Reinvestingin Montanas Economic Future Draft

Reinvesting in Montana’s Economic Future

Presentation Date Location

A Brief Look Back 1999 Session, Rep. Doug Mood sponsored HB260 entitled

“Encourage Economic Development via Investment in Research/Commercialization Projects.”

The bill was a product of Governor Racicot’s Jobs & Income initiative and the Vision 2005 (Agricultural) initiative. The bill was passed into law but used a coal tax diversion for funding. The funding source was ruled unconstitutional by the Montana Supreme Court, leaving the programs unfunded.

A special session was called by Governor Racicot in May of 2000 to, among other things, fund the programs through a constitutional source.

Then Rep.Karl Ohs sponsored HB1 during the 2000 Special Session. It was a bill entitled “Legislation appropriating funds from the General Fund for programs established through the good-faith efforts of the Fifty-Sixth Montana Legislature in HB260.”

Programs Initiated or Enhanced as a Result:

Thanks to the united efforts of great leadership and a large coalition of partners, the following programs were initiated or enhanced:

Montana Growth Through Agriculture  Montana Cooperative Development Center  Montana Board of Research and Commercialization Technology  Small Business Development Centers  Montana Technology Innovation Partnership (formerly SBIR)  Certified Regional Development Corporations (previously Certified

Communities program)  Montana Manufacturing Extension Center  Trade and International Relations Bureau 

Why the 2010 Coalition has Formed: The 1999 session sun-setted the programs after 5 years. In the 2005

session, that sunset was moved to 10 years, meaning that the programs now are schedule to sunset in 2010, necessitating their renewal in the 2009 session.

Prior to inclusion in this report, each program went through a review by a subcommittee of Montana Economic Developers Association (MEDA) to evaluate the involved economic development programs determine if the programs should be recommended for reauthorized what funding levels should be and what modifications, if any, should be made for program improvement. 

A report titled “Reinvesting in Montana’s Economoic Future” has been assembled as a result of the committee’s study and demonstrates each program’s strengths, purpose and success.

Once again a coalition has formed to insure that these proven and successful endeavors may continue far beyond their sunset of 2010!

Montana Growth Through Agriculture Program (GTA)

The Growth Through Agriculture

program and the Montana

Agriculture Development Council

were established by the Montana Legislature to

strengthen and diversify Montana's agricultural

industry through private-public partnerships that

assist in the development of new agricultural

products and processes.

Montana Growth Through Agriculture Program (GTA) Current Funding: $1,250,000 Projects Funded: 355 (40% since 2004) Total Awards Given: $8,350,976 Total Matching Funds: $51,880,524 Per Dollar Return: $6.21 generated Total Financial Benefit: $101,302,972 Total Jobs Created/Retained: 588

GTA SUCCESS STORY Assisted: Montana Specialty Mills, LLC (MSM)

Description of Need: MSM was forced to relocate its operations due to circumstances beyond it control. Faced with relocation, the company considered many other sites, including some that were out-of-state. The company needed financial assistance to perform a feasibility study aimed at determining the best location for the operation in Montana.

Assistance Provided:  $46,500 for consultant services

Outcome:   The study recommended locating a new plant in Great Falls with double MSM’s

current capacity; The study showed that the new plant’s direct economic impact will be $13.35 million

(currently $6.68 million); Indirect impacts will include retained payroll, plant construction and additional

employment. Dollars leveraged: GTA funding was matched by $52,900 in private funds. MSM

expects to spend approximately $4.5 million for the relocation and expansion of its operation.

Certified Regional Development Corporations (CRDC)CRDC’s are responsible for

helping local officials, communities and businesses “assess, plan, and facilitate

action” within their regions. CRDC’s are required to have the

support of all counties and a majority of the incorporated cities and towns in their region to obtain and maintain certification. CRDC’s receive regional capacity building

grants from the Department of Commerce on an annual basis.

Certified Regional Development Corporations (CRDC)

Current Funding: $425,000 per year Funds Leveraged: $19.3 million Jobs Created/Retained: 730 Businesses Assisted: 917 Loans Provided: 103 Total Loan Value: $8.7 million

INSERT YOUR CRDC SUCCESS STORY HERE (suggested outline below)

Name of CRDC Business/Agency Assisted Description of Need Assistance provided Outcome Dollars leveraged

Montana Technology Innovation Partnership (MTIP)

The Montana Technology Innovation Partnership (MTIP) is a Montana Department of Commerce initiative created to promote technology commercialization as a viable economic development strategy for the State of Montana. Our mission is to help build the short-term benefits of technology research and development into the long-term rewards of economic development.

