Montana – A Recipe for Success: A Low-Tax Environment and an Underemployed Workforce

Montana’s $10 million Workforce Training Act is now up and running. “We recently began using this program, which passed in last year’s legislative session,” says Dave Gibson, chief business officer for the Montana Governor’s Office of Economic Opportunity. The awards are capped at $5,000 per new job for training.

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Gibson says that while the Montana Legislature convenes only every other year, items that will be looked at in January 2005 include the creation of seed money and early-stage capital funds.

Gibson says businesses in the hunt for new locations should also note Montana’s positive corporate tax climate. “In the last six years we have been conducting tax reform,” he says.

To begin with, the state doesn’t charge sales taxes. Among the tax reforms are the lowering of the business equipment tax to 1.5 percent, which varies by locality. “Companies pay a business equipment tax that is in the 50th percentile for states in our region,” Gibson notes. “There is an automatic ratcheting that drops this tax to zero percent across time.”

Montana is also lowering its income tax from 11 percent at the top rate to 6.9 percent. The capital gains tax has also been lowered, dropping from 9 percent to 4.9 percent.

Gibson notes that some of the tax reforms, which are laws, are still being phased in.

Targets

Gibson says because of the differences among Montana’s various communities, corporations that are best suited to conduct business in the state are companies with 100 to 200 employees.

Gibson notes Montana is home to 900,000 residents, and the largest MSA features a population of 150,000. A couple of regions have MSAs of 50,000. “Our larger communities have had some businesses come in who needed 500 to 1,000 employees,” Gibson notes. “However, you can’t come to Montana looking for 1,500 workers to build the next Boeing plant, for instance.”

Gibson says Kalispell, Great Falls, Bozeman and Butte are regions that have had great success in bringing in businesses that are tailored to each community’s strengths.

Kalispell and Bozeman are growing at a rate of 5 percent a year. “These communities are located near national parks and feature ski resorts,” Gibson notes. “So people want a life outside of work and these areas are filled with high-skilled workers.”

With that stated, Montana is a good spot for distribution and light manufacturing. “Many companies are interested in setting up distribution centers, particularly overseas businesses, because they can get through our customs system faster because we are smaller,” Gibson says.

He notes that clearing goods through customs at the Great Falls International Airport takes half the time of going through larger ports in large cities.

Naturally, Great Falls targets logistics operations. The city is home to Malmstrom Air Force Base, which is now a missile command center. It was built in World War II to move goods and services to China and Russia. The idea was to move goods over the top of the world instead of going around the outer edge.

“This opens up something for us as more companies go international,” says John Kramer, president, Great Falls Development Authority. “There are a lot of areas in large cities where there is only so much air space available. So, companies like FedEx are building back up facilities here to their larger metro areas.”

Kramer says a Great Falls operation allows companies to cut their costs 40 percent just on the distribution of their product alone, and still meet the same time sensitivity issues.

Great Falls also targets value-added commodity processing because of the area’s crops, mainly wheat and barley, assisted in attracting a more than $60 million investment by International Malting Co. for a malting plant.

Workforce and Education

Gibson says Montana’s huge selling point is its tremendous and available workforce. In independent surveys, Montana was found to have more than 150,000 available workers, many of whom are underemployed.

“When you combine this workforce data with the Workforce Training Act, which gives up to $5,000 per job for training, we offer a great workforce package,” Gibson notes. He adds that companies that want to offer $10 to $12 an hour can find 200 to 300 people overnight in most of the state’s communities.

Kramer says the Great Falls underemployed workforce is 25,000. He says there is a 98 percent high-school graduation rate among his workforce, and more than 85 percent have some college or advanced degrees under their belts.

The Great Falls area draws from a labor pool of 120,000 in a 120-mile radius. Kramer says an hour’s drive in Montana equals 90 miles.

In terms of the higher education system, there are 15 two-year campuses and six four-year campuses in Montana. Montana State University and the University of Montana are both major research universities. “In terms of per capita, research in our Montana state university system is always in the top 10,” Gibson notes.

Business Climate

In Great Falls, officials are developing a 600-acre business park to attract companies that use the area’s commodities and process them at the park. Kramer says sewer capabilities, raw water, potable water and rail spurs are being explored for this park.

Great Falls is also exploring the redevelopment of a brownfields property for an office park development, situated near the Missouri River. In addition, the Great Falls Development Authority and the airport authority are pursuing the development of an area at the airport for logistics companies.

Kramer says there are two warehouse buildings available in his area, each in excess of 200,000 square feet. Both feature refrigerator and freezer capabilities.

Gibson says that Montana is heavily populated with both electric and telecom cooperatives, which is important for one reason: because these cooperatives’ sole territories are only four or five counties, they have no place else to invest. “Places you have never heard of in Montana have better broadband access than a lot of large cities,” Gibson says.

Zoot Enterprises http://zootweb.com in Bozeman is an online credit card processor, handling banks’ critical data on a real-time basis. “The company couldn’t be in a location where they didn’t have redundant communications and reliability,” Gibson says. “If the company shuts down for five minutes, its business is dead.”

Kramer notes that because Malmstrom Air Force Base is major missile command center the communications capabilities in Great Falls are equal to those for the White House.

In Great Falls, it is anticipated that a new 200-megawatt gas fired energy generation station will be running by the end of the year.

Gibson points out that the telecom and electric system in the state is one of the items fueling the high-tech and entrepreneurial growth. “Companies can run their national consulting and electronic based businesses out of Montana just as well as they could in the San Francisco Bay area and pay half the cost of living.”

On the quality of life front, Gibson notes companies will find a much more relaxed atmosphere in Montana, with no commuting problems, great schools and affordable housing in almost all communities.

For complete details on conducting business in Montana visit http://www.bizmt.com, http://www.medamembers.org, http://commerce.state.mt.us/brd/BRD_SBDC.html, http://www.matr.net/companies.phtml and http://www.gfdevelopment.org .