate than the more populous area. Construction was so robust that the county was responsible for half of the state’s construction worker earnings growth — a hugely disproportionate figure.

Experts predict southwest Montana to gain more jobs than any other region, according to the Montana government’s Labor Day report, but most of that growth is expected to occur in Bozeman.

Still, there are some encouraging signs in Butte.

After a flurry of retail closures during the past two years prompted a re-examination of economic policy in Butte-Silver Bow, Hardee’s and Buffalo Wild Wings have announced plans to open restaurants in Butte. That renewed interest is a good thing, but Butte’s population is probably too low to attract other major retail chains, experts say.

Whether or not Butte is able to grow consistently depends on its ability to bring in employers outside the mining industry, Barkey said.

Some have wondered if Bozeman’s growth is sustainable.

“I think it’s sustainable for a long time,” Barkey said. “Billings and Boise grew for a long time.”

MONTANA METH PROJECT

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We have launched a digital campaign that reaches teens online, and educators all across Montana are implementing our Meth Prevention Lesson in their classrooms.

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MONTANA METH PROJECT FACEBOOK.COM/MONTANAMETHPROJECT

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Montana Economy

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Still the Treasure State

Larry Mayer/Billings Gazette

Interstate 90 winds toward Bozeman Pass in this aerial view.

Natural resources in Montana have bounced back since the recession A shovel removes overburden from Montana Resources’ Continental pit mine in Butte.

Montana Standard

Filling bottles of Neversweat bourbon at Headframe Distillery in Butte.

booze

By MATT HOFFMAN Montana Standard

Montana’s more traditional mineral mining is a mixed bag: Some mines are staring limited supply in the face — Butte’s Continental Mine has about 40 more years of projected production. At the same time, a company is trying to reopen a gold mine in the Highland Mountains near Butte.

Overall, the state’s metal mining tax receipts declined 20 percent during the last fiscal year, probably tied to lower commodity prices and depressed international demand.

“China’s changing,” Barkey said. “They have some significant issues there.”

BUTTE — While accounting for about only 3 percent of the Montana’s employers, agriculture, forestry and mining industries make up 12.5 percent of the state’s gross domestic product and almost 10 percent of work earnings.

This is, after all, still the Treasure State.

The industries have weathered the recession and come roaring back; less than 1,000 jobs were lost, and more than 2,000 were gained between 2010 and 2013.

Agriculture, forestry and mining are often lumped together in eco- Timber nomic reports, but they are Montana’s timber inthree distinct industries, each with their own ad- dustry hoped to bounce back with construction vantages and challenges: growth as the country waddles out of the recesMining sion but has been hamMost of this combined pered by supply problems. growth is fueled by Bakken Nationwide housing oil and gas. While nothing starts — the major driver of new, the extraction of fuels wood products — are still in Eastern Montana isn’t below long-term averages slowing down. As it con- but have improved since tinues, it brings in good the recession. That imjobs with good pay — min- provement is projected to ing pays the highest aver- continue, but not enough age annual wage in Mon- to return to past levels tana. anytime soon.

It also creates a trickleThe improvement has down effect into transpor- created demand for more tation industries; truck logs, and producers have and train transporta- had trouble filling it. tion have seen significant About 60 percent of boosts, as oil and gas need Montana’s timber is on to be shipped to refineries federal lands, which are and markets. often the most cumberBut it’s not perfect; fall- some from which to haring oil prices and lower in- vest. Generally, private ternational demand have landowners have the highcast something of a shad- est harvest rates, followed ow over the Bakken’s star. by state lands then federal “There’s been a real lands. maturing of growth,” said “Prices were generally Patrick Barkey, director pretty good this year,” said of the University of Mon- Todd Morgan, the research tana’s Bureau of Business bureau’s director of forestand Economic Research. ry research. “(But) it’s going “The outlook has gotten to be difficult for producers increasingly guarded.” to capitalize on that.”

Because of policy regulations, federal lands are often slower to respond to market changes. Montana’s national forest region just signed a new deal to harvest more timber than previous years, but that won’t get cut overnight.

“It might be two or three years until it gets out,” Morgan said. If the industry does grow, development in the Bakken also makes it harder to attract loggers and truckers that might have found work in the oil industry while logging took a dip.

Agriculture Agriculture is perhaps the most visible of the three categories, as Montana ranch lands and cattle herds line highways.

Increasing foreign demand and strong domestic demand for beef is bolstering the cattle industry. However, the cattle inventory in the U.S. and Montana has stayed flat over concerns about global market conditions.

With low corn prices there’s an incentive to feed calves to drive up their weight; but near-record beef calf prices have some ranchers anxious to cash in early.

Prices for Montana’s two dominant crops — wheat and barely — are low but better than predicted.

In a report this fall, Gov. Steve Bullock praised the agriculture industry for outperforming national averages. The state has also become the nation’s largest lentil grower, although it’s a niche crop.

One challenge for agriculture has little to do with crops or the weather, but transportation. As trains carry more oil, farmers have dealt with rail shipping delays — although railways blamed weather and construction.

By MATT HOFFMAN Montana Standard BUTTE — Craft distilleries are beginning to scatter across Montana like shot glasses across a bar, and it turns out Montanans have a taste for their own brand of booze.

The renaissance began with Roughstock Distillery in Bozeman. In 2005 the Montana Legislature loosened laws to make it feasible for craft distillers to follow in the footsteps of their beer-brewing brethern. Bryan Schultz started using Montana barley to craft small-batch whiskey and launched Roughstock in 2009.

“When started, there were very few people who were doing it,” he said. “We were definitely learning on the fly.”

Now, several other distillers have bellied up to the bar, and one in Butte has plans to open the nation’s largest distillery West of the Mississippi River.

The state has at least 18 operating or planned distilleries; less than seven years ago, Roughstock stood alone. A recent report from the University of Montana’s Bureau of Business and Economic Research emphasized the importance of craft brewers to the state’s economy — many of those same characteristics apply to craft distillers.

The expansion of the industry has left some of its more established players with a choice — stay small, or try to expand.

Montana Standard photos

Montana’s latest natural resource Roughstock, though it distributes internationally, prefers to stay small.

“Not everybody wants to be Jack Daniels,” Schultz said. “We can experiment and do other things that a larger distillery can’t do.”

Roughstock produces only whiskey, and many of its products need to be exceptionally fine-tuned. But part of the battle is convincing customers that a premium product is worth a premium price.

