Butte’s economy: Changes coming today for a bluer sky tomorrow

Nearly everyone surveyed about the state of Butte’s economy agrees on one point: it’s seen better times.

However, they are equally adamant that Butte is a city of survivors that can outlast any downturn in the economy with its famous “ can-do” attitude.

By Leslie McCartney of The Montana Standard

“ Right now, we are trying to diver sify and there’s that fear of the unknown,” said Kathy Fasso, the Butte-Silver Bow economic develop ment director. “ We’ve gone from being a historically mining and manu facturing base to trying to branch out and diversify.”

NorthWestern Energy economist John Kasperick agrees with Fasso’s assessment of the economy and the challenges facing the community.

“ Butte grew up on mining and manufacturing,” Kasperick said. “ It still needs that kind of foundation. We need those high-quality jobs in Butte.”

Butte has had a rough year with a smattering of business closures or businesses leaving town, following a bruising year in 2000 in which its last mine shut down, a victim of skyrock eting power prices.

“ There are significant impacts on Butte right now,” said Evan Barrett, executive director of the Butte Local Development Corp.

He said that the city is feeling the impact of the shutdown of Montana Resources with secondary impacts — those businesses dependent on Montana Resources and employees who have run out of options.

New factors came into play this year as well with the meltdown of the telecommunications industry that has weighed heavily against Touch America, Butte’s homegrown telecom firm that employs about 200 people in town. The firm has had a roller-coast er year — and its share of bad press — and a stock that has plummeted from a high of $65 per share to one dwelling around 50 cents.

Percolating in the mix is uncertainty surrounding other large indus tries in Butte, from a depressed price paid for products from Advanced Silicon Materials — a silicon manufac turer — to the future of the Golden Sunlight Mine at Whitehall.

Also, while the future of NorthWestern Energy seems solid — it bought the transmission and distrib ution assets of the old Montana Power Co. — questions remain as to whether it will downsize its workforce in town. NorthWestern is the town’s largest employer, with 530 employees.

“ A company does not need two headquarters,” said Paul Polzin, an economist with the University of Montana in surveying NorthWestern’s business, referring to NorthWestern’s headquarters in Sioux City, S.D.

The companies “ are big and basic industries, and all three are facing uncertain futures,” said Polzin. Touch America adds to that mix, he said.

However, Polzin also pointed out that other places such as Bozeman and Billings have seen uncertainty pop up in an otherwise healthier economy with the twin whammies of Sept. 11 and a lingering recession.

Barrett also said that much like the national economy, Butte is driven by consumer confidence, and when people feel good, they spend money. If not, they pull back.

“ Consumer confidence is not high here, and those kinds of factors lead to a very soft economy,” he said.

But one thing those towns have that Butte does not is being a “ trade center” by attracting people from other communities and making the city a destination point.

That is something officials are working to correct, noting that Butte is a natural destination city since two major interstates connect in the heart of the city.

“ Currently we haven’t acted as the hub, but we are putting in place things to do that,” Fasso said.

“ It’s very simple,” Polzin said. “ People come to Missoula, Billings and Bozeman to shop and see doctors and dentists. At one time, Butte was in that category.”

With the $32.5 million renovation at St. James Healthcare, that could change. The hospital, another large employer in town, has committed itself to the community by undergoing an ambitious renovation designed to make Butte a regional health care destination.

“ We want to make health care No. 1,” said spokeswoman Karen Sullivan.

To that end, the hospital has brightened its neighborhood on the Butte Hill, creating a green corridor, and has established a high-tech atmosphere for patients.

Another bright spot in Butte is MSE Inc., a for-profit umbrella com pany connected to a host of other entities. Those include the Montana Economic Revitalization and Development Institute and MSETechnology Applications.

The company has reeled in important contracts from the Mariah wind tunnel experiments for the Air Force and this year bought an Uptown building to create a high-tech economic hub.

“ We believe, and are committed to Butte,” said Don Peoples, a former chief executive for Butte-Silver Bow and now president of MSE.

Believing in the city and staying true to the goal of bettering Butte for Butte people is a common mantra for MSE: all of its primary projects are guided in a way to benefit the town, either by attracting jobs, prestige or notoriety.

Even with ideas and promise on the horizon, officials don’t expect a dramatic change in the economy for the next few years. However, it is difficult to get a complete picture of the economy since sales tax records — there is no sales tax — and other record-keep ing that would provide details do not exist.

Overall, despite a blip in which Butte-Silver Bow saw an increase in population, the county’s 2000 census reflects a decline.

According to Kasperick, Silver Bow’s census stood at 33,604 — down nearly 1,000 peo ple from the previous year, ranking it near the bottom of Montana’s 56 counties in terms of loss.

Also, earlier this summer, labor statistics showed the county’s unemployment rate at 5.1 percent or nearly 1 percent higher than the state average.

“ Montana as a whole, with its lack of high-tech employment has been only mildly impacted by the most recent national recession,” wrote Kasperick in his assessment of the economy. “ However, Silver Bow has not fared as well.”

Economists say that Butte lost an estimated 300 good-paying jobs with the shutdown of Montana Resources — and most of the job creation since then is in the lower wage service industry.

Kasperick also points to another significant factor embedded in this year’s economy: Because of the dramatic decline of the value of Touch America stock, retirees’ and investors’ portfolios have been devastated.

“ There has been a significant reduction in wealth in the community and statewide,” Kasperick said. “ Although not quantifiable at present, the loss of wealth associated with stock price reduction leads to lower spending, less production, reductions in employment and ultimately increases in the unemployment rate.”

While balancing all the good things about Butte — its location, people and quality of life — with its challenges, officials urge cooperation, support for local businesses and continuing support for economic development.

“ All areas of government, to the local business development corporations, to private corporations must now more than ever work together to turn around the downward trend,” Kasperick wrote.

“ Trying to save what you’ve got is always easier than working with new companies (recruiting efforts),’ “ Polzin said.

Barrett said that his organization is chasing opportunities for Butte and strives for job creation.

However, the diversification of an economy that has long been a one-company town: first with the Anaconda Co., and then to a degree with Montana Power Co., is a struggle.

“ It’s a challenge,” Barrett said.

Reporter Leslie McCartney may be reached via e-mail at leslie.mccartney(at)(at)mtstandard.com.

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