Transcript Slide 1

BUTTE-SILVER BOW
Target Industry Report
September 9, 2014
AGENDA
• Stakeholder
Engagement
• Target
Industry Selection Process
• Target
Industries and Niches
• Target
Industry Summaries
• Product
• Site
Improvement
Selector Perception Survey
Butte-Silver Bow Target Industry Report | 2
PROJECT APPROACH
PHASE 1
Stakeholder
Engagement
• One-to-One
Interviews
• Focus Groups
• Online Surveys
PHASE 2
Target Industry
Analysis
• Target Industries
• Business Case
Analysis
PHASE 3
Strategic
Recommendations
• Strategic
Recommendations
• Best Practices
Butte-Silver Bow Target Industry Report | 3
PROJECT APPROACH
STAKEHOLDER ENGAGEMENT
INTERVIEWS &
FOCUS GROUPS
1-ON-1 KEY STAKEHOLDER
INTERVIEWS
RESIDENT SURVEY
INDUSTRY FOCUS GROUPS
BUSINESS SURVEY
Butte-Silver Bow Target Industry Report | 4
PROJECT APPROACH
TARGET INDUSTRY ANALYSIS
TARGET INDUSTRY
ANALYSIS
BUSINESS CASE
ANALYSIS
CLUSTER ANALYSIS
GROWTH POTENTIAL
BENCHMARKING
NATIONAL/REGIONAL TRENDS
Butte-Silver Bow Target Industry Report | 5
PROJECT APPROACH
TARGET INDUSTRY ANALYSIS
TARGET INDUSTRY
ANALYSIS
BUSINESS CASE
ANALYSIS
INDUSTRY SITE SELECTION
REQUIREMENTS & SCORECARD
COST OF OPERATIONS MODEL
OCCUPATIONAL ANALYSIS
REVERSE SITE SELECTION
DELIVERABLES:
Target Industry Analysis, Occupational Analysis, Cost of Operations Model,
Reverse Site Selection, Strategic Recommendations
Butte-Silver Bow Target Industry Report | 6
STAKEHOLDER ENGAGEMENT
RESIDENT SURVEY RESPONSES
What are the most significant challenges
facing Butte-Silver Bow?
Available jobs
Factor
Available jobs
Quality of public schools
Overall economic conditions
Aesthetics/appearance
Affordable healthcare
Safety
Parks & resources for recreation
Cost of living
Presence of colleges/universities
Employee compensation
Uptown district
Importance Rating
(1-5)
(1-5)
4.59
2.38
4.54
3.07
4.42
2.41
4.35
2.52
4.33
2.93
4.27
3.20
4.23
3.32
4.18
3.60
4.16
4.02
4.10
2.76
4.10
3.04
 397 Resident Respondents
66.2%
Uptown district
37.9%
Social barriers for newcomers
32.7%
Resources to support small…
30.6%
Quality of public schools
30.0%
Healthcare options
25.9%
Access to healthy foods
23.9%
Employee compensation
22.7%
Affordable housing options
18.1%
Regional planning
17.2%
Cost of living
10.8%
Local public transportation
10.2%
Safety
9.6%
Taxes
9.6%
Regional transportation
8.7%
0% 25% 50% 75%100%
Butte-Silver Bow Target Industry Report | 7
STAKEHOLDER ENGAGEMENT
BUSINESS SURVEY RESPONSES
Importance
(1-5)
Access to customers
4.58
Quality of life
4.56
Cost of living
3.97
Operating costs
3.95
Ability to attract & retain employees
3.93
Aesthetics/appearance
3.93
Utilities and infrastructure
3.90
Quality of public schools
3.88
Uptown district
3.75
Cost of utilities
3.71
Labor costs
3.71
Factor
Rating
(1-5)
3.08
3.73
3.85
3.38
2.56
2.39
3.28
3.03
3.37
3.17
3.26
What are the primary reasons your
business is located in Butte-Silver Bow?
Community ties/founded here
82.9%
Quality of life
41.4%
Ease of customer access
24.3%
Local business environment
21.4%
Favorable cost of doing business
21.4%
Proximity to collegs/universities
11.4%
Trained and educated workers
10.0%
regional transportation and…
Infrastructure
7.1%
7.1%
Proximity to suppliers
2.9%
0%
50%
100%
 79 Business Respondents
Butte-Silver Bow Target Industry Report | 8
STAKEHOLDER ENGAGEMENT
SWOT Analysis
Strengths
•
•
•
•
•
•
•
•
•
•
•
•
High quality of life
Great place to do business
Strong work ethic
Politicians are accessible to the public
Montana Tech & Highlands College
Low cost of living
Access to fiber optic networks
Strong sense of community pride
Local sense of belonging to a community
A safe place to live
Low business taxes and fees
Centrally located within the wider region
•
•
•
•
Opportunities
Union Pacific to have a greater presence
Junction at I-15 & I-90
Fed Ex’s first major hub coming to and from Canada
Leverage the Port of Montana
Weaknesses
•
•
•
•
•
•
•
•
•
High rate of poverty
Wage disparities
Lack of young professionals
Few sustainable middle class jobs
High rates of vacancy
Many buildings need renovations before they can be occupied
Problem with drugs in the community
Decaying infrastructure
Perception that government needs better balance between public
and business interests
Threats
•
•
•
•
Declining retail sector
Lingering perceptions of local labor unions
Closure of Montana Resources
Economic growth stalls
Butte-Silver Bow Target Industry Report | 9
TARGET INDUSTRY SELECTION PROCESS
Cluster Concentration
1) Which industries
are strong and are
concentrated locally
or regionally?
Industry Trends
2) Do the clusters
reflect national
growth trends?
Regional Assets
3) Are there local or
regional assets that
give industries a
competitive edge?
Vision Alignment
4) Do these clusters
meet the goals of
the community?
Butte-Silver Bow Target Industry Report | 10
TARGET INDUSTRY ANALYSIS
Competitive Assets
Industry Concentrations
(By Location Quotient, 2013)
Industry
Montana Tech & Highlands College
Employment
LQ
Natural resources and mining
460
1.92
Education and health services
3,470
1.45
Leisure and hospitality
2,274
1.36
Growing Festival Economy
Trade, transportation, and utilities
3,506
1.16
Legacy of Mining
Other services
495
1.01
Information
241
0.76
Construction
495
0.72
1,260
0.58
Community Pride
Financial activities
465
0.52
Fiber Optic Network
Manufacturing
672
0.47
High Quality of Life
Professional and business services
Major Interstate junction at I-15 & I90
Major rail intersection – BNSF & UP
Natural Beauty & Outdoor Recreation
Port of Montana
Source: BLS
Uptown District & Historic Structures
Butte-Silver Bow Target Industry Report | 11
TARGET INDUSTRIES AND NICHES
Tourism &
Destination
Retail
Manufacturing
Logistics
Mining &
Environmental
Engineering
Outdoor sports
Light assembly
Warehousing
Mining support
services
Innovative &
Specialized
Services
Economic Development Activities:
Mature/Core
Targets
Specialized truck
delivery
• Retention
• Expansion
Diversification
Targets
Micro-distilleries
DIY manufacturing
Supply chain
management
Mining technologies
Publishers
Web app design
• Attraction
• Entrepreneurship and Small
Business Development
Emerging
Targets
• Expansion
• Attraction
• Entrepreneurship and Small
Business Development
Tour packages
Prototyping
Festival economy
Aerospace
Bed & breakfasts
Creative content
providers
International trade
services
Environmental
remediation
Education IT
Health IT
Butte-Silver Bow Target Industry Report | 12
TOURISM & DESTINATION RETAIL
Wages Per Capita (Total Employment)
Number of Businesses: 253
$25,000
Total Square Footage: 2.8 million
Total Revenues: $900 million
$20,427
$20,000
$17,820
$16,010
$15,000
$10,000
(3,465)
(23,365,530)
(90,988)
$5,000
$0
Butte-Silver Bow
“Heat map” of Butte-Silver Bow
Businesses
Lower Density
Higher Density










