Hi-Line poised for strong performance
Panelists says adaptation is key, housing is an issue
June 9, 2014
Panelists at an economic summit in Havre said local business could continue to be strong and grow, although one said a key to growth and survival is adapting with the times.
Miles Hamilton, president and CEO of Independence Bank, moderated a business roundtable at the inaugural Hi-Line Economic Summit held in May in Havre.
In his presentation, Hamilton showed data reporting increased deposits in Hi-Line banks throughout the time of the great recession, and U.S. Census estimates indicating some population growth might be coming.
“I think there are lots of good things that are kind of set up for us going forward … ,” Hamilton said. “What you see in these numbers reflect a vibrant Hi-Line economy and one I think is thriving and growing in the future.”
A varied presentation on business
The panelists represented a variety of interests — along with Hamilton, Jim Anderson of Northern Montana Realty, Chief of Staff Richard Sangrey of the Chippewa Cree Tribe of Rocky Boy’s Indian Reservation, Ron Gleason of Northern Montana Health Care, Hill County Commissioner Mike Wendland and Northern Home Essentials Manager Kati Purkett — and talked about business with people at the summit.
One of Hamilton’s points was that the Great Recession pretty well missed the Hi-Line, and the region remains poised to grow.
During the recession in 2008 and 2009, the banking industry as a whole lost money — $10 billion in the second year of the recession.
“The banking industry, nationally, hit the ditch in 2009,” Hamilton said. “Basically, we went underwater.”
In Montana, that was delayed. Hamilton said 2010 was the low year for the Montana banking industry, when it made $235 million, half of what it did in 2007. That turned around by last year, and Montana banks as a whole had recovered.
“But on the Hi-Line we didn’t even do what the rest of the Montana banks did,” Hamilton said, with people still depositing money.
He said the worse performance was in “the boot,” the region from the Flathead Valley to Missoula and the Bitterroot and across through Bozeman and Billings.
“They had the tough spot, but this was the sweet spot, north-central, northeastern Montana … ,” Hamilton said. “This is reflective of this Hi-Line and what we’ve had going on for the last couple of years.”
Native Americans contribute billions
Sangrey said the Indian reservations on the Hi-Line play a significant part in stimulating the economy — $3.18 billion.
The five-year average in the Monetary Contribution Report on Reservations to the State of Montana, first commissioned in 2005, shows Rocky Boy itself contributes nearly $669 million to the local economy, mostly in local towns such as Havre, Box Elder and Big Sandy.
Fort Belknap Indian Reservation contributes another $515 million, and the Little Shell Tribe of Chippewa Indians, which is recognized by the state but not by the federal government, another $205,000.
“I was astonished by these numbers,” Sangrey said. “And I was pleased that we were able to show that Indian reservations contributed to the state of montana and the communities located on or near our borders.”
Health care a major economic component
Gleason said the impact of health care is to bring millions in local paychecks to the local economies.
That impact is magnified even more in smaller communities, he added — in Liberty County, the medical centers there pay 23 percent of the nonfarm payroll in the county.
“If you take health care out of some of these smaller communities” like Chester, Big Sandy, Fort Benton, Chinook and Malta, “it has a major impact on the economy,” he said.
He also said Northern Montana Health Care has been very successful in recruiting new health care providers to the area, but there is a major stumbling block on that — a lack of housing.
“We have very, very little housing on the market,” Gleason said. “It’s very difficult here in Havre.”
Realty market strong — but new housing is short
Anderson agreed, although he said the real estate market has been doing well.
He said the basis of the local economy — heavy on agriculture, the railroad and other natural resource industries — has helped keep the housing market stable on the Hi-Line.
“We’re extremely stable … where we’re hurting is, we’re just not inflowing additional units in our inventory,” he said.
Anderson said the Hi-Line typically lags behind the rest of the country — and sometimes the rest of the state — in changes in the real estate market, good or bad. That often is a 12-month or even 18-month lag, he said.
The recession had an even later impact, he said. The Hi-Line didn’t see much of a change until 2011 and a little of 2012.
“And so we had a very short window where we slowed down,” Anderson said, adding that even that slowdown didn’t impact prices much.
And the ag real estate market has thrived, driven by high commodity prices. That has led to people buying dry cropland and and increasing the demand for grazing land — including large investment groups buying land as a stable investment.
“That may not be good in the long term, but it is driving the economy right now, and it does drive cropland prices,” Anderson said.
He said it also is making it difficult for young people to get into farming, although programs exist or are being created to help with that transition.
“Another thing I think we’re charged with is talking to older producers and helping them transition to younger producers,” he said.
But a major issue in this area is the lack of units — right now, from about Chester to Harlem and down to Big Sandy the area had about 81 units available, compared to what would normally be 120 to 130.
A recent Census data listing showed seven new building permits issued from Valley through Liberty counties, compared to 164 issued in Richland County at the Bakken Formation oil boom, he said.
Anderson said the region needs to not only find ways to increase housing, but to increase affordable, quality housing to attract workers and businesspeople.
“I think we’re tasked with finding ways to do that,” he said.
Adapting and growing businesses
Purkett, a member of the third generation of her family at Northern Home Essentials, said a key to surviving and growing is to change.
If her father, Larry Derosa, had not done that with the business started by her grandfather, Frank Derosa, it would no longer be in business, she said.
“We truly believe at Northern Home Essentials that changing and adapting to the needs of the community is the only way that we can succeed … ,” Purkett said. “The ability to embrace change needs to be true of everybody in the room and beyond. Economic development is truly seeing business opportunities and taking advantage of them.”
She said one of those keys in Havre is offered by the neighbors to the north. The Havre Area Chamber of Commerce and Bear Paw Development Corp. recently conducted a business survey in which 83 percent of the respondents said Canadian business was very important to their operation.
In the survey, 64 percent of the respondents said Canadian customers provide up to 25 percent of their business, 18 percent of respondents said Canadians provide 25 percent to 50 percent and 12 percent of the businesses said Canadians provide half to three-quarters of their busiess.
Purkett said that showed the need to implement a pilot program extending the hours of the Port of Wild Horse on the border between Havre and Medicine Hat.
And, she said, just like in the stock market, business owners won’t see their investment grow without putting more in.
“Every business has an opportunity right now, to change, and you can do that just by doing little things,” Purkett said. “So my question for you is, what are you going to do today to make a change.”