Some people drink under the assumption that liquor doesn’t have the same nuances as beer or wine.

“We educate consumers all the time,” Schultz said. That also ties in with marketing efforts.

Schultz believes that the best way to get consumers to buy a product is to build a one-on-one relationship with those selling the product, whether that’s a bartender or a liquor store owner. Schultz flies across the country pitching Roughstock, emphasizing its qualities and making sure it stands out to the people who directly interact with the final consumer.

It also helps if products have a story behind them. When Schultz started making whiskey, he tapped into Montana’s roughand-tumble Western heritage.

Headframe Spirits in Butte also emphasizes storytelling. Headframe names its products after mines in Butte, and emphasizes the mining heritage behind the Please see Booze, Page 10

Headframe Spirits owners Courtney and John McKee listen to distillery boss Justin Adin discuss spirits the Butte distillery is producing from the still in the background.

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Montana economy

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State set back by federal cuts in spending

By TERENCE CORRIGAN Independent Record HELENA — Montana’s economy has not grown as fast in 2014 as was predicted and the reasons seem to be drops in commodity prices and lower federal government spending.

Early in 2014, economist Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research, predicted growth of more than 3 percent. The headline of an article he wrote for the Spring 2014 edition of the Montana Business Quarterly, reflected his optimism — “The West is Back.” Although the final numbers aren’t yet in, Barkey was tamping down his optimism for 2014 just before Thanksgiving.

“We have pretty good data on state economic activity for the first half of 2014,” Barkey said. “Very broadly speaking, how the economy is behaving relative to what we said last winter, I don’t think the state is going to have quite as good a year as we thought.”

However, this splash of cold water on the state’s economic furnace is not cause for too much concern.

“We’re talking shades of gray here,” Barkey said.

“We’re not going down.”

The numbers aren’t in yet, and Barkey was careful to temper his statements.

“Broadly speaking,” he said. “It’s surprising how little we know.”

The leading drag on Montana’s economy, Barkey said, has been federal government spending.

“There’s been a con-

Independent Record

The Montana Capitol in Helena. In a 2005 study, authored by the University of Montana’s Patrick Barkey, he determined that for every dollar sent to Washington, D.C., Montana got $1.49 back. The federal government spent $11 billion in Montana in 2010. That was $10,873 for every Montanan.

tinued government slowdown,” he said.

The brakes have been applied a little more forcefully this last year, and the rate of the slowdown has been increasing.

“I’m not sure if that contraction is going to continue,” Barkey said. “It took us a little bit by surprise, how strong it was in 2013 coming into 2014.”

Another unexpected change in 2014 has been a “retreat” in commodity prices, he said.

“That’s taken a little bit of the froth out of the growth in the natural resource dependent parts of the state,” he said.

The federal government is a big player in Montana’s

Booze Continued from Page 8 brand. It recently helped fund and produce a film project highlighting Butte’s mining heritage and related videos featuring current Butte industries.

The business launched in 2010 and opened a distillery and tasting

economy. Barkey calls it a “driver.” In a 2005 study, authored by Barkey, he determined that for every dollar sent to Washington, D.C., Montana got $1.49 back. The federal government spent $11 billion in Montana in 2010. That was $10,873 for every Montanan.

Most federal government spending in Montana (32 percent) is retirement and disability payments for Social Security and military and veteran’s benefits.

Medicare and assistance to agriculture are also significant federal expenses in Montana.

Federal retirement and disability costs in 2010 ranged from $7,472 per

room in Uptown Butte in 2012.

But where Roughstock is staying small, Headframe has proposed an ambitious project to build the largest distillery west of the Mississippi River.

John McKee, one of Headframe’s owners, is confident that the market for more — and better — booze is there.

“We have a guy who has done feasibility studies for Jim Beam do-

capita in Daniels County to a low of $2,040 in Toole County.

One element of slowdown in federal spending in Montana in 2014 Barkey cited was a $70 million reduction in payroll.

“We’re trying to figure out what that means,” he said. “Is it budget sequester? Is it because we had a light fire season? We’re really not sure.”

Another factor in Montana is the federal appropriations process that “has been broken for five or six years. There’s a realization by some people that this spending curve has to bend somehow but whether they’re doing it in a way that’s best for everyone, I’m

ing (a study) here to show we can do it and support it,” he said.

The facility wouldn’t just turn out Headframe Spirits but would aim to contract with other liquor makers as well. It would use “continuous flow” distillation, a process that Headframe developed. The company already manufactures and sells stills that use the method.

The proposed site for the distillery — an old mineyard — is owned

not sure,” Barkey said.

Disappearing federal stimulus dollars are also on the decline.

“If you’ve ever looked at anyone’s analysis of what the stimulus was supposed to do, it is basically borrowing from future growth,” Barkey said. “When you add a stimulus you by definition take it away later.

You got the growth in ’08 and ’09 when everything else was going down and then (with the end of stimulus spending) you subtract the growth.”

Also affecting current numbers was an employment surge during the 2010 federal census.

“Some people don’t really appreciate that when

by Butte-Silver Bow and Atlantic Richfield Co. Headframe is negotiating to buy it and has plans that extend beyond booze.

“What we really all want this project to be is an anchor for economic development in Butte,” said McKee, who owns Headframe Spirits with his wife, Courtney.

“This isn’t just a place for us to make hooch.”

They would try to locate a res-

they talk about how things have declined since 2010,” he said. “It’s OK, it’s a real number (census employment) but it’s artificial.”

Until 2011, federal spending was viewed by economists as a “source of (economic) stability,” Barkey said. But following the enactment of the Budget Control Act of 2011, Congress was unable to come to agreement on ways to cut the federal deficit and the result has been mandated automatic spending cuts.

“A couple of years ago, as sequestration was being unsheathed a lot of shakeups were occurring in federal spending,” Barkey said. “We lowered our short-term outlook because things didn’t look so good.”

But as time has passed, the threat posed by deficit reduction pressure has lessened, he said.

“In the last couple of years, especially right now, in the short term, things have really eased,” Barkey said. “There doesn’t seem to be the same urgency — for better or worse — to take deficit action right now.”

Looking into 2015, Barkey said, the “politics of the situation” seem to suggest a relatively stable year for Montana.

“There doesn’t seem to be as much impetus for fiscal restraint,” he said. “We think the threat to Montana’s economy posed by federal cutbacks is not quite as large.”