Montana
US
INDUSTRY CRITERIA
Reliable workforce with hospitality experience
Low labor cost
Natural, historical, and cultural assets
Entertainment venues
Transportation infrastructure
Strong airport accessibility
Low cost of doing business
Stable regulatory environment
Hotel/Convention space
Food support
Sources: BLS,Sources:
AE, ReferenceUSA
AE, BLS
Butte-Silver Bow Target Industry Report | 13
TOURISM & DESTINATION RETAIL
RANKING OF BUTTE-SILVER BOW’S TOURISM & DESTINATION RETAIL INDUSTRY
Assessment Rationale
Tourism & Destination Retail
Variable
• Employment levels fluctuate year to year due to seasonality
• Overall, employment growth is slow, but positive
Employment Trends
• Wages are competitive compared to state and U.S.
• Wage growth is strong, growing by 27% between 2003 & 2013
Wage Trends
• Establishments have remained stable since 2003
• Growth in establishments was 3.3% from 2003 to 2013
Business Establishments
• Butte-Silver Bow has the semi-skilled workers necessary
Employee Skill Set
• Strong outdoor recreation activities
• Historical bed and breakfast locations
• The retail sector has lost major employers in recent years
Industry Assets
Leading
Strong
Average
Weak
Overall Tourism & Destination
Retail Industry
Butte-Silver Bow Target Industry Report | 14
TOURISM & DESTINATION RETAIL
Industry Action Plan
1. Create retail clusters along major corridors. Provide incentives to new
and existing retailers to move or relocate along the chosen corridors.
Offer moving costs, financing options, and grants for modernizing old
buildings
2. Create and market vacation packages that combine natural attractions,
historical sites, cultural events, festivals, retail, and outdoor recreation
3. Recruit a home supply store
4. Work with Butte Plaza Mall owners to develop plan for empty spaces
5. Continue to facilitate & encourage development of bed & breakfast
establishments
Butte-Silver Bow Target Industry Report | 15
MANUFACTURING
Number of Businesses: 41
Total Square Footage: 350,000
Total Revenues: $146 million
Wages Per Capita (Employment)
$70,000
$61,137
$60,000
$53,317
$50,000
$43,818
$40,000
$30,000
(12,039,266)
(672)
(18,342)
$20,000
$10,000
$0
Butte-Silver Bow
Montana
US
INDUSTRY CRITERIA
“Heat map” of Butte-Silver Bow
Businesses
Lower Density
Higher Density





