Turning to high-tech

Manufacturing in Bozeman may seem invisible, but it’s very much alive

BOZEMAN – It’s a 5-degree day, the kind that makes the hot breath of industry hang overhead, but above the state’s second-largest manufacturing economy there is nary a wisp.

Oh it’s there, said Gary Bloomer, a man who has seen high-tech and light manufacturing in the Gallatin Valley go from economic sideshow to stabilizing force.

A patchwork quilt of high-tech and manufacturing jobs is keeping some 3,200 people employed in the community. There are cancer drug labs and gun part manufacturers, guitar makers and one of the world’s only fabricators of trailers large enough to haul the

8.5 million-pound dragline excavators digging coal in southeast Montana.

“There are 22 optical companies here,” said Bloomer, who has seen laser equipment manufacturers flourish in the past decade.

Bloomer works for TechRanch, a nonprofit business incubator that specializes in helping businesses with their first steps. Bridger Photonics, a company using laser technology to identify pollution sources, is a TechRanch alum. Bone graft manufacturer Bacterin is another. He sees tremendous potential for local high-tech and manufacturing. So do economists looking for Bozeman’s climb out of a deep recession.

The community shed thousands of jobs as its once red-hot construction industry took a polar plunge. Economist Patrick Barkey of the Bureau of Business and Economic Research at the University of Montana said Gallatin County may never return to its pre- recession building levels. He sees a full economic recovery for the county still three years away with non-construction businesses leading the way.

The bureau recently released data showing statewide construction employment still in a steady slide from 2008 to present, with more than a 10 percent drop in October when compared to the same month a year earlier.

High-tech manufacturing will play a big role in pulling Bozeman back up.

“I’m most optimistic about Gallatin County,” Barkey said. “Once the economy picks up, it’s going to be leading the way again.”

Manufacturing unemployment during the recession was modest in Gallatin County, Barkey said, with non-construction-related businesses mostly holding steady. That’s important because other counties like Missoula and Flathead not only lost jobs as timber-related manufacturing disappeared, but also lost factory equipment, which was sold off.

In Bozeman, there are high-tech companies and light industry manufacturers currently adding jobs. RightNow Technologies, an on-demand customer service software company, and Bozeman’s largest private employer with 450 workers, is hiring after reporting a 25 percent revenue increase for the third quarter compared to the same quarter a year earlier.

Backpack company Mystery Ranch is moving into a larger building and boosting its staff from 70 to 100.

Both companies have gone elsewhere to find growth. RightNow markets its customer service solution products to a global business market and is adapting to cloud computing, and new service demands teched-up customers.

Mystery Ranch has contracted with the military to provide backpacks that fit over armored plating and can withstand loads more than 100 pounds.

The backpack company has benefited from a federal Office of Technology Transition Partnership called MilTech, which connects businesses with military technology and contracts. MilTech partners with the Montana Manufacturing Extension Center and TechLink, another go-between focused on transferring government technology to private companies for licensing, research and development.

Those organizations have been key players in developing high-tech and manufacturing locally, but also statewide, Bloomer said. The other big factor has been Montana State University’s expansion of research over the last decade. In 2000, MSU’s research funding budget was $61 million, less than

$10 million ahead of its cross-state rival, the University of Montana.

MSU made research expansion a priority, aggressively pursuing government funding for biomedical, energy and environmental research. Research funding topped

$109 million in 2010. The University of Montana expanded its research funding to $67 million, according to the Bureau of Business and Economic Research.

Research at MSU has produced a steady drip of high-tech startups as researchers took what they developed on campus and went into private business, Bloomer said, though he would like to see more. There will have to be more to counter the economic blow of this recession.

The blow that clobbered Gallatin County’s economy came on the end of a framing hammer. The county was on an unprecedented growth streak in the last decade, picking up about 33,000 new residents from 2000 through 2009, as people with financial ties to other parts of the country relocated, with incomes in tow, to southwest Montana.

The building economy soared, peaking at $158 million in new construction in 2007, then soured. Building activity in Gallatin County was less than half its peak by 2009 and unemployment within the construction industry was devastating.

One year after hitting its peak, the construction industry shed 15 percent of its jobs in 2008, and then shed another 1,600 jobs, or 30 percent, in 2009, according to state Bureau of Labor and Statistics data.

By October of this year, the county’s overall seasonally unadjusted unemployment rate was 6.7 percent, but buried in the single digit jobless percentage is a construction unemployment rate still lodged in the 30s. Lost construction jobs in Gallatin County are now estimated at 2,600 since the recession’s start.

“Many industries, particularly construction and retail, have lost so many jobs that it will be difficult for workers to find jobs in their old occupation,” said Barbara Wagner, senior economist at the Department of Labor and Industry’s Research and Analysis Bureau.

Wagner puts the number of construction jobs lost statewide from 2007 to 2009 at 8,300, enough to account for 55 percent of the total number of Montana jobs lost during that period. And construction job losses continue this year, with Flathead and Gallatin counties taking the biggest hit. Most of the jobs lost belonged to laborers and not skilled carpenters, though even the best hands are taking a hit.

Wagner told legislators in November that as the state pulled out of the recession, it would probably add 100 new carpenter jobs each year. And that simply is not enough to accommodate the 2,000 skilled carpenters currently unemployed.

Those highly skilled workers are going to have to retrain for other professions, like nursing, in order to continue employment at comparable income, Wagner said.

However, economists also see Gallatin and Missoula counties as primed for growth again as the economy picks up. Both have benefited from having stable government employment from state universities, as well as state and federal government agencies.

In Bozeman, those entities make up 40 percent of Gallatin County’s economic base.

Reporter Tom Lutey can be reached at (406) 657-1288 or at tlutey@billingsgazette.com.