Montguy... how to transform MT's economy... (Billings, Missoula: real estate, 2013, insurance)

[pnwmdk]

This is a spillover from another thread. What to do to transform Montana's economy?

With the exception of the Bakken oil field, how do you go about bringing changes to Montana's many economies? With few exceptions, Montana's an "import-export" economy. MT produces various things it exports to other states - food commodities, minerals, energy, lumber. It imports machinery, technology, vehicles, and tourism. These things are relatively stable except for tourism. When the people who fund tourism dollars have a mild economic sniffle, the places dependent upon tourism have economic cardiac arrest. It's unstable, plain and simple.

So, while tourism brings in discretionary money, it isn't a solid economic foundation.

I'm curious as to what you think is not just feasible, but could also be beneficial?

I noticed you referred to high tech industry. To what, precisely, do you refer?

[Montguy]

Here's the thing: You cannot expect me to answer these kinds of loaded questions realistically without inclusion of Bakken development, as the state's Eastern oil fields, in addition to our abundance of coal deposits, are currently the greatest economic assets we have, more so than wheat, timber or livestock can ever be. Large-scale development of these resources can provide Montanans with occupations that offer the highest wages and salaries in the nation, almost bar none--engineering, high-paying manual labor/drilling, excavating, research, IT, etc., etc., etc., including the ways in which this activity would spill over to the timber industries in terms of increased demand for contracting and construction for commercial and residential purposes.

So let's pretend that the communities in Montana's portion of the Bakken area are now in a position to increase oil productivity--they've attracted more industrial interest--followed by the inevitable increase in population and wages, along with shortages in housing and other amenities. Here we now have an even higher demand for infrastructure expansions, be it in terms of roads, maybe new bridges, schools, housing, retail, and yes, a local need for other industrial jobs related to high-tech equipment manufacturing--we're talking about a boom here, and one that could, I wonder, actually reduce the quantity of lumber that we're able to export (kind of a downside, but at least the local demand would remain strong).

Most of what you've read above hardly touches on the possibilities with coal extraction and development of clean technologies to lessen the (already overblown) environmental impacts of such geological activity. This is a practice, however, with a very uncertain future and under a way more heavy-handed assault from outside of the state and within. The best way to even approach expanding this industry must be preceded at least by a massive transfer of Montana's federally controlled public lands to the state itself, right in Utah's footsteps thus far (refer to their Transfer of Public Lands Act of 2012). This could help tremendously with oil production as well.

Understand that I'm aware of what kind of fight that would be, but what, really, do we have to lose for trying (well, except for money, but humor me)? I was pleased to know that public land transfer was discussed at fairly great length during the 2013 legislative session and was even endorsed wholesale by the state's Republican Party a month ago. It's nice to see these idiots finally starting somewhere...

So, back to high-tech.

For a Montana example of how, say, a software engineering company can successfully establish itself here, look no further than RightNow Technologies. This was a Bozeman-based company that was acquired by Oracle a few years ago. It's still there, and it's still, as far as I know, paying its employees wages far higher than anything one could find outside of work directly related to natural resources. This is possible because in this kind of white-collar sector of high-tech, the company's foremost expenditure, without exception, is wages. Because RightNow didn't pay its employees below average compared to their worth, these people live, work and pay taxes in Montana. What else do you need to know?

To think that this company--established only in 1997--became worth 1.5 billion dollars by 2011 while headquartered in Montana (but incorporated in Delaware, mind you) is pretty amazing, no? I'd simply like to see more examples of this, and with that being said, we have to ask how this kind of success can be replicated and why, for the most part, it hasn't been.

There are ways for it to happen here, but apparently not as often as it should; unlike hurdles concerning natural resource development, we can't point our fingers at the Feds for half of the blame (emphasis on "half"), we have to look at what Montana is doing wrong, and, more interestingly, who and what is preventing it from being corrected (For example, the central reason identified by MT economists for the reluctance of businesses to establish/relocate here is almost always the cost of worker's comp insurance, not geography. Why isn't this being addressed?).

So, any questions?

There's plenty more I should've gotten into, not least of all the issue of Montana's imports and exports and the notable disparity between the two, but I'm leaving it right here for now. If you'd like a better focus on the more white-collar-oriented tech companies that Montana needs (i.e. Bozeman, Missoula, Billings, Helena, Great Falls), along with those that already exist in very early start-up phases in several communities, I guess I could do that, too...

