Transcript Reinvesting in Montana’s Economic Future

REINVESTING IN MONTANA’S
ECONOMIC FUTURE
Presentation Date
Location
A BRIEF LOOK BACK…
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1999 Session, Rep. Doug Mood sponsored HB260 entitled
“Encourage Economic Development via Investment in
Research/Commercialization Projects.”
The bill was a product of Governor Racicot’s Jobs & Income
initiative and the Vision 2005 (Agricultural) initiative. The bill
was passed into law but used a coal tax diversion for funding.
The funding source was ruled unconstitutional by the Montana
Supreme Court, leaving the programs unfunded.
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A special session was called by Governor Racicot in May of
2000 to, among other things, fund the programs through a
constitutional source.
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Then Rep.Karl Ohs sponsored HB1 during the 2000 Special
Session. It was a bill entitled “Legislation appropriating funds
from the General Fund for programs established through the
good-faith efforts of the Fifty-Sixth Montana Legislature in
HB260.”
PROGRAMS INITIATED OR
ENHANCED AS A RESULT…
Thanks to the united efforts of great leadership and a large coalition of
partners, the following programs were initiated or enhanced:
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Montana Growth Through Agriculture
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Montana Cooperative Development Center
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Montana Board of Research and Commercialization Technology
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Small Business Development Centers
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Montana Technology Innovation Partnership (formerly SBIR)
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Certified Regional Development Corporations (previously Certified
Communities program)
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Montana Manufacturing Extension Center
Trade and International Relations Bureau
RESULTS FROM THE 2009 SESSION
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The 1999 session sun-setted the programs after 5 years. In the 2005 session,
that sunset was moved to 10 years, meaning that the programs were scheduled
to sunset in 2010, necessitating their renewal in the 2009 session.
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During the 2009 Legislature House Bill 123, entitled Fund Statutory Economic
Development Programs, was introduced to extend the sunset on the eight
economic development programs from June 30, 2010 to June 30, 2019.
House Bill 123 as passed by the Legislature provides level funding for all of the
economic development programs from June 30, 2010 to June 30, 2019 except
for the following two programs.
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The Growth Through Agriculture Program is reduced from $1.25 million per year
to $625,000 per year for the period from July 1, 2010 until June 30, 2013. On July
1, 2013 the funding will go back up to $1.25 million per year through June 30,
2019.
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The Research & Commercialization Program is reduced from $3.65 million per
year to $1.275 million per year for the period from July 1, 2010 until June 30, 2013.
On July 1, 2013 the funding will go back up to $3.65 million per year through June
30, 2019.
THE PURPOSE OF THIS REPORT
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The 2019 Economic Development Programs continue to be key
to the success of Montana’s economic development. This is
especially true during these challenging economic times.
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Prior to inclusion in this report, each program went through a
review by a subcommittee of Montana Economic Developers
Association (MEDA) which was intended to…
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Evaluate the effectiveness of these economic development
programs
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Determine what modifications, if any, should be made for
program improvement.
This report, entitled “Reinvesting in Montana’s Economic
Future”, has been assembled as a result of the committee’s
study and demonstrates each program’s strengths, purpose
and success.
Montana Growth Through Agriculture
Program (GTA)
The Growth Through Agriculture
program and the Montana
Agriculture Development Council
were established by the Montana Legislature to
strengthen and diversify Montana's agricultural
industry through private-public partnerships that
assist in the development of new agricultural
products and processes, creating new jobs and expanding
small ag-business opportunities.
Montana Growth Through Agriculture
Program (GTA)
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Current Funding: $625,000
Projects Funded: 456*
Total Value of Awards Given: $10,101,107.54
Total Match by Non-State Funds: $197,397,053.79
For every dollar provided by the State: $6.21*
generated
* This is an estimate. Final figures will be provided the end of November,
2010.
GTA SUCCESS STORY
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Assisted: Montana Specialty Mills, LLC (MSM)
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Description of Need: MSM was forced to relocate its operations due to circumstances
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beyond it control. Faced with relocation, the company considered many other sites,
including some that were out-of-state. The company needed financial assistance to
perform a feasibility study aimed at determining the best location for the operation in
Montana.
