Bozeman Economy Is Back
Gallatin County Leads in Economic Growth
09/09/13
BY QUINCY ORHAI
Gallatin County clearly leads the state in economic growth. At the 8th Annual Economic Outlook Seminar by the Montana Chamber of Commerce, Dr. Paul Polzin predicted “Gallatin County's growth will be the highest in Montana in coming years.”
Mostly the result of existing local businesses expanding product lines and sales volume, the current economic expansion promises more resident stability than the previous decade’s high growth rates that were fueled by the ill-fated housing bubble.
Partially the result of new job creation, as well as retirement and investment funds moving into Gallatin and Park counties, the building industry has taken off again. Six years ago, the construction boom was the major driving force of the local economic growth cycle. Now, though, after weathering the Great Recession, new home construction in Gallatin County seems to be driven by the growing technology and manufact-uring sectors.
Tom Simkins, owner of Bozeman’s building materials supplier Simkins-Hallins, observed that new housing construction material sales have picked up in recent months, and the pattern is similar to the boom times of the last decade, and that new home construction is filling in existing subdivisions.
“Sooner or later more property will be subdivided to make room for continuing growth. There are new subdivisions being planned now to meet local needs in a couple of years,” Simkins told the Pioneer.
Similarly, a Rocky Mountain Contractors utility installation foreman, at a site in Bozeman’s Oak Springs subdivision, where houses are now under construction, told us “development here has picked up to near the pace of 2007.”
In Park County, building permits are generally not required, but new housing starts can be tracked by new septic permit applications. The years 2010 and 2011 saw less than half the housing starts of 2007 in Park County. Craig Caes of the Park County Environmental Health Department reports that new septic permit applications have increased since last year, but still have not yet caught up to the housing boom record numbers that peaked in 2007.
According to the Bureau of Business and Economic Research at the University of Montana, Bozeman’s economy will outpace Billings in 2013, with 5 percent growth this year. The high tech sector, epitomized by the innovative customer service software company RightNow Technologies, has become increasingly important in the former cow-college city of Bozeman. The news-making 2011 acquisition of RightNow Technologies by industry giant Oracle for $1.5 billion shows the huge increase locally of the value of information technology. Started in 1997 with $50,000 by Greg Gianforte, the founder and former chief executive officer of RightNow, the business has become the largest private employer in Montana, with over 550 workers, and has provided inspiration for numerous spinoffs.
Another innovative company, privately held Zoot Enterprises, which started in Bozeman in 1990, regularly provides high speed processing of hundreds of millions of transactions a year for services such as credit cards, home mortgages, and underwriting. Founded by Billings native Chris Nelson, the majority of Zoot's employees are graduates of Montana universities. Like most of the high tech companies springing up in the Gallatin Valley, Zoot could, in fact, be located literally anywhere. So why Bozeman?
“You can’t eat the scenery” has been a complaint heard for decades from underpaid service workers in the Gallatin Valley, many holding down two or three low-paying part time jobs to make ends meet (and even worse is the difficulty of actually finding time to hike or ski with such a work schedule).
Times, though, are changing. The low wage jobs are still here, but their services increasingly cater to people with higher incomes and whose occupations are indications of investment – entrepreneurs, engineers, consultants and technicians.
Ray Rasker, cofounder of Headwaters Economics, a socioeconomic-environmental think tank in Bozeman, has made understanding the New West economy his life work. His analysis indicates that Bozeman and a handful of other communities in the West are thriving primarily because of being surrounded by protected public lands, with state and local regulations putting certain kinds of development off limits. A recent study by the Manhattan Institute for Policy Research (that’s Manhattan, New York) identified the Intermountain West as having more than three times the national average rate of job growth over the past 10 years, at 14.7 percent.
Montana State University, what’s more, has pulled in more than $100 million annually in research grants and contracts for two years running now, related to technology development in fields involving nanotechnology for use in artificial intelligence, medicine, information storage, Defense Department research, laser optics design, manufacturing, and satellite communications.
In the last twelve years, TechLink, the Defense Department’s technology transfer intermediary at MSU, has facilitated technology sharing agreements worth an esti-mated $3 billion in sales of products that include advanced materials, nanotechnology, aerospace, electronics, environmental technology, medical and biotechnology, pho-tonics and sensors, and software and information technologies.
Other industries, though, besides tech, are choosing Gallatin County as their home. Outdoor sports and equipment design businesses turning out product around Bozeman include Black Hawk’s gear for military and law enforcement agencies, Mystery Ranch’s backpacks, Crosstac’s competition shooting gear, Twenty6 and Strong Frame’s custom bicycles, and Simms Fishing Products’ Made In The USA waders, to name a few.
All of these enterprises generate spin-off effects, often creating three additional jobs in the local economy for every directly paid employee, and STEM occupations (science, technology, engineering, and math) typically earn 17 to 27 percent more than other workers, according to the recent report Technology Works: Patterns of High Technology Employment and Wages in the United States, commissioned by the educational coalition Engine Advocacy. These kinds of jobs and positions are the phenomenal wealth and growth drivers of the Gallatin County economy.
High-tech and high-touch Bozeman is also increasingly developing a reputation as a world-class outdoor-sports community. In 2003, Outside magazine ranked Montana State University fifth in its forty best places in North America to learn, live, work, and play.
Ten years later, Bozeman continues to hold that fifth place spot. The Yellowstone, Gallatin, and Madison rivers powerfully appeal to water adventurers seeking trout fishing, rafting, and kayaking just outside town. The four Rocky Mountain ranges surrounding the Gallatin Valley magnetically attract hikers, bikers, rock climbers, big game hunters, skiers, and other winter recreation enthusiasts. These natural resources are prime perks for many highly skilled workers whose efforts can make or break a company in the fast paced information and high technology industries.
Much has changed recently in the way things work here in the New West economy. Montana, in particular, strikes many as a place to work, play, and invest.
High speed internet is now available in many formats and in most locations in Gallatin and Park counties. Smart phones have brought the near constant availability of powerful search engines, instantaneous written and spoken communications, and mobile communications as never before. With such wired workers, and jobs fueled by creative entrepreneurial employers, comes a new vocational phenomenon—anglers and hikers can be overheard conferring with business or work colleagues, while simultaneously pursuing their avocations in the wilderness.
With unemployment at 7.4 percent nationally (not including those not counted among the unemploy-ed, who put the figure significantly higher), the Montana Department of Labor and Industry reports statewide unemployment rates fell to 5.3 percent in July, down 0.1 percentage points from June, over two percentage points below the national average.
“Montana’s unemployment rate is continuing its downward trend, as employers continue to feel more confident in our economy”, said Labor Commissioner Pam Bucy. “Despite job growth being slower than last year,” she said, “our [statewide] economy is gaining ground and getting stronger every day.”
Gallatin County, and Bozeman in particular, more than any other area in the state, is a driving force helping to make that happen.
