Montana Economic Report 2013

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SUNDAY, DECEMBER 22, 2013

MONTANA

ECONOMY

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

‘THE NEWS GETS BETTER IF YOU COME TO MONTANA. OUR ECONOMIC DRIVERS ARE

STILL CLICKING’

LARRY MAYER/Billings Gazette

Pat Weber and Jolene Lee, of Sunset Construction, show some of the hundreds of apartments they are building for Billings developer Cal Kunkel, who is betting big on the rental market.

Montana’s economy sees stronger growth in 2013

By JAN FALSTAD Billings Gazette

I

f Cal Kunkel were playing baccarat in Las Vegas, instead of building apartments in Billings, he’d definitely be a high roller.

The risk taker decided to start building apartment complexes just before the housing recession hit.

“Without bragging, I think in the past eight years, I’ve built more apartments than anyone else,” he said.

He and his partners have invested $66 million building more than 700 apartments in four West End and four Heights developments. And Kunkel is only half done, as long as his buildings keep filling up.

“I’m just lucky, maybe,” he said. “If everything works good, I’m trying to build 100 units a year for the next eight years.”

His 168-unit Sunset Beach development off King Avenue West was completed in late summer, and he’s now building Western

CASEY PAGE/Billings Gazette

Housing is under construction off Shiloh Road on the West End of Billings. Retail and apartment construction has taken off Please see Economy, Page 4 on Shiloh Road, which is easily accessible from Interstate 90.

Bakken boom benefits Billings

By JAN FALSTAD Billings Gazette

M

ontana’s oil production held steady last year, but North Dakota pumped 60 percent more crude than in 2011.

And the sprint continues.

North Dakota is now the country’s No. 2 oil-producing state and Mineral Resources Director Lynn Helms predicts production will double again by 2017.

Sitting atop the deepest pool of Bakken oil, North Dakota is the geological winner in the Bakken game. But the economic ripples are becoming more visible in Billings.

“It affects everybody. It really does,”

Bob Dunker, owner of the Fly In Lube & Wash on Johnson Lane in Lockwood, said business servicing oil field tankers and other Bakken trucks helped him reach record sales last year.

said Bob Dunker, owner of the Fly In Lube & Wash in Lockwood, where Bakken drivers provide nearly 15 percent of his business.

Last year was Dunker’s best year. So, this year he invested $1 million to double the size of his wash and lube shop. A big rig oil change at the Fly In costs $250 to $300 — half as much as in western North Dakota and there’s no two-week waiting period.

“They make a weekend of coming to Billings and they can save money,” Dunker said.

Companies from all over Eastern Montana have jumped into the Bakken building

LARRY MAYER/ Billings Gazette

Please see Bakken, Page 10

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MONTANA ECONOMY

Sunday, December 22, 2013

CONTENTS 5 — National park profit: Tourism keeps northwest Montana’s economy strong

14 — Seal of success: Billings-based Darcova finds its niche through customizing

5 — Missoula expected to see stable, subtle growth in ’14

20 — Original recipe: Bozeman’s oldest cafe sticks with what works 21 — Things are looking up in 2014 for Great Falls economy

8 — Changing with the times: Missoula construction industry adjusts to market

21 — Employers worry about affordability of offering insurance 9 — Thompson Falls couple doubles down on Sanders County tourism 21 — Butte’s economy ‘steady, manageable’

10 — Bitterroot Valley economy on its way up from the bottom

22 — Helena economy slowed by government cuts, but steady

11 — Surviving and thriving: Hamilton business finds success in changing economy

22 — Big on Boeing: Helena hopes expanding aeronautics business will boost economy

13 — Primed for growth: Energy industry boosts Yellowstone County economy

23 — Maintaining momentum: Butte’s challenge is to keep up the good work shown at summit

13 — Tourism keeps Bozeman’s restaurant economy cooking

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montana economy

Sunday, December 22, 2013

Economy Continued from Page 1 Sky One at King and 44th Street West.

Rental property may remain hot because home construction is still recovering.

U.S. contractors are expected to start about 1 million homes this year, still way below the average of 1.6 million starts during the past decade.

Billings builders took out 393 single-family home permits through November, 57 more than the same period last year.

But Billings has a strange lag in home sales, according to Realtor Howard Sumner.

As many as 1,800 homes could be sold in Yellowstone County this year, he said, which is 9 percent below the peak seen in 2006.

This year should have been a banner year because interest rates are 35 percent lower than 2006 and the county has 15,000 more residents.

And 81 percent more families now earn $100,000 or more per year, putting them well within reach of buying a home. Even with all those positives, home sales have increased only 27 percent since 2006, Sumner said.

“We have higher income, higher jobs and yet you have fewer sales for those statistics,” he said.

“There is only one way for that to occur: Our friends in Washington, D.C., made it more difficult for you as a consumer to purchase a home.”

He estimates that 30 percent of first-time homebuyers can’t get financed for low or no down payment Federal Housing Administration loans.

Still, Yellowstone remains the second-fastest growing county in Montana, behind Gallatin County.

“Construction in Yellowstone County, I won’t say it’s off the charts, but it’s very, very healthy,” said Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research.

Building at the refineries has helped boost the numbers, he said.

And Billings is home to some big regional projects, including the Scheels megastore costing $40 million, the $38 million FedEx Ground transportation hub and the new Billings library costing about $20 million.

Like last year, Montana should end 2013 with a stronger economy

LARRY MAYER/Billings Gazette

Sunset Construction erects some of the hundreds of apartments the company is building for developer Cal Kunkel and his partners off King Avenue West and 44th Street West in Billings.

than earlier predictions, Barkey said, about a 2.7 percent growth rate.

“It’s a disappointingly slow recovery, but it’s a recovery,” he said.

Montana’s annual growth is a full percentage point higher than the national rate, but it still lags behind the 3.2 percent growth seen between 2001 and 2008.

Agriculture revenues this year are running a shade better than last year, said George Haynes, a professor of small business finance and agricultural policy at Montana State University in Bozeman.

“We don’t have final numbers, but we’re thinking Montana perhaps got over the $4 billion threshold for ag revenues, possibly for the first time,” he said.

Grain prices will stay strong in 2014 and Montana cow/calf producers should benefit from high prices and lower national cattle inventories, he said.

Tourism is another bright spot.

For the first nine months of 2013, 2 percent more out-ofstate visitors came to Montana, especially Canadians, than last

year. And they spent 9 percent more on hotels, gas, shopping and restaurants and that is the key statistic, said Jeri Duran, division administrator for the Montana Office of Tourism in Helena.

“We want to get income out of the visitors, not necessarily just more visitors,” she said.

The federal government shutdown cut fall visitors to Yellowstone National Park by 73 percent and Glacier National Park by 52 percent, according to Norma Nickerson, director of the University of Montana’s Institute for Tourism and Recreation Research. Yet visitation to Montana’s star attractions is up for the year and tourism revenues should outpace last year, she said.

Montana is enjoying “very strong” growth in employment and wages for the first half of the year, Barkey said.

Yellowstone County has a 3.5 percent jobless rate, a low last seen in July 2008 before the recession. The tight labor market is forcing hospitality and retail employers to raise wages or add benefits, said Billings Job Service manager Ryan Van Ballegooyen.

“They realize it’s their time to acquiesce to what the job seeker wants, rather than the other way around when unemployment was 8 percent,” he said.

Areas of Western Montana clobbered by the recession are coming back, including Ravalli and Flathead counties where the moribund forest products industry is recovering. But those counties still have a long way to crawl out of the deep hole they fell into, Barkey said.

Montana’s economic growth in 2014 could be hurt by continued inaction or poor decisions by Congress and by falling growth rates in the emerging economies of Brazil, Russia, India, China and South Africa, he said.

China’s once double-digit growth has dropped almost by half. A slowdown in overseas demand can depress prices for Montana’s ag products and precious metals. That’s a worry for Montana Resources in Butte, which operates one of the least profitable copper and molybdenum mines in the world, Barkey said.

“If copper prices fall, compa-

nies operate their more profitable mines,” he said.

Next year should see continued economic growth.

Last year, Barkey’s economic team predicted that Montana’s economy would grow 3 percent in 2014.

The team is updating that forecast now for release in January.

This recovery has been good for U.S. companies and owners, Barkey said, but not for workers, whose wages haven’t risen significantly.

Domestic auto sales are healthy, but consumers are borrowing less frequently to purchase other big ticket items, he said.

Since consumer spending accounts for two-thirds of the country’s growth, stimulating demand is an important goal, he said.

“It’s not really clear what policymakers can do to make that happen. I think we’re learning to live where we are,” Barkey said.

“The news gets better if you come to Montana. Our economic drivers are still clicking.”

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MONTANA ECONOMY

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Sunday, December 22, 2013

5

NATIONAL PARK PROFIT

Of the 11 million nonresidents who visited Montana last year, 21 percent came specifically to visit the grandeur of Glacier National Park.

KURT WILSON/Missoulian

Tourism keeps northwest Montana’s economy strong

By VINCE DEVLIN Missoulian

K

ALISPELL — Tourism drives much of the economy in the northwest corner of Montana. The area has a national park to thank for that.

Of the 11 million nonresidents who visited Montana last year, 21 percent came specifically because of Glacier National Park, according to data from the University of Montana’s Institute for Tourism and Recreation Research. (Yellowstone National Park was the main reason another 27 percent arrived.)

“That’ll never change,” said Diane Medler, director of the Kalispell Convention and Visitor Bureau. “We’re lucky to have a national park in our backyard.”

The bulk of the nearly 2.2 million people who visited Glacier through October 2013 — more than 1.6 million of them — arrived, not surprisingly, in June, July and August.

It’s no more surprising, then, that the convention and visitor bureau focuses its efforts on luring people to this corner of the state between September and May. “Historically, our hotel occupancy rates are dictated by the opening and closing of Goingto-the-Sun Road,” Medler said.

“Our focus is to push for activities and events outside of July and August.”

And push they do.

Whitefish Mountain Resort

MICHAEL GALLACHER/Missoulian

Dragon boat racing, a new event to Western Montana, had a $2 million economic impact on the area this last summer.

The festival will enter its third year on Flathead Lake in 2014.

and Blacktail Mountain Ski Area will always draw skiers in the winter.

Kalispell has roped the Montana High School Rodeo Finals away from Bozeman, and will host the event at the Majestic Valley Arena on June 3-8, before the summer rush of tourists arrive.

“It’s the best indoor arena in the state,” Medler said. “It did

take a couple of years, but at that time of year there can be rain, and the other places are outdoors. A number of people on the committee hadn’t been here before, but once they saw the facility, it was an easy sell after that point.”

Kalispell has the high school rodeo for 2015 as well, with an option for 2016. It’s expected to bring 4,000 people to town for its

five-day run in 2014.

On May 10, more than 6,000 people are expected for an extreme obstacle race called the Spartan Sprint in Bigfork. The Reebok-sponsored event will be run over a 4-mile course where participants encounter all sorts of surprises and challenges on the way to the finish line.

The puck drops for the inaugu-

ral Montana Pond Hockey Classic on Feb. 21-23 at Foys Lake west of Kalispell.

Medler said the 4-on-4 outdoor hockey tournaments on natural ice are very popular in the Northeast.

“What we do with all these things is research them, find an individual or company that’s knowledgeable, has already put on events, and gauge their interest in coming to Montana,” she said.

In this case, a New England promoter who runs two large pond hockey tournaments there will be in charge. More than 100 teams, and more than 1,000 more spectators, are expected.

In case the weather doesn’t cooperate, Medler said another lake at a higher elevation that is almost guaranteed to be frozen in February will be on standby.

Organizers expect plenty for the Montana Pond Hockey Classic, just as they get a lot of teams from north of the border for the Montana Dragon Boat Festival, which will enter its third year on Flathead Lake in 2014.