Barkey pointed out one bit of good news.

“Montana’s economy didn’t come in as good as we thought,” he said, “but the U.S. economy is doing better than we thought.”

taurant on-site and develop bungalow-style lodging, hoping to improve the area’s tourism appeal.

While Headframe is confident that the market has plenty of room to expand, Schultz noted that the market is becoming more and more crowded.

“There’s only so much shelf space in liquor stores and behind bars,” Schultz said. “There’s going to be a threshold.”

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Montana Economy

Sunday, December 21, 2014

11

‘Better late than never’

Missoula showing signs of recovery after recession

By DAVID ERICKSON Missoulian

M

ISSOULA — The Missoula economy was hit harder than other areas of the state by the recession of 2008 because the closures of both the Stimson lumber mill in Bonner in 2008 and the Smurfit-Stone Container plant in Frenchtown in 2010 exacerbated the problem.

“Missoula had a couple extra challenges,” explained Patrick Barkey, an economist with the University of Montana’s Bureau of Business and Economic Research. “The recession was bookended by those two closures. Growth started later here because the closure of Smurfit-Stone kept us in the recession an extra year. And Missoula was a community hit hard by the housing bust.”

However, Barkey said Missoula County is finally digging itself out of a hole and is poised to see growth in 2015.

“Missoula’s recovery is better late than never,” he explained. “It took a while, but it has arrived. We’ve now had two years of pretty solid growth behind us, and I look for more of the same.

We’re not booming, but we’re recovering, and those of us who survived the recession are poised to keep growing. The big picture is that growth, by and large, has returned to western Montana.”

Looking at the most recent trends has been encouraging for the local economy, Barkey said.

“There has been some reasonably good growth over 2013 and into 2014,” he said. “The economy here didn’t start growing until mid-2012, believe it or not. In terms of the pace of growth, it’s about average with the state, maybe a little bit below.”

The BBER looks at total wages paid by employers, rather than unemployment numbers, because employers are required to fill out the former statistic on unemployment insurance filings. Also, Barkey said, total wages paid is a good measure of the spending power of Missoula workers.

“It’s going to capture how many people are working, how many hours they’re working and what kind of wages they’re earning,” he said. “We don’t look at local unemployment rates. It sounds funny because that’s the one economic indicator everybody knows. But that’s not our performance

KURT WILSON/Missoulian photos

Spending by visitors and tourists is expected to remain healthy next year in the Missoula area. Here, visitors take a zipline ride down the newly installed feature at Montana Snowbowl just north of town.

metric for the economy. It’s based on surveys and models, and because of that it can be revised later.”

Missoula County is approaching $2 billion in total wages paid per year, Barkey said.

“The growth in last full calendar year of 2013, the total wages in the Missoula County economy grew by 1.4 percent,” Barkey said.

“Growth if anything has picked up in 2014. In the first quarter of 2014 it was 4 percent, and it was 1.8 percent in second quarter. Those numbers tend to jump around wildly from quarter to quarter for various reasons.”

Certain sectors of Missoula’s economic are weak, while others are strong.

“By and large, government is pretty weak,” Barkey said. “The BLM and the Forest Service are stagnating and in decline. There have been quite a few contractions in federal government. That’s nothing new.”

On the flipside, the health care industry is doing better than average here.

“We’re the second biggest health care market in the state,” Barkey said.

“We’re not booming, but the 2.6 percent growth in 2013 is better than average. I wouldn’t bet against growth in health care just based on demographics.

People don’t appreciate just how dominant health care is for Missoula in this part of the state.”

The health care industry is fairing better in Missoula County than in other parts of the state and researcher Patrick Barkey says, “People don’t appreciate just how dominate healthcare is for Missoula in this part of the state.”

Another bright point for Missoula is evidence that spending by visitors and tourists has been healthy in terms of growth.

“For example, we don’t have perfect measure, but restaurant and food service growth was 5 percent last year and arts and entertainment grew by 13 percent,” Barkey said. “That evidence of visitor economy is kind of a bright spot.”

The overall trend of growth in the national economy is good news for western Montana, Barkey explained, because people

with spending power will want to visit or move here.

“When the U.S. economy was in the absolute depths of the recession, mobility was affected,” he said. “People couldn’t sell their houses. They couldn’t move even if they wanted to because they were underwater,” meaning they owed more on their mortgages than their homes were worth.

Another strong segment of the economy that doesn’t get a lot of recognition is the wood products industry.

“We have Pyramid Lumber in Seeley and Roseburg in Missoula, and very quietly they are doing very well,” Barkey said.

“The wood products industry here is smaller than it was before the recession, and it will stay that way permanently, but the survivors are doing better is the way I like to put it. Wood products had a 12 percent gain in payrolls in 2013. So there have been pluses and minuses.”

Construction had a near zero percent growth in 2013 in Missoula. The

University of Montana also was not a source of growth contributions, Barkey said.

“I’m guardedly optimistic about the housing market,” he added. “But every time you get ready to predict the breakout for home construction, it doesn’t happen.”

The falling costs of mined metals and energy are not good news for Missoula.

“We don’t mine copper or dig oil wells or dig coal in Missoula, but prices are going down, and Missoula is home to Montana Rail Link,” Barkey explained.

“And they are in the business of transporting that stuff around. So that actually matters. And we are a university town, and the university is funded by state government. When the price of oil changes, the severance tax collections for the state change immediately. They change daily because it’s based on value, and a lot of things are funded by that, public and private. That’s a concern.”

Barkey said that eventually, interest rates are going to go up.

“We are coming up from some unbelievable low levels,” he said. “We’re not sure how it’s going to affect the economy. People that are saving money are going to like it. These things get fuzzy for how it’s impacting Missoula. But Missoula is on track to have a better year in 2015.”

Stronger than before: Missoula starting to return to pre-recession economy

By DAVID ERICKSON Missoulian MISSOULA ­— If there is one business in Missoula that could be considered a bellwether of the local economy, it might be WGM Group, a firm that provides an array of engineering, planning, consulting, surveying, environmental and water resources services.

If things are going good at WGM Group — and they are — it’s a safe bet that things are looking good for the Missoula economy as a whole.

“We’re a good indicator for economic activity because we are working on a lot of stuff in design that is going to be built next year,” explained company CEO Brent Campbell. “We’re a good precursor. And we’re really busy.”