Skilled & trained workforce
Low labor cost
Transportation infrastructure
Strong airport accessibility
Stable regulatory environment
Sources: BLS, AE, ReferenceUSA
Butte-Silver Bow Target Industry Report | 16
MANUFACTURING
Cost of Operations: Wind Turbine Manufacturing
Local Cost of Operations Index
140%

Butte-Silver Bow is marginally
more expensive than benchmarks

Low property taxes are a strength
to the region

Utilities are the primary negative
cost factor
119%
120%
100%
96%
100%
91%
80%
60%
40%
20%
0%
BSB, MT
Golden, CO
Pocatello, ID
Twin Falls, ID
Total Annual Operating Costs
BSB, MT
$8,617,877
Golden, CO
Pocatello, ID
Twin Falls, ID
$10,222,024
$7,845,822
$8,298,454
Butte-Silver Bow Target Industry Report | 17
MANUFACTURING
RANKING OF BUTTE-SILVER BOW’S MANUFACTURING INDUSTRY
Assessment Rationale
Manufacturing Variable
• Significant positive net employment growth, 27%, since 2003
• Growth in employment increased throughout the recession
Employment Trends
• Industry wages are more competitive than national wages
• The state is more competitive for manufacturing wages
Wage Trends
• Establishments diminished strongly during the recession, only
seeing growth in the most previous year of data
• 2012 - 2013, growth in establishments was strong, at 10.8%
Business Establishments
• Employee skills seem specialized in a few areas, but training
may be needed many different manufacturing types
• The local labor force is well-suited for manufacturing jobs,
having strong work ethic and a propensity for skilled labor
Employee Skill Set
• Butte-Silver Bow is competitive for employee wages, building
payments, and property taxes
• Competitiveness is hampered by high utility costs
Cost of Operations
Leading
Strong
Average
Weak
Overall Manufacturing Industry
Butte-Silver Bow Target Industry Report | 18
MANUFACTURING
Industry Action Plan
1. Implement a shovel ready certification program within the TIFID to
attract development and streamline development and permitting
process
2. Create a “Makers’ Space” to support manufacturing entrepreneurs and
promote innovation
3. Consider establishment of 3D printing & rapid prototyping center
4. Work with local high schools and trade schools to develop needed
workforce development programs for manufacturing
5. Market the county’s high school and tech school manufacturing job
training programs
Butte-Silver Bow Target Industry Report | 19
LOGISTICS
Wages Per Capita (Employment)
Number of Businesses: 75
$70,000
$59,794
Total Square Footage: 2.7 million
$60,000
Total Revenues: $2 billion
$50,000
$45,932
$47,767
(563)
(22,617)
Butte-Silver Bow
Montana
$40,000
$30,000
$20,000
(6,887,500)
$10,000
$0
US
INDUSTRY CRITERIA
“Heat map” of Butte-Silver Bow
Businesses
Lower Density
Higher Density









