Tending the garden – Dick King, President and CEO of the Missoula Area Economic Development Corp. talks about the economic future of Missoula and Montana.

Missoula economic leader says the key to attracting new employers is placing a premium on protecting infrastructure, existing businesses

By Mike McInally

http://www.mtinbusiness.com/current/bus10.html

Dick King is president and CEO of the Missoula Area Economic Development Corp. He was born in Chinook; after earning a masters degree in history at the University of Montana, he served stints in the U.S. Army and in the Peace Corps in Afghanistan. Before taking the reins at MAEDC in 2000, he worked for more than two decades at a similar economic-organization in Havre. He recently sat down with Mike McInally, the editor of Western Montana InBusiness, for a chat about economic development in Montana. This is the full version of the conversation; some minor editing was necessary for the purpose of clarity. An abridged version of the conversation appears in the winter edition of Western Montana InBusiness.

InBusiness: I wanted to start with some general conversation about economic development and what Montanans mean when they say economic development and the strategies behind economic development. Everyone seems to have a different definition of economic development. From your perspective, what are the strategies to implement economic development? And do you sense that there’s an agreement in the state about what we mean when we say, “we’re going to develop the economy this way, this is the future?”

Dick King: One of the strengths of economic development is that it’s locally based, so what we do in Missoula will be different from what they do in Great Falls – and hopefully, that reflects a basic consensus in the community and what needs to be done and how people perceive their future. So in Missoula, for example, there’s not a lot of support for recruitment. I’ve talked about this before. People are a little skeptical about getting Any Company U.S.A. to come to town. Along with that, of course, any more, you put a lot of money in a wheelbarrow as incentives, and say, “here, you come, we’ll do this for you.” Missoula’s a fairly sophisticated audience and pretty skeptical sometimes about this sort of stuff and I find that people question it. Let me put it this way: If it makes sense for a company to locate here, business sense, then yes, we should work with them.

So one of the strengths of economic development is that you try to develop a local strategy that has support in the community. And then you’ll have different ways of organizing that. Billings has the Big Sky Economic Development Authority, and they have everything under one roof, one big organization with two mills in tax support. In Great Falls, you now have the Great Falls Economic Development Authority, also getting significant public taxpayer support. In Missoula, we receive a membership from the city and one from the county, but the county gives us $10,000 and the city $8,500, so (it’s) a very modest amount of funding compared to what public support’s coming in other areas. So here, our basis comes from the members. … We have about 95 businesses that are members that contribute the annual dues that form the base of the organization. There’s not a lot of support in Missoula for doing a two-mill levy to support economic development. We support things like libraries and pools. So the community’s different. I think that when you get economic development people together, you realize that there’s a lot in common but that they’re different organizations.

InBusiness: So the recruitment card or strategy, for example, might play better in Billings or Great Falls than in Missoula.

King: Great Falls raised $2 million to do recruitment. They got pledges over a five-year period, and they’re out aggressively recruiting companies. We market Missoula, we work with the chamber, we encourage people to look at Missoula, but our priority is companies that are already here that can expand. I have very good support for that activity. The MonTec project, which is built with the basis of the university, (we have) good support for that, because people see that that makes sense, that we’re working around our strengths. There’s interest in Missoula in working with a prospect. You know, there was recently a large life-insurance company, their site-location firm called us and asked us for information. They’re looking at a town for an insurance back office that would employ 420 people. It would be a major impact. So we supplied information, and we’re not sure what’s going to happen there. But we’re not spending a lot of money on the recruitment activity. Other communities spend more money than we do, a lot of communities. The other thing, of course, is that a lot of states spend a lot of money on recruitment and we don’t have any money in Montana at the state level. So our basic strategy is, we have a good deal flow from existing companies, investors and entrepreneurs. They’re creating good jobs and we try to help them. That might be assisting them with a bank-financing package, explaining how they can qualify for tax-increment funding, working with them to locate at the development park – other ways to help them other than just strict monetary incentive. What people are thinking of when they say economic development is, they’re usually thinking of jobs. It comes down to jobs. Well, we don’t have any lack of jobs in Missoula. We have a very low unemployment rate. We have a lack of good-paying jobs. So our priority is to work with existing companies that we feel can grow and create quality jobs. Now, Kalispell saw fit to put together a big incentive package for Stream. Created a thousand jobs. But Stream’s no longer there. Stream looked at Missoula, too – this was before I came – but Stream looked at Missoula, and the decision here wasn’t to turn a cold shoulder to them, but to basically say, “if you want to come to Missoula, you’re welcome, but we’re not interested in putting together a lot of money to give you an incentive to come here, because the jobs that you’re going to create are going to be lower-paying jobs, and we already have plenty of those.” Kalispell thought about it differently. They said, you know, “you’re going to be in the technology business, you’re going to be training people, we think that will be an asset to our community,” and they got a lot of state and federal help to bring them.