The company is back up to their pre-recession staffing level of 50 employees, which is a vast improvement over the 28 they had at the low point of the economic crash of 2008.

“We just finished our best year ever at WGM,” Campbell said. “We are back at levels that are exceeding the boomtimes before the downturn. We’ve retooled. We’re a very different company than we were before

the downturn. But all the indicators are good for us and good for the local and regional economy.”

The company has a very diverse set of projects they are working on. For example, it is working on the Russell Street redesign and the new bridge that will be going in over the Clark Fork River.

“That will put a lot of contractors to work. It will be a really good economic boost,” Campbell said. “There’s been a lot of activity in the commercial development area. There are a lot of commercial projects in the Missoula area. I can’t be too specific, but there are some exciting projects on the horizon.”

The company is also planning on submitting a bid to design and permit the South Avenue bridge over the Bitterroot River.

“We do the design and hydraulic modeling, the permitting and environmental assessments and impacts on fish and wetlands, the entire environmental assessment,” he said.

“We have our own in-house biologists and hydrologists.”

WGM Group has diversified its services in the past couple years.

“We added staff in water re-

Missoulian

WGM Group CEO Brent Campbell says he is optimistic about Missoula’s economy for 2015.

sources and water rights and environmental permitting,” Campbell said. “That’s been going great. That’s a totally new business line for us. We’ve also been adding technology to our company. We put together a remote camera system for use at construction sites and for measuring water flow. We do a lot of land-use planning, water rights resources, water rights permitting, expert witness stuff.”

Campbell said that he would characterize Missoula’s eco-

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nomic health as a “slow recovery” from the recession.

“Our economy is retooling,” he said. “We lost a lot of industrial jobs at Stimson and Smurfit-Stone. But we are regaining jobs in technology and computer programming and web development. That part of the economy is going very good. It’s interesting because it’s not brick-andmortar buildings that they need.

They don’t need big buildings.

They are creating jobs but not building infrastructure. Their

needs are different, like Internet connectivity and broadband.”

Even the site of the old Stimson lumber mill in Bonner is seeing a resurgence. Campbell said his company just finished up a big project with Harris Thermal and the outlook for manufacturing jobs in the area is good.

Missoula is well-position to attract new businesses because of the natural beauty of the surrounding landscape “I’m on the board for Missoula Economic Partnership, and a lot of people are looking at Missoula for quality life and education,” Campbell said. “Missoula has a diversified economy.

There is a lot of government, like the University of Montana and the U.S. Forest Service. We continue to diversify in the private sector. Biotechnology companies like Blue Marble, Rocky Mountain Biologicals and Rivertop Renewables are doing well. All of those folks are doing good things. That kind of development is what we need to continue to work on. The beer industry is doing very well here.”

Campbell said he is optimistic about Missoula’s economy for 2015.

“Missoula is coming back stronger than before the recession,” he predicted.

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Growing market

Bitterroot Valley builders are seeing an upswing in home construction projects. Singlefamily residence were up 34 percent from the year before.

Businesses ‘cautious and smarter’ in the Bitterroot Valley, development director says

Perry Backus/ Ravalli Republic

By PERRY BACKUS Ravalli Republic HAMILTON — The economy of the Bitterroot Valley appears to be on the upswing, but there are still some speed bumps that will have to be negotiated.

Builders are seeing the largest uptick in years in single-family home starts, but many face challenges in finding the skilled workforce they need to keep up with demand.

Ravalli County’s unemployment rate keeps dropping and there are far more job openings now than last year. Still, some employers are challenged to find the people with the right skills to fill the jobs they have.

People looking to start a new business are being cautious before taking a leap into entrepreneurship.

Ravalli County Economic Development Authority Executive Director Julie Foster said it appears there’s a lot of private investment in new small manufacturing and expansion of existing businesses.

“During the recession, private investment was hardly happening at all,” Foster said. “When a lot of businesses failed during the recession, it took the equity that people had in their homes.”

As a result, people are being far more cautious when it comes to expanding their operations or starting a new business this time around.

“They are more cautious and smarter,” she said. “They have thought it through. They seem to know now that if they don’t go through the entire process, they

could end up facing insurmountable problems in the future.”

Even with all that, Foster said she’s seen an upswing in both expansion of current businesses and new ventures that are creating jobs.

“A lot of these new jobs in small manufacturing are good paying positions,” she said. “Most aren’t jobs hammering a couple of boards together. They require skills.”

Five years ago, workers had to leave the valley to learn those skills.

“Back then, they didn’t have college right here in the valley where they could learn those skills,” Foster said. “They didn’t have access to business classes like we now offer. We have those kinds of services here now and it’s making a difference.”

Angela Previte, executive director of the Bitterroot Building Industry Association, said that organization is discussing the potential of working with local high schools to create an internship program for young people interested in the building trade.

“This year has been really good for our builders,” Previte said. “We are seeing a lot of new construction starts. … Many of our associate members — those in the trades, granite countertops and cabinetry — are telling us this is the busiest year they’ve seen in the last five or six years.”

Single family residence permits are up 34 percent more than the year before, Previte said.

As builder confidence climbs, Previte said builders typically begin to hire more employees to keep up with the mounting demand.

That has been a challenge for some.

Many of the workers who had those skills have since moved to the North Dakota oil fields. The Bitterroot Valley even lost many of its building contractors to the oil boom during the recession years.

“Some workers have returned, but, for the most part, many haven’t come back,” Previte said.

“It’s a hurdle that we’re going to have to negotiate.”

For several years, the number of general contractors in the valley was on the downslide as people made decisions to move east during the recession to survive. Others just opted to retire.

Some contractors decided to stick it out in the Bitterroot by diversifying their operations by taking on remodeling jobs and building outbuildings.

The new home market is being driven this time around by smaller homes built for the people who live and work here versus the larger second homes that people from outside the area often build as a vacation home.

“While Hamilton and Ravalli County remain a desirable location for second homes, most of what we’re seeing built are for the family who live and work here or want to retire here. They are closer in size to 2,200 to 3,500 square feet,” Previte said.

The people who have opted to stick it out in the Bitterroot now have more choices when it comes to jobs, said Vickie Steele, workforce consultant with Bitterroot Job Service.

Ravalli County is lagging behind the average of the state when it comes to unemployment. In November, the state had a 4.2 per-

“We’re seeing jobs coming back that are much more diverse. It runs the gamut from a lot of service sector jobs to medical-related positions to clerical and welding. There are a lot of different kinds of jobs being offered.”