Solid transportation infrastructure
Access to international sales and distribution channels
Low labor costs
Availability of inexpensive land
Availability of inexpensive utilities
Export and import products
Proximity to market
Hub airport access
Public policy support
Sources: BLS, AE, ReferenceUSA
Butte-Silver Bow Target Industry Report | 20
LOGISTICS
Cost of Operations: Warehousing
Total Cost of Operations Index

The region is cost competitive vs
benchmarks

Employee payroll (38%) and building
payments (37%) are the primary cost
factors

Utilities only comprise 7% of costs, but
are much higher than benchmarks
140%
116%
120%
105%
100%
95%
100%
80%
60%
40%
20%
0%
BSB, MT
Golden, CO
Pocatello, ID
Twin Falls, ID
Total Annual Operating Costs
BSB, MT
$6,507,220
Golden, CO
$7,558,618
Pocatello, ID
Twin Falls, ID
$6,802,176
$6,187,598
Butte-Silver Bow Target Industry Report | 21
LOGISTICS
RANKING OF BUTTE-SILVER BOW’S LOGISTICS INDUSTRY
Assessment Rationale
Logistics Variable
• Employment has yet to reach pre-recession levels
• Despite growth since the recession, the most previous year
saw a 2.4% decrease in industry employment
Employment Trends
• Wages are rising, but remain competitive against state & U.S.
Wage Trends
• Establishment growth has outpaced the state and the nation
• Establishments have surpassed pre-recession levels
Business Establishments
• The semi-skilled nature of the jobs in this industry are a good
fit for the local workers in this industry
• Strong work ethic is a competitive advantage for the region
Employee Skill Set
• Total operating costs are lower in Butte-Silver Bow than all
benchmarks except Twin Fall, ID
• Shipping and utilities are the region’s least competitive
aspects, but those are only a small percent of overall costs
Cost of Operations
Leading
Strong
Average
Weak
Overall Logistics Industry
Butte-Silver Bow Target Industry Report | 22
LOGISTICS
Industry Action Plan
1. Offer additional incentives to suppliers of existing businesses to develop
the supply chain of target industries
2. Create and implement a marketing campaign which promotes ButteSilver Bow as a hub for road and rail transportation
3.Work with local high schools and trade schools to develop effective job
training programs or apprenticeships, which teach modern logistics
skills and practices
4.Market Port of Montana as a logistics hub between Canada and Latin
America
Butte-Silver Bow Target Industry Report | 23
MINING & ENVIRONMENTAL ENGINEERING
Number of Businesses: 75
Total Square Footage: 784,000
Wages Per Capita (Employment)
$83,764
$85,000
Total Revenues: $195 million
$80,000
$75,000
$74,072
(3,798,209)
$69,969
$70,000
(793)
$65,000
(21,775)
$60,000
Butte-Silver Bow
Montana
US
INDUSTRY CRITERIA