Dragon boat racing had a $2 million economic impact on the area this year, Medler said, part of Flathead County’s $290 milliona-year tourism industry.

A significant portion of the latter figure is due to Canadian visitors, and Medler said unlike all the other people who come here, Glacier National Park is not necesPlease see Northwest, Page 8

Missoula expected to see stable, subtle growth in ’14

By ALICE MILLER Missoulian

M

ISSOULA – Missoulians can expect more of the same when it comes to the 2014 economy, subtle growth.

“I think the trajectory is up for Missoula,” said Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research.

The recovery hasn’t been pronounced, though, Barkey said, adding that the economic decline wasn’t dramatic, but it was lengthy and the recovery has been muted.

Montana as a whole is doing better than the nation, he said.

“The bad part of that story is that the U.S. really is not doing well,” Barkey said.

Budget cuts at Missoula-area hospitals and the University of Montana are areas of concern for Missoula’s economy going into 2014, said Larry Swanson, director of the O’Connor Center for the Rocky Mountain West.

Cutbacks at Providence St. Patrick Hospital and Community Medical Center — to the tune of roughly $8 million — will moderate growth in employment and labor earnings, especially

MICHAEL GALLACHER/Missoulian

Matt Schaefer, left, and Caleb Larson, with Rugged Traditions Log and Timber in Missoula, cut trim for the bathrooms at Silver Park. The park development is part of the old Sawmill District redevelopment near downtown Missoula that will include office buildings and residential.

considering that the health care sector is Missoula County’s biggest generator of labor income, Swanson said.

Nonetheless, the health care sector will continue to grow overall, largely because of the area’s growing elderly population

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and their medical needs, Swanson predicted. The Affordable Care Act’s mandated health insurance coverage also should help, he said.

Cuts at the University of Montana, necessitated by enrollment declines, also will slow the area’s economic recovery.

“These cuts will ripple through and negatively impact the Missoula-area economy, particularly when combined with cutbacks

by Missoula’s major hospitals,” Swanson said in a recent report.

The construction sector also has been slow to recover from the recession, although 2013 saw growth and that’s expected to continue through 2014, according to Swanson.

Jobs and income will continue to grow in Missoula’s professional, technical, financial and business service areas, similar to national trends, he said.

Although manufacturing as a whole is expected to experience little growth, Missoula’s microbreweries have shown steady growth, Swanson said.

Also in 2014, Missoula will continue to benefit from the quality of life it offers in attracting population and economic growth, he said, adding that tourism is growing and bringing money and visibility to the area.

“The region offers a lot in Please see Missoula, Page 12

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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.

Rain foR Rent CURRENT OPENINGS: • Radiologic Technologist - FT • Occupational Therapist • Assistant Lab Manager - FT • Patient Financial Services Manager - FT • Medical Coder – Full-time • Respiratory Therapist – 40hrs/wk • EMT - FT or PT • Visiting Nurse - RN/LPN - Supplemental • RN or LPN - Lemmon Clinic - PT • Family Nurse Practitioner or Physician Assistant (Lemmon, SD) • Lead Paramedic - FT • Ultrasound Technologist - 40 hrs/wk • Medical Technologist (ASCP) Hospital

We offer competitive wages and benefits.

All interested applicants should contact Tera at teraf@wrhs.com

Parkview & eagle Cliff HealtHCare Communities

now Hiring RN/LPN’s CNA’s (All shifts $11/hr, higher DOE) Dietary Aides and Cook PT Activities Assistant Apply in person: Parkview - 600 S. 27th Eagle Cliff - 1415 Yellowstone River Rd. Or Apply online:

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NAPA Auto Parts Great Opportunities • Territory Sales Manager in Western North Dakota Must live in Eastern MT or Western ND

• Counter Sales • Executive Management Trainee Highly motivated, self-starting individuals with previous experience are preferred; parts retail experience a plus.

Must be able to lift 60 lbs.

Competitive wage. Great benefits with FT positions.

Most importantly, applicants need to be customer oriented.

Apply online at napaautojobs.com or send resume to 5320 Southgate Drive • Billings, MT 59101. EOE

Grow With Us at St. Joseph’s Hospital • New Hospital Facility Opening Fall 2014 to Serve Dickinson’s Growing Community • Hiring for Numerous Positions: Go to www.stjoeshospital.org/HR.htm • Ranked a Top 100 Critical Access Hospital Nationwide • Serving Western ND and Eastern MT

Visit our website at www.sidneyhealth.org for a complete list of job postings and benefits.

Applications are accepted online or may be sent to: Marilyn Olson, HR Assistant 216 14th Ave SW Sidney, MT 59270 Phone: 406-488-2571 Email: mjolson@sidneyhealth.org

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30 WEST SEVENTH STREET DICKINSON, ND 58601-4399 Human Resources: 701-456-4274

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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.

NWCCD JOB OPENINGS

Sheridan College:

“I’m proud to come to work each day. Our caregivers truly make the difference in our patients’ lives.”

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Be a part of our outstanding team.

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970-903-7582 Apply online at www.holyrosaryhealthcare.org

• Bus Drivers (PT) Great locations and facilities!

Outstanding benefits on FT positions.

Please see on-line job postings and application at:

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Located in Miles City, Montana Equal Opportunity Employer

Not only are we committed to helping people with disabilities, we’re equally committed to helping one another.

As an AWARE employee, we train you and provide ongoing guidance and direction to help you advance your career.

Are you ready to make a difference in someone’s life?

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• Experienced Nurse Practitioners/Physician Assistants for Express Care Clinics • Director of Cardiology • IP Cancer Care Nurse Manager • Medical Technicians – Billings & Columbus • CEO, Affiliate Site- Plentywood, Montana • Experienced RN’s • Clinical Pharmacist for Infections Disease & Oncology • Experienced Cath Lab RN

www.aware-inc.org Come join our team of professional and caring health care workers.

Enjoy the peaceful country setting of our friendly Community. Our facility is a growing rural hospital with state of the art equipment.

Frances Mahon Deaconess Hospital, a JCAHO, 25 bed Critical Access Hospital is located near a large lake and recreation area in NE Montana. We are located 15 miles from Fort Peck Reservoir, with an abundance of outdoor activities, including boating, fishing, hunting, camping and hiking

Fulltime Positions Available: • Clinic RN, LPN and Medical Assistant • Clinical Software Analyst • Patient Accounting Assistant Manager • Surgical Technologist • Medical Records/Transcriptionist We offer competitive salaries and excellent employee benefits. Relocation and interview expenses may be considered. For more information visit our website at www.fmdh.org (job opportunities) or call 406-228-3647 (EOE).

SALES OPPORTUNITIES AcuSport Corporation, one of the nation’s leading distributors of shooting sports products has the following sales opportunities:

Inside Sales Representative

The MonTana FireFighTers’ TesTing ConsorTiuM written And physicAl Ability testing will be held in greAt fAlls, mt,

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Our sales representatives consult with retailers on promotional efforts, marketing and merchandising, product inventory management and financial aspects of business. These positions are also responsible for managing business-to-business relationships with a specific group of retailers, new retailer development and growth of existing markets.

This is an exciting opportunity to build a rewarding sales career in a recreational products industry.

QUALIFICATIONS & BENEFITS: We are looking for outgoing, poised and persuasive communicators with a sense of urgency and the confidence to handle a variety of challenges, a full commitment to success of the business and high standards of goal achievement. A bachelor’s degree, prior sales and business experience is a plus.

AcuSport offers competitive compensation and benefits, including medical, dental, vision, wellness program, athletic club membership benefit, life insurance, paid time off, participation in 401k and profit sharing plan, business casual dress, and employee purchase program.

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E-mail: HR@AcuSport.com • Fax: 937.592.2595 AcuSport Corporation 3419 Central Ave. • Billings, MT 59102-6647

eoe.

Visit www.AcuSport.com for more information.

AcuSport is an Equal Opportunity Employer.

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MONTANA ECONCOMY

CHANGING WITH THE TIMES

Missoula construction industry adjusts to market

“We don’t really want the market to explode or anything, but we do want it to be steadier than it has ISSOULA — Before conbeen in the past,” he said. struction began its uptick When the recession hit, after the Great Recession, Mostad said, he had to downsize James Schafer was busy carving a his business and repeat business niche and growing the business he and referrals helped the company launched in 2007. weather the downturn. No longer It can be difficult to find somedoes Mostad develop land in anone to do small projects, such as a ticipation of building. bathroom remodel, who doesn’t “We still need to see the raw have to subcontract, and that’s land costs of the land come down where StraightEdge comes in, so if we do offer lots we can offer Schafer said. them at a reasonable, competitive “When people would hit dead price,” he said. ends for finding someone to do In the past six months, though, a particular project, we’d come he said he has hired three employin and do the project for them ees, bringing his staff to nine. basically turn-key from start to The demand for new homes finish,”Schafer said. isn’t just from Missoulians.

The owner of StraightEdge “We are seeing some people Construction initially set out on moving into Missoula,” whether his own as a builder, with his wife it be for professional or retirement managing the books. reasons, Mostad said.

Now, he employs three others “As everyone starts to feel betand several more people seasonter about the economy nationally, ally to keep up with the demand the people, they start going forMICHAEL GALLACHER/Missoulian for remodeling and renovation ward with their plans to relocate,” Above, Evan Zamore with StraightEdge Construction installs an egress window recently on a remodel project in work in the Missoula area. he said.

Missoula. Top, StraightEdge owner James Schafer remodeled the kitchen and installed new flooring in this house on “I’ve noticed just slow Whether they build in the city growth,” Schafer said, adding that Arcadia Drive in Missoula. “It’s a whole different atmosphere than it was when a lot of these houses were built, so or in the county, buyers are still we’re making them more functional for today’s uses,” he said. skilled trade workers have longer extremely money conscious, Modelays before they have the time stad said, adding most are looking to take on additional projects and today’s uses,” he said. addition to smaller projects people “The last year’s definitely for energy- and space-efficient products are tougher to get.

The coming year looks promis- typically save up for instead of been a more positive experience, homes with large, open living With existing home sales ing for business, Schafer said. getting financing. especially in the past 12 months. areas. steady, Schafer and his crew have “It’s just been pretty steady, “And it looks like some signs We definitely see more people Many homebuyers want been busy making fixes just prior especially with, I think, consumer that there will be (bigger projects), wanting to build,” said Mostad, low-maintenance residences and to or just after a sale. confidence coming back right with interest rates still being low whose business does residential townhomes have been particuPeople don’t want separated now,” Schafer said. and with people who have been and commercial construction as larly popular, he said. kitchens and living rooms anySeveral projects are lined up sitting on the sidelines starting well as remodels.

Mostad said he won’t get a good more, he said. Instead, they want for the spring already and, in the to spend money on their houses,” The increases come in waves sense for the upcoming year until large, open living areas. meantime, the crew will focus on Schafer said. and are impacted by the real estate the construction season kicks off “It’s a whole different atmokeeping up with advances in the Demand for new construction market for existing housing, but in the spring, but things appear sphere than it was when a lot of industry, he said. also is increasing in the Missoula overall the past year has been good to be on track for growth. “We’re these houses were built, so we’re In addition, he hopes to pick up area, said Gene Mostad, owner of and Mostad said he hopes 2014 cautiously optimistic about the making them more functional for some bigger, long-term projects in Mostad Construction Inc. will be as well. future.”

By ALICE MILLER Missoulian

M

Northwest Continued from Page 5 sarily the main attraction.

“That’s why Canadians are so beneficial,” she said. “Glacier’s not their primary reason for coming. They have their own national parks (Waterton, which connects to Glacier, being the most obvious) and they come in the shoulder and winter months, too. Recreational shopping is one of their top activities.”

They’ll find a new Cabela’s in Kalispell and, in 2014, a 24,000foot expansion to Sportsman & Ski Haus.