— Vickie Steele

workforce consultant with Bitterroot Job Service cent unemployment rate. Ravalli County stood at 6 percent.

For those looking for work, there are certainly more listings this year than last. In mid-November, there were 145 job openings compared to less than 100 at the same time last year.

“We were just blown away as compared to years past,” Steele said.

The challenge has been fitting people’s current skills with the needs of an employee.

“There are a lot of people out there who are registered and looking for work,” she said. “They may not have the skill set that employers need. They may not want to work the hours or like the pay.

“Still, we think that many jobs is really great news,” Steele said.

“It’s a really good sign that our job market is strengthening.”

Job Service offers some training grants to businesses that help pay the for the specific training employees need.

“Since 2008, when the job market dropped dramatically, jobs for people working in the lumber industry and construction

trades took a nosedive,” Steele said. “We’re seeing jobs coming back that are much more diverse.

It runs the gamut from a lot of service sector jobs to medical-related positions to clerical and welding.

There are a lot of different kinds of jobs being offered.”

Foster said it’s going to take time to stabilize.

“When you think about the fact that the timber industry was the mainstay of this valley’s economy for so many years and then it just went away,” Foster said, “it’s a huge struggle to overcome that.

You just don’t turn something upside down and it pops out the other side fixed.”

The new and diverse group of small manufacturing businesses in the Bitterroot Valley will make the economy more diverse and stronger in the future, Foster said.

“Ninety-nine percent of them are from here,” Foster said. “They may not be born and bred Montanans, but they moved here to stay. They are totally invested here with the family, lifestyle and schools. That’s really an important thing.”

Businesses look to capture some of Bigfork’s success

By VINCE DEVLIN Missoulian POLSON — At the north end of Flathead Lake sits Bigfork, and its main drag — Electric Avenue — is packed with tourist-driven art galleries, gift shops, restaurants and a summer theater.

At the south end of the lake is Polson, where Main Street is occupied primarily by stores that sell furniture, shoes, floor coverings, clothes, cellphones and real estate.

Not that there’s anything wrong with that.

But to Tasha Avison, it seemed like there was an opening for more tourism-related businesses, given that Bigfork and Polson sit on the same spectacular lake.

So, at the age of 24, she started one.

Well, actually, two.

“In Polson, sometimes you have to do two things to make it,” said Avison, whose new Main Street store, Perfectly Imperfect, offers a combination of new and vintage gifts, goods and furniture.

Walk a few steps beyond the retail section and you enter Polson Old Time Photos, where you can dress up in period clothing and have your picture taken on a variety of sets, from a saloon to a jail to one anchored by a clawfoot bathtub.

“I like it because I think Old Time Photos compliments the other half of the business,” Avison said.

“My husband and I have always had our pictures taken at places like this when we’ve gone places — why

wouldn’t people do it here?”

Old-time photo business An Internet search turned up a woman in Bardstown, Ky., who was selling her old-time photo business to concentrate on her photography studio work.

Avison spent $10,000, and the woman personally delivered everything — costumes, props, sets, cameras, lights, computer and printer — to Polson, and trained her.

“One reason it spoke to me is there’s not a lot of overhead,” Avison said. “Once you pay it off, you’re mostly investing your time.

And it’s like playing dress-up with people all day.”

For $29.95, up to four people can dress up as everything from a Civil War-era soldier to a saloon girl to a prohibition-era gangster, pick a set and have a photo shoot that comes with an 8-by-10 photo.

With add-ons — extra pictures, a CD, or putting images on a “wanted” poster — the average shoot costs about $65, according to Avison.

Perfectly Imperfect and Polson Old Time Photos opened in early November — a couple of months after tourists departed Polson — on purpose.

“I figure I’ll know what I’m doing by the time we’re hit with tourists again,” Avison said. “Plus, I did open in time for Christmas and Thanksgiving.”

Perfectly Imperfect is a great place to search for unusual gifts,

and families,” Avison said, and she’s also planning to put together a set, costumes and props with a pirate theme since the Pirate is the mascot of Polson’s high school athletic teams.

Her store, meantime, is an eclectic mix of antique fans, bread boxes, globes, skates and furniture, plus new gift items.

Avison had been working at her husband’s family’s business, the Cove Deli and Pizza, a short distance away, and refurbishing furniture on the side and selling at temporary vintage markets for three years.

“I miss the people there, but I wanted to do my own thing,” Avison said. “I’ve always wanted to do something I love.”

Perfectly Imperfect is it.

“I’m known as the ‘Junk Lady,’” she said. “Once you get a name like that, everyone comes calling.

People see my pickup and ask if I’m moving or going to the dump.”

She often does have company at her new store, located at 305 Main St. Son Zane is 8 months old, just starting to crawl, and hard at work re-arranging the store every chance he gets.

His mother is hoping the store and old-time photo business deKurt Wilson/Missoulian velop a loyal local following, and Tasha Avison’s store Perfectly Imperfect in Polson seeks to tap in to the can capitalize on Montana’s tourtourism market by offering visitors the chance to dress up in period costumes ism industry and the $4 billion and have their picture taken. non-resident visitors spend in Montana each year. she said, and Old Time Photos had with Santa Claus.

Businesses in Bigfork do it all already started offering parents a “Already people are asking me the time. Avison’s just asking, why chance to get pictures of their kids to do regular photos of their babies not Polson too?

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LARRY MAYER/Billings Gazette

The Crazy Mountains form a backdrop as cattle graze near Big Timber. Gross income from Montana cattle sales hit $1.52 billion in 2013.

Weather, cattle prices color the 2014 agriculture economy

By TOM LUTEY Billings Gazette BILLINGS — Phil Steinberger was one of the lucky farmers. He got his wheat in the ground early, harvested in mid-July, and was done farming when all hell broke loose across Montana in August.

“I cut my wheat July 11,” Steinberger told The Gazette on Aug. 7.

At a time when his Forsyth neighbors were just beginning to fire up their combines, the North Dakota native had to scale a grain bin and pop the hatch to sample his.

Three weeks into August, heavy rains were devastating wheat and

barley crops along the Hi-Line and washing away millions of dollars in profit from Montana agriculture. Hay losses alone were in the range of $1 million for 15,000 bales ruined by flooding, according to extension agents. Those losses were just a drop in the rain barrel.