Skilled & trained workforce
Low labor cost
Transportation infrastructure
Strong interstate accessibility
Stable regulatory environment
“Heat map” of Butte-Silver Bow
Businesses
Lower Density
Higher Density
Sources: BLS, AE, ReferenceUSA
Butte-Silver Bow Target Industry Report | 24
MINING & ENVIRONMENTAL ENGINEERING
RANKING OF BUTTE-SILVER BOW’S MINING & ENVIRONMENTAL ENGINEERING INDUSTRY
Assessment Rationale
Mining & Environmental
Engineering Variable
• Employment grew steadily through the recession but has
remained flat since 2009
• Growth in employment from 2003 to 2013 was 27%
Employment Trends
• Wages are higher in comparison to the rest of the state,
making the region less competitive
• The region is still competitive when compared against U.S.
Wage Trends
• Since the recession, establishments recovered more quickly
than Montana or the U.S.
Business Establishments
• Legacy of skilled labor in mining
• Wages for key positions remain competitive compared to U.S.
Employee Skill Set
Leading
Strong
Average
Weak
Overall Mining &
Environmental Engineering
Butte-Silver Bow Target Industry Report | 25
MINING & ENVIRONMENTAL ENGINEERING
Industry Action Plan
1. Create more programs, like the What a Blast program, that engage
high school students in mining or environmental engineering to
generate interest for the industry
2. Market Butte-Silver Bow as a hub for environmental remediation
services
3. Establish an annual conference or trade show that showcases mining
technologies
Butte-Silver Bow Target Industry Report | 26
INNOVATIVE & SPECIALIZED SERVICES
Number of Businesses: 177
Wages Per Capita (Employment)
Total Square Footage: 3.2 million
$60,000
Total Revenues: $303 million
$50,000
$40,000
$53,089
$38,283
$41,239
$30,000
$20,000
(22,071,491)
(1,402)
(66,958)
$10,000
$0
Butte-Silver Bow
“Heat map” of Butte-Silver Bow
Businesses
Lower Density
Higher Density











Montana
US
INDUSTRY CRITERIA
Skilled professional workforce
Entrepreneurial environment
Existing medical presence
Available venture capital
Proximity to market
Institutional research and development
Affordable lab space
International airport access
Business friendly climate
Low tax environment
Public policy support
Sources: BLS, AE, ReferenceUSA
Butte-Silver Bow Target Industry Report | 27
INNOVATIVE & SPECIALIZED SERVICES
Cost of Operations: Web App Design
Local Cost of Operations Index
140%