[pnwmdk]

Originally Posted by Montguy

Here's the thing: You cannot expect me to answer these kinds of loaded questions realistically without inclusion of Bakken development, as the state's Eastern oil fields, in addition to our abundance of coal deposits, are currently the greatest economic assets we have, more so than wheat, timber or livestock can ever be. Large-scale development of these resources can provide Montanans with occupations that offer the highest wages and salaries in the nation, almost bar none--engineering, high-paying manual labor/drilling, excavating, research, IT, etc., etc., etc., including the ways in which this activity would spill over to the timber industries in terms of increased demand for contracting and construction for commercial and residential purposes.

You know coal isn't going to happen. There's more money than the federal government has allied to prevent coal development. While there's SOME coal export, this country has simply forbidden the production of anything that will improve the economy ( I say with only a hint of "tongue in cheek").

So let's pretend that the communities in Montana's portion of the Bakken area are now in a position to increase oil productivity--they've attracted more industrial interest--followed by the inevitable increase in population and wages, along with shortages in housing and other amenities. Here we now have an even higher demand for infrastructure expansions, be it in terms of roads, maybe new bridges, schools, housing, retail, and yes, a local need for other industrial jobs related to high-tech equipment manufacturing--we're talking about a boom here, and one that could, I wonder, actually reduce the quantity of lumber that we're able to export (kind of a downside, but at least the local demand would remain strong).

Of course. But it is local.

Most of what you've read above hardly touches on the possibilities with coal extraction and development of clean technologies to lessen the (already overblown) environmental impacts of such geological activity. This is a practice, however, with a very uncertain future and under a way more heavy-handed assault from outside of the state and within. The best way to even approach expanding this industry must be preceded at least by a massive transfer of Montana's federally controlled public lands to the state itself, right in Utah's footsteps thus far (refer to their Transfer of Public Lands Act of 2012). This could help tremendously with oil production as well.

That won't happen without an armed overthrow of the federal government. So... While a great idea, it's just a dream.

Understand that I'm aware of what kind of fight that would be, but what, really, do we have to lose for trying (well, except for money, but humor me)? I was pleased to know that public land transfer was discussed at fairly great length during the 2013 legislative session and was even endorsed wholesale by the state's Republican Party a month ago. It's nice to see these idiots finally starting somewhere...

Western states, other than the Californicators, have never been adverse to the idea of gaining control over their lands, but Washington DC is firmly in the grip of the eastern "intellectuals" and it would require, as I said, armed overthrow to get around them. These things are sensible, in and of themselves, but any clear eyed look at our current political climate reveals they're non-starters, in terms of actually doing anything.

So, back to high-tech.

For a Montana example of how, say, a software engineering company can successfully establish itself here, look no further than RightNow Technologies. This was a Bozeman-based company that was acquired by Oracle a few years ago. It's still there, and it's still, as far as I know, paying its employees wages far higher than anything one could find outside of work directly related to natural resources. This is possible because in this kind of white-collar sector of high-tech, the company's foremost expenditure, without exception, is wages. Because RightNow didn't pay its employees below average compared to their worth, these people live, work and pay taxes in Montana. What else do you need to know?

I'm aware of software companies. I'm also keenly aware that geography is absolutely meaningless to this kind of work and places like India are underpricing us badly, and are not that far behind in terms of ability. I would not hang my hat on writing code, these days. 15 years ago, it was incredibly lucrative. Today, very few are finding it so, they tend to be niche markets served by small to middle-sized companies.

To think that this company--established only in 1997--became worth 1.5 billion dollars by 2011 while headquartered in Montana (but incorporated in Delaware, mind you) is pretty amazing, no? I'd simply like to see more examples of this, and with that being said, we have to ask how this kind of success can be replicated and why, for the most part, it hasn't been.

I just told you why in the last reply. Nobody's investing in new software startups, as places like India are very agressively pursuing our markets.

There are ways for it to happen here, but apparently not as often as it should; unlike hurdles concerning natural resource development, we can't point our fingers at the Feds for half of the blame (emphasis on "half"), we have to look at what Montana is doing wrong, and, more interestingly, who and what is preventing it from being corrected (For example, the central reason identified by MT economists for the reluctance of businesses to establish/relocate here is almost always the cost of worker's comp insurance, not geography. Why isn't this being addressed?).