But Steinberger was sitting pretty, along with other farmers in Montana’s southern half and the state’s ranchers, who are experiencing record high prices for cattle.

Economically the farming forecast for 2014 was a lot like that rain-soaked August weekend, dark and stormy for most, with

only a few really sunny spots for everyone else.

Cattle sales not only led the Montana farm and ranch economy in 2014, but also most economic sectors in the state. Gross income from Montana cattle sales has jumped from $972 million before the Great Recession to $1.52 billion in 2013, according to the U.S. Department of Agriculture.

Prices this year increased another 30 percent, which depending on sales volume could put gross income for Montana cattle sales near $2 billion for 2014. To put those numbers in perspective, the state’s wheat boom, now unwinding after

seven years, peaked at about $1.7 billion.

The reason behind the ranchers’ fortune is fairly simple, said Gary Brester, Montana State University economist. After several years of drought conditions in some the world’s best cattle producing regions, there aren’t as many cows as there once were. Worries about future drought discourage ranchers from expanding herds.

“It’s all about the availability of grazing,” Brester said. “If you don’t have grass, you don’t have cows. And if you don’t have any confidence that you will have grass, you don’t expand.”

High cattle prices will likely keep the state’s annual gross income from farms and ranches above $4.3 billion.

The sugar beet industry, which is worth more than $100 million to the regional economies of Billings and Sidney, struggled with low prices for the third consecutive year in 2014, in part because of Mexican sugar imports, which created a sweetener surplus and pushed prices downward. Global sugar production is also high. As a result, U.S. sugar producers experienced some of the lowest prices Please see Agriculture, Page 16

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EmploymEnt opportunitiEs from across thE Big sky statE View current vacancies and career opportunities listed below from these Montana employers.

You can also find their website in their ad to learn more about their company and additional current openings they may have.

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PHYSICAL THERAPIST Outpatient physical therapy clinic seeking Physical Therapist. Competitive pay, great work environment, and a well-equipped facility offered. Montana State License and Minimum of Bachelor Degree in Physical Therapy required.

Now HiriNg BRANCH MANAGER - HAMILTON Opportunity Bank of Montana has an exciting career opportunity for a Branch Manager in their Hamilton Branch!

The Branch Manager is responsible for overseeing branch personnel, achieving monthly branch goals, and ensuring operational guidelines and polices are followed.

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PLEASE SUBMIT RESUME TO:

Montana Orthopedics 435 South Crystal, Suite 400 Butte, MT 59701 (406) 496-3400 Fax: (406) 496-3401 email: lcurran@montanaorthopedics.com

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Providence has cared for the people of Montana for more than 140 years. As one of western Montana’s largest, award-winning healthcare providers, we offer outstanding career opportunities to those who join in our mission of providing excellent health care, especially for the poor and vulnerable.

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EmploymEnt opportunitiEs from across thE Big sky statE View current vacancies and career opportunities listed below from these Montana employers.

You can also find their website in their ad to learn more about their company and additional current openings they may have.

Flathead Valley Chemical Dependency Clinic

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LICENSED ADDICTION COUNSELOR

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A & I Distributors is an established Wholesale Distributor. A & I distributes automotive and industrial lubricants throughout Montana, Wyoming, North Dakota and South Dakota. Our warehouses are located in Billings, MT, Bismarck, ND, Rapid City, SD and Missoula, MT. A & I is a growing company and is proud to open the opportunities for new drivers to join our team of professional drivers. A & I offers excellent benefits; Health, Dental, Life Insurance, 401K, Profit Sharing, 2 weeks paid vacation and paid Holidays. All travel expenses are paid for up front.

Drivers stay in motels. Out 3-4 days and home for the weekends. Looking for Class A with Hazmat and Tanker Endorsements. Will help Class B Drivers move up to Class A.

Apply at A & I Distributors

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FCI Constructors, Inc. is expanding our construction management/general contracting services in North Dakota and Eastern Montana. FCI has been working and managing projects in North Dakota for five years and has opened a permanent office in Williston, ND. We are currently seeking Full Time Project Superintendents.

We offer competitive pay and exceptional benefits as well as a dynamic and challenging workplace.

Interested applicants can learn more about FCI by visiting our website at www.fciol.com.

If you are looking to join a quality team of professionals who represent one of Montana’s longest serving, most respected outpatient addictions treatment service providers and to live in beautiful northwest Montana, then the Flathead Valley Chemical Dependency Clinic has an exciting opportunity for you.

Due to retirement, we presently have an opening for a full time licensed addiction counselor in our Libby Montana office. This is a full time position that performs diagnostic evaluations, facilitates treatment referrals and provides individual and group therapy as well as DUI programming. This position is also collaborates with our larger treatment and prevention staff providing services in Kalispell, Thompson Falls, Eureka and our Women’s Recovery Home.

Pay range is $15.50 to $18.00 with a competitive benefit package of tax-sheltered annuity, health and life insurance, three week vacation and sick leave.

Please contact us by sending your resume with cover letter to:

Please direct letters of interest and resumes to mlierz@fciol.com.

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PO Box 7115 Kalispell, MT. 59904.

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West Park Hospital in beautiful Cody, Wyoming has opportunities for compassionate RN’s LPN’s and CNA’s.

If you are looking for an opportunity to provide exceptional xceptional patient care in a nurturing environment while enjoying a fulfilling work/life balance, explore a career at West Park Hospital. Our facility is state-of-the-art, and our leadership is committed to ensuring a positive patient experience.

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West Park Hospital District is committed to providing a workplace free from alcohol and controlled substances in order to ensure a safe, healthy, and work-efficient environment for employees, patients and visitors. Successful candidates will be required to complete a post-offer drug screen. EOE

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JAMES WOODCOCK/Billings Gazette

Students walk on the University of Montana campus. Renee Reijo-Pera, the university’s vice president, said the MSU shines in areas like optics and agriculture, where fundamental science is routinely applied to technological applications for Bozeman companies and around the state through the MSU Extension office. In health care and energy, the vice president sees untapped opportunities.

MSU Continued from Page 16 The sheer size of MSU’s research program — by far the largest in the state and one of just more than 100 universities nationwide to be classified in the highest tier of research activity by the Carnegie Foundation — makes it an economic engine responsible for more than 600 jobs, according to a 2010 University of Montana Bureau of Business and Economic Research study.