Montana Technology Innovation Partnership (MTIP) Current Funding: $50,000 per year Funds Leveraged: $500,000 per year 2006 Awards: 11 companies New Companies Launched: 20 Annual Dollar Awards: $10-15 million Total Business Assisted: 350

Montana Technology Innovation Partnership (MTIP)

Assisted: Lee & Maggie Arbuckle, Billings, MT developers of the Native Seedster, a new technology for harvesting wild native grass seeds.

Description of Need: In order to move forward with their research and commercialization development, they needed early-stage seed capital, assurances their intellectual property (IP) was well protected, and a pre-commercialization strategic plan to launch their product into the marketplace.

Assistance Provided:  IP development/protection, proposal development/review to win

R & D grants, commercialization planning, and governmental accounting assistance.

Outcome:  More than a $1 million dollars in grants to fund early-stage research and development efforts

were secured. A new generation of harvesting equipment called the Native Seedster was developed,

commercialized and manufactured in Montana Research efforts will be expanded to determine if the harvesting equipment can be used to harvest

camolina seeds. Dollars leveraged: No-cost technical assistance provided by the MTIP Program and other resource

providers, combined with the company’s personal investment of funds, has helped build an agriculture-based business that will net thousands of dollars in annual sale revenues for Montana’s economy.

Trade and International Relations Bureau

The Bureau provides information

and technical and marketing

assistance to help Montanans pursue business opportunities, both domestically and worldwide. Export trade and marketing specialists provide consultation and training for companies to successfully compete in new markets.

Trade and International Relations Bureau

Current funding: $300,000 per year 2000 Total State Exports: $796 million 2007 Total State Exports: $1.7 billion Percent of Increase: 21.3% Average Counseling Sessions: 960 Average Foreign Visits: 15

Trade and International Relations Bureau Success Story

Assisted: Montana Natural Pork Producers Description of Need: Development of export markets for Montana pork Assistance Provided:  The Montana Asia Pacific Trade Office has worked extensively with Mayfull

Foods Corporation to promote the sales of Montana natural pork. Mayfull is the Taiwan importer for Independent Food Corp. USA based in Idaho, which sources 80% of its natural pork production from Montana producers. The Montana Trade Office has provided Mayfull Foods Corp. with advertising materials and industry tradeshow assistance to promote the image of Montana as a quality source of natural pork. In April 2008 the Montana Asia Pacific Trade Representative joined Independent Food Corp. representatives in hosting a tour of Montana pork production facilities with a major importer from Hong Kong.

Outcome: The Hong Kong importer owns and operates 39 steak house restaurants in Hong Kong. The importer was impressed by the Montana producers’ commitment to quality and natural pork production protocols and has begun importing Montana natural pork. The importer also offered to feature Montana natural pork and tourism information on his restaurants’ table placemats. There will be 400,000 placemats produced, which equates to one-month of the chain restaurants’ customers, at no cost to the State of Montana. Additionally, an important working relationship has been established with the Hong Kong importer to explore the potential for sourcing Montana beef for the restaurant chain.

Dollars leveraged: Free direct advertising of Montana agriculture and tourism to 400,000 consumers in Hong Kong. The Idaho company is projecting that the future growth in their natural pork production will be from Montana and is currently exploring options for constructing a pork processing facility in Montana.

Montana Small Business Development Centers (SBDCs)

The Montana Small Business

Development Centers (SBDCs) focus on the creation, retention and expansion of small businesses. Each year, the Montana SBDC network counsels more than 1,500 entrepreneurs and existing business owners through direct assistance and referral.

Montana Small Business Development Centers (SBDCs)

Current Funding: $125,000 per year Leveraged Return: $5 for every $1 Total Financing Obtained: $64 million Clients Counseled/Trained: 4500 per year Jobs Created/Retained: 414/434 per year Counseling Hours Provided: 6,000/year

SBDC SUCCESS STORY

Assisted: Betty’s Devine (A Missoula retail operation focuses on some of the latest fashions to be found anywhere in Montana.)

Description of Need: Aimee McQuilkin learned her trade working in the garment retail industry, but was frustrated by not being able to use the full range of her knowledge while being employed by someone else.

Assistance Provided:  Not only was Aimee assisted by Anne Iverson of the Missoula SBDC with technical advice on a business plan and cash flow templates, but, in true teamwork fashion, Lorene Hintz from the SBDC in Wolf Point also reviewed Aimee’s business plan. Hintz used to own a women’s clothing store on Main Street in Wolf Point, and was able to provide some valuable insight.