Those are two of the highlights Kalispell Chamber of Commerce President and CEO Joe Unterreiner is trumpeting as the Flathead Valley emerges from the recession.

“There are a lot of positive signs,” Unterreiner said. “Health care and tourism are bright spots, and we’re making good progress in the real estate and construction markets.”

Housing starts and hotel occupancy rates “are pointing upward,” he said, while unemployment is falling. Hotelier revenues increased 35 percent from 2010 to 2012, the first three years that the convention and visitor bureau

A tourist in Glacier National Park steps outside one of the famed red buses in the park to film video.

has been operating, according to Unterreiner.

Plum Creek restarted its Evergreen sawmill, adding $1.4 million in payroll to the county.

Fred’s Appliance is building a 26,000-square-foot facility that will add 20 employees, Unterreiner said, and the Flathead Lake

Brewing Company will have 40 employees at its new Bigfork location.

Visitors also have another choice for lodging. Hilton Homewood Suites opened a 100-room property at Hutton Ranch Plaza.

Smaller communities in the northwest corner of the state are

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also seeing growth. In Polson, for instance, a new Wal-Mart Super Center opened in October, Murdoch’s Ranch and Home Supply will take over the old Wal-Mart location, and AutoZone arrived in town — a flurry of activity for a community of 4,500.

While final figures aren’t ready

for 2013, Norma Nickerson, director at UM’s Institute for Tourism and Recreation Research, is projecting a 2.3 percent increase in tourists for the year — and expects another 2 to 3 percent increase in 2014.

“Most people think it will be a better year next year than this year,” she said, “and 2013 probably would be bigger if not for the government shutdown. We’re lucky it didn’t happen in the middle of summer.”

Of those 11 million who visited the state, the institute estimates 35 percent — almost 4 million — were in Montana for the first time in their lives.

Another 23 percent were in groups that had a mix of first-time and repeat visitors.

“You’ll see a lot of cases where maybe a couple visits Glacier because one of them went through as a teenager and tells their spouse, ‘You’ve got to see it too,’ ” Nickerson said.

The park will always be the primary draw to northwestern Montana, and most of those tourists will arrive in the heat of summer.

Medler said it’s outdoor hockey tournaments in February, and indoor rodeos in June, that will help tourism contribute to the rest of Glacier Country’s economy.

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Sunday, December 22, 2013

9

Thompson Falls couple doubles down on Sanders County

By VINCE DEVLIN Missoulian

T

HOMPSON FALLS — Here in the county seat of Sanders County — which typically delivers some of the toughest economic figures in Montana for unemployment — a young husband-andwife business team is doubling down on the area’s natural beauty, and Montana’s tourism industry.

It wasn’t that long ago that Mark and Katrina Campbell had the Falls Motel, which they purchased in 2007, up for sale.

Now, they’re not only keeping the motel on the west side of Thompson Falls — they’re constructing a new restaurant, sports bar and casino on the east end of town.

Big Eddy’s Deck Bar and Casino is “a natural next step” for the couple, Katrina said, and will take advantage of a waterfront location that is both on Main Street and Montana Highway 200.

They’re the same stretch of pavement in Thompson Falls.

Across the Clark Fork River from what will be a riverfront deck — a grand view of Eddy Peak. The peak, and the onetime town of Eddy, inspired the name.

The Campbells, who moved here from Colorado six years ago, never intended to leave when they put their motel on the market.

“We were in the process of getting the liquor license for Big Eddy’s and we thought, ‘Oh no, it’s going to be hard to do both,’ ” Katrina said. “Eventually it made sense to keep the motel, too. We figured we could do it.”

While Mark Campbell has focused on running and improving the motel, which they’ve spent $70,000 updating and remodeling, his wife has helped there and devoted countless hours to promoting somewhat isolated Thompson Falls as a tourist destination.

“There’s a Chamber of Commerce here that has worked really hard on businessto-business partnerships,” Katrina said, “but there wasn’t really a countywide effort to promote tourism. A lot of times at the motel we’d get accidental tourists” — people who, for whatever reason, drove Highway 200 rather than Interstate 90.

I-90 is less than 20 miles south of Thompson Falls as the crow flies, but more than 60 miles from the nearest year-round access at St. Regis.

Since arriving in town, Katrina:  Has served on the board of Tour 200, which promotes the scenic corridor along the Flathead and Clark Fork rivers that Montana Highway 200 travels through Sanders County, from the tiny burgs of Dixon to Heron.  Has served on the Chamber board of directors.  Has run a countywide, eight-community yard sale that draws bargain and treasure hunters from around the region

Photo courtesy of Tim Harlan

Katrina Campbell has worked hard to lure tourists to Sanders County while her husband, Mark, has worked hard to improve the motel in Thompson Falls they purchased in 2007. Now the couple is investing further in the tourism industry by constructing a restaurant, bar and casino on the other end of the small town in northwest Montana. Big Eddy’s is scheduled to open in May 2014.

who prowl more than 100 sales up and down Highway 200 in the county on the last weekend of June.  Has run the Thompson Falls community Christmas celebration.  Started and ran the Thompson Falls Farmers Market.  Served on the Glacier Country Tourism Board.

The motel’s website also promotes local fishing, golfing, hiking, biking, shopping and area attractions from the National Bison Range to the Ross Creek Cedar Grove Scenic Area.

While they came here from Kremmling, Colo. — a mountain community of 1,500 people about 100 miles northwest of Denver, where Mark sold real estate and Katrina worked for the Chamber of Commerce — Thompson Falls felt like a homecoming of sorts for both.

Mark was born and raised in Butte.

Katrina grew up outside Spokane, Wash., which is even closer.

“Mark really wanted to come back to Montana, and we fell in love with how

beautiful this valley is,” Katrina said. “We have a passion for entrepreneurship, and we knew we could do it together.”

The riverfront property where they are building Big Eddy’s was for sale when they arrived in 2007, and Katrina said they saw the possibilities from the get-go.

But seeing the possibilities doesn’t get you a liquor license.

When Boondogglers Saloon, just a few blocks away from the property, closed and the owner put the liquor license, but not the building, up for sale, everything fell into place and the Campbells made the leap.

“We’ve had a number of motel customers ask us if there’s a place in town they can go for a drink and try some Montana-made stuff,” Katrina said, and, come late next spring, they’ll be directing them 11 blocks east to Big Eddy’s.

The Campbells are funding the $200,000 to $250,000 construction project through First Security Bank, which has a branch in Thompson Falls, with the support of the Sanders and Lake county

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community development corporations.

They also hired Steve Clark Construction of Thompson Falls to build Big Eddy’s, in part “because he was able to work with us from design through construction,” Katrina said.

“We also understood that he hires the best subcontractors in the area.”

The husband-wife team will devote themselves primarily to Big Eddy’s when it opens — in May, if all goes according to plan — and leave the Falls Motel much in the hands of two primary employees who have been with them for five years.

The plan for Big Eddy’s, meantime, is to capitalize on the tourist season Katrina has spent so much of the past six years promoting. It will be open from May through Halloween.

“Mark says unless we stay crazy busy,” Katrina said. “You never know. We do like our winter down time.’

The Campbells also say Big Eddy’s will employ eight to 10 people — welcome news in a rural county that often leads the state in unemployment.

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Sunday, December 22, 2013

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Bitterroot Valley economy on its way up from the bottom “WE HAVE KIND OF HIT THE BOTTOM OF THE BARREL AND WE’RE HEADED BACK.”

By PERRY BACKUS Ravalli Republic

H

AMILTON — Vicki Steele no longer feels like the Bitterroot Valley is on a freefall toward the bottom of the

barrel.

The workforce consultant and business advocate with the Bitterroot Job Service has seen the number of jobs being offered by local companies spin around in the right direction.

“I think things are slowly beginning to turn around here,” Steele said. “There is no question about that. We have kind of hit the bottom of the barrel and we’re headed back the other way. Our job seekers are finding a way to get back to work. Some have taken advantage of opportunities to be retrained and others have found work in their chosen fields.”

The service’s job board typically has been holding steady during the past few months at 90 to 100 job openings.

That’s nearly double what it showed just a few years ago.

“During the worst of it, it got as low as 15 to 20 job openings,” Steele said. “That was very, very scary. There were so many people looking for work back then.”

In the past few years, the board typically averaged 50 to 60 jobs this time of year.

“I think the fact that we have so many employers looking for people right now is a ray of hope for the future,” she said. “We know there is no overnight fix for this.”

There are still plenty of challenges ahead for the Bitterroot Valley.

The empty storefronts scattered throughout downtown Hamilton have

Bakken Continued from Page 1 boom, constructing hotels, motels, truck stops, houses and restaurants. In turn, oil field companies and workers and companies buy RVs, homes and more in Billings.

Last year, Fiberglass Structures in Laurel sold more huge tanks to hold crude or wastewater from the hydraulic fracking process than it has in nearly four decades.

This year is a bit slower, but after doubling his staff and quadrupling sales in three years, president Rob Harris is happy.

“Business may be 15 percent off, but when you come off a year like 2012, you welcome a slowdown because it gives you a chance to catch your breath,”

Bitterroot Valley Chamber of Commerce director Al Mitchell concerned.

“We all know that the job market is improving statewide, but locally we have some mixed signals,” Mitchell said. “Main Street is struggling right now and that has to do with people choosing not to stay and shop here. There are a lot of dollars flying right out of the valley. Our hope is that we can find a way to convince people to try shopping here first.”

The city of Hamilton is considering setting aside funds to conduct a study that would eventually create a master plan for the downtown area. The study would consider the current mix of businesses with an eye toward looking for ways to make the downtown more attractive to both locals and visitors.

“Over the past few years, we’ve put a lot money into our parks in Hamilton,” said Mitchell, who also serves on the city council. “We want to now concentrate our efforts on downtown to see what we can accomplish there. I think a lot of it right now is an attitude problem. We want to get the message out there that we’re open for business.”

The housing market in the Bitterroot has been on the upswing this past year. The

Harris said. “And our suppliers say they are expecting 2014 to be as big or bigger than 2012.”

Seven years into the Bakken boom, oil producing and service companies are opening regional offices in Billings.

Two Houston players moved to town: Cudd Energy Services moved to Montana Avenue and Conoco Phillips leased a West End building to house about 70 professionals managing its regional oil and natural gas operations.

For now, the oil giant is focusing on North Dakota and letting other companies drill in Montana.

“If those turn out to be really good wells, we may get active (in Montana) again,” said ConocoPhillips’ Williston asset manager David Cook.

Denver-based Energy Corp. of America opened a Central Ave-

are doing a little bit of expansion and some capital improvements.”

“I think there’s been some new business that flowed in under the radar screen of most people here in the valley,” she said.

And there has been some community activity to promote new business opportunities as they become available. As a prime example, Foster points to Stevensville, where a $5 million water and sewer infrastructure improvement project is helping businesses expand and increasing the potential for new ones to locate there.

The project is scheduled for completion this year.

“Stevensville should be really proud.

Once you get that kind of infrastructure completed, people will come and locate there. If you don’t have it, people move away,” Foster said. “What it comes down to is, if a community waits until an opportunity is looking it in the eye, then you don’t have time to build the infrastructure. At some point, any community that wants to grow has to have the vision and agree that some things need to happen. Stevensville has gone and done that.”

The local businesses that have weathered the storm are stronger for it.

“They are those companies that have this knowledge that they’ve built over time,” Foster said.

“Companies like Cooper Firearms and Lakeland Feed survived because of their attention to quality that has allowed them to get customers that others can’t easily get.

Those customers will be hard for others to take away. There are businesses out there that have a lower threshold and it’s easier to take their piece of the pie.”

average sales price of a home was $223,222 in the first three quarters of the year. That was up from $197,819 the year before.