MSU’s long-standing technology transfer office had over 250 active licenses last fall, 77 of those with Montana companies.

That’s more than 10 times the number coming out of the University of Montana, whose technology transfer office was established only a few years ago.

But maintaining high research output won’t be easy for MSU. Competition for research dollars has become fierce as federal spending, which accounts for the vast majority of university research, has declined. Montana has allocated virtually no state funds for university research. And MSU faces a challenge of its own making: a streak of recordbreaking undergraduate classes that puts pressure on faculty resources.

The university faced a shortfall in its research budget in 2013, when expenditures dropped 17 percent from the previous record-breaking year.

They slipped again in 2014 to $90.5 million — the lowest level in a decade. Total enrollment increased by 5 percent during the same period, to 15,421 last August.

Faced with these pres-

sures, MSU is sharpening its emphasis on research that has clear applications to the regional economy.

“Funding research for economic development demonstrates that there’s a commitment to economic development, and it becomes easier to recruit companies and additional funds for research projects that we’re interested in,” said Renee Reijo Pera, the university’s new vice president for research and economic development.

Reijo Pera joined MSU in January, leaving her position as director of Stanford University’s Center for Human Pluripotent Stem Cell Research and Education and the Center for Reproductive and Stem Cell Biology.

She has garnered millions in funding for stem cell research during her career and has experience translating it to medical applications. Newsweek named her one of the 20 most influential women in America in 2006.

Why would a Stanford researcher move to MSU? “It’s the potential that was actually the driving force,” Reijo Pera said.

“We have the room to expand the quantity of research, the quality of research. We have the ability to really link research with economic development and make a difference throughout the state.

That’s unique.”

The university shines in areas like optics and agriculture, she said, where fundamental science is routinely applied to technological applications for Bozeman companies and around the state through the MSU Extension office.

In health care and energy, the vice president sees untapped opportunities.

She put out a univer-

sitywide request for proposals last spring that drew 200 faculty requests totaling $25 million. Research proposals included everything from understanding Parkinson’s disease in farmers and ranchers, to examining end-of-life health care services for rural Montanans, to developing new building materials for bridges.

“I learned what this place is about,” Reijo Pera said.

Last fall the university announced the creation of a new, multidisciplinary Center for Mental Health Research and Recovery which will mix public and private funding to advance diagnosis and treatment of mental illness.

She plans to aggressively pursue federal contracts and private funding for new research in particularly fecund areas. While the research climate is difficult, Reijo Pera said MSU is relatively well-situated because it draws funding from a variety of sources.

Whereas some major research universities rely on the National Institutes of Health, where cash has been dwindling, for their funding, MSU drew upon the NIH for a relatively modest 20 percent of its grants and contracts in 2014.

MSU is also hoping for a shot in the arm from state government, which hasn’t allocated ongoing funds for university research.

The university system has lobbied the state to do so, and Gov. Steve Bullock responded last month with a $15 million research initiative in his proposed budget.

Reijo Pera said the university could leverage an infusion of cash from the governor’s office to multiply its research productivity.

“With funding comes more funding,” she said.

Meanwhile, some Bozeman tech leaders speak of an emerging “critical mass” of companies in certain industries that, in tandem with university partnerships, can turn the town into a destination for creative talent.

“The rising tide infra-

structure that funding helps create in Montana helps us recruit people from outside Montana,” said Steve Harvey, general manager of photonics company ILX Lightwave, during a research roundtable hosted by Lt. Gov. Angela McLean.

And a thriving hightech sector, in turn, will

continue to help MSU meet its research ambitions.

“If you put these things together along with this growing business cluster, all the fundamentals are in place,” Reijo Pera said.

“There’s a limited number of places in the United States where all the fundamentals are in place.”

Why Choose Montana Tech?

Be in demand

Best Lifetime ROI

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JAMES WOODCOCK/Billings Gazette

mtech.edu 1.800.445.8324

Montana State University Vice President Renee Reijo-Pera, right, and Montana Lt. Governor Angela McLean share ideas during a round table discussion at Microbian in Bozeman.

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Associated Press

An out-of-service missile stands as a sculpture at the main gate of Malmstrom Air Force Base in Great Falls, where hundreds of nuclear missiles are siloed over thousands of square miles and ready to launch from remote underground rooms on the base.

Malmstrom sees growth, stability Base remains economic anchor for Great Falls — and Montana

By MIKE DENNISON Lee State Bureau GREAT FALLS — While manufacturing and other industrial developments are making a comeback here, city leaders say they still strive to maintain the biggest economic player in town — Malmstrom Air Force Base.

“The way to grow a community is the same way you build a business,” said Brett Doney, president of the Great Falls Development Authority. “You protect your existing customers first, and the military is our biggest customer.”

Malmstrom has 3,400 activeduty military personnel and another 4,500 military family dependents, civilian employees and contractors attached to the base, creating an estimated economic impact of $300 million to $350 million a year, according to the Air Force.

Its payroll alone last year was $219 million, base officials say.

Local economic and business officials said that effect certainly is felt in Great Falls; it’s estimated at 45 percent of the local economy. But its impact also spreads throughout the state, as Malmstrom personnel and families travel Montana and do things that all Montanans do, from hunting to skiing to attending sporting events to buying cars, officials said.

“It’s a common thought process that (the base) is just a Great Falls thing,” said David Weissman, chairman of the Montana Defense Alliance and owner of 13 Subway restaurants in Great Falls, Helena and Conrad. “But it touches all corners of the state.”

Malmstrom is deactivating some nuclear missiles next year.

However, the change doesn’t mean fewer personnel or duties, and the base’s mission is expected to remain a vital part of national security for at least another 15 years, officials say.

“We’re not losing any manpower, we’re not losing any money,” said Col. John Wilcox, commander of the 341st Missile Wing, the primary mission at Malmstrom. “There are no

MIKE DENNISON/Lee State Bureau

Malmstrom Air Force Base, on the east edge of Great Falls, contributes an estimated $300 million to $350 million to the local and state economy, Air Force officials say. It has 3,400 active-duty military personnel and another 4,500 military family dependents, civilian employees and contractors attached to the base.

losses associated with (the reMalmstrom’s status as a misduction).” sile base leads local officials to The three bases that over- believe it will be around for some see intercontinental ballistic time, as a key link in the nationmissiles — Malmstrom, Minot al-defense chain.