Outcome: Aimee was able to follow in the footsteps of her mother who owned a retail-clothing store in Bend, Oregon during Aimee’s childhood. Betty’s Divine is well on its way to being a fixture on Higgins Avenue in downtown Missoula. With the bright paint job on the exterior of the store and the funky, fashion-forward clothing on the inside, Betty’s Divine and Aimee McQuilkin are generating their own energy.

Montana Manufacturing Extension Center (MMEC)

   The Montana Manufacturing Extension Center is a statewide

manufacturing outreach & assistance center staffed by full-time professionals with degrees in engineering and extensive experience in manufacturing and business in a variety of industries. MMEC has a proven record of positive impact for client firms and the economy.

Montana Manufacturing Extension Center (MMEC) Current Funding: $200,000 per year Clients Served: 126 Counties Served: 29 Jobs Created/Retained: 544 Increased Sales: $86,334,400 Client Investment: $12,830,700 Client Satisfaction: 4.72/5

MMEC Success Story Assisted: Diversified Plastics, Inc. (family-owned, 46 employees) Description of Need: More space & efficiency required for new equipment to

reach new market. Resolve a persistent variation in monthly raw materials inventory counts vs. computerized inventory tracking data that made it difficult to know if business was thriving.

Assistance Provided: Helped implement Lean Manufacturing techniques, created new plant layout and solved inventory variance

Outcome:  $40,000 (10%) reduction in inventory, freeing up cash for investment in

other areas of the business; $10,200 cost savings by eliminating expedited freight charges and wasted

staff time searching for materials; $675,000 invested in new equipment; 2 new employees hired.

Dollars leveraged: Company, one of 575 MMEC clients, invested $12,000 in successful completion of project with MMEC.

Montana Cooperative Development Center (MCDC)

The Montana Cooperative Development Center (MCDC) works with new and existing co-ops and other groups to evaluate co-op business models and strategies to meet their objectives. MCDC is a nonprofit corporation with financial assistance from state and federal sources, which allows MCDC to offer services at little or no cost to project groups.

Montana Cooperative Development Center (MCDC) Current Funding: $65,000 per year New Cooperatives Formed: 25 Cooperatives Pending: 13 Jobs Created/Retained: 296 Total Payroll Benefit: $8,335,807 Grants Provided: $20,000 Funds Leveraged: $3.5 million

Montana Cooperative Development Center (MCDC) Success Story Assisted: Since its inception in 2000, MCDC has assisted 89 entities

with Cooperative Education and Project Management Description of Need: Directed and managed 33 Feasibility Studies and

36 Business and Marketing Plans Assistance Provided: 

Assisted 12 entities with Applied Research Provided Legal Assistance to 27 projects Provided Financing for 28 projects Provided various training opportunities for 44 projects

Outcome:  The formation of 25 Cooperatives First year impacts over $8.3 million wages/ $113 million to

economic sector (construction, utilities, etc.) Dollars leveraged:  State Dollars ($455,000) Leveraged $3,668,955

Montana Board of Research and Commercialization Technology

The Montana Board of Research and Commercialization Technology was created to provide a predictable and stable source of funding for research and commercialization projects to be conducted at research and commercialization centers in Montana. The purpose of the program is to encourage economic development through investment in research projects that have a clear path to commercialization.

Montana Board of Research and Commercialization Technology

Current Funding: $3,650,000 per year Projects Funded: 127 Initial Project Funding: $30 million Leveraged Funding: $36 million Follow-on New Funding: $171 million

Montana Board of Research and Commercialization Technology Success Story

Assisted: Sustainable Systems, LLC, Missoula and Culbertson Description of Need: To pursue the development of a versatile and proprietary

biodegradable hydraulic fluid and novel vegetable oil-based penetrating lubricants and wood treatments.

Assistance Provided:  MBRCT provided grant funds in the amount of $100,000 for this project.

Outcome: A biobased hydraulic fluid using a high oleic vegetable oil base stock was formulated and tested; a patent application has been filed and a marketing plan initiated; a biobased penetrating wood coating was created from the natural oils of Montana grown oilseeds; the name EcoSeal was trademarked; the product is available for sale at home improvement stores.

Dollars leveraged: $5.3 million in private equity and bank loans. This project is an example of a small Montana business that is using MBRCT

funds to develop environmentally safe products while creating value-added products from Montana grown and processed oilseeds.

Join us in Reinvesting In Montana's Economic Future!

Support renewed investment in proven programs for Montana’s future.

Realize the power of each program to leverage additional dollars and help the private sector to create jobs.

Share in the continued growth of Montana’s economy.

Strengthen multiple economic sectors including local government, higher education, economic development, chambers of commerce, agriculture, cooperatives and the private sector.

Reinvesting in Montana’s Economic Future

Thank Youfrom the

2010 Coalition