InBusiness: In retrospect, it’s easy to say, well, look at Kalispell, they made the wrong decision. But it’s just a function of a different philosophy, a different sense of what the consensus of the community was.

King: Exactly. The other danger of recruitment is that Montana’s viewed as a low-cost state. Why are we low-cost? It used to be because we had low utility rates. Now, it’s because we have low wages. So when you’re talking recruitment, you’re competing against other states based on the cost of labor. People are coming to you because they have a lower labor cost, but if that’s the reason for them coming, aren’t we in competition with places like India and other parts of the world where they have even lower wages? You don’t ignore this, and you provide information, but to put all your eggs in the basket of recruitment is not a strategy that has much support in Missoula. So we try to develop around a strategy that we think has good local support. Of course, we’ve got two economic-development organizations here; we’re separate organizations, have separate funding sources, but we complement each other. So we do things that MCDC (the Montana Community Development Corp.) doesn’t do, Rosalie Cates’ office, and they do things we don’t do. So there’s obviously a little bit of overlap, but we talk together, we refer back and forth. So together, we’ve got two organizations serving the Missoula area that get a lot done that’s maybe done under one office in another community. It’s more of a Missoula model than it is a Billings model. Billings will tend to put it all together and say, “we can do it all.” So what you do and how you organize it will vary. The real strength in the economic-development field is that as long as that has local support and buy-in, and you’re accountable, then you’re communicating to people like at the state level, “In Missoula, we’re interested in this.” We’re representing the community with a sound strategy rather than trying to do something that, you know, we’ll grab a strategy from another community and just apply it here because it seems to be working there.

(Another key to economic development is) if we cultivate the garden, if we nurture the soil, if we take care of the infrastructure supporting that, entrepreneurs will see the opportunity and they’ll want to live here. … Entrepreneurs see (Missoula) as a place to locate. Where that leads our economy, we’re not magicians to figure that out. We just know that if the environment for business and for entrepreneurial development is tended, then we’ll see the benefit. Then, the other thing is, you need to pay attention to, in economic development, the other side of it, is retention. It’s fashionable or commonplace for people to say, Missoula’s no longer dependant on wood products. In 1980, wood products were about a third of our basic economy, now it’s about 14 percent. I would argue that they’re actually more important to us now then they were in 1980 in one way, and that is, they form a base of quality jobs in income that has contributed to our community consistently over many years. We have the three largest manufacturers in Montana located here, as far as number of employees – Stone Container, Roseburg Lumber and the Stimson mill at Bonner. Together, they employ about 1,200 people, paying – if I said $20 an hour, I’m actually a little low as the average salary, but that gives you an idea of the size of the payroll. One of our priorities, then, is we know we don’t control decisions on those plants. Dick King and MAEDC can’t control that decision. The best we can do is to convey a message that, number one, these are extremely important to our community, number two, they’re appreciated and we’ll do everything we can to help keep them here, and, number three, we’re interested in developing the workforce to support these companies. Talking to the people at Stone, you know, half the people who work out there are my age or older.

InBusiness: And you know that has to be a factor on some level in the decisions that Stimson’s going to make about the future of that plant.

King: So they’re under the gun a little bit right now on productivity. So when we look at an economic-development strategy, we want to do everything we can. You know, they’re already here. They’ve invested in the facility. A lot of work has gone on to make them an environmentally better corporate citizen; I think the company’s done a yeoman’s job on that over the years. And so, we’ve got this facility. Now, manufacturing is declining in the United States. So demand for cardboard boxes is going down a little bit. So Stone is re-evaluating all of its plants. How do we shape up? So this takes the form of the company needs to make sure that it can hire qualified people, a good workforce. And then it also translates into issues like the tax policy. The Montana Economic Development Association, MEDA, is a statewide organization of economic-development organizations, and MEDA has a legislative priority list. And one of MEDA’s legislative priorities is to preserve the business-equipment tax at the current rate of 3 percent. The law would actually allow it to drop to zero if the economy performed well enough. So MEDA’s position has been, we want to keep it at 3 percent, we don’t want it to drop to zero. Well, we have a minority opinion in MEDA, because we’re saying, you know, the law that’s there on the books now is important to some of our companies, especially these three I mentioned, as well as some small companies that have a lot of equipment. And now we’re going to tell them that we’re going to change it again. We changed it once on the business equipment, now we’re going to change it again. That’s not the right message. Yes, there’s an issue with local-government finance, the impact on schools, cities and counties. But if you’re trying to help Stone, increase their productivity, do you want to take this away from them? Bob Boschee (goes) back to Chicago and says, well, one of the things that’s looking here is the next two or three years, our taxes are going to go down because this trigger is going to be hit, and the business-equipment tax in Montana is going to drop to zero, so we won’t be taxed on our equipment and Montana then will be like a lot of other states. Right now, we’re a little higher on that stuff. Again, economic development has to have the local message. So here’s the statewide organization being concerned about the impact of this measure on local government. We’re saying we understand that, there may be other ways to meet local-government funding needs, but we have to also pay attention to the quality employers in our community. And the business-equipment tax is important to them. We’ve talked to them, and they all feel the business-equipment tax should stay the same, should stay as written. Again, it’s that one solution doesn’t fit all. A lot of us in economic development can work together, but we do have to have programs that are based on what’s right for our community.