The inventory of homes at the lower price levels is getting tight.

“The really low and best sales deals are gone,” said longtime Bitterroot Valley appraiser Darwin Ernst. “The property owners who are left get to sell their properties at something closer to what the home’s market value really is.”

There were 357 sales of residential homes on 40 acres or less through Sept. 30 this year. Of that number, 73 were owned by banks or the government.

In the same period last year, there were 318 sales, of which 105 were bank or government owned.

Ernst said there is still a year-and-ahalf surplus of homes on the market in the Bitterroot Valley, which will keep prices in check.

Julie Foster, director of the Ravalli County Economic Development Authority, said this year just feels different to her.

“It seems like the last three years everyone was just working on staying in business and doing what they had to to make that happen,” Foster said. “Now people are starting to hire some new employees. They

nue office to ramp up drilling near Roscoe and Belfry and south into the Bighorn Basin of Wyoming.

Tom Richmond, administrator of the Montana Board of Oil and Gas, expected a flat year for new wells and production in Montana and that’s what happened.

“So far this year, we’re at 23 million barrels through October, so that’s going to be really close to last year, maybe even up a little,” he said.

But that’s good news, Richmond said, because you need to drill new wells to keep up production as older wells produce less.

Montana pumped 26.5 million barrels of oil last year, down from the peak of 36.3 million barrels in 2006.

As of Dec. 6, Montana had 12 rigs operating, the same as last year with 10 drilling in the Bakken, according to the oilfield ser-

vices company Baker Hughes.

North Dakota had 167 operating rigs.

New drilling technology makes it possible to punch in wells between existing wells in the Elm Coulee field near Sidney, Richmond said, and there are some good wells around Bainville in Roosevelt County.

Early excitement two years ago about developing the Heath shale formation across central and Eastern Montana virtually stopped this year, after the initial wells proved uneconomical.

Onshore Holdings, a subsidiary of Norway’s state-owned oil company, Statoil, is drilling a Heath well near Sumatra.

And plans to drill near the Beartooth Mountains and along the Clarks Fork River flowing into Wyoming have stirred up local residents.

In October, ECA chief execu-

tive John Mork announced plans to develop up to 50 wells near Roscoe and Dean, and an undetermined number in the Bighorn Basin.

Residents concerned about traffic, water and the social consequences of a Beartooth oil boom started protest petitions and are holding meetings.

Despite the company’s big plans, ECA has applied for just a couple of well permits, Richmond said.

At the end of November, ECA applied for a permit to drill a wildcat well three miles east of Belfry; the permit was granted.

Richmond said the wells will be on the east and west flanks of the Beartooths.

“I don’t think anybody proposes to drill along the Beartooth front, other than in existing fields where there’s been activity for a century now,” he said.

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Sunday, December 22, 2013

11

SURVIVING & THRIVING Hamilton business finds success in changing economy

By PERRY BACKUS Ravalli Republic

H

AMILTON – Timber framers are like farmers.

“We’re not salesmen,” said Mark Gantt of Hamilton.

“We’re craftsmen. We tend to undervalue our product in a business that’s very competitive and not highly profitable.”

And so when the bottom dropped out of the housing market at the beginning of the Great Recession, people like Gantt did everything they could to hold on.

Many didn’t survive.

“This last downturn was pretty painful for people in my business,” he said. “Our old clients helped us get through it. We luckily had some large projects in the pipeline that kept us afloat.”

Now Gantt and his partner, John Perry, are seeing an uptick in the kind of upscale construction that drives timber-framing operations like theirs. Their business is called Timber Builders.

Over the years, the partners have built a home for Tom Cruise, a barn for Harrison Ford and a Maui getaway for the director of the “Lethal Weapon” series.

“He had Danny Glover’s old boat in his driveway,” Gantt remembered. “We’ve also worked for a lot of people that no one has ever heard of who are much more wealthy than that.”

The partners built their 26-year-old business on service and quality of craftsmanship.

That combination is what has helped them survive the periodic swings of the economy.

On a recent morning, Gantt’s

Sean McGrath of Hamilton’s Timber Builders carefully sands a beam for a project at the Yellowstone Club.

small crew of gifted craftsmen was busily using a variety of hand tools to turn thick beams into works of art. Inside the plain two-story heated shop, the dried Douglas fir beams — some a century old — were carefully notched, shaved and sanded in preparation for placement in a new high-end home at the Yellowstone Club.

“The day the market dropped, we saw our business change,” Gantt remembered. “It seemed like we were still bidding on jobs, but clients weren’t ready to move.”

“In a good market, we get about 90 percent of the jobs we bid on and lose the other 10 percent,” he said. “It completely flipped when the recession

started. We were getting about 10 percent of the jobs. The architects were still out there trying to sell people, but the projects weren’t happening.”

That all started to change about a year ago.

“We’ve definitely had a lot more projects to bid on and there is more construction of highend homes happening,” he said.

“We’re starting to get back to where we were before the downturn.”

The partners are cautious.

Their crew is half of what it was during the heyday when they took on more of the construction work themselves.

Instead of adding to their workforce, they employ contractors to do some of the construc-

tion work.

“We used to do it all, but we are a little bit more careful now,” he said. “This higher-end construction does seem to be more sensitive to political and financial news. Right now, it seems like a lot of the people who have been waiting to do a project are moving forward.”

Today’s project is being accomplished using recycled timbers that come from all parts of the continent via the Bozeman-based business, Montana Reclaimed Lumber.

The most sought-after timber for the most expensive timberframed buildings is well-aged Douglas fir that’s been reclaimed from buildings mostly found on the East Coast.

PERRY BACKUS/Ravalli Republic

“Drier is better in this business,” he said. “It also costs more.”

Some bone-dry beams can cost thousands of dollars. To ensure that not a one is wasted, the partners have developed a system that uses sophisticated drawings that show exactly how everything fits together.

“It’s one of the things our clients like about working with us,” he said. “If you make a mistake on a job that’s thousands of miles away, it can cost you thousands of dollars.”

“My name is on the job,” he said. “It matters to me that it all comes together just like we said it would. That’s how we’ve been able to stay in business all these years.”

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Sunday, December 22, 2013

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montana economy

Missoula

Visitors fill the taproom at Big Sky Brewery in Missoula.

The growth of microbreweries in Missoula has shown steady growth over the past several years.

Riverfront Triangle areas.

“It should be a tremendous shot in the arm for the economy,” he Continued from Page 5 said.

Startup business growth is also terms of environmental amenities likely to continue, building off and quality of life and this will be of 2013’s successes, particularly a prime driver in our economy,” he technology-related firms, Grunke said. said. “I think we’re going to really Other sectors of the economy see some critical mass in entrealso are improving, including trans- preneurship happening in the next portation and the financial sector, year,” Grunke said.

Barkey said.

Although manufacturing hasn’t Adding to construction growth recovered well elsewhere in the nawill be millions of dollars in planned tion, Grunke remained optimistic commercial construction, said about potential growth here, using James Grunke, president and CEO a multimillion-dollar expansion of the Missoula Economic Partner- planned at Roseburg Forest Prodship. ucts’ manufacturing facility as an Grunke estimated that as much example. Strong interest in the old as $100 million could flow into the Bonner Mill site also continues, he area economy from large projects, said. including construction of a new “I think this is the first year we’re Missoula College and development really going to feel the economy is in the Old Sawmill District and back on track” he said.

Cans of Cold Smoke, one of the most popular beers being brewed in Missoula, come off the line at the Kettlehouse Brewery.

KURT WILSON/ Missoulian

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Sunday, December 22, 2013

13

PRIMED FOR GROWTH

CASEY PAGE/Billings Gazette

A Hilton Homewood Suites is under construction just beyond the “Welcome to Billings” sign on Zoo Drive.

Energy industry boosts Yellowstone County economy

By TOM LUTEY Billings Gazette

T

he Bakken oil boom and skyrocketing farm commodity prices kept the Billings economy chugging through the recession, and still economic developers believe its train has yet to come in.

That optimism stems from the belief that more oil and gas development is on tap for Montana both in the Bakken oil shale along the North Dakota border, and closer to Billings in the Beartooth Mountains and in the Bighorn Basin of Montana and Wyoming.

Two major announcements in October suggest energy could give the local economy a boost in 2014. Burlington Northern Sante Fe Railroad announced that it expected Bakken oil development to intensify on the Montana side of the border. Accordingly, the railroad opened an economic development office in Billings to meet demand for new or expanding rail facilities, specifically rail industrial parks 80 to 200 acres in size.

Days after BNSF economists opened shop, Denver-based Energy Corp. of America opened its Billings office to develop oil and gas leases near Roscoe, Red Lodge and the Bighorn Basin. ECA plans to develop 50 wells using horizontal drilling and hydraulic fracturing. Drilling cost of each well is expected to be $5 million, with most of the development taking place in the next two years.

The Big Sky Economic Development Agency then sweetened

CASEY PAGE/Billings Gazette

The Scheels store under construction on Shiloh Road in west Billings is expected to open in September 2014.

BNSF’s development announcement by disclosing its interest in building a rail-based industrial park, mostly to meet existing demand.

“In the last 18 months, even the last two years, we were getting a lot of phone calls asking, ‘Do you have 20 acres where I can build a distribution facility and does it have infrastructure in place?’ ” said Steve Arveschoug, Big Sky Economic Development director.

Big Sky EDC has since hired an engineering firm to look into potential sites for a rail park, though there already seems to be interest

in a park in Lockwood where Pacific Steel installed a rail-sided car shredder big enough to serve four states. Pacific plans to eventually ship 80 railcars of shredded metal to the steel mills every month. The 23-acre park cost $30 million.

The rail activity is welcome news to a Billings economy that was just beginning to see a slowdown in manufacturing.

“Yellowstone manufacturing actually declined a little bit, but let me tell you a fuller story,” said Patrick Barkey, chief economist at the Montana Bureau of Business and Economic research at the

University of Montana. “Montana has recovered manufacturing, manufacturing wages are recovering, but Montana was coming out of a hole. Yellowstone County was not. Energy basically allowed Yellowstone manufacturing to have a different experience during the recession.”

In fact, manufacturing grew slowly as the oil development demanded steel and fiberglass tanks, as well as custom machinery. Texas-based Bay Ltd. moved in and hired 250 people to manufacture steel structures for the oil companies in the Canadian

tar sands.

In 2010, with the recession showing its first signs of easing, manufacturing jobs in Yellowstone County numbered 3,022.

The number of jobs peaked at the end of 2012 with 3,347.

“It appears that Yellowstone County maintained their manufacturing sector better than the state for awhile during the recession,” said Barbara Wagner, chief economist for the Research and Analysis Bureau of the state Department of Labor. “The better performance of Yellowstone manufacturing is likely because of the decline of the wood products industry due to the national housing problems. Plus, Yellowstone manufacturing is concentrated in food products and petroleum, both industries that performed well during the recession.”

However, during the first half of 2013, manufacturing jobs tumbled to 3,179, according to the Research and Analysis Bureau of the state Department of Labor.

Nearly all of the job loss was in food manufacturing, mostly likely related to the closing of Sweetheart Bakery. Sweetheart closed at the end of 2012, leaving about 250 Montanans unemployed. The company had 100 workers in Billings, many of whom were rehired when Franz Bakery reopened the Billings facility in May. Other than food manufacturing declines, other sectors of the regional economy showed steady growth.

Construction growth had its Please see Billings, Page 15

Tourism keeps Bozeman’s restaurant economy cooking

By TOM LUTEY Billings Gazette

T

he restaurant economy in this quaint Rocky Mountain community never captures front-page headlines like Oracle or Big Sky, but without a doubt, the industry is sizzling.