Assistance Provided: $46,500 for consultant services
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Outcome:
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The study recommended locating a new plant in Great Falls with double MSM’s current
capacity;
The study showed that the new plant’s direct economic impact will be $13.35 million
(currently $6.68 million);
Indirect impacts will include retained payroll, plant construction and additional
employment.
Dollars leveraged: GTA funding was matched by $52,900 in private funds. MSM expects
to spend approximately $4.5 million for the relocation and expansion of its operation.
Certified Regional Development
Corporations (CRDC)
CRDC’s are responsible for helping
local officials, communities and
businesses “assess, plan, and facilitate
action” within their regions.
CRDC’s are required to have the
support of all counties and a
majority of the incorporated cities
and towns in their region to obtain
and maintain certification. CRDC’s
receive regional capacity building
grants from the Department of
Commerce on an annual basis.
Certified Regional Development
Corporations (CRDC)
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Current Funding: $425,000 per year
Funds Leveraged: $22.4 million
Jobs Created/Retained: 1,445
Businesses Assisted: 1,271
Loans Provided: 157
Total Loan Value: $14.5 million
INSERT YOUR CRDC SUCCESS STORY HERE
(suggested outline below)
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Name of CRDC
Business/Agency Assisted
Description of Need
Assistance provided
Outcome
Dollars leveraged
Montana Technology Innovation Partnership
(MTIP)
The Montana Technology Innovation Partnership
(MTIP) is a Montana Department of Commerce
initiative created to promote technology
commercialization as a viable economic development
strategy for the State of Montana. Our mission is to
help build the short-term benefits of technology
research and development into the long-term rewards
of economic development.
Montana Technology Innovation Partnership
(MTIP) Figures as of May, 2010
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Current Funding: $50,000 per year
Montana Awards Received 2000-2009: 326
SBIR Funds to Montana Companies 2000-2009:
$85,359,799
Annual SBIR Average Awards made to Montana
Companies: $8,535,979
Montana Technology Innovation Partnership
(MTIP)
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Assisted: Lee & Maggie Arbuckle, Billings, MT developers of the Native Seedster, a new
technology for harvesting wild native grass seeds.
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Description of Need: In order to move forward with their research and commercialization
development, they needed early-stage seed capital, assurances their intellectual property (IP) was
well protected, and a pre-commercialization strategic plan to launch their product into the
marketplace.
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Assistance Provided: IP development/protection, proposal development/review to win R & D
grants, commercialization planning, and governmental accounting assistance.
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Outcome:
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More than a $1 million dollars in grants to fund early-stage research and development efforts
were secured.
A new generation of harvesting equipment called the Native Seedster was developed,
commercialized and manufactured in Montana
Research efforts will be expanded to determine if the harvesting equipment can be used to
harvest camolina seeds.
Dollars leveraged: No-cost technical assistance provided by the MTIP Program and other
resource providers, combined with the company’s personal investment of funds, has helped build
an agriculture-based business that will net thousands of dollars in annual sale revenues for
Montana’s economy.
Trade and International Relations Bureau
The Bureau provides information
and technical and marketing
assistance to help Montanans pursue business
opportunities, both domestically and worldwide.
Export trade and marketing specialists provide
consultation and training for companies to successfully
compete in new markets.
Office of Trade and International Relations
Statistics from 2000-2010
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Current funding: $300,000 per year
Export Sales in 2009: $1.5billion
Total Export Sales since 2000: $11.2billion
Export Sales Average Increase per year: 4%
Businesses Directly Assisted per year: 275
Made in Montana participants as of May 2010:
1,500
Trade and International Relations Bureau
Success Story
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Assisted: Montana Tourism & Montana Natural Pork Producers
Description of Need: Promotion of international tourism in conjunction with developing export markets for Montana
natural pork. International tourism is considered a “reverse-export” with foreign money being spent in-state.
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Assistance Provided:
The Montana Asia Pacific Trade Office, located in the Taipei World Trade Center in Taiwan,
works to promote both Montana as a premier tourism destination and the export of Montana value-added products.