InBusiness: When we were talking to (Montana Chief Business Officer) David Gibson, we got the sense that he had long since disabused himself of the notion that there was one solution that was going to work for all of Montana. As we talk about economic development as a state, you do get the feeling that we’re looking for that one big score and not paying as much attention to the companies that are here – because when they grow, they add one or two jobs at a time, whereas a big company – like Stream – might come here with 500 or so jobs at a time.

King: I think that’s the classic dilemma. We need to pay attention to opportunities for major recruitment. Take Montana Rail Link, for example. I think they employ about 900 people, and two-thirds of those people are in Missoula. Rail Link’s biggest customers are the wood-products facilities in Missoula and the oil refineries in Laurel and Billings. So between Missoula and Billings, they don’t have a lot of freight. So MRL really wants to see the state do something to recruit industrial tenants. I think there may be opportunities given we have land. … You would not put a major new industrial facility in Missoula; where would you do it? We’d have all sorts of issues. But you could put it in Anaconda, Butte, Three Forks, Livingston, Big Timber and it still helps MRL, which is based in Missoula. So one of the things about this state recruiting, if it’s done with intelligence, recruitment can also help the existing businesses in the state and some of our key large employers can lead us in the right direction for recruitment opportunities. This is truly a state role here. Those of us at the local level can play if David Gibson calls us and says, “Dick, we’ve got this company and they want to locate near Frenchtown and we want to make sure this gets on the right track. We need you to make sure the county’s on board, etc.” Fine. We have a role to play to walk through that, so there’s that partnership. But some of these major recruitment things have to be done by the state. And the direction for where to spend what money and resources you have needs to come from the business community in Montana, those people that would benefit from that kind of siting and they then have the leads. That’s the key. One example of this is Georgia’s success at recruiting Mercedes. Well, gee. Could that Mercedes plant in Georgia have come to Montana? Is there a locational advantage in Georgia over Montana? Probably not, because you’re shipping all over anyway. So here you have the railroad, and they would love to have that kind of business. We didn’t even consider that as an option. David struggles with it, there needs to be leadership at the state level for – call them strategic recruitment opportunities. Those aren’t the call centers or that sort of thing that can go just about anywhere. That’s something that we probably could do a little better at in the state of Montana.

InBusiness: That requires such a broad focus and understanding of where something could fit into the different needs of each of Montana’s different areas and economies. In fairness to David and in fairness to the governor, that’s something that’s hard to develop. But that is something that you can do more effectively at the state level.

King: Exactly. A good example recently is the malting barley plant in Great Falls. The danger when you do a major recruitment is that it gets political, and then some bad decisions are made because there were political considerations that drove it. You’re always going to have that aspect of it – credit’s going to go to the people who hold office. But the malting barley plant at least made some sense in the fact that we have producers and the facility’s based on using a product grown in Montana, so fine. The state then stepped forward with $34 million in lending assistance through the Board of Investments, which was remarkable. The hazard for the state of Montana again is that we get seduced by the Hail Mary pass, and then we end up committing a lot of money to it, and if it’s not successful, well, we’re back again, saying, “well, we blew it.”

InBusiness: We’re looking for the next Hail Mary pass.

King: Yes. So those of us in economic development say, well, gee, the malting barley plant will create how many permanent jobs? Twenty-five or 30. And we’re putting how much of our resource there? It’s a huge financial commitment. Yes, it’s a credit-worthy borrower and all that, but did we need to do that? So when you do this at the state level, you have a lot of pitfalls. That’s why nurturing our local communities, doing things to make sure that our communities are healthy, that they’re taking care of the fundamentals. This is the other side of economic development that’s not the deal side. Economic developers are sometimes accused of being deal junkies.

InBusiness: Well, most of them come from business backgrounds, where the deal is very important. That’s how you measure your success, by the size and the prestige of the deals you make.