Gallatin County has more restaurants than any other county in the state, according to the Department of Public Health and Human Services, which handles food licensing. Licenses for “food large” establishments, that is brick-and-mortar restaurants and markets that prepare food on site and have at least three employees, number 397 in Gallatin County.

That’s one license for every 230 Gallatin County residents, with trendy Bozeman setting the table.

No other community approaches that number.

The offerings range from a 116-pour whiskey bar and grill to a wine bar and restaurant offering a nine-course meal served in its cellar.

“Bozeman is a very unique

LARRY MAYER/Billings Gazette

The Roost Fried Chicken in Bozeman features a variety of Southern foods.

Side dishes include fried okra, collard greens, boiled peanuts as well as more traditional fare such as coleslaw and macaroni and cheese.

place. It’s all about the amenities around it, the outdoor amenities and the fabulous air service Bozeman has,” said Jay Bentley, a celebrity chef with an Amazon top 25 regional cookbook, “Open Range,” and a downtown Bozeman restaurant by the same name.

Bentley is known for his steaks and other carnivorous offerings.

LARRY MAYER/Billings Gazette “The air service is huge because Joe Darr launched The Roost this year with his partner Mike Buck. The fried you can get on a plane anywhere on either end of the country and be chicken restaurant in Bozeman features a variety of Southern foods. Darr’s family has operated barbecue and fried chicken restaurants in Tennessee since here in half a day.” the 1950s. He used family recipes for roasted and fried chicken and some key Please see Cooking, Page 16 contacts in food distribution to produce an offering like no other in Montana.

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MONTANA ECONOMY

Sunday, December 22, 2013

SEAL OF SUCCESS

Billings-based Darcova finds its niche through customizing

By TOM LUTEY tlutey@billingsgazette.com

I

n the back of a South Side Billings warehouse, the quiet whir of machinery hangs in the air as Walter Salley rolls latex onto cotton cloth, a tried and true recipe for success at an oilfield supply business as old as Ford’s first car.

Darcova has been making the seals needed to pump oil from the ground since 1904. This quiet company in the Foote industrial area has survived by manufacturing components as indispensable to oil extraction as butter is to bread.

The seals help create the vacuum necessary to pump oil to the surface, which is essential once the earth’s natural squeeze can no longer send crude gushing up a well. All oil wells need pumping eventually, which has made Darcova a unique survivor in an industry known for discarding companies as soon as market prices ebb.

“We have a niche market, basically,” said co-owner Mike Baugh. “We have three competitors.”

In Yellowstone County, manufactures have done well, primarily because of strong economic growth in the petroleum and agriculture industries.

The booming economy of the Bakken oilfield and Canadian tar sands is a significant driver of manufacturing demand. But so is the high trading price of crude, which can take the financial sting out of projects that require substantial investments. Yellowstone County’s manufacturing economy was the only one in the state to see positive growth through the recession, according to the Research and Analysis Bureau of the state Department of Labor and Industry.

Baugh partnered with the owners of Cline Production Co. to bring Darcova to Billings in the mid-’90s. Cline’s specialty is taking on older wells that big oil companies no longer consider worth the cost of operating.

Cline works the wells over to improve suction and thereby get the oil flowing again at profitable volume. Because quality seals are an important part of the company’s business model, acquiring Darcova made sense.

The company’s small size, 11 employees with only 10 involved in manufacturing, works to its advantage. Bigger manufacturers with high output prefer standardization of sizes, which isn’t a model that works with old wells, where the slow grind of grit on moving metal parts wears everything beyond its original gauge. Darcova measures its work to five-thousandths of an inch.

“Twenty five to 30 percent of what we do is custom work,” Baugh said. “We do OEM” — original equipment manufacturing products branded and sold by another company — “but we will also make parts for a small, momand-pop shop in the backwoods

LARRY MAYER/Billings Gazette

Above, Walter Salley rolls latex onto cotton cloth, the first step in the process to make seals for oil field equipment at Darcova Inc. in Billings. Top, Mike Baugh explains the operation of the company’s injection moulding equipment. The company manufactures oil field products.

LARRY MAYER/Billings Gazette

Darcova Inc. produces oil field products in Billings.

of Kentucky.”

Darcova is also an example of a manufacturing trend in which output increases, but the workforce doesn’t necessarily follow suit.

The company does $2 million in gross sales, double what it did a decade ago, but has one less person working in manufacturing.

That’s because technological improvements have made Darcova more efficient.

“We do lots of impact studies where people say ‘You’re going to create 300 coal mining jobs,’” said Patrick Barkey, economist for the Montana Bureau of Business and Economic Research.

“And we’ll say, ‘Well, there’s 300

Nylon parts wait to be assembled into seals for oil field equipment at Darcova Inc. in Billings.

coal mining jobs now, standing here today, but there might be 260 in 10 years.”

However, Darcova does contribute to manufacturing labor

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figures beyond its own shop.

The company produces seals for Laurel-based Wood’s Powr-Grip, a company that manufactures vacuum cup lifting equipment,

LARRY MAYER/Billings Gazette

like those used for lifting sheets of glass. Darcova is also working with an entrepreneur on a device to detect locked air brakes on freight trucks.

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Sunday, December 22, 2013

15

“MONTANA WAS COMING OUT OF A HOLE. YELLOWSTONE COUNTY WAS NOT.” The Scheels store under construction on Shiloh Road on the West End of Billings will be 220,000 square feet and is set to open Sept. 6, 2014.

CASEY PAGE/Gazette Staff

Billings Continued from 13 second strong year in a row, with the value of new construction within Billings city limits through November at $302.3 million, compared to $171.9 million a year earlier through November.

Denise Smith with the Billings Homebuilders Association said there would be more industry growth, but banking regulations have slowed lending.

“Because of the financial stuff that’s happening at the federal level, there are

so many more hoops that the banks have to jump through to finance a spec home,” Smith said. “The big banks that have banks in Kalispell, the Bitterroot and Missoula are still dealing with foreclosures and that plays into what they can do in Billings.”

The biggest difference was commercial and multifamily housing values. Stockman Bank and Billings Clinic had the most expensive construction.

Billings Clinic has been in perpetual expansion for the past few years. The hospital began construction on a 20,000-squarefoot cardiac center in the spring, and also an ambulatory telemetry unit. Together, the projects cost an estimated $10.9 million.

Last July, Billings Clinic began work on a new $11.5 million intensive care unit. The clinic also opened a $1.2 million center for breast health.

Those medical projects were rolled out at the same time the federal government began a 44,000-square-foot expansion of the Veterans Affairs Clinic. The $67.3 million expansion comes just four years after the original clinic was built. Roughly 20 to 50 new jobs will be created by the VA expansion.

Billings Clinic employment has also increased steadily, from 3,400 employees in 2008 to 3,766 workers on payroll currently.

St. Vincent Healthcare has also been

growing steadily. In the past five years, the medical provider’s footprint has increased more than 100,000 square feet to 1.14 million. St. Vincent employs 2,100 people in Yellowstone County.

After a disconnect of several years between the retail economy and other Yellowstone County industries, earnings for retail employees increased 3.5 percent in 2013. The sector was most affected by the recession and the last to recover.

The single largest retail expansion in Yellowstone County is the 220,000-squarefoot Scheels sporting goods store at Shiloh Crossing. The store is set to open Sept. 6, 2014.

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Sunday, December 22, 2013

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montana economy

LARRY MAYER/Billings Gazette

The La Parrilla is one of several restaurants that Pete Strom has operated in Bozeman and Livingston.

Cooking Continued from 13 Here’s how restaurant spending by out-of-state tourists in Gallatin County compares to the state’s next two biggest earners for bar and restaurant revenue, Yellowstone and Flathead.

In 2012, restaurant and bar spending by nonresidents totaled $115.9 million in Bozeman, according data by the Institute for Tourism and Recreation Research at the University of Montana. In Yellowstone County, nonresident purchases were $90.8 million.

Flathead County, which like Gallatin has the draw of a national park, did $62.7 million in bar and restaurant sales. Missoula County was a distant fourth at $49.4 million.

“You can make the conclusion that nonresidents in Gallatin County are spending more money and that there’s more of them,” said Norma Nickerson, UM professor and principal investigator. “If I was in a business that depended on tourists, I would be in Gallatin and Park counties.”

Visitors from outside Montana who spent at least one night in Gallatin County in 2012 numbered 2.39 million, compared to 1.6 million visitors to Yellowstone and Missoula Counties.

Yellowstone and Missoula rank second and third for licensing of food large establishments.

Yellowstone County’s 375 licenses come closest to Gallatin, but with a county population of 151,882 residents, the ratio of restaurants to people is one for every 408. Missoula County with 372 licenses has a food establishment for every 298 people.

There was some thinking that the number of restaurants in Bozeman and Gallatin County would decline during the recession, said Tim Roark, county

Pete Strom talks about the La Parrilla, right, one of several restaurants he has operated in Bozeman and Livingston.

health inspector.

From 2007 to 2010, net jobs losses in Gallatin County totaled 4,854, as construction and manufacturing industries hemorrhaged jobs, according to state labor data. Annual wages lost totaled $104 million.

But Bozeman entrepreneurs

didn’t lose their appetite for opening restaurants, even as unemployment exceeded 7 percent in 2009. That spike in entrepreneurship in mid-recession could be people turning to self-employment in a bad job market. In fact, more than 1,000 new businesses of all kinds were

started in Gallatin County from 2007 through 2010, even as the community lost more than 1,500 existing businesses, according to state licensing data.

Battle-tested restaurateurs like Pete Strom said the desire to stay in Bozeman is a spark for restaurant start-ups.

LARRY MAYER/Billings Gazette

“People move to Bozeman and they want to make a living,” said Strom, whose first restaurant La Parilla launched in the mid-1990s and is now available for franchising. Strom also has ownership in Bozeman’s Garage Please see Eateries, Page 17

The Roost Fried Chicken in Bozeman features a variety of Southern foods, including chicken and a biscuit on a stick, at left.

LARRY MAYER/ Billings Gazette

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CYAN montana economy

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Sunday, December 22, 2013

17

LARRY MAYER/Billings Gazette

Jay Bentley owns the Open Range steakhouse on Main Street in Bozeman. He also wrote a cookbook by the same name. He credits the air services into Bozeman for his restaurant’s and others’ success with tourists.

Eateries Continued from Page 16 Soup Shack and Mesquite Grill.

He previously held interests in On The Rise bakery and the Naked Noodle, as well as Moo Casa, a gourmet ice cream shop that has since closed.

“Restaurants benefit from uneducated entrepreneurial spirit.

Everyone cooks,” Strom said.

“But two out of eight restaurants survive the first two years, and that’s probably pretty similar to what occurs in Bozeman.”

Strom’s hallmark business, La Parilla, started in a 700-squarefoot building one block south of East Main Street on a road with little foot traffic and no restaurants. It was the brainchild of Zack Anderson, 26 years old at the time with personal and family experience in restaurants.

Anderson envisioned wrapping flavors from around the world in a large tortilla, allowing customers to select toppings from the counter as their food was prepared. There was another burrito shop in town, but it had just chicken and beef. La Parilla offered pit-roasted pork, blackened salmon, Cajun shrimp and more than a dozen other options.

Strom became a partner in the business a few years later and eventually its owner.

Today, La Parilla is still off the beaten path. The original restaurant location was sold to neighboring American Bank several years ago. When the location sold, “La Pa,” as the locals know it, uprooted its small building and moved across Babcock and 50 yards west.

Several of the long-distance runners of the Bozeman restaurant world are off the beaten path, where rent is cheap.

Just west of La Parilla’s original location, is a hard-to-notice, even harder to drive into, restaurant location that’s spawned several businesses, including the The Roost, a new fried chicken restaurant that’s Southern down to its cheese grits and boiled peanuts.