With both of those goals in mind the trade office arranged for renowned photographer Pei-hong Hsu to visit Montana
to conduct photo shoots of our spectacular scenery. The result was that in 2009, the office worked with the
photographer and a major publishing company to print a Chinese language Montana photo journal with the title of
“Look up at the 180 degree sky.” The trade office organized a media luncheon to release the travel photo journal at
which a Montana natural pork menu was featured. The Trade Office has worked extensively with Independent Meat
Corp. USA to promote the sales of Montana natural pork in Asia. By pairing the two projects the office reinforced the
idea of Montana as a natural tourism destination and that Montana pork is delicious and safe.
Pei-hong Hsu’s photos were also featured at a 2010 “True Love meets True Colors” – Montana photo exhibition in
Taipei, as well as the trade office’s Asia promotions of the Glacier National Park Centennial celebration in 2010.
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Outcome:
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Dollars Leveraged: The photo journal was published and distributed at no-cost to the state of Montana. The
A luncheon promoting the photo journal and targeted for the media was held at a popular upscale Taipei
restaurant. All major tourism related media outlets carried the story as well as photographs of the event. The
restaurant has continued to offer the Montana natural pork entrée as a regular menu item. The Office continues to
assist Independent Meat to enter new markets and they are currently exporting natural pork products to distributors in
Taiwan, Hong Kong, Macau, China, Japan and Singapore.
release of the publication created a great deal of exposure for Montana with over 30 Chinese language feature stories
in newspapers, magazines, and TV. The photographer has permitted the State of Montana to use his photos in
tourism and product promotional materials at no-charge. By combining Montana tourism and food products, the Trade
Office created a win-win promotion at a nominal expense to the state.
Montana Small Business Development
Centers (SBDCs)
The Montana Small Business
Development Centers (SBDCs) focus on the creation,
retention and expansion of small businesses. Each
year, the Montana SBDC network counsels more
than 1,500 entrepreneurs and existing business
owners through direct assistance and referral.
Montana Small Business Development
Centers (SBDCs)
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Current Funding: $125,000 per year
State’s Return on Investment of Dollars (Federal/Local
Match): $4 for every $1
Number of loans/capital infusion dollars 2009:
305/$80 million
Businesses Counseled/Trained 2009: 1,257
Total counseling hours (Contact/Travel and Preparation):
7,849
Training Attendees 2009: 2,156
SBDC SUCCESS STORY
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Assisted: Betty’s Devine (A Missoula retail operation focuses on some
of the latest fashions to be found anywhere in Montana.)
Description of Need: The owner was interested in starting a niche
market for women’s clothing in Missoula; needed assistance with the
target market, budgeting and financing.
Assistance Provided: The SBDC reviewed and made recommendations
on the business plan, assessing the target market, understanding the
competition, and providing cash flow projections and financial analysis
in preparation for bank financing.
Outcome: Project financing (owner equity, bank, and RLF loan)
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Opened clothing store in downtown Missoula
$133,000 annual wages in 2007
$877,000 in annual sales in 2007
Sales doubled in two years
Six new employees hired, 3 full-time positions with health benefits
Dollars leveraged: Owner equity leveraged $90,000 in financing
Montana Manufacturing Extension Center
(MMEC)
The Montana Manufacturing
Extension Center is a statewide manufacturing
outreach & assistance center staffed by full-time
professionals with degrees in engineering and
extensive experience in manufacturing and
business in a variety of industries. MMEC has a
proven record of positive impact for client firms and
the economy.
Montana Manufacturing Extension Center
(MMEC)
Statistics from July 2008- June 2010
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Current Funding: $200,000 per year
Clients Served: 66
Counties Served: 25
Jobs Created/Retained: 134
Increased Sales: $186,900,000
Client Investment: $27,200,000
Return on Each State Dollar Investment (2009): $2.40
MMEC Success Story
 Assisted: Diversified Plastics, Inc. (family-owned, 46 employees)
 Description of Need: More space & efficiency required for new equipment to
reach new market. Resolve a persistent variation in monthly raw materials
inventory counts vs. computerized inventory tracking data that made it difficult to
know if business was thriving.