King: Exactly. But you can make as much progress in economic development by building good communities that are good places to live and good places to do business. So getting back to the environment that you work with, it’s not just helping the existing business community, those companies that can expand, it’s also taking care of the place. Because people don’t come to Montana, they come to Missoula or Bozeman. And those communities need to have a good community of life, good schools, good streets, being places where people want to live. When the city of Missoula is wrestling some of these contentious issues like sewer, is that an economic-development question? Well, it is in the long run, because how can you accommodate a growing community unless you build a sewer system? At some point, you’re just going to have to understand that the sewer system is a fundamental infrastructure. So if the city’s not addressing its infrastructure needs, we become less attractive as a community. And the state plays a role in that through things like the Treasure State Endowment program, helping finance some of those things.

InBusiness: You’ve obviously heard Larry Swanson (with the University of Montana Center for the Rocky Mountain West) talk about his sense that many of the decisions we make about economic development are based on looking at the economy through the rear-view mirror. The history of Montana’s economy is the history of mining, the history of agriculture, of wood products in western Montana. To what extent do you think that history has shaped the way that we think about Montana’s economy now?

King: One of our great opportunities in Montana is the research that’s going on at our major universities – Missoula to Bozeman with Montana Tech in the middle. That’s $175 million a year in funded research. It’s a real engine for economic development. Well, research in itself creates good jobs. It attracts talented people to our state. We’re competing with the Stanfords and MITs of the world and we’ve done a good job. Research also creates the opportunities for commercialization. But to commercialize research, you need investors to start early-stage companies. One of the hurdles in Montana, given our history, where we had an industrial past based on some key basic histories, is we don’t have the entrepreneurial tradition. A lot of people here are not used to that idea of investing in companies, starting a company. That’s starting to change. When you look to the future, I see Montana becoming much more of an entrepreneurial state and fewer people depending on the large employer for their paycheck. But that takes a lot of time to change that. If you were in Malta working for the gold mine, Pegasus Gold, and you were making $45,000 a year, and you were 23 years old, hey, the world is your napkin, right? But you don’t develop the mentality about risk and reward that someone who’s started a business does. You work hard, you earn your money and you get paid well. We’ve moved away from that history but culturally we haven’t caught up yet. And I think that’s reflected in attitudes like at the Legislature. There was discussion this past session in the Legislature about venture capital, doing something at the state level to create more incentive for venture capital. A couple of bills were discussed (and legislators said), “well, that’s not venture capital, that’s vulture capital.” Again, there’s a bit of a cultural attitude in Montana toward these that’s skeptical about it. You know, we’re not the hard-driving urban center in Seattle or wherever. But there are investors here. There are people with wealth here. There’s opportunity here. So we need more of these entrepreneurs to take the risk. And the attitude toward risk is perhaps – people are more open toward risk in other parts of the country than they are in Montana. Years ago, when I was working in Havre, we tried to start up a particleboard plant using straw. OK, a waste product. This was a great concept, and you could sell strawboard in California as a green product. It gets a big bonus in price. Everything looked good, but we needed to raise equity, risk capital. And the people who would benefit most from the strawboard plant would be the farmers that sell the straw, right? So they’re the ones you go to to invest. No interest in investing. They saw risk, and it’s very difficult to get that community to step up and raise capital to invest in a project, even though it’d be located in a rural town and it would provide the value-added (product) that they’re interested in. You just can’t raise the equity money from that community like you thought maybe you should be able to. Again, the entrepreneurial tradition just isn’t there. So you have to raise all the money from other investors. At that time, why would you invest in a particleboard plant in eastern Montana when you could invest in amazon.com in Seattle? So that project, even though a lot of great people worked on it, worked hard, failed.

InBusiness: Again, that ties into that notion that you’re going to make a big score.

King: One of the interesting things about that project that intrigued me. One thing about state economic development: You have to do a lot of these plants because you can’t carry straw very far. The freight costs are too high. You could have regional development. There were a lot of people who got involved in this who felt that government could help it get started, but the farming community just couldn’t come up with the money. Wouldn’t do it. Is it an issue of resources or is it an issue of choice, preference? So we have a tradition in Montana where we haven’t had a lot of entrepreneurial drive. That’s changing and the centers of change for that are in Missoula, Bozeman, Kalispell, Hamilton, because that’s where the growth is occurring. That’s where the new population is at. When you leave those communities, you go to places like Great Falls, the entrepreneurial energy isn’t nearly as great. The people in business in Great Falls have been there for quite a while, maybe it’s the son running the business, they’ve pretty well figured out what their business is, there’s not the drive to create new companies that innovate new ideas.

InBusiness: And that’s part of the reason why recruitment becomes a consensus economic-development strategy in certain areas.

