Economic Change                                        Labor Earnings for Major "Segments" of the MT Economy, 1990-2008 (Mil. 2005 dollars)

in Montana by                          $4,000

Major Segment of                                                                                                                 $3,679
                                                                                                                                              Prof, Tech,
                                                                                                                                              Fin & Bus
the Economy                            $3,500                                                                                                 Serv

                                                                                                                                              Fed & State
By combining several major                                                                                                                    Govt.
NAICS sectors together into
larger segments, a more                $3,000                                                                                                 Wholsl & Retl
simplified view of the economy                                                                                                                Tr
can be portrayed. The chart                                                                                                      $2,750
shows levels of annual labor                                                                                                     $2,618       Health care
earnings for major segments with       $2,500
services that are largely
“business services” or services                                                                                                  $2,183
for business combined. These                                                                                                                  Util.
include Professional and               $2,000
technical services, financial                                                                                                    $1,891
                                                                                                                                              Constr & Real
services, management and                                                                                                         $1,729       Est
administrative services, etc.
Federal and state government are       $1,500                                                                                                 Local Govt
combined, shown in yellow.
Wholesale and retail trade are
combined, shown in orange.                                                                                                                    Arts,Ent,Acc
Manufacturing is combined with         $1,000                                                                                                 om, Food,
utilities and transportation into an                                                                                             $856
overall “primary sectors”                                                                                                                     Mining
segment. Construction and real
estate are combined and shown           $500
in red.                                                                                                                          $372         Net farm &
                                                                                                                                              ag,for serv
The segment that includes a wide
range of business services is             $0
Montana’s largest single segment                '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08

of the economy.                                                   Source: Sw anson, using Com m erce Dept. data
Economic Growth
                                                        Change in Labor Earnings by Major Economic Segment in MT, 1998-2008
in Montana by
Major Segment,                          Prof, Tech, Fin & Bus Serv                                                                            $1,453

1998 – 2008
                                                       Health care                                                       $957
The chart focuses on growth only
in total labor earnings for each of
                                                Constr & Real Est                                                   $886
the ten major segments of the
economy over the ten-year period
from 1998 to 2008. Figures are in
                                                 Fed & State Govt.                                                $834
2005 inflation-adjusted dollars.

The segment including
                                                  Wholsl & Retl Tr                                   $631
professional, technical, financial,
insurance, and other business
services grew by almost $1.5                                  Mining                    $463
billion, more than any other
segment and an increase of 65%.
                                      Arts,Ent,Accom , Food, Other                  $415
Health care growth was 2nd with
an increase of almost $1 billion,
up by 58%. Growth in                                    Local Govt                $390
construction and real estate
closely followed, rising by $886
million and an increase of 68%.                   Mfg.,Transp,Util.              $349
Federal and state government
labor earnings grew by $834
million, an increase of 44%.                Net farm & ag,for serv

Labor earnings in agriculture                          -200            0   200   400           600          800          1000   1200   1400       1600
declined and there was only a
                                                                                         Millions of 2005 Dollars
17% increase in labor earnings by
the primary sectors.
Sector Labor                                                            MT Sector Labor Earnings, 2008 vs. 1998 (Mil. 2005$)

Earnings in                                 Health care                                                                                                           $2,618

Montana, 1998 vs.                            Local govt

                                               Retail tr                                                                                    $1,788
2008                                      Construction                                                                                 $1,646

                                         Prof/tech serv                                                                       $1,465
The chart shows annual labor
earnings for each major NAICS            Manufacturing                                                               $1,200
sector in 2005 inflation-adjusted                                                                                  $1,156
                                             State govt
dollars in 2008 and ten years
earlier in 1998. Sectors are rank         Fed civil govt
ordered in the chart from largest           Fin & insur                                                    $958
to smallest, as measured in total
                                          Wholesale tr                                                 $924
labor earnings.
                                             All Mining                                              $856
Health care in the state’s single                                                                   $804
                                      Transpt/w arehsg
largest sector measured in this
                                     Accom & food serv                                          $793
way with labor earnings in 2008
exceeding $2.6 billion, up from             Other serv                                       $668
about $1.7 billion in 1998. Only                                                        $607
                                           Adm in serv
four of the 24 sectors exceed $1.6
billion in labor earnings. Besides          Real estate                               $537

Health care, these include Local           U.S. Military                         $459
government, Retail trade, and
                                                Utilities                      $428
Construction. Two of the sectors
exceed $1.2 billion – Professional            Info serv                        $402
and technical services and                                              $268
                                         Arts, ent, recr
                                         For. Fish serv            $195

                                           Net farm inc            $178

                                                Ed serv          $134

                                         Managm t serv           $113

                                                            $0            $400                $800                $1,200       $1,600           $2,000   $2,400
Growth in Labor                                       MT Labor Earnings Growth by Sector, 1998 to 2008 (Millions of 2005 dollars)

Earnings by Major                                  Health care                                                                                                 $957
                                               Prof/tech serv                                                                             $650
Sector in Montana,                              Construction                                                                      $572

1998 – 2008                                         All Mining                                                             $463

                                                    Local govt                                                      $390
The chart at the right focuses
                                                      Retail tr                                                    $375
simply on labor earnings growth
for each sector over the period                     State govt                                                 $358
from 1998 to 2008. Figures in the                  Fin & insur                                              $317
chart are adjusted for inflation.
                                                   Real estate                                              $315

Health care had the largest                      Fed civil govt                                         $296
increase in labor earnings, rising                Adm in serv                                         $274
by $957 million over the ten-year
                                                 Wholesale tr                                        $256
period. Considerably behind in
2nd place is Professional and            Accom & food serv                                    $201
technical services, with labor                    U.S. Military                            $180
earnings growth of $650 million.
Construction is 3rd, growing by                Manufacturing                               $172
over $570 million.                                 Other serv                          $148
                                                       Utilities                    $109
All of the sectors shown in “teal
blue” are some part of the larger                    Info serv                  $90
segment of the economy made                            Ed serv                $69
up of professional, technical,
                                             Transpt/w arehsg                 $68
financial, insurance, and other
business services. Those shown                  Arts, ent, recr               $66
in yellow are government sectors.              Managm t serv              $53
Those in orange are trade sectors
                                             Ag For. Fish serv          $22
– both retail and services trade.
Those in red are particularly        -$214        Net farm inc
“growth dependent” sectors.
                                     -$250       -$125             $0          $125            $250           $375         $500    $625          $750   $875   $1,000
Employment by                                                      Montana Employment by Major NAICS Sector, 1997 vs