 Assistance Provided: Helped implement Lean Manufacturing techniques, created
new plant layout and solved inventory variance
 Outcome:
 $40,000 (10%) reduction in inventory, freeing up cash for investment in other
areas of the business;
 $10,200 cost savings by eliminating expedited freight charges and wasted
staff time searching for materials;
 $675,000 invested in new equipment;
 2 new employees hired.
 Dollars leveraged: The company’s $12,000 was leveraged with a similar amount
through MMEC’s model federal/state/private partnership.
Montana Cooperative Development Center
(MCDC)
The Montana Cooperative Development Center
(MCDC) works with new and existing co-ops and other
groups to evaluate co-op business models and
strategies to meet their objectives. MCDC is a
nonprofit corporation with financial assistance from
state and federal sources, which allows MCDC to
offer services at little or no cost to project groups.
Montana Cooperative Development Center
(MCDC)
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Current Funding: $65,000 per year
New Cooperatives Formed: 38
Cooperatives Pending: 10
Jobs Created/Retained: 442
Total Payroll Benefit: $19,295,712
Grants Provided: $27,500
Funds Leveraged: $4.1 million
Statistics from Program Inception in 2000 through May 2010.
Montana Cooperative Development Center
(MCDC) Success Story
 Assisted: Since its inception in 2000, MCDC has assisted 123 entities
with Cooperative Education and Project Management
 Description of Need: Directed and managed 44 Feasibility Studies and
58 Business and Marketing Plans
 Assistance Provided:
 Assisted 21 entities with Applied Research
 Provided Legal Assistance to 41 projects
 Provided Financing for 37 projects
 Provided various training opportunities for 75 projects
 Outcome:
 The formation of 38 Cooperatives
 First year impacts over $19.3 million wages/ $119 million to
economic sector (construction, utilities, etc.)
 Dollars leveraged: State Dollars ($510,000) Leveraged $4.1 million
Montana Board of Research and
Commercialization Technology
The Montana Board of Research and
Commercialization Technology was created to provide
a predictable and stable source of funding for
research and commercialization projects to be
conducted at research and commercialization centers
in Montana. The purpose of the program is to encourage
economic development through investment in research
projects that have a clear path to commercialization.
Montana Board of Research and
Commercialization Technology
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Current Funding: $1,275,000 per year
Dollar amount for 181 projects funded: $37million
Non-State matching dollars leveraged to date:
$42 million
Follow-on New Funding: $230 million
Statistics from program inception in 1999.
Montana Board of Research and Commercialization
Technology Success Story
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Assisted: Bacterin International, Belgrade, Montana
Description of Need: The focus of this project was development and
commercialization of an allograft based bone void filler for surgical bone grafting
applications. MBRCT funding was essential to the concept development and
preclinical studies of this Class II medical device.
Assistance Provided: MBRCT provided grant funds in the amount of $165,974 for
this project.
Outcome: The OsteoSelect® product is comprised of donated human bone tissue and
a polymer component designed to improve the handling characteristics during
surgical applications. When implanted into a surgical site, OsteoSelect® induces
bone formation at the graft site. OsteoSelect® is the first tissue-based medical device
approved and marketed by Bacterin International, an FDA and American Association
of Tissue Banks registered processor and distributor of donated musculoskeletal
allograft tissue. OsteoSelect® has generated over $1 million in total sales revenue
and has been responsible for the creation of six full-time jobs in Montana to date.
Dollars leveraged: The project leveraged over $180,000 in matching funds and has
generated over $1 million in total sales revenue to date. Bacterin is a Montanagrown company and many of its employees are Montana residents and/or graduates
of Montana schools.
JOIN US IN REINVESTING IN MONTANA’S
ECONOMIC FUTURE
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Support the continued investment in proven programs
for Montana’s future.
Realize the power of each program to leverage
additional dollars and help the private sector to
create jobs.
Share in the continued growth of Montana’s economy.
Strengthen multiple economic sectors including local
government, higher education, economic development,
chambers of commerce, agriculture, cooperatives and
the private sector.
REINVESTING IN MONTANA’S ECONOMIC
FUTURE
Thank You