King: That’s why recruitment makes more sense in Great Falls as a way to create more income in the community than it does here. I grew up in Chinook, Montana. I had one uncle who lived in Chinook and he was the Montana Power gas guy. I had another uncle who lived in Glasgow and he was the Montana Power gas guy. There was a whole family tradition, right? The family company. So you grew up with that and you worked hard and you lived in good communities and you raised your kids and it was all fine. The company’s not here anymore.

InBusiness: And if there’s any event in the last five years that symbolizes how the (Montana) economy has changed, it’s the fact that Montana Power is no longer here.

King: No longer here. We can talk all afternoon about what happened to them – was it inevitable or was it just bad management or what? But (it was) a very reliable source of employment in the state and also, by the way, a very reliable investment for people. They could buy a Fortune 500 company stock, get their dividend and attend the annual meeting, all in Montana. Now, we don’t have that. So people would buy Montana Power stock and they would collect the 7 or 8 percent dividend and that was great. We lost that. The idea of investing in a company that’s more of a start-up firm in the state – there just aren’t a lot of people interested in that. So when we lost Montana Power, we lost a source of great employment, steady employment, consistent service, but also we cut a bond with the past. But people don’t change that fast. Again, this is why our higher education establishment in Montana is so important, because entrepreneurs will thrive in areas where there’s quality higher education, research, innovation going on – they may not be involved directly, but their venture will thrive off of that environment, that milieu, if you will.

InBusiness: So you were born in Chinook. How did you make your way from Chinook to Havre and then over to Missoula?

King: I came here, to the University of Montana, in 1965. Took a masters degree in history. I went in the Army, I had an ROTC commission. At that time, it was an interesting time to be in the Army, but they had a big surplus of infantry officers. So after six months of active duty, they offered reserve commissioned officers release. So I went into assignment to a reserve unit and spent four years in the Peace Corps in Afghanistan. Came back to Montana, then, in 1975 – you know, my family’s here, etcetera – (and I) found a job in Havre working economic development. Spent from 1979 to 2000, until I came here. … It’s my home state and one of the nice things about Montana, you feel like, gee, even though I might live in Missoula, I can go to Billings and feel like I’m home. There’s a certain sense about it that I enjoy. Missoula, having been here as a student and having some relatives here, you pay attention to what’s going on here, even when you’re in a small town. When I came to school here, it was OK to come to Missoula, but by the late 60s, it was really questionable for someone from eastern Montana to come here. But that’s changed a lot, thanks in part to the football program. … But, also, Missoula’s a market now. We’re big enough in Montana now that we’re a market. We can be a market for products grown in the rest of the state. We’ve got a little company here that started at the University of Montana, chemistry department, Montana BioDiesel. They run the biobus. So you’ve got a graduate student there who works on this technology. He’s now created a company called Peaks to Prairie and his partners are a farmer up in Thompson Falls and a farmer in Big Sandy and an economic-development organization in Malta. They’re going to build a processing facility in Malta to process grain to make biolubricants first. Biolubricants, there’s a much better market than getting in the biofuel market right away. … All of a sudden, Missoula is a market, because we have Mountain Line transportation. Now, people in Missoula like the idea of having a renewable, sustainable product being used, so we’ll pay a little more, we’ll find a way to use this product in our public transportation. This community’s receptive to that. The areas in eastern Montana don’t have anywhere near the population to try to do this. So Missoula can be a market for producers in eastern Montana. That’s why growth in western Montana is not a negative for eastern Montana. It’s a big positive, because it creates opportunities. If you go to the Good Food Store, you look at the products that are in there, that are being sold in the Good Food Store, whether it’s a little fellow down in Victor with sausages, a Hutterite colony over by Choteau, a ranching co-op in eastern Montana, they’re selling into the Missoula market through the Good Food Store. If they’re successful, their next markets are Seattle or Portland, so I think that’s a big opportunity for this community. To me, that makes sense in economic development.

InBusiness: That does require, in eastern Montana, a little bit of change in attitude and thinking.

King: It does. They need to get a little more entrepreneurial in their ideas. I attended a meeting a few years ago of grain producers and they asked me to come down because they were looking at growing safflower. They were going to buy an old seed plant in Big Sandy and convert it into a mill to make safflower oil. That area of north-central Montana is the world’s best climate for growing safflower. So it’s a natural. So we had about 80 farmers there, and they needed commitments from those farmers for enough product so they could justify trying to put the safflower plant, the oil-seed plant, together. Most of those farmers were not willing to commit, because safflower is not a federally subsidized grain product. One of the farmers stood up and he said, “Let’s face it, we’re our own worst enemy. Wheat and barley, barley and wheat. And the government’s price-support program … we understand, and so we’re not going to change that.” So the idea of growing safflower and selling it to a local plant, which made a lot of sense, there was not the support for it that you’d think there would be, again because there was risk. Many people have studied this and talked about (it), but it comes down to, we need one or two good models to work and see the benefit to farmers. The change will happen, but it’s going to take a little time. When I talk about Missoula being a market, agriculture producers understand markets, the problem is, they’re selling a generic product into a worldwide market. If you want a better price, you need to find the niche market. You have to think like an entrepreneur and say, “Where’s my value proposition?” It isn’t selling grain on the world grain market. I work my tail off growing the best grain in the world and I don’t get any more price for it than somebody else does, in Russia. But if I grow this product, and there’s this niche market, and they’re willing to pay, that might make more sense. So you have to think in terms of markets and niche. That’s not a traditional thing in agriculture.

