High-tech, manufacturing businesses pulling Bozeman out of deep hole

2012-12-16T00:30:00Z 2015-12-07T17:03:26Z High-tech, manufacturing businesses pulling Bozeman out of deep holeBy TOM LUTEY Billings Gazette Montana Standard
December 16, 2012 12:30 am  • 

BOZEMAN — Montana’s fastest growing economy, the one that begins with a B?

Could it be Bozeman’s? Economists think so.

While the Bakken oil play on Montana’s border with North Dakota receives the most attention, economists expect Bozeman and Gallatin County to lead the state in jobs and economic growth for the next few years. High-tech and manufacturing businesses are pulling Bozeman out of a deep hole. Job growth and incomes in Bozeman have risen sharply because of Oracle's $1.8 billion purchase of hometown software company RightNow Technologies. 

“In some sense, Bozeman’s economy is reverting back to trend,” said Patrick Barkey, of the Bureau of Business and Economic Research at the University of Montana. “Basically what I have said about the recession is that so many trends got interrupted.”

Bozeman’s economy is on pace to grow 5 percent next year, the fastest of any urban Montana economy, faster than Billings', which is expected to grow about 3.5 percent. More importantly, the growth is coming from several sectors.

Light manufacturing in Gallatin County is on the rise. Weapons accessory manufacturer Blackhawk! has opened a 181-employee manufacturing facility in Manhattan. Simms Fishing Products, maker of Gore-Tex waders, added 15,000 square feet to its footprint.

A host of new software companies aspiring to be the next RightNow Technologies have launched. RightNow, which sold to software giant Oracle for roughly $1.9 billion, is still one of the largest high-tech employers in Montana. Word from RightNow employees is that salaries there have increased.

Zoot Enterprises of Four Corners, the financial security megacompany that most likely determines whether your debit and credit card transactions go through, has struck up a partnership and European security clearances that should grow its business.

WebFilings, which offers financial-reporting software, is rapidly expanding its Bozeman development office.

Bozeman’s laser optics industry, which boasts three dozen companies, is showing steady growth.

Research spending at Montana State University has surpassed $100 million annually for the second year in a row.

Hotels, restaurants and retail merchants have all added employees since the recession’s end. Even the construction industry, which lost more than 3,000 jobs to the subprime mortgage disaster at the beginning of the recession, is growing again, though it has so much ground to make up that it probably won’t return to its 2007 high of 6,500 workers until 2021.

And then there’s the RightNow money bomb. When RightNow technologies sold to Oracle last year, employees who held stock in RightNow received a shot of cash so large it moved the state average for real payroll wages, while locally moving the needle for real payroll wages growth upward by 22 percent.

“This is sort of the Montana version of the Microsoft dividend of years back,” Barkey said. “The main thing it’s given them is a little faster growth. Their recovery is a little farther along.”

Some RightNow employees have left to launch their own companies. Former RightNow President Wayne Huyard has teamed up with Joe Walkuski at TEXbase, a Bozeman software business that helps clothing manufacturers control quality and cost. The company’s service is based on technology that Walkuski crafted for Patagonia more than 20 years ago. Patagonia, Brooks Brothers, Polartec, Under Armor and Gore Tex are TEXbase customers.

Walkuski and Huyard believe they have the makings of another RightNow software success, though there’s a big difference between TEXbase and RightNow.

TEXbase is a company created by Bozeman entrepreneurs spun off from other Bozeman companies. RightNow was the brainchild of Greg Gianforte, who brought his ideas to the Gallatin Valley from the East Coast. It says much about the maturity of Bozeman’s high-tech economy that it has enough talent on hand to build a national contender from scratch.

"Who would have thought even 12 months ago that I would have an opportunity to partner with someone like Wayne and do it from Bozeman?" Walkuski said.

Walkuski and Huyard credit companies like RightNow and Zoot for establishing the infrastructure in Gallatin Valley to enable startups to keep their businesses in Bozeman, a community that first drew him in while working for Patagonia in the mid-1990s. That's the fiber connectivity, but there's a human connectivity in Bozeman that is allowing entrepreneurs to stick around as well.

Tyler Jarosz moved to Bozeman from Wisconsin with an industrial manufacturing trade degree and a dream of making bicycle parts for a living. He launched Twenty6, a top-end mountain bike parts company. But he needed more business than that to keep the company afloat. He got the business he needed from Bozeman's laser optics industry. Three dozen companies strong, the laser optics industry was always in need of small batch orders of machined parts, which was perfect for Jarosz's two-person milling business.

"I knew if I wanted to stay here, I had to get my own thing going," he said of his small machine business. A few years into his venture, he owns his own shop and two other business bays, plus a condominium.

Laser optics companies use more than one local machinist for parts. The relationships between two different types of manufacturers illustrates how the cogs of Bozeman's economy mesh, and those interactions have helped lower unemployment to 5 percent even as the community's construction industry continues to struggle.

The Great Recession in Gallatin County was deep but short. Unemployment bottomed out at 7.4 percent in January 2010, as the national mortgage crisis kicked the legs out from under one of the state’s hottest construction economies. More than 3,100 construction-related jobs were lost, almost half of the county’s building workforce, according to state labor statistics.

But since early 2010, employment in Gallatin County has been looking up. The community added 3,845 jobs, including more than 1,800 in 2012. It's this year's jump in job growth that tells economists that, moving forward, Bozeman's economy will likely see Montana's best growth.

“Since the recession’s been over, Bozeman has been doing really well,” said Barbara Wagner, senior economist for the Research and Analysis Bureau of the Montana Department of Labor and Industry. “Southwest Montana, which includes Helena and Butte, is on track to add more than 4,000 jobs this year, but most of those are in Bozeman. They’re not back to where they were at the start of the recession, but they’re pretty darn close.”



Billings Gazette reporter Tom Lutey may be reached at 406-657-1288 or tlutey@billingsgazette.com.

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