The 1520 W. Main St. location sports only an open sign in a window fronting Bozeman’s busiest street. The restaurant’s easiest entrance is 20 yards to the east in what doubles as a ski shop parking lot. In spite of this, The Roost is standing room only at lunch time.

“I love chicken. I love fried chicken. I’m passionate about it,” said Joe Darr, who with partner Mike Buck launched the restaurant this year. “So far our promotion has been word of mouth and the response has been tremendous.”

Darr, whose family has operated barbecue and fried chicken restaurants in Tennessee since the 1950s, was working for an organic and natural foods distributor before opening The Roost. He used family recipes for roasted and fried chicken and some key contacts in food distribution to

Bill Baskin is executive chef at the Open Range steakhouse on Main Street in Bozeman.

LARRY MAYER/Billings Gazette

LARRY MAYER/Billings Gazette

Jay Bentley owns the Open Range steakhouse on Main Street in Bozeman.

Bentley is well known for his restaurants and has published a book of recipes.

produce an offering like no other in Montana.

In November, customers were lining up for the “Nashville Burn,” a deceptively spicy fried chicken that goes down easy but raises sweat beads on the nape of customers’ necks about five minutes later. The Roost has less spicy options than the Nashville Burn, but everything has a little heat to it and goes well with a glass of iced sweet tea.

The Roost has several things working in its favor, according to Strom. First, diners are creatures of habit. They return to the same locations where they’ve eaten before. The last tenant at 1520

W. Main was Café Zydeco, a true Cajun cuisine restaurant that branched out with locations in Billings, Helena and Missoula, as well as 2711 W. College St. in Bozeman.

Second, The Roost is the fourth restaurant at 1520 W. Main, formerly home to an Asian restaurant and a bagel shop, in addition to Café Zydeco. As such, the location already had the kind of restaurant infrastructure that can cost a start-up plenty, but customers rarely appreciate.

“You can spend half of your money or more on things like plumbing and ventilation and it’s not what anybody sees,”

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Strom said.

Darr and Buck are working seven days a week to get The Roost up and running, selling chicken and buttermilk biscuits on a stick wherever they can to promote their product.

Marketing for small, independent restaurant owners is cheap and creative. The customerdriven restaurant review site “Yelp,” has been useful in turning on newcomers to The Roost, Darr said.

Locals also seem to have an affinity for independent establishments. Bozeman was the last large Montana city on Interstate 90 to get a Starbucks, though it’s

hard to travel more than a few blocks without stumbling onto a local coffee shop.

“Montanans all want the same thing. They want good value. They want to feel like they’re getting something for their money and they want to be treated well,” Bentley said.

“I don’t care whether it’s The Roost, which does a great job with chicken, or La Parilla, or any of those guys. People don’t want to be waited on by someone who is anonymous. Chains are kind of anonymous. There’s no one you can go to and say ‘this food is good, or bad, you know what I mean?”

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1

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.

RiverStone Health is committed to providing a work environment where passionate people have the knowledge, tools and opportunity to make a positive difference in the lives of our patients. We are a public health organization whose mission is to improve life, health, and safety.

We are currently seeking:

Per diem RN’s and LPN’s (Must have current licensure in State of Montana)

SyStem Programmer/Software engineer Location: Bozeman or miSSouLa

TeleSphere Software, Inc., a subsidiary of Blackfoot Telecommunications Group (BTG), is seeking a software engineer who has great communication skills and enjoys participating in the full development cycle. Experience in C#, Java or C++, with experience in Windows or Web GUI design and SQL. Must enjoy building business applications and be very good at problem solving. XML, ASP.NET, HTML 5, and multi-tier product development are all big pluses. We are taking application for all levels of experience, but a computer science degree

Visit us online at www.riverstonehealth.org Click on careers RiverStone Health is an Equal Opportunity Employer and minority candidates are encouraged to apply

is necessary. If you are interested in joining a fun and fast paced team, and working with some really great people, please submit a cover letter, resume, application for employment (www.blackfoot.com) to: employment@blackfoot.com or BTG, HR Dept. 1221 N. Russell, Missoula, MT 59808, open until filled. EOE

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• Clinical Dietician • Office Coordinator

If you are ready to make a difference in the lives of our patients, please visit www.westparkhospital.org for a job description and to complete an application or call the Recruiting Office at 307-578-2465 for additional information.

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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605-996-3983 EOE/AA

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Sunday, December 22, 2013

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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.

Share your passion to be featured in the next ad #passiontowork Allegiance Benefit Plan Management, Inc., develops and administers employee benefit plans for companies, associations and government agencies. This includes medical management. We are dedicated to providing excellent customer service in all areas of our company. With Allegiance it is a Career not a job.

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American Federal is an equal opportunity employer.

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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.

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MONTANA ECONOMY

Sunday, December 22, 2013

ORIGINAL RECIPE

LARRY MAYER/Billings Gazette

Regulars line up for breakfast at the Western Cafe in Bozeman.

Bozeman’s oldest cafe sticks with what works

By TOM LUTEY Billings Gazette

T

he cinnamon roll French toast at the Western Café is a sweet, sticky treat that when slathered in butter and washed down with coffee, takes on rich undertones of home.

It’s the kind of rare-find entrée upon which other restaurants might build a cult following. But it is not restaurateur Susan Sebena’s recipe for success. That recipe, the one that’s kept the griddle hot at Bozeman’s oldest restaurant for more than 70 years years, is equal parts nostalgia, conversation, community and, of course, food.

“I think it’s the quality of the food. It’s the friendliness, the atmosphere,” Sebena said. “I try to keep the old feel, and I think that’s why people come. The come to me and say, ‘Oh, thank God you didn’t make it into just a coffee shop. There’s so many of those going up.’”

A trendy coffee shop, the Western is not.

Sebena bought the Western in 2008 and billed it as “The Last Best Café.” Rather than modernize its knotty-pine interior, she enhanced it, returning the ceiling to a coffered style that harkens back to the 1940s and decorating with wildlife art and cowboy artifacts. In one dining area hang photographs of downtown Bozeman back 100 years. The Western Café seems just a block outside the photographer’s frame in many of the images, perhaps too simple to be included in the same shot as the art deco Baxter Hotel on the other end of the strip.

The 400 block of east Main Street, which the café anchors, has always been a denim jacket and work glove kind of place.

There’s a single chair barber shop next door offering $12 haircuts and a cabinet shop west of that. For decades the Western’s next nearest neighbors were a gas station, lumberyard and paint store. The Western’s block never experienced the foot traffic that drives the bars and art galleries to its west until the Montana Ale Works, a trendy bar and restaurant, opened to the east. Now passersby look through the windows of the café daily.

What makes the Western work, said celebrity chef Jay Bentley who owns a steak restaurant two blocks down the street, is that customers searching for an experience get what they came for.

“Bozeman is a combination of old money, new money, tech people and agriculture.

It’s a great place to live and it draws a lot of different people who are willing to pay for an experience,” Bentley said. “And like it is at the Western, it all boils down to the same principle: You give people what they want.”

The Western may be one of the few establishments on Main Street that doesn’t offer customers WiFi. Sebena prefers that patrons engage each other rather than stare into the white-blue glow of their smartphones. There are usually a couple of copies of The Billings Gazette or Bozeman Chronicle to be split into sections and shared.

Sebena has been known to seat strangers together during a lunch rush rather than leave them waiting at the front door. The vinyl upholstered swivel stools at the lunch counter are usually occupied and always turned inward as customers interact.

It isn’t uncommon to see a customer walk through the front door and speak with 10 people on the way to their table. This the

LARRY MAYER/Billings Gazette

Susan Sebena shows the lunch special at the Western Cafe in Bozeman.

LARRY MAYER/Billings Gazette

Hand-cut chicken fried steaks are available at the Western Cafe in Bozeman.

LARRY MAYER/Billings Gazette

Sebena bought the Western Cafe in 2008. She enhanced the old restaurant’s knotty-pine interior and decorated it with wildlife art and cowboy artifacts. She often seats strangers together during busy lunch rushes and doesn’t offer WiFi, prefering that customers interact with one another.

way the restaurateur prefers the Western, a menu of small-town American favorites served up with familiarity and friendship, a warm slice of what Bozeman used to be.

Sebena likes to point out that a lot of what foodies are after the Western has been quietly serving for years. The pancakes are dotted with Montana huckleberries hand picked by a local man during peak season.

At this restaurant, which at one time cut its own meat and still spends hours prepar-

ing its chicken-fried steak, food is bought locally whenever possible.

The saucer-sized cinnamon rolls are baked fresh every morning and served hot from the oven, just as they have been for 40 years. Before buying the Western in 2008, Sebena made sure that Annie Robinson, the restaurant’s cook of 30 years was willing to stay.

“She’s so skilled, everything she does, she does from scratch,” Sebena said.

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LARRY MAYER/Billings Gazette

The Western Cafe features homemade rolls and pies, along with hearty traditional meals at reasonable prices.

“She doesn’t know the exact recipes.

She’s just so used to doing it that way,” which seems to work best for a café marketing memories.

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Sunday, December 22, 2013

Things are looking up in 2014 for Great Falls economy

By CHARLES S. JOHNSON Lee Newspapers

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he Great Falls area should see an economic boost in 2014, the president of the Great Falls Development Authority said.

“We’re trying to grow the economy faster, diversify it and support the creation of higher wage jobs,” the authority’s Brett Doney said.

Doney said Great Falls is looking for improved economic numbers from recent years.

“We were not chalking up the numbers we wanted in 2011 and 2012, but I think our numbers will really start improving in 2014,” he said. “We’ve got a long ways to go.

We’re headed in the right direction.

We just need to keep the momentum going. We’re excited about the progress we’re seeing. It’s nice to see years of effort paying off.”

Great Falls has had a number of positive developments announced affecting its primary sector, Doney said. These include:  ADF Group Inc., based in Quebec, is building a $24 million steel fabrication plant. The company is expected to employ 300 people opening in three years to manufacture oil production modules for customers in the Alberta oil sands and possibly other markets.  Emteq, which makes wir-

ing harnesses for the commercial aviation industry, announced an expansion during the summer for the next two years. It added 20 employees and 80 more are expected during the next two years.  Calumet Montana Refining announced a major capital project to double the capacity of the oil refinery in Great Falls. It’s a $275 million project that will add 30 jobs in the refiner.  Centene Corp. announced it is adding a second shift of workers to handle managed care plans for Medicaid for states. The job totals haven’t been announced yet.  Health Care Service Corp., which bought Blue Cross and Blue Shield of Montana, is setting up a call center to provide assistance to members of Blue Cross plans in Illinois, Oklahoma, Texas, New Mexico and Montana. It will open next year and plans to hire 100 to 150 full-time employees at competitive wages.  Two new apartment complexes will be constructed. One, being developed by the Strand Group of Missoula, is a 216-unit complex, with a clubhouse and pool, while the other, by Damon Carroll of Great Falls, is a 24-unit complex.  Some new restaurants and a brew pub are on the horizon, and some big major retail announcements are expected between now

and April.

The unemployment rate in Great Falls remains below the Montana average, Barbara Wagner, chief economist for the state Department of Labor and Industry, said.

“This is because the Great Falls region was more stable during the recession than the state as a whole, with smaller job losses,” Wagner said. “However, in the past few years, the state has recovered faster than Great Falls.”

More than 21 percent of Cascade County’s private employment falls within the health care and social assistance industry category, higher the national average of 15.2 percent, according to Industry 2012, which breaks out private payroll employment into various industry groups, Wagner said.

“Like other areas of the state, health care has added quite a few jobs to the region,” the economist said. “And retail trade appears to be recovering nicely from the recession, although employment is still below the peak in 2008.”

Wagner said Great Falls didn’t experience as large of job losses in 2009 when the state saw losses, but Great Falls and Cascade County faced a couple of months of job losses in 2012 and 2013, which seem to coincide with various cuts in federal government funding during the past three years.

