Missoula Area Economic Development Corporation- TheProgressReport- Spring 2002

Approximately 75 people attended a dedication ceremony on February
20th for the Montana Technology Enterprise Center, held at its East
Broadway site. MAEDC’s President, Dick King, gave a short welcome
and introduced President George Dennison of The University of Montana
who in turn introduced Senator Max Baucus. Senator Baucus was
instrumental in helping MonTEC receive a $1.5 million grant from the U.S
Economic Development Administration.

Senator Baucus cited MonTEC as an example of the benefit of
working together to improve Montana’s economy. "MonTEC shows us
what can be achieved when entities cooperate to create high quality jobs
for Montana’s citizens," Baucus stated.

A collaborative project between The University of Montana and the Missoula Area Economic Development Foundation, MonTEC is a private, non-profit
organization that is financially independent with a mission of helping companies commercialize opportunities created by University research.

Following his remarks, Senator Baucus introduced Dr. David Sampson, the Assistant Secretary of Commerce for Economic Development. As head
of the U.S. Economic Development Administration, Dr. Sampson oversees a federal agency with a small budget but a big mission. EDA’s total
appropriation this year is $335 million, but in his remarks, Dr. Sampson stressed that EDA seeks to invest in projects like MonTEC that have private sector
participation, include value-added processes, enhance economic innovation, and are based on rational, comprehensive strategies developed by key
stakeholders.

Both Senator Baucus and Assistant Secretary Sampson received plaques expressing appreciation for their help with the MonTEC project. The
dedication ceremony continued with presentations by five businesses that plan to move into the MonTEC facility when it is completed. Representatives
of Purity Systems, Inc., Buffalo Jump LLC, Sunburst Sensors, Sustainable Systems, and ChelaTech discussed their company’s products and services.
MonTEC is currently under construction, with completion anticipated by August.

MAEDC Holds Annual Meeting;

Frank Worden and C.P. Higgins Awards Presented
The Missoula Area Economic Development Corporation held its Annual Meeting on March 15th at the Boone and Crockett Club.

Approximately 60 members and guests attended the event, which featured Montana’s Chief Business Officer, David Gibson, as
the keynote speaker. The annual meeting followed the 14th “listening session” that Mr. Gibson has held to obtain public input for
the state’s economic development plan.

In his remarks, Mr. Gibson discussed the Framework for Economic Development that was released in January and has been
subject of the many listening sessions he has held around the state. He stressed the importance of focusing clearly on what the
state can accomplish, the need to concentrate resources, and the need to work with local economic development organizations
like MAEDC. He also discussed tax reform, especially the need to reduce Montana’s capital gains tax and adjust the marginal rate
of the personal income tax. Other areas of concern include the need to expand workforce development programs and provide
customized training to employers, to improve Internet connectivity and other telecommunications services critical for business
growth, and to better utilize our educational system to support economic development.

In response to a question about recruiting new businesses to Montana, Gibson responded that it’s “more important for the
state to create an environment that will draw business to Montana and keep businesses that are already here healthy and
expanding.” He felt the state should spend most of its resources on business retention, while leaving the bulk of recruitment to
local efforts. He concluded by stating that “state government cannot be the principal force of economic growth; it has to be a
partnership between the public and private sectors.” Gibson said the eventual economic plan will be a long-range strategy that
will be fully realized over a 10-year period. “it’s time to move out of the talking phase and move into action,” he asserted.

In recognition of significant achievement by individual businesses, MAEDC annually selects two businesses for special
recognition. This year’s recipient of the Frank Worden Award, which is presented to a business with fewer than 50 employees,
was CM Manufacturing, Inc. The firm is located at the Missoula Development Park and fabricates specialty parts for military
aircraft landing gear. The company moved to Missoula from Cleveland in 1996 and, despite its distance from similar small firms that
are clustered around Cleveland as well as Los Angeles and Seattle, CM Manufacturing has been successful in Missoula.

MAEDC’s Board Chairman, Kent Bray, presented the award to Ken Johnson, manager and son of the company’s founder Richard
Johnson.

The recipient of the C.P. Higgins Award was Pyramid Mountain Lumber, located in Seeley Lake. Eighteen months ago, Pyramid
had announced it would close, putting about 130 employees out of work. Working with MAEDC, Missoula County, the Montana
CDBG Program, Two Rivers Bank, USDA/Rural Development, and the Montana Board of Investments, Pyramid was able to stay
open and complete a much-needed modernization project in 2001. The total financing package was almost $6 million, and the
bank’s long-term loan was closed at the end of February. Despite encountering many delays during the past year, Pyramid’s
management persevered. The company installed $2.5 million of new equipment in 2001 and still managed to record a profit for the
year. At present, Pyramid is well situated to sell its product line into the market with a lower break-even point. Loren Rose,
controller, accepted the award on behalf of Roger Johnson, the company’s president.

“state government cannot be the principal
force of economic growth; it has to be a
partnership between the public and private
sectors.”

-David Gibson

CM Manufacturing: Precision and Quality Create Niche Market
Everyone agrees that attracting a mix of manufacturing firms to Montana would benefit our economy. But, our state
lacks a key magnet around which a cluster of small specialty manufacturers take root. Montana does not have a Boeing,
a Lockheed Martin, or a similar company that relies on other firms to meet its supply needs. It is a simple matter to find a
company that will do heat treating of metal alloys, or precision grinding, or other specialty processes, if you are in
Seattle, Los Angeles, or Cleveland.
How then does one explain the success of CM Manufacturing, which located in the Missoula Development Park? As
Richard Johnson explained, “We are not here because it is easy to do business in Montana.” CM Manufacturing is a
precision machining company that makes a variety of parts for aircraft landing gear and related components.

