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 

RESULTS FROM THE 2009 SESSION

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 were scheduled to sunset in 2010, necessitating their renewal in the 2009 session.

During the 2009 Legislature House Bill 123, entitled Fund Statutory Economic Development Programs, was introduced to extend the sunset on the eight economic development programs from June 30, 2010 to June 30, 2019.

House Bill 123 as passed by the Legislature provides level funding for all of the economic development programs from June 30, 2010 to June 30, 2019 except for the following two programs.

The Growth Through Agriculture Program is reduced from $1.25 million per year to $625,000 per year for the period from July 1, 2010 until June 30, 2013. On July 1, 2013 the funding will go back up to $1.25 million per year through June 30, 2019.

The Research & Commercialization Program is reduced from $3.65 million per year to $1.275 million per year for the period from July 1, 2010 until June 30, 2013. On July 1, 2013 the funding will go back up to $3.65 million per year through June 30, 2019.

THE PURPOSE OF THIS REPORT

The 2019 Economic Development Programs continue to be key to the success of Montana’s economic development. This is especially true during these challenging economic times.

Prior to inclusion in this report, each program went through a review by a subcommittee of Montana Economic Developers Association (MEDA) which was intended to… Evaluate the effectiveness of these economic development

programs Determine what modifications, if any, should be made for

program improvement.  This report, entitled “Reinvesting in Montana’s Economic

Future”, has been assembled as a result of the committee’s study and demonstrates each program’s strengths, purpose and success.

Montana Growth Through Agriculture Program (GTA)

The Growth Through Agriculture program and the Montana Agriculture Development Council were established by the Montana Legislature tostrengthen and diversify Montana's agricultural industry through private-public partnerships

that assist in the development of new agricultural products and processes, creating new jobs and

expanding small ag-business opportunities.

Montana Growth Through Agriculture Program (GTA)

Current Funding: $625,000 Projects Funded: 456* Total Value of Awards Given:

$10,101,107.54 Total Match by Non-State Funds:

$197,397,053.79 For every dollar provided by the State:

$6.21* generated* This is an estimate. Final figures will be provided the end of

November, 2010.

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: $22.4 million Jobs Created/Retained: 1,445 Businesses Assisted: 1,271 Loans Provided: 157 Total Loan Value: $14.5 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) Figures as of May, 2010

Current Funding: $50,000 per year Montana Awards Received 2000-2009:

326 SBIR Funds to Montana Companies 2000-

2009: $85,359,799 Annual SBIR Average Awards made to

Montana Companies: $8,535,979

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.

Office of Trade and International RelationsStatistics from 2000-2010

Current funding: $300,000 per year Export Sales in 2009: $1.5billion Total Export Sales since 2000: $11.2billion Export Sales Average Increase per year:

4% Businesses Directly Assisted per year: 275 Made in Montana participants as of May

2010: 1,500

Trade and International Relations Bureau Success Story

Assisted: Montana Tourism & Montana Natural Pork Producers Description of Need: Promotion of international tourism in conjunction with developing export markets for

Montana natural pork. International tourism is considered a “reverse-export” with foreign money being spent in-state.

Assistance Provided: The Montana Asia Pacific Trade Office, located in the Taipei World Trade Center in Taiwan, works to promote both Montana as a premier tourism destination and the export of Montana value-added products. With both of those goals in mind the trade office arranged for renowned photographer Pei-hong Hsu to visit Montana to conduct photo shoots of our spectacular scenery. The result was that in 2009, the office worked with the photographer and a major publishing company to print a Chinese language Montana photo journal with the title of “Look up at the 180 degree sky.” The trade office organized a media luncheon to release the travel photo journal at which a Montana natural pork menu was featured. The Trade Office has worked extensively with Independent Meat Corp. USA to promote the sales of Montana natural pork in Asia. By pairing the two projects the office reinforced the idea of Montana as a natural tourism destination and that Montana pork is delicious and safe.

Pei-hong Hsu’s photos were also featured at a 2010 “True Love meets True Colors” – Montana photo exhibition in Taipei, as well as the trade office’s Asia promotions of the Glacier National Park Centennial celebration in 2010.

