Experts: Infrastructure, labor pool keys to attracting firms to rural areas

Rural states such as Montana have a lot to offer companies looking to outsource white-collar support services for the insurance, financial, medical and information technology fields, say local and national experts on the subject.

By ROBERT STRUCKMAN of the Missoulian

http://missoulian.com/articles/2004/10/19/business/bus04.txt

And while offshore outsourcing does have an immediate negative impact on the employees and communities that lost jobs, "the trend won’t hollow out our economy or cannibalize all our jobs," said Daniel Kah, an economist with Angelou Economics. Based in Austin, Texas, Angelou Economics is a leading economic-development and site-selection firm specializing in the needs of the technology industry and the communities seeking to recruit them.

Even on the subject of outsourcing in the manufacturing sector, Steven Holland, director of the Montana Manufacturing Extension Center, said the same thing: "There are times when it flat makes sense for efficiency and cost."

Financial-service firms in particular have chosen to keep operations in the United States recently for security and quality-control reasons, Kah said. Just as important, the cost difference between a place like Missoula and Bangalore, India, is only about 25 or 30 percent.

"It is not as pronounced as it is made out to be," Kah said.

Local infrastructure and labor availability are primary concerns, right up there with cost structure, Kah said.

"If the site lacks adequate telecommunication infrastructure and a local university to churn out graduates, it is automatically off the slate," he said.

Then there’s the question of available office space. Is it there already or does it need to be developed?

From the construction end, western Montana is headed in the right direction.

In Missoula, several specific projects are already in the works. Steve Gordon, co-owner of Gordon Construction, has plans to build on the groundwork laid by the Rocky Mountain Elk Foundation’s offices on West Broadway. When the foundation moves into new space under construction, it will leave behind about 70,000 square feet of high-tech office space.

Gordon plans next spring to break ground on what he hopes will become a small high-tech campus on the 10-acre spot there to complement the existing structure, which also houses his offices. Others in Missoula, the Bitterroot Valley and the Flathead area, too, are planning and constructing office space that meets the technology requirements of today’s businesses.

Perhaps the greatest testament to the prospects of Montana’s future role in the national economy is in Flathead County, where Stream International left a 78,000-square-foot call-support center only three years after receiving generous tax incentives from Kalispell.

Liz Harris of JobsNOW in Kalispell said Montana needs to consider Stream’s departure the way some people recover from a layoff or breakup. They buck up, make changes and end up saying it was the best thing that ever happened to them.

Harris said Stream’s departure should be viewed as an opportunity. "Stream left (300 employees with a total of) 300,000 hours of training. That has fueled small-business development," she said.

Harris is excited about the prospects in the Flathead.

"I’m totally OK with outsourcing. It’s a motivator like nothing else," Harris said.

Reporter Robert Struckman can be reached at 523-5262 or [email protected].