Butte-Silver Bow is comparable to
benchmarks for this industry

Employee payroll and benefits
comprise 89% of costs

Utilities prices are the least
competitive cost factor
128%
120%
100%
100%
100%
93%
80%
60%
40%
20%
0%
BSB, MT
Golden, CO
Pocatello, ID
Twin Falls, ID
Total Annual Operating Costs
BSB, MT
$1,634,188
Golden, CO
Pocatello, ID
Twin Falls, ID
$2,097,976
$1,630,894
$1,525,924
Butte-Silver Bow Target Industry Report | 28
INNOVATIVE & SPECIALIZED SERVICES
RANKING OF BUTTE-SILVER BOW’S INNOVATIVE & SPECIALIZED SERVICES INDUSTRY
Assessment Rationale
Innovative & Specialized
Services Variable
• Local employment has not followed the steady growth trends
seen state-wide and nationally
• Employment has grown by 30.4% since 2003, but has not yet
recovered to pre-recession levels
Employment Trends
• Wages have stayed fairly flat, but remain competitive against
state and local averages
Wage Trends
• Establishments have seen solid growth since 2011, at 5.4%
• Butte-Silver Bow will be able to rely somewhat on the growth
that is taking place at the state and national level
Business Establishments
• The occupational analysis shows that while wages are
competitive, some key jobs are underrepresented locally
Employee Skill Set
• Apart from utilities costs, Butte-Silver Bow is generally more
competitive than two out of three benchmarks
• Travel is more expensive in Butte-Silver Bow, while offering
fewer flight options.
Cost of Operations
Leading
Strong
Average
Weak
Overall Innovative &
Specialized Services Industry
Butte-Silver Bow Target Industry Report | 29
INNOVATIVE & SPECIALIZED SERVICES
Industry Action Plan
1. Develop a tech-based business accelerator or incubator
2. Allow live/work product zoning
3. Develop co-working space that hosts entrepreneurs, seminars,
guest speakers, and networking events
4. Expand connectivity of fiber network throughout Uptown and
then throughout residential areas
5. Offer housing options to local artists which include 100% home
financing or price levels based on income
6. Offer coursework at Montana Tech or Highlands College for
entrepreneurship
Butte-Silver Bow Target Industry Report | 30
PRODUCT IMPROVEMENT
Product Improvement Strategies
1. Consider locating the Highlands College expansion Uptown, to occupy currently vacant space
2. Commission a highest and best use study to cover the TIFID to ensure all of the land is properly utilized
3. More strict adherence to code enforcement policies
4. Consider combining economic development organizations to increase efficiencies in economic development efforts
5. Create an alumni network to bring highly-skilled Butte-Silver Bow natives back to the region
6. Develop a “go to” process for business attraction, retention, and expansion
7. Leverage the Butte AeroTec Facility to attract additional high-tech research and development to the region
8. Raise funds for marketing ventures through public / private partnerships
9. Establish a united regional brand
10.Celebrate regional successes by engaging the media to cover positive developments in the community
11.Market to industry-related conferences and trade shows
Butte-Silver Bow Target Industry Report | 31
SITE SELECTOR PERCEPTION SURVEY
What is your current perception of
Butte-Silver Bow, MT?
Neutral,
43%
If you have worked with Butte-Silver Bow in the past,
please rate your satisfaction with the agency
Positive,
43%
Responsiveness
4.5
Ability/willingness to coordinate with
local economic developers/officials
4.5
Accessibility
4.3
Availability of business incentive tools
4.3
Negative,
14%
1
2
3
4
5
Which of the following cities have you considered most often for business locations for
your clients?
Lincoln, NE
7.0
Golden, CO
6.0
Twin Falls, ID
5.2
Yakima, WA
4.7
Pocatello, ID
4.6
Helena, MT
3.3
Great Falls, MT
3.0
Butte, MT
2.2
1
2
3
4
5
6
7
8
Butte-Silver Bow Target Industry Report | 32
SITE SELECTOR PERCEPTION SURVEY
Based on your experience, please rate the aggressiveness of the economic
development marketing activities for the following cities
Lincoln, NE
3.7
Twin Falls, ID
2.7
Butte, MT
2.5
Pocatello, ID
2.3
Golden, CO
2.3
Great Falls, MT
2.3
Yakima, WA
2.2
Helena, MT
2.0
1
2
3
4
Based on your experience, please rate the aggressiveness of the economic
development incentive programs for the following cities
Lincoln, NE
3.1
Pocatello, ID
2.5
Twin Falls, ID
2.3
Helena, MT
2.3
Butte, MT
2.3
Great Falls, MT
2.1
Golden, CO
1.7
Yakima, WA
1.4
1
2
3
4
Butte-Silver Bow Target Industry Report | 33
THANK YOU!
Butte-Silver Bow Target Industry Report | 34
APPENDIX: COST OF OPERATIONS SOURCES
Employee Payrolls: Bureau of Labor Statistics Occupational Employment Statistics (http://www.bls.gov/oes/current/oessrcma.htm)
Employee Benefits: Bureau of Labor Statistics Employer Costs for Employee Compensation (http://www.bls.gov/ro7/ro7ecec.htm)
Electric / Natural Gas Rates: Energy Information Administration (http://www.eia.gov/)
Water / Sewer Rates: County and City Websites
Land Costs / Property Lease Rates: Averages found from LoopNet (www.loopnet.com)
Construction Costs: Reed Construction Data (http://www.reedconstructiondata.com/rsmeans/models / 2012 Means Construction Indexes)
Property Tax Rates: County and City Websites
Industry Clusters: U.S. Cluster Mapping (http://clustermapping.us/home/)
Travel Costs: Bureau of Transportation Statistics (http://www.rita.dot.gov/bts/airfares)
Hotel Costs: Hotel Price Index (http://files.hotel-price-index.com//2010/full-year/pdf/HPI_USA_2010.pdf)
Freight Costs: UShip (www.uship.com)