Outcome: A luncheon promoting the photo journal and targeted for the media was held at a popular upscale Taipei restaurant. All major tourism related media outlets carried the story as well as photographs of the event. The restaurant has continued to offer the Montana natural pork entrée as a regular menu item. The Office continues to assist Independent Meat to enter new markets and they are currently exporting natural pork products to distributors in Taiwan, Hong Kong, Macau, China, Japan and Singapore.

Dollars Leveraged: The photo journal was published and distributed at no-cost to the state of Montana. The release of the publication created a great deal of exposure for Montana with over 30 Chinese language feature stories in newspapers, magazines, and TV. The photographer has permitted the State of Montana to use his photos in tourism and product promotional materials at no-charge. By combining Montana tourism and food products, the Trade

Office created a win-win promotion at a nominal expense to the state.  

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 State’s Return on Investment of Dollars

(Federal/Local Match): $4 for every $1 Number of loans/capital infusion dollars

2009: 305/$80 million Businesses Counseled/Trained 2009: 1,257 Total counseling hours (Contact/Travel and

Preparation): 7,849 Training Attendees 2009: 2,156

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: The owner was interested in starting a niche market for women’s clothing in Missoula; needed assistance with the target market, budgeting and financing.

Assistance Provided:  The SBDC reviewed and made recommendations on the business plan, assessing the target market, understanding the competition, and providing cash flow projections and financial analysis in preparation for bank financing.

Outcome: Project financing (owner equity, bank, and RLF loan)

Opened clothing store in downtown Missoula $133,000 annual wages in 2007 $877,000 in annual sales in 2007 Sales doubled in two years Six new employees hired, 3 full-time positions with health benefits

Dollars leveraged:  Owner equity leveraged $90,000 in financing

 

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)

Statistics from July 2008- June 2010

Current Funding: $200,000 per year Clients Served: 66 Counties Served: 25 Jobs Created/Retained: 134 Increased Sales: $186,900,000 Client Investment: $27,200,000 Return on Each State Dollar Investment

(2009): $2.40

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: The company’s $12,000 was leveraged with a similar amount through MMEC’s model federal/state/private partnership.

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: 38 Cooperatives Pending: 10 Jobs Created/Retained: 442 Total Payroll Benefit: $19,295,712 Grants Provided: $27,500 Funds Leveraged: $4.1 millionStatistics from Program Inception in 2000 through

May 2010.

Montana Cooperative Development Center (MCDC) Success Story

Assisted: Since its inception in 2000, MCDC has assisted 123 entities

with Cooperative Education and Project Management Description of Need: Directed and managed 44 Feasibility Studies and

58 Business and Marketing Plans Assistance Provided: 

Assisted 21 entities with Applied Research Provided Legal Assistance to 41 projects Provided Financing for 37 projects Provided various training opportunities for 75 projects

Outcome:  The formation of 38 Cooperatives First year impacts over $19.3 million wages/ $119 million to

economic sector (construction, utilities, etc.) Dollars leveraged:  State Dollars ($510,000) Leveraged $4.1 million

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: $1,275,000 per year Dollar amount for 181 projects funded:

$37million Non-State matching dollars leveraged to

date: $42 million

Follow-on New Funding: $230 millionStatistics from program inception in 1999.

Montana Board of Research and Commercialization Technology Success Story

Assisted: Bacterin International, Belgrade, Montana Description of Need: The focus of this project was development and

commercialization of an allograft based bone void filler for surgical bone grafting applications. MBRCT funding was essential to the concept development and preclinical studies of this Class II medical device.

Assistance Provided:  MBRCT provided grant funds in the amount of $165,974 for this project.

Outcome:  The OsteoSelect® product is comprised of donated human bone tissue and a polymer component designed to improve the handling characteristics during surgical applications. When implanted into a surgical site, OsteoSelect® induces bone formation at the graft site. OsteoSelect® is the first tissue-based medical device approved and marketed by Bacterin International, an FDA and American Association of Tissue Banks registered processor and distributor of donated musculoskeletal allograft tissue. OsteoSelect® has generated over $1 million in total sales revenue and has been responsible for the creation of six full-time jobs in Montana to date.

Dollars leveraged:  The project leveraged over $180,000 in matching funds and has generated over $1 million in total sales revenue to date. Bacterin is a Montana-grown company and many of its employees are Montana residents and/or graduates of Montana schools.

JOIN US IN REINVESTING IN MONTANA’S ECONOMIC FUTURE

Support the continued 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 You