InBusiness: That’s true. But if you start looking at western Montana as a possible first stop for a niche market, that’s a different way of looking at the west.

King: This is why David Gibson has a hard job. Terribly hard job. Because he goes to Glendive and Sidney and most places and they see nothing in common with those of us over here. They see nothing in common. So how do you articulate something that makes sense at the state level? Well, I think you look at what the state can do to help cooperatives get together for products and then find ways to get those into the urban centers of Montana, where the consumers are. The state Department of Agriculture, I think they could do a little more in this area. North Dakota is a lot more aggressive on this sort of thing. It’s not easy; it’s very hard. When you go to the Farmers Market, and you buy a cantaloupe from the Dixon melon people, they’re related to another family south of Big Sandy who also are growing cantaloupe. This started off as a high school project by a kid in the ag program, Future Farmers of America. So this kid’s project was to find ways to supplement income on the farm, and he thought he would grow cantaloupe. It’s down on the Missouri River, south of Big Sandy. He found out that he could grow cantaloupe. Now his family sells it into the Farmers Market in Great Falls. Again, the consumers are in the big city. But now we have a product – what do they charge, $2 a pound for cantaloupe? – people pay it, because it’s good cantaloupe and they like the idea of actually buying it from the producer. So the Dixon melon guy comes in and he brings a whole pickup full of melons, and sells the whole thing at Farmers Market. The idea gets sparked because there’s an FAA student who’s got a project that changes the way we start to think about farming and how to make income. So little by little, I think, that would make a huge difference in a big part of the state, if people saw opportunity in the rural areas. And western Montana has a lot of rural areas as well. Not all of western Montana is urban.

InBusiness: Do you believe that there might be a point where whole areas of the state empty out in population so that those regions that are losing population become less and less economically viable?

King: I think that’s a real big issue. (In) some communities … there’s just not the services to support people and that’s a real concern. If you have an elderly relative living in a small town, and maybe she’s a widow, and her faucet breaks in the bathroom and she can’t get a plumber to come so she’s got to rely on a neighbor or something who might be gone, that sort of makes you question the viability of living in that town. That’s what we’re in danger of in the rural areas of eastern Montana, that … the services you need to support the population are disappearing. Hopefully, there’s a response to that. Hopefully, some people will see some opportunity. But the future of some of those small towns is really questionable. That’s nothing that an economic-development person can have much influence over. But you do have the ranching business, which is doing quite well, and a lot of the sparsely populated area of eastern Montana is ranch country. And it takes a lot of acreage, and you have people who love that lifestyle. Loggers and ranchers have a lot in common. They don’t do ranching and they don’t do logging, they ARE ranchers and loggers. Again, that’s a whole tradition in this state. For me, it’s been a lot of fun getting to know loggers and talking to these families, because you could put ranchers in their place, and it’s the same thing – they’re the same sort of culture. But again, these aren’t people who are on the cutting edge of economic development, entrepreneurial activity. But they take care of themselves and they’re valuable people in the state, they contribute to our communities. But … it’s hard to get consensus around a solid economic-development initiative at the state level because of those things. That’s why I think the local organizations are so important. The state’s finally coming around I think more and more to support that, which is welcome.

InBusiness: That’s inevitable, I think, that you see the state rely more on the local organizations, for exactly the same reasons we’ve talked about here: We have no single economy. No single solution is going to work for east or west, or for rural and urban.

King: One of the very important things in rural areas is they need the same sort of access to economic-development organizations that we have in the urban areas. It’s very encouraging to me to see rural areas start to come together to form regions. They have some common interests. I worked at Bearpaw Development (in Havre) for a long time. One of the reasons I stayed there for a long time was I worked in five counties and two Indian reservations. It was a lot of challenge and a lot of variety and a lot of great people working in small towns. That was a real privilege to work with. But we had those five counties that agreed to work together. Other parts of rural Montana – to get one county to agree to work with another one is a huge expectation. So one of the keys to doing what you can in rural areas is getting a capacity to help meet the needs of local economic development, and the only way you can do that is on a regional basis.