Their
market is primarily military aircraft and the firm does business with Boeing’s St. Louis facility, with Lockheed Martin, and
with other contractors.

CM Manufacturing, Inc., is a specialized fabricator for the military aircraft
industry. This shop produces very high quality products that must meet
stringent specifications.

Prior to coming to Missoula, the company was located in Ohio and obtained basic parts from other machine shops. Quality of the machined parts was controlled by the companies that
manufactured for CM, which was a disadvantage since parts could not be tested for tolerance until they were shipped. The move to Montana enabled the company to gain control of the
quality of their products by doing their own machining. “We have to send parts all over the country for certain procedures, such as heat treating, but we still control the quality of the final
product.” Johnson said.

CM Manufacturing has been successful in Montana because its customers demand the highest quality. “This gives us the margins we need to be profitable in Montana, and we are
very pleased that the move has worked out so well,” Johnson concluded.
As a specialist in high strength steel and aluminum parts for performance aircraft, CM Manufacturing is one of the few companies in Montana with this level of machining expertise.

As the company’s Manager, Ken Johnson, explained, “we are fully committed to the highest quality possible, as our parts must meet stringent specifications and pass government
inspections.” He added, however, that the company is also committed to its ten employees. “We work four tens and take a week off during Christmas and the 4th of July. Everyone who
works here has the opportunity to fulfill personal needs by enjoying the quality of life in Missoula.”

MAEDC to Package SBA 504 Loans

MAEDC recently contracted with the Montana Community Finance Corporation to package SBA 504 loans for Missoula, Ravalli and Mineral Counties. The 504 Program is a financing
tool for businesses that is especially well suited for expansion projects. Typically, a private bank will provide 50 percent of project cost, with SBA providing 40 percent through a
subordinated debenture, with the business picking up the balance.

MCFC’s 504-loan program experienced a 50 percent increase in approvals in 2001 with an average approved loan of $273,900. Since 1986, MCFC has approved 176 loans for a total
of $53,221,000, with private sector financing contributing another $74,462,000 and borrowers injecting $30,839,000.

Lenders in the three-county area that have customers who may be appropriate 504 borrowers are encouraged to contact MAEDC for packaging assistance.
Pyramid Financing Complete
Fourteen months after Pyramid Lumber’s management met with MAEDC to find a way to keep their mill in Seeley Lake open, the financing has been completed. MAEDC advanced most
of its $950,000 commitment last summer. Bank financing was delayed while an environmental issue was addressed. More than twenty years ago, the company treated posts and low
levels of contamination were found during the site assessment process. After lengthy negotiations, the Montana Department of Environmental Quality, allowed Pyramid to continue to
monitor the site and the company agreed to eliminate the contamination if such action is determined to be needed in the future.

In January, MAEDC provided the balance of its financing commitment and Two Rivers Bank closed its $4.6 million long-term loan at the end of February. The bank’s loan was
guaranteed by USDA/Rural Development and the Montana Board of Investments purchased the guaranteed portion of the loan under the Board’s "value-added" loan program, resulting in
a two percent interest rate for the first five years on all but twenty percent of the bank loan.
MAEDC Elects New Board Members and Officers
In January 2002, the MAEDC Board of Directors elected three new board members to replace three others whose terms had expired or for other reasons were no longer able to serve.

Leaving the board as of December 31st were Jim Bell, who represented the Missoula Development Park, Linda Reed, Qwest, and Ralph Holliday, Western Security Bank. Replacing
these board members are Frank D’Angelo, D.A. Davidson, Ned Becker, Nutritional Laboratories International, Inc., and Greg Tabish, Tabish Brother’s Distributors, Inc.

MAEDC’s officers for 2002 are as follows: Kent Bray, CTA (Chairman), Bob Kelly, Intertec (Chair-Elect),Diane Beck, Gillespie Realty (Vice-Chairman), Keith Sommer (Secretary), Bill
Bouchee, First Security Bank (Treasurer), and Wes Spiker, Spiker Communications (Immediate Past Chairman).

Terms Expiring December 31, 2002:

Bill Kohl 2000-2002
Jim Krusemark 2000-2002
Kevin Mytty 2000-2002
Keith Sommer 2000-2002
Greg Tabish 2002-2002

Terms Expiring December 31, 2003:

Diane Beck 2001-2003
Bill Bouchee 1998-2003
Kent Bray 1998-2003
Joyce Dombrouski 2001-2003
Frank D’Angelo 2002-2003

Terms Expiring December 31, 2004:

Ned Becker 2002-2004
Dave Fuselier 1999-2004
Casey Jones 1999-2004
Bob Kelly 1999-2004
Wes Spiker 1996-2004

2002 Community Directors:

George Dennison The University of Montana
Barbara Evans Missoula County
Larry Fox Missoula Area Central Labor Council
Vicki Judd Chamber of Commerce
Mike Kadas City of Missoula
John Seymour Missoula County Airport Authority

TheProgressReport is a quarterly newsletter published by MAEDC and distributed to members, local officials, partners of the organization, and any person interested in economic
development issues.

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