“For example, the job losses in 2013 appear after the federal government sequester,” Wagner said, adding that it’s “fairly likely that the job losses were related to fewer federal dollars being spent within the Great Falls economy.”

Paul Polzin, director emeritus of the University of Montana Bureau of Business and Economic Research, said, “Stability, or the lack of ups and downs, seems to be the word for Cascade County.”

Great Falls merchants serve a large market area running from Toole County to Valley County across the Hi-Line and counties to the south.

“It has got a very large market area,” Polzin said. “It’s not just retail, but health care, professional services, accountants and lawyers.”

The past five years have been good ones for grain farmers in the Great Falls trade area, Polzin said.

“That finds its way into Great Falls farm equipment dealers and the retail trade,” he said.

Malmstrom Air Force Base remains “the big player” in Great Falls, Polzin said, adding: “If anything should happen to Malmstrom, it would be devastating.”

The bureau has calculated that the air base makes up 47 percent of the Great Falls area’s economy, although Doney said the authority believes it’s closer to the 33 percent.

“Malmstrom’s looking pretty stable now,” Doney said, but there is concern about future changes as a result of a 2010 arms reduction treaty between the United States and Russia.

“We’re going to lose some missiles,” Doney said.

He said the future of Malmstrom “is always a psychological anvil over our heads. That’s why we’re working so hard to diversify the economy.”

David Weissman, chair of the Montana Defense Alliance who owns Subway restaurant franchises in Great Falls and Helena, said the base’s future is “fairly stable today.” He said there are a total of 450 U.S. land-based MinutemanIII intercontinental ballistic missiles in silos. They are evenly divided, with 150 missiles in silos around each of these three bases: Malmstrom, Minot Air Force Base in North Dakota and F.E. Warren Air Force Base in Wyoming.

The arms reduction treaty requires the United States to reduce the number of ICBMs by 30 to bring the total down to 420 ICBMs. “What we’re fearing and hearing, it probably would be (a reduction of) 50, probably a squadron, and it’s really fluid which base would get the reduction,” Weissman said. “The question is where the reductions would come from — one base or three.”

Employers worry about affordability of offering insurance

By MIKE DENNISON Lee Newspapers

their workforce, and are taking a “wait-and-see” attitude on whether to pass ACA-related costs ELENA — In the face of directly to employees. new health insurance re“We have not seen our emquirements under the Afployers turn and run,” he said. fordable Care Act, most Montana “They’re watching what’s going businesses that already provide on, but they’re also investing health coverage for employees are in their (health staying with it, business health plans).” advisers say.

The ACA, also Yet business owners also are known as “Obamfacing increasing costs and comacare,” creates plexity when it comes to employee many new requirehealth plans, prompting them to ments and costs wonder what the future holds. affecting employee “Although it’s called the health plans.

LARSON Affordable Care Act, we’re not Next year, seeing a lot of changes that are businesses with health plans must making it more affordable,” said pay a $63 per-covered-person Kevin Larson, president of EBMS, fee, to finance a reinsurance pool a Billings firm that manages selffor individuals buying their own funded health plans for companies plans via the new state online in nine states, including Montana. “marketplace.” Some other, lesser “A lot of these (changes) will add taxes and excise fees on health costs.” plans also are taking effect.

Still, Larson said most larger Health plans also no longer can businesses with employee health restrict entry for people who have plans consider them to be a good pre-existing health conditions or recruiting tool and investment in have annual benefit limits, adding

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costs to the plans.

The ACA also requires businesses with 50 or more employees to provide health coverage to employees, or pay a tax penalty.

The Obama administration has delayed enforcement of this requirement until 2015, but some businesses already are reacting to it.

Becky Byrne, a benefits consultant for PayneWest Insurance in Missoula, said she has a client with 80 employees that plans to drop its employee health plan, pay the penalty and then give leftover money it would have spent on its current plan to employees, to help them buy individual policies on the online marketplace.

“The ACA is really putting employers in a tough spot,” she said. “Affordability for Montana employers is really getting out of reach. … Everything that the ACA has done comes at a cost.”

Byrne says while most employers are keeping existing health plans for workers, some are dropping employee coverage

because it’s become too costly and complicated. “(Some) employers are just tired of dealing with health insurance,” she said. “They want out of the business.”

Smaller businesses are not required to offer health coverage to workers, but that doesn’t mean they’re unaffected by the law.

Some of these businesses had expected they might be able to shop for polices via the online marketplace. That aspect of the marketplace has been delayed for a year.

Others, including some that offer coverage now, had been hoping they might be able to direct their employees to the marketplace to get a better deal with a federally subsidized individual policy.

But early technical problems with the marketplace in Montana dimmed that possibility, said Richard Miltenberger of Mountain West Benefits, which advises businesses on health plans.

“There is a lack of confidence that the marketplace mechanism

is going to be fixed in time for Jan. 1,” he said.

The website, www.healthcare. gov, is much improved, insurance officials said earlier this month, but the deadline for people to get coverage through the marketplace that’s effective Jan. 1 is Dec. 23.

Jim Nys, a personnel consultant in Helena, said many business owners remain confused about the ACA and how or whether it applies to them, in part because of misinformation about the law.

Nys said he’s conducted several workshops for employers and consumers around the state, and that he often ends up providing very basic information about the fundamental contents of the law.

“The vast number of (small) employers haven’t even got the information that it doesn’t really apply to them,” he said.

“The administrative burden (for employers), the changes taking place are unprecedented,” Larson said. “There is a lot of work, a lot of changes and a lot of confusion.”

Butte’s economy continues to be ‘manageable’ and steady

By RENATA BIRKENBUEL Montana Standard

and there, so we’re able to weather the storm a little bit.”

Montana Resources, which runs the mine in Butte; Renewable UTTE — Compared to the Energy Corp., which makes solar recent rapid growth in Boze- and silicon products; NorthWestman and Missoula, Butte ern Energy; St. James Healthcare maintains an even, manageable and other health services; Butteeconomy, which local economists Silver Bow County; Montana Tech say is more desirable for the city’s and Town Pump are among the economic stability. employers in Butte that provide Diversity drives a healthy mix reliable employment. of firepower necessary to keep Butte-Silver Bow’s 2012 per Butte competitive, said John capita income, $44,641, placed Kasperick, NorthWestern Energy ninth of 56 counties in the state, economist, referring to muchahead of Yellowstone (15th at needed services in the mining, $41,710), Lewis and Clark (16th manufacturing, public utilities, at $41,098), Cascade (17th at health services, government, $40,822) and Gallatin counties, education and trade sectors. according to Kasperick’s data.

“We used to be so mining-deGallatin, home to Bozeman pendent, that if prices went down, and several high-profile tech layoffs would happen and hurt firms, had a per capita income of the county bad,” Kasperick said. $40,000 for the 20th spot.

“Now we have a few layoffs here Eastern Montana counties

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like Daniels and Richland, which thrive on the Bakken oilfields or agriculture, barreled to the top eight.

“We’ve never grown like a Gallatin, Ravalli and Flathead,” added Kasperick. “Gallatin was hurt during the recession more than us. Since 2000 we’ve held pretty steady.”

Contrary to perceptions, population in Butte-Silver Bow actually grew steadily between 2000 and 2012 after decades of decline following the Anaconda Company years.

Jim Smitham, who keeps his pulse on the local economy as the Butte Local Development Corp. director, said Butte’s economy grew during the recession while neighboring cities suffered.

For instance, Butte’s housing market is more reasonably priced than neighboring Bozeman.

The median sale price of a single-family residence in Bozeman was $295,000 for the first half of 2013 while the same type of house in Butte sold for $116,378, according to the Multiple Listing Service.

Meanwhile, there are advantages to keeping a level economy devoid of up-and-down fluctuations.

“Are we going to be a grower like Bozeman, Missoula or Helena?,” Smitham asked.

“No, we’re not. Those towns took a hard hit during the recession and it’s taken a while for them to recover.”

During a midyear session summarizing the state of Montana’s economy last summer in Butte, economist Paul Polzin projected only a 2.2-percent growth in nonfarm labor income for 20132016 due primarily, he said, to

“uncertainty of the worldwide economy.”

Other recent closures in Butte’s service industry include Denny’s Restaurant and 4-B’s Restaurant.

In manufacturing, REC announced layoffs in October.

At the time, Polzin reported to local business leaders that earnings were up 5.3 percent in ButteSilver Bow County — the highest in the state. He referred specifically to bonuses that Montana Resources’ employees received during 2009-2012.

Marko Lucich, executive director of the Butte Chamber of Commerce, reiterated at the mid-year economic meeting last summer, that the county “is going in a positive direction from 2009-2010 to the present time.

“What stands out for me is that we’re showing growth compared to the rest of the state,” he said.

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Sunday, December 22, 2013

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MONTANA ECONOMY

Helena economy slowed by government cuts, but steady

By DEREK BROUWER Independent Record

mall tenants, “because that’s just a shame.”

She hopes another large retailer can fill the void left, whether in the mall, downtown ELENA — Economists projected as an “anchor store,” or elsewhere.

Lewis and Clark County to see slow Commercial building permits in 2013 but consistent growth this year, with may drop over amounts in recent years. cuts to government spending felt more in Through November, 176 building permits Helena than other areas of the state. were issued worth $37.4 million. 2012 perThat’s not unusual for the city to hear, mits were valued at $49.2 million. as it’s consistently ranked as one of the top There’s plenty of bright spots, Burwell small communities in the country in ecosaid, including new openings in the Skyway nomic strength.

Regional Shopping Center at the Interstate “I always say that we didn’t participate in 15 and Custer Avenue interchange, expanthe recession,” said Cathy Burwell, Presision of the Cinemark theater in the Great dent of the Helena Chamber of Commerce.

Northern and ongoing construction of a Employment levels have increased Super One grocery store in the north part of throughout the year, and Helena’s real estate town. market appears to have made significant Burwell said the new Custer highway gains. Business growth may be more of a interchange is been an important boost to mixed bag. that area. “There’s quite a lot of room for Burwell said some retail sectors, such as development there,” she said. automotive sales, seem to be doing well, but Lewis and Clark County’s unemploythe retail industry has room to improve. ment rate dropped throughout the year to In particular, she said anecdotal reports 3.8 percent in October — the lowest it’s been from the start of the holiday shopping seain five years, since November 2008 and a son weren’t very encouraging. “I don’t think point better than the statewide rate. it’s as good as we hope right now,” she said.

Trade professions like carpenters and Burwell said Helena’s ailing mall also electricians are in high demand by clients at results in some shopping “leakage” out of A to Z Staffing job service, said vice presitown. dent Anna Kazmierowski. “I think it has “I feel for them,” Burwell said of current changed from last year,” she said.

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A to Z fills primarily office and construction positions in Helena and around the state, but Kazmierowski said the kinds of businesses that are seeking help from an employment agency has been widening.

“It’s really different. A lot of companies turn to employment agencies for assistance,” she said. “It’s just difficult for everybody to find people.”

With the labor market tightening, Burwell said she hopes the unemployment rate doesn’t drop too much further. An increasing number of businesses are looking to attract employees from their competitors, she said.

“That’s a challenge for us here,” she said.

Meanwhile, Helena Food Share distributed an average of 100,000 pound of food each month in 2013, up 25 percent more than last year.

Nearly 1,000 new households were served this year, according to Communications Director Dana Friede.

The residential real estate market has proven to be a bright spot for the Helena area as the number of sales and price levels have risen.

Home sales in the past 12 months have risen by over seven percent from the prior 12-month period, market data from Moore Appraisal Firm shows.

“Most everyone I’ve talked to has reported increased sales, a busy market,” Shaun Moore said. “Even in the months that seemed to be slower, it seemed to be more steady.”