InBusiness: What sort of person is drawn to economic-development work? It’s half-private, half-public work; you work in the shadows a little bit. As you look around the state at your colleagues in other economic-development organizations, do you see any common traits?

King: (Laughs.) Well, like I said, economic-development people have sometimes been accused of being deal junkies. We’re a little bit like the real-estate agent who kind of brings buyer and seller together and gets it done. There’s satisfaction in seeing those things happen because you had an influence on getting something done that might not have happened otherwise. And so from a personal standpoint, it’s a real unique opportunity to bridge a gap between, say, local government and a business. So I think it appeals to people who have that, who enjoy that challenge. And it’s also a rewarding field in that sense. When I go to Seeley Lake, for example – I took my kid and his friends there this summer a couple times to go play golf. They have a nice little golf course. Well, when I go there, there’s Pyramid Lumber, and I say, you know, “we didn’t quote ‘save’ Pyramid Lumber. We helped the owners make a decision to stay in business. From a personal and professional standpoint, when you have that opportunity, it makes it all worthwhile. The other thing about economic development that is humbling is when you see a business grow and create jobs; you’re almost in awe of that process. One example is ModWest. Four guys who were working for a company called Dantis – it was a dot com company here in town. They came to us in the fall of 2000 and they wanted to start their own Web-hosting company. And I told them, “Don’t quit your day jobs, you guys.” But I gave them some idea on how to do a business plan and that kind of stuff. Well, three or four weeks later, Dantis announced it was closing. (The Missoulian) ran the picture of the office, with the computers still there, the chairs there, the desk. It was like, what happened? Boom, it’s gone. These guys come back and they said, “Well, our day jobs quit us. We’re going to start this business. We need a loan.” And we sat down with them and we said, “You know, you guys, not only are you not bankable, you’re not lendable from us. We don’t even understand your value proposition. What are you going to bring to the marketplace that will allow you to build up a company? You have experience, but you don’t have anything to show us yet as to what your real value proposition is.” Well, you know, they were sort of disappointed. But they went to work. They partnered with Tim Gillespie over here at InterTech, he helped them get going with some of their connectivity issues and such. Three years later, this company now is going to do $700,000, $800,000 in sales. They have no debt. Eight of 10 dollars from sales comes from out of state. So how in the hell did this company find customers in places like New York City and Los Angeles? So I asked (ModWest’s) John Masterson, I said, “Now, tell me, John, what makes you guys able to do what you do? Why would a customer in New York do business with you?” And he said, “Because we’re very good at it, and our rates are reasonable.” And he said, “There’s a lot of business to be had out there, so we can get our share of it.” They now have seven employees that came from zero. So from an economic-development standpoint, when you’re involved with that, and you had a little bit of help, maybe just some advice, but when you see an entrepreneur create a company and create jobs, that tells you that the American system, the opportunity we provide, really is a precious thing. And secondly, that’s what you’re hoping in a community is to create a place where people want to live, (then) they have some good ideas and talent, and they have the opportunity to try it. Above all, they also have the opportunity to fail. If they fail, I think, one of the great American traits is, we understand you can fail. It doesn’t make you a bad person. And many of the people we deal with in business have come from a failure to a success. And so you respect this area of private-sector initiative and ingenuity and hard work that results in jobs being created. And when you can help with that, that’s reward enough.

InBusiness: So you have a pretty steady stream of people who are basically coming through the door, saying “I need help in starting a business or developing my business?”

King: We get a lot of that. We usually refer those people to MCDC (Montana Community Development Corp.), to the small-business development center, so they can get some counseling right off, get them on the right track. If they’re in a retail or service business, you know, we don’t finance that; Rosalie’s (Cates of MCDC) office will help them finance that. So that’s the interplay we do with MCDC. And then we have a company like we just met with this morning, it has a great opportunity to do contracting using hyperspectral technology, and they need to get an agreement with the university because the university can get them onto several contracts. So these are sophisticated investors and business people, but we need to help them get their business plan and get them started and they’ll be off and running. So you have jobs being created by little entrepreneurs creating small service or retail businesses and entrepreneurs creating companies that have great potential. So between the two organizations, I think Missoula’s well-served in that regard. I think we’re very fortunate.

InBusiness: You probably see folks with varying backgrounds and levels of experience, from very sophisticated entrepreneurs to folks who just have a vague longing to get out there and see what they can do.