(N.D.) Air Force Base and War“You can’t move missiles,” ren Air Force Base in Cheyenne, said Weissman. “You can move Wyo. — will remove 50 missiles, airplanes, you can move people, to comply with international nu- you can move helicopters, but clear weapons-reduction trea- you can’t move missiles.” ties.

“We’re seeing growth, which However, the 16 or 17 is something we haven’t silos emptied in northseen at the base for a central Montana will relong time,” said Doney. main on “warm” status, “Growth and stabilmeaning they’ll be mainity — those are two great tained by Malmstrom for words when it comes to use, as remaining missiles talking about our miliare shuttled among all of tary mission.” the existing silos.

Steve Malicott, presiWilcox Malmstrom’s misdent and CEO of the sile wing also is adding Great Falls Area Cham216 personnel within the next ber of Commerce, said the Air two years, as part of a “force Force and its personnel not only improvement program” partly spend their money locally, but in response to last year’s test- also are big volunteers in the cheating scandal, when investi- community. gators found that missile officers “It’s not only an economic at Malmstrom and other bases factor, but a human factor,” had cheated on proficiency tests. Malicott said.

Malmstrom’s commanding Wilcox points out 45 percent officer at the time, Col. Robert of participants in the local Big Stanley, resigned in March.

Brothers and Big Sisters program

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“We’re seeing growth, which is something we haven’t seen at the base for a long time. Growth and stability — those are two great words when it comes to talking about our military mission.”

— Brett Doney

president of the Great Falls Development Authority come from the base.

Air Force dependents also make great employees, and many military personnel decide they want to retire in the area, sometimes returning to Montana after being stationed elsewhere, said Doney.

He said the economic development authority runs a workshop for Air Force personnel looking to retire in Great Falls and start a business.

Weissman and others say Great Falls would like to continue to diversify its economy and depend a little less on Malmstrom and the military, but that

the base continues to be a valued partner.

The base helps counties in the region maintain roads that access missile silos, and the Air Force and Great Falls have a year-long “community partnership initiative,” where each side looks for services they can offer to each other to improve life and facilities in town. “(The base) is just welcomed and appreciated,” said Malicott.

“It’s truly a wonderful partnership. I think both the military and the community are much better for it, because they work so harmoniously together.”

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Back to growing

Courtesy ADF International

An employee welds at ADF International steel fabrication plant in Great Falls.

Industrial growth boosts Great Falls economy

By CHARLES S. JOHNSON Lee State Bureau

HELENA — The Great Falls area is enjoying some industrial and other growth that is helping spur the local economy.

“Things are looking very good in Great Falls,” said Brett Doney, president of the Great Falls Development Authority. “It’s going to continue at least for the next couple of years, and we’re determined to make it continue far beyond that. The nice thing is we’re seeing growth and investment in a number of different industry sectors.”

One manufacturing company that continues to grow is ADF International, a Quebec-based company that built a $25 million fabrication facility in Great Falls that has been operating since January. It fabricates structural steel for bridges and commercial and industrial buildings.

ADF was on target to open a $6 million painting facility next door some time before the end of 2014.

“We have 130 employees today, and we’ll double that in six to 12 months because we have a considerable backlog in steel fabrication projects,” said ADF plant manager Dan Rooney.

Rooney said ADF hired a recruiter to help fill 130 industrial job openings for welders’ helpers,

welders and structural steel fitters. The pay ranges from $14 an hour for a welders’ helper to $20 an hour for a top fitter, he said.

ADF chose Great Falls because “we’re near a high and wide corridor,” Rooney said. “We just had to open up between Great Falls and Fort Benton. The utility line had to be raised and a few obstructions had to be moved. It’s now high and wide to the Alberta border. We’re looking south as well.”

He said the company has not yet signed contracts for oil sandsrelated projects in northern Alberta.

Next door to ADF, a company called Loenbro has bought 52 acres and is building another fabrication plant, Doney said. It has grown to 600 employees with a number working in the Bakken.

The company focuses on pipeline fabrication.

“They’re (Loenbro) problemsolvers,” Doney said. “They see an issue in oil or gas or other industrial operations, they see a problem and they come up with a solution and create a division.”

Calumet Montana Refinery is undergoing a $400 million construction project to increase its output to 25,000 barrels of oil a day from the current 10,000 barrels, Doney said. It will add 30 to 35 permanent jobs when the project is completed in 18 months.

Courtesy ADF International

ADF International’s steel fabrication plant in Great Falls produces structural steel for bridges and buildings.

Another growing Great Falls business is BE Aerospace, which in June announced it was buying EMTEQ Inc. It is a wire harness manufacturing company which serves commercial aviation.

“They have over 120 jobs, and they announced this summer they were going to add another 80 jobs in Great Falls,” Doney said.

Centene, a business that provides health plans through Medicaid, Medicare and other health insurance plans, continues to expand, Doney said. More than 325 people work for the company, which has added a second shift.

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Health Care Service Corp., which bought Blue Cross and Blue Shield of Montana, opened a claims processing center in Great Falls that has more than 100 employees, Doney said.

Patrick Barkey, director of University of Montana Bureau of Business and Economic Research, said.

“Our expectation is that Cascade (County) won’t be among the fastest growing areas. But it had a pretty good year.”

Up until 2014, Cascade County experienced what Barkey called “some rather unpleasant trends.”

“There were some slow declines

when the rest of the state, especially western Montana, was starting to pick up,” he said. “I’m happy to say in 2014 it appears that some of the announced businesses are starting to show up in the data in a meaningful way.”

He said Cascade County was relatively stable during the recession because of the strength of its government employment, with the county not seeing the boom and bust in housing.

Total pay for all payroll employees declined by 1 percent in 2013, but rose by 2.6 and 2.7 percent the first two quarters of 2014, Barkey said.

Barbara Wagner, chief economist for the Montana Department of Labor and Industry, said North Central Montana performed well during the recession, but the recovery in that region has been the slowest in the state.

“It is the only region to have posted job losses in 2011 (only about 600 jobs) and the job growth since then has been the slowest of all Montana regions,” she said.

The unemployment rate in Cascade County was at 5.1 percent in 2013 and likely will be around 4.4 percent in 2014, Wagner said.

For the most recent month of data in September, Cascade County added about 1,500 jobs in the last two years, she said. The industries gaining the most jobs in 2013 were leisure activities, trade, transportation and health care.

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