Again, you have the best negative government interventions OPM can buy. But, I would say it's not at all impossible to influence wc insurance rates. Just simply opening up the state to allow competition from any insurer would do wonders.

So, any questions?

You haven't really answered mine.

There's plenty more I should've gotten into, not least of all the issue of Montana's imports and exports and the notable disparity between the two, but I'm leaving it right here for now. If you'd like a better focus on the more white-collar-oriented tech companies that Montana needs (i.e. Bozeman, Missoula, Billings, Helena, Great Falls), along with those that already exist in very early start-up phases in several communities, I guess I could do that, too...

My question was meant to elicit your mental image of what "transformation" means. You did not in any way address the fundamental reasons why organic economic growth isn't happening in spades. If you'd like to see what a 'fundamental transformation" looks like, when you change a local economy from service and commodity production to white collar, look at Jackson, WY.

It basically froze into place almost everyone NOT white collar in Jackson, because housing prices went ballistic missile altitude, the service jobs that they generate don't pay much better than the ranchhand and tourism work it has somewhat displaced. The personal wealth of those with it is their own and they do not risk it on local ventures, they don't need or want to.

A similar transformation is occurring where I left in Oregon, where real estate prices jumped 50 to 500% in 10 years. Wages went nowhere and unemployment is very high and organic business growth is almost non-existent. Yet, hundreds of millions of dollars were invested in moneymaking industries, the profit the owners hundreds of more millions, and there are scores of them.

Yet, the places selling building supplies and the contractors that build houses... are going bankrupt.

[flyingcat2k]

A couple if things I can suggest.

1) Clearly define the "Right to a clean environment." The right to privacy in Montana is clearly defined in the State Constitution. The clean environment right opens the door for any and all NIMBY, OMG WITH, and out-of-state do-gooders to kill projects with over litigious actions. Clearly defining what this is applicable to and critically, how many people have to be impacted or effected, would create a more positive environment for developing natural resources. Right now, any development can face 3-4 actions upon announcement.

2) Close the "door" to large blocks of land being placed in land conservation easements that are blocked to future development or hunting. These lessen the property tax base for the state at the same time as prohibiting things that can generate revenue like hunting licenses or improving property bordering or near the land. This kills rural development and does nothing but create an economic black hole in the county and state revenue.

3) Mandate or at least make provisions for a Eastern Montanan counties in the Bakken area to be given a position of the oil revenue off the top. These counties are under duress and do not have adequate infrastructure to meet current populations needs. The old system of Billings and Great Falls Reps and Senators helping out with rural needs in the East against the "urbanites" in the West. It no longer works as Great Falls is a shell and the West now outvotes the East 2:1. Thus, the vast oil wealth of Montana is stuck propping up an Olive Garden in Bozeman as "economic development."

4) Make US 2 a semi-controlled 4-lane highway like it is in ND and MN. MT DOT has refused to do this for years and it restricts trade on the northern half of the state. Most truck lines mandate using I-90 through MT even if US 2 would be shorter, even if they just go to Great Falls and turn south rather than use some of the passes to go directly to Missoula.

[Redraven]

Montguy, you forgot Semi-Tool in Kalispell, and the aircraft parts company in Helena (now part of the Boeing conglomerate).
You can forget about the timber industry. Out of all the lumber mills that used to be in Kalispell, Columbia Falls, Martin City, and Coram, I think there are about three left.
There is a stud mill in Evergreen (if it is still going).
There is Stoltze in Half Moon.
Plum Creek has some operations going in CF, but from what I read it is only the fiber-board plant.
The enviros killed logging in the Flathead National Forest!

[pnwmdk]

Originally Posted by Redraven

Montguy, you forgot Semi-Tool in Kalispell, and the aircraft parts company in Helena (now part of the Boeing conglomerate).
You can forget about the timber industry. Out of all the lumber mills that used to be in Kalispell, Columbia Falls, Martin City, and Coram, I think there are about three left.
There is a stud mill in Evergreen (if it is still going).
There is Stoltze in Half Moon.
Plum Creek has some operations going in CF, but from what I read it is only the fiber-board plant.
The enviros killed logging in the Flathead National Forest!

That's because cutting trees in Canada and handing our money to the Canadians is perfectly fine with the enviro-wackos. It isn't their job, so they don't care.