King: Uh-huh. There’s a lot of assistance out here today for people wanting to start a business. I recommend that they take advantage of every bit of it before they make a decision. Define the right niche to get the help they need. The banking world is very interesting. A lot of banks are looking at, when they make a loan, they’ll keep it all in-house rather than using the guarantee and selling off the guaranteed portion to the secondary market. Because of the rates in the market now, if they can make a good business loan, they’d rather have that whole loan in their portfolio. So one of the things we do in economic development is try to understand financial markets a little bit and give clients some help in doing loan proposals that have a better chance of success. And to get a bank to make a loan anymore – the lending industry is, commercial lending is complicated. There’s so many trip points that you can fail on that businesses need the right help. Whether it’s Steve Grover at the SBDC (Small Business Development Center) helping them put a basic business plan together or I’m trying to walk them through the process of buying land at the development park, there’s assistance available to people starting and growing businesses that we hope gives them a much better chance of success. I think that’s what we’re all pointed for is that, with the help we have available, the types of financing tools we have, that we increase the chances of success. We can’t eliminate the possibility they may fail, but we can increase the percentage chance of success. It’s not very scientific, and it still comes down to the person who’s doing it, that entrepreneur. What can they do? And sometimes you’re just absolutely, like when John Masterson was telling me about this and this, I was just amazed that they stuck it through and they found a way to bootstrap their company. I mean, these guys don’t have a lot of money. But they found a way to build their company. They did a couple of short-term loans with relatives and then they raised what money they had. They’re totally committed to it. So if they’re successful, they’ve earned every bit of it. It’s that’s kind of achievement that’s perhaps more commonplace in urban areas and less common in Montana, but we’re seeing good strong pockets develop in some of our larger communities, especially Bozeman, Missoula, Kalispell, Hamilton, that area.

InBusiness: So really when you talk about the future of Montana business, it rests on that person out there who’s going to start a business.

King: It does a lot. It does a lot. If you want to talk about a two-pronged strategy, one is to nurture, foster and encourage entrepreneurs and growing companies, link that with research at the university, build on that base. And the second is the retention of our key industries, which is going to be difficult. When you say retention, the very word isn’t very positive – it’s, I’m going to keep what I have, rather than grow something new. But it’s a critical strategy. You need to tend that garden of those people who have helped build our community, and those are the big manufacturers who have been here for many years. And you look at their employees and, you know, it’s just a solid base that a community can grow and diversify with. Probably one of the insights to understand eastern Montana is that you had very little value-added industry in eastern Montana. I grew up in Chinook, where there was a sugar-beet factory that was closed in the early 1950s. It took 20 years, 25 years before the last farmer gave up growing sugar beets in the Milk River Valley. They’d ship them to Billings. But that’s how long it took to adapt to the change. There are very few value-added processing and manufacturing facilities because what was there was pretty much allowed to go by the wayside. Whereas western Montana has had more of the manufacturing background, and I think it’s still a very important part of what we are. And then you’ve got this whole issue of what are we going to do with all the stuff in the woods. We need people to use it.

InBusiness: We need people to be thinking about different ways to use it as well.

King: Yes. We’ve got it. There’s no answer to it unless we’re willing to put people to work in the woods. We can use new technology and etcetera, but we’ve got to do forest treatment and then, with the material coming out of there, we have to have a market for it to make this work. And that’s why someone like Stone is so important, because they chip, they run a chipping operation and they’re a customer. If we can do a better job assuring them of the reliability of supply, that also helps keep the company here.

InBusiness: And then, work force issues, training issues, those all flow into retention as well. And being able and alert to that occasional big fish you can recruit and lure out here.

King: Yeah. When we’ve had a couple of opportunities for a company to come here, we asked for as much information as we could get about the company and its financial condition and the salaries and benefits that they were going to pay and the job requirements, the skill requirements. We would then take that to the city and the county, my board, with the question, do we want to go after this? So it’s not a decision that just, say, Dick King makes sitting in his office, it has to be a community decision. That’s why, when you talk about local economic-development organizations, the people who serve on on the board are very important. We’ve got about 95 members. MAEDC began as a committee of the chamber. We were spun off from the chamber in 1980. So it’s those people who contribute to our organization as members and who serve on the board who make that decision. The best I can do is present information, give my best take on it and then let the board determine if that makes sense. In addition to the business community, we have the city and the county on the board, the airport authority, the university, public schools. That helps to get a cross-section of the community to make sure that if we’re going to go after something like that, it makes sense. And believe me, the board sometimes says, “I don’t think we want to do that.” The boards of local development organizations are often overlooked, they’re sort of, gee, you’ve got these economic-development people, these individuals running around, you know, the Dick Kings, and Evan Barrett and Rosalie Cates and these people. But without our board of directors, we have nothing to stand on.

InBusiness: You rely on those folks to give you the cross-section of the community. They’re people who have been around maybe longer than you have.

King: That’s the other nice thing about working in economic development. You have the chance to meet this wide variety of people from your community.