A successful entrepreneur from North Dakota hopes to open a second office in Billings.

But, it takes more than hope.
Gerald Groenewold and his Energy & Environmental Research Center, appears to be
the only corporation actively exploring a move to this area after Dell Computers picked
Oregon for its next tech center.

By JAN FALSTAD
Of The Gazette Staff

"We’re going to get there," Groenewold said of his expansion to Billings.
For now, two things stand in his way.
To expand his $19 million not-for-profit Grand
Forks business, which currently employs 230 workers,
he needs to keep adding customers. Currently, the
company is pursuing a "major" coalbed methane
project in the Powder River Basin.
"If that happens and if we can expand into
Montana, then Billings could be the headquarters,"
Groenewold said.
He also needs some financial incentives from
local economic development officials.

N.D. on the rise

In Montana, disparaging North Dakota jokes can
run as thick as cheat grass in July. But the rapid pace
of economic development in our sister state is no
joke.
The latest Forbes/Milken list of best places to do
business in the U.S. ranked three North Dakota cities
higher than it did in 2000.

For metro areas below 177,000 residents,
Bismarck moved up from 30th place to 18th last year. Fargo-Moorhead moved up 10 spots to 21st. And Grand
Forks gained 11 notches to finish 72nd. That growth is leading to real money in real pockets.
Billings rose on the list too, from 37th in 2000 to 12th place this year, but so far has been unable to turn that
reputation into a flood of jobs.
Employment in Grand Forks has increased almost five percent over the last three years. Primary sector
manufacturing has grown by more than 20 percent in same period. And in three years, Grand Forks saw a 19
percent improvement in annual per capita incomes, from $20,700 in 1997 to more than $24,700 in 2000.

East Grand Forks boasts a Cabela’s store and a Danish company manufacturing wind turbine blades. And
there are parks and greenways sprouting where devastating floods hit most recently in 1997.
The EERC is about to break ground on a new 47,000-square-foot building costing
$8 million. The new space will allow Groenewold to add 100 more jobs for a total of
330.
"We have 19 job ads out now, so we’re growing very, very fast," he said.

Keeping up with the neighbors

Neighbors like North Dakota and Idaho have abundant economic incentive
packages to help lure new businesses, or to help existing businesses add jobs.
In Idaho, Twin Falls landed a Dell Computer technology center in part because of
the state’s irresistible economic incentive package.

Idaho diverts 3 percent of its state unemployment insurance fund to train workers
for new jobs. Jay Engstrom, Idaho’s economic development administrator, said the
program started in 1996 and it reimburses businesses after they have actually trained
workers and kicked in 25 percent of the costs.

"We’ve done 61 projects and created 9,747 planned number of new employees," Engstrom said. To be
eligible, businesses must pay workers at least $10.32 an hour plus benefits.
"That way, we get away from training Wal-Mart employees as opposed to the Ma and Pa businesses,"
Engstrom said.
North Dakota has both state-funded and regional economic development funds offering low-interest loans
to new businesses and established businesses interested in expanding.

For the EERC, the incentives amount to between $5,000 to $10,000 in training money per worker. And a
decade ago, Grand Forks granted $1 million to help the EERC construct its first building and to keep 160 jobs
in town. About 20 jobs would have been lost without a new facility.
Accepting bricks-and-mortar funding is philosophically acceptable to Groenewold. But he’s proudof saying
he has never taken a dime of legislative funding from North Dakota for programs or research.
"I made a promise that as long as I was director, we would not take any state money," he said. "If we take
one state dollar, then you lose your freedom."

Groenewold gives high marks to Montana’s congressional, state and local officials for trying to attract his
company.
"I just wish they had more tools," he said of the state’s incentives.

Money talks

We do have the tools, insists Joe McClure, executive director of the Big Sky Economic Development
Authority. "We just need to sharpen them.
McClure acknowledges that he feels "slightly underarmed" when it comes to competing with neighboring
states for economic development.
His office is working with other Montana officials to create legislation that would route more money into
economic development.

Initially, EERC was talking about bringing up to 15 jobs to Billings with expectations to grow from there.
With that in mind, McClure said he felt like his incentive offer was generous.
He views incentive packages like any other business deal.
"They have to be worth it. You don’t spend $5 to make $4," he said. "Some communities go overboard in
offering incentives and don’t look at the long-term benefit to the community."

With no other businesses actively looking at a move to Billings, McClure said his staff will continue to talk to
companies in big cities in surrounding states to "let them know that Billings is open for business."

The boss and the vision

Groenewold describes himself as a "hard-nosed business man with a soft soul who cares about the
environment."
The geologist has been talking about moving to Montana for seven years. But that effort hit asnag recently.
A few months ago, someone at the Department of Commerce e-mailed Groenewold a note that temporarily
derailed his plans to move here. The note from the unnamed official told Groenewold to forget North Dakota
and build his new facility in Montana.
"That bothered me very, very much. I’m not interested in setting up a competitive situation between North
Dakota and Montana," Groenewold said.