Of the more than 800 homes sold, one of seven were considered new construction, he said. The price for vacant land is holding steady, but much more of it is selling.

“In past years we’re been really oversupplied with the amount of land that we’ve had. We started to see a correction of that over the past couple years,” Moore said.

More than 180 lots sold during the most recent 12-month period, up from only 102 the year before. Moore said it indicates that local contractors are more confident in the market.

Prices are also on track to exceed median values in each of the past five years. The median sale price during the past 12 months has approached $210,000, according to Moore’s data.

However, he said the market still shows some resistance toward higher-end homes.

The numbers show evidence of the Helena real estate market’s constant recovery from the recession, Moore said.

“I think the housing market is coming back strong,” Burwell said. “I think that things are back on track in Helena.”

BIG ON BOEING

ELIZA WILEY/Independent Record

A Summit Aeronautics Group employee drives one of their hard metal machining devices at the Helena shop in 2008. Boeing announced an agreeement to acquire the business and operations conducted by Summit. Summit employs 135 people to manufacture titanium and other hard metal structures for commercial and military aircraft.

Helena hopes expanding aeronautics business will boost economy

By DEREK BROUWER Independent Record

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ELENA — Helena is known as a stable government town, but will a growing aeronautics industry make the capital city’s economy soar?

Two industry milestones during the past six months have city officials hopeful that the expanding manufacturing sector will ripple through the local economy and attract further investment.

Boeing made state headlines in September when CEO Jim McNerney announced a $35 million expansion to the company’s Helena facility during the economic development summit in Butte.

The expansion will increase the manufacturing plant by about one-third, to 167,099 square feet, and add some 20 to 25 jobs to its 144-person workforce.

“It is a major increase in what we do here,” McNerney said at the time. “It is significant.”

Also this year, constructions crews broke ground on a facility for Pioneer Aerostructures — the latest venture by local industry entrepreneur Tom Hoffman.

Pioneer will manufacture highend parts for commercial and military aircraft and employ between 12 and 24 people, Hoffman has said previously.

Together the two projects total $53 million and may add as many as 50 jobs. It’s the latest addition to a sector that has grown steadily in Helena over the past 16 years.

“It’s a growth industry for us,” said Ron Mercer, director of the Helena Regional Airport Authority, which leases the land for both facilities. “I’m really excited to see this expansion.”

He said Boeing and Pioneer of-

try through tax breaks, hoping it will continue to grow.

Commissioners granted a tax abatement for Summit in 2002, and another nearly $900,000 abatement in 2008, and last year Boeing was forgiven an estimated $811,860 in taxes during 10 years when it purchased new equipment.

With the latest projects, further tax abatement requests may be on the way. Holland said Boeing is working with staff and elected officials to see if the company qualifies for another one. Hoffman did not return a call for comment for this story.

ELIZA WILEY/Independent Record City manager Alles said if he Precision machining is a specialty of Summit Aeronautics Group, which is now were in their position, he would owned by Boeing. apply. He said granting the abatements demonstrate to the corpofer good jobs with strong benefits “For us to be a part of a worldrate offices that the city is “open in an industry that has proven to wide corporation, to have that for business.” be successful in Helena. little piece of the pie, I think is big “We want to work with these Aircraft manufacturing took for us,” he said. companies to continue to invest in root here in 1997, when Hoffman Boeing purchased $5.9 milHelena,” he said. started Summit Aeronautics in lion from 86 Montana suppliers in Through in-state purchases 1997.

2012, according to figures provided Boeing estimates it supports about Summit began with four emby the company. Its supplier pur200 jobs in Montana in addition to ployees and a 25,000-square-foot chases have increased $2.6 million its own employees. plant, Mercer said. By 2010 the since 2010, said public relations That number doesn’t include company had 135 employees and officer Bev Holland. the secondary economic benefits caught the eye of Boeing, which The aeronautics industry may induced by employees into other purchased it. “There wouldn’t be be a large employer in the area, sectors like real estate, retail and aerospace in Helena if it wasn’t for but it isn’t the largest. Boeing isn’t restaurants — the “trickle down” Tom Hoffman,” Mercer said. among the city of Helena’s top that Alles said adds to the econoThe Boeing plant manufactures 10 employers, the only group for my in other ways. precision hard-metal parts for the which comparison data is availOne clear impact is the pipeline company’s commercial aircraft, able. Summit was listed by the the industry has developed for including the new 787 Dreamliner. Department of Labor and Indusgraduates at Helena College.

Since acquiring the facility, try as one of the county’s top 20 Helena College CEO Daniel Boeing has added a handful of jobs private employers in 2011, though Bingham said many graduates and invested more than $11 million the agency doesn’t provide specific in the school’s computer-aided in equipment. rankings. manufacturing program go to Helena city manager Ron Alles In 2013 Boeing had the seventh work for Summit and now Boeing called Boeing-Helena a core busi- highest taxable valuation in the each year. ness that brings diversity to the city at $342,395.

The college has been growing area economy and injects money The city and county, meanthe program for several years, havinto the community. while, have invested in the indus- ing projected the need for the skill

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set, he said. A Boeing representative sits on the program’s advisory board, which the college uses to adjust curricula to fit industry trends.

“There is a high demand for skilled workers and employers compete for them,” Bingham said, noting that all CAM graduates are employed.

He hopes Pioneer will also seek Helena College graduates, and that both companies “will attract industries to complement their work.”

Both Mercer and Alles said the economic promise of investments

by Boeing and Pioneer is that they won’t be the last.

“To me, with two of these companies, there’s probably some good opportunity for spin-off businesses” in manufacturing, Mercer said.

Chris Shove, executive director for Montana Business Area Connection, said Helena has lacked an industrial base that creates chances for such spin offs. He said he hopes aeronautics can become an industrial cluster for the county.

Alles said he hopes the latest expansion is only “phase one.”

Boeing “isn’t a fly-by-night company,” he said.

“Aerospace is a nice little niche that we’re going to have in Helena.

The opportunity for that niche to grow is real,” he said.

Mercer said he is glad Helena can capture a piece of the industry, given that Montana doesn’t boast a lot of manufacturing.

And he’s very optimistic about the future.

“If I was going to project out in another 10 years, just doubling I don’t think is even adequate,” Mercer said. “The potential is only what you can imagine.”

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MAINTAINING MOMENTUM

A Montana Resources shovel loads a haul truck with copper ore mined from the Continental Pit on Butte’s Eastside.

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WALTER HINICK/Montana Standard

Butte’s challenge is to keep up the good work shown at summit

By MIKE SMITH Montana Standard

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UTTE — Butte put on a bright smile and big show for national and international business leaders — and some prominent politicians to boot — during the two-day Montana Economic Summit in September.

The city showed some of its renewed energy and labors to become again a place that wows, that draws in people and businesses and their money.

“People came out of that with a whole new respect for Butte and people were really thumping their chests and saying, ‘Yeah, I live here, I do business here, and you know, this is a damn good place to live and do business,’” said Jim Smitham, executive director of the Butte Local DeWALTER HINICK/Montana Standard velopment Corp.

The main reactor room at the Renewable Energy Corp.’s Butte plant.

Silicon is refined in these giant The challenge is to keep the momenreactors to nearly 100 percent purity. tum going for reshaping the city and its Uptown as a bigger draw in Montana and beyond.

After a half-century of declining population or stagnant growth, disinvestment and lingering problems with missing property owners and empty buildings in Uptown — public and private investments and initiatives have picked up and more are in the works.

NorthWestern Energy has committed to build a $23 million headquarters, a private investor is pledging fresh uses for the historic YMCA building, and plans are taking hold for a multilevel parking garage and an expanded taxing district to help grow Uptown.

On a broader scale, the Local Development Corp. — working with Montana Tech and Butte-Silver Bow County – is trying to position the area as one of 15 future innovative-manufacturing hubs that could draw millions of federal dollars and private investments.

Chief Executive Matt Vincent attended WALTER HINICK/Montana Standard a White House summit on the initiative Exterior of Renewable Energy Corp. Butte plant located at Silver Bow just west of town. earlier this month hoping to enhance Butte’s chances for becoming one of the hubs.

UPTOWN’S UPSIDES Meanwhile, developers and others are seriously exploring ways to finance and build a convention center in Uptown they say could not only be a crown jewel for Butte but all of Montana.

“Now is the time for Butte to really embrace all this,” said Peter Sorini, a neurosurgeon who is buying the YMCA building and is among a cadre of people behind the push for a convention center.

Vincent recently flew to Los Angeles to get insight for capitalizing on the recent investments and community efforts to bring new life, more people and more dollars to Uptown and forge stronger ties to Montana Tech.

Vincent joined urban design experts and leaders of seven other western U.S. cities for a two-day brainstorming conference at UCLA on ways to coordinate and expand economic investment in their communities.

Mohamed Sharif, a faculty member with UCLA’s Department of Architecture and Urban Design, visited Butte to get insights into Uptown for consideration at the session of the Mayor’s Institute on City Design.

Sharif had been to the eighth-floor of an Uptown building where new residents live, had visited with folks at the Headframe Spirits distillery about their commitment to Butte and talked with officials

WALTER HINICK/Montana Standard

A view looking east along Park Street into Uptown Butte from Montana Tech. The Uptown is being reshaped as a bigger draw in Montana and beyond. The challenge now is to keep the momentum going.

PROBLEMS PAST AND PRESENT The second half of the 20th century was not kind to a city that was once bustled with nearly 70,000 people and was the world’s largest producer of copper ore.

Mining slowed substantially, the population dropped by half before stabilizing in the 1990s, and decisions were made to steer future commercial, retail and residential development in newer, suburban parts of town.

“The decision dealt a hefty blow to historic Uptown,” said a case-study paper Vincent presented at the conference.

“Uptown Butte suffered even though some of the more significant structures were restored or stabilized for future development.”

Unemployment in Butte overall is around 5 percent, a level envied by many U.S. cities.

But the city continues to struggle with environmental problems tied to its mining past and the Berkeley Pit remains one of the nation’s largest hazardous cleanup sites and — ironically — one of Butte’s biggest tourist attractions.

There are still lots of vacant buildings and absentee property owners in Uptown that hamper improvement efforts by neighbors, developers and local government officials.

SEIZING THE POSITIVES But there are positives to point to of late.

Several buildings that were once vacant are now home to combinations of commercial, retail and residential use.

Butte-Silver Bow has a plan for a new Urban Renewal District and associated tax-increment financing district for Uptown that will capture new tax dollars from development and reinvest the money in the area.

The new headquarters planned for NorthWestern Energy is expected to be a key catalyst for the new district, and a new historic-preservation plan for Uptown is in the works.

The Historic Preservation Department is working with engineering students at Montana Tech on developing traffic flow studies and parking alternatives for UpWALTER HINICK/Montana Standard town. Vincent recently announced intenA Montana Resources shovel mining in the Butte open pit mine, 40 cubic yards a scoop. tions to bring angled parking — common in many cities — to Uptown. at Montana Tech. retail, residential and cultural offerings Vincent has organized and held two “I have been here for 24 hours and what and forging closer ties to Montana Tech. community meetings following the ecoI have seen and felt is unlike any other “Now we’re finally seeing some prinomic summit in September in hopes of place I have been,” Sharif said. “There is a vate-sector investment and it’s becoming keeping the momentum going and getting lot going on. It’s not something that is far a public-private partnership with the URA everyone on the same page. off. It’s actually happening.”

(Urban Revitalization Agency),” Vincent Smitham, at the second meeting held Vincent wants to create an urban said. “This is another piece that I think on Dec. 3, said the meetings were useful design “master plan” that maintains the we as a local government can bring to the and the optimism justified. historic fabric of Uptown while weaving table to help further increase some of those “We’re entering a whole new era as far in new investments and connections to its investments.” as I’m concerned,” he said.

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Sunday, December 22, 2013

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