"Just the opposite. I’m looking for an easy way to build a partnership between Montana and North Dakota
with EERC as the vehicle."
Groenewold said after the e-mail, he decided to stop his expansion plans for a while and regroup.
"Then I asked around to see if that was a common attitude or if maybe that attitude was exceptional, and it
was," Groenewold said. "So, no, we’re back on track."

More life’s lessons

The 1972 Ph.D. graduate from UND in geology has two other life lessons for Montanans trying to attract
well-paying, stable jobs.
Montana’s high marginal income tax rate, which few pay because federal taxes are deductible before the
state tax kicks in, doesn’t register on his radar screen in deciding whether to move to West.
Billings’ low unemployment rate doesn’t either, although Dell Computers cited that as a reason it chose
Oregon. Groenewold said Grand Forks also has few unemployed workers, but it doesn’t matter because he
recruits top candidates from all over including Seattle, Philadelphia or the Silicon Valley.
By positioning EERC in the right technology fields and developing an international reputation, the top
scientists are interested, he said. They are willing to move the flat, cold and windy north country because of a
good wage and something even rarer.

"We give them the chance to be the best in the world at what they do," he said. "Money can do a few things,
but it’s about corporate culture and attitude."

International reputation

The Grand Forks executive has been coming to the Billings area with his family for many years,first looking
seriously at doing business in Billings in 1995.
"It’s like my second hometown," Groenewold said.
The words aren’t just plastic platitudes from a businessman wanting to flatter the locals. Groenewold is a
historian and adores the history of the West. He serves as president of the Frontier Heritage Alliance and is
active in historical projects in a five state area including Montana.

He said allowing oil-and-gas drilling in the Valley of the Chiefs of Montana was like "drilling for oil on the
floor of the Sistine Chapel."
He’s proud of that phrase. "It was heard round the world and was quoted in Congress," he said. The
ancient pictograph area was withdrawn from development.

The two Interstate highways flowing into the Magic City and the airport also are attractive, hesaid. Air travel
is a key to his doing business successfully in 49 states and 47 countries.
"We are the largest single draw for air traffic in and out of Grand Forks and have been for eight or nine
years," he said.

The Energy & Economic Research Center staff flies 363 trips a year out of Grand Forks or 1 1/2ticket per
day. It attracts two to three in-coming groups per week.Cash and culture
Culture counts in attracting the brains who bring the money, he says. Cities and universities need to
understand that they must embrace change, just like private business does. But it’s a hard lesson for anyone to
learn, he said, quoting his father’s words.
"My boy, you need to understand that the only people who like a change is a wet baby," he said. "That’s the
thing that really slows a lot of companies. They want to keep everything the way it is."

And economic development people tend to miss another lesson, he said. People will move from the
Silicon Valley to Grand Forks more readily if the towns offer fine dining and culture because work is just one part
of life.

"It’s about great symphony, great theater. The arts are very important. We have a magnificent museum of art
here (on UND campus)," Groenewold said. "It’s the old question of what are you going to do on a Tuesday night.
That’s another reason I like Billings."
When told Billings voters narrowly defeated a mill levy to support culture, he said, "Oh my God. It’s a step
backward."

The road ahead

Economic development is mostly through the county and the county has to be willing to provide some
financial incentives and make a decision about what kind of jobs they want, he said. "If they want telemarketing,
which is not where people should go, then leave me out. If they want a quality partnership, then I’m interested."
Groenewold remains interested in setting up another office in Billings if his company’s needs are met and
the customers materialize.

"We’re going to get there, but it will take a while," he said.
Snapshot of a tech company

The Energy & Environmental Research Center is based at the University of North Dakota in Grand Forks and specializes in
moving technology out of the laboratory and into commercial use.

The goal is to market new technology to solve real-world energy and environmental problems.
The not-for-profit center is on campus, but operates as a separate business.
Here’s more:
The EERC has served more than 700 clients in 49 states and 47 countries.

Handled 234 active contracts last year.
About 82 percent are private sector contracts.
Employs 230 people and plans to add 100 jobs over the next three years.
Average salary is $52,000 plus benefits. Lowest wage is $10 per hour plus benefits.
Starting an $8 million building expansion on the UND campus.
Started in 1951 as a federal facility under the U.S. Bureau of Mines. Became part of UND in 1983, but receives no
state-appropriated funding.

Focuses on a global market demand for environmental technology estimated to hit $586 billion by 2008.
EERC specializes in pollution prevention, waste management and clean air, water and soil technologies.
The technology is used for many purposes including cleaning saline water from oil and gas production, producing wind and
biomass energy, emission control, lowering emissions from coal plants and waste site cleanup.
Engaged in a regional program to use EERC technology to help production and environmental problems in the Wyoming
and Montana coalbed methane fields.

Note: Some of these products were developed with other corporate partners and some are still being field tested.

Source: The company’s Website: http://www.undeerc.org

Jan Falstad can be contacted at (406) 657-1306 or at [email protected]

http://www.billingsgazette.com/index.php?id=1&display=rednews/2002/07/07/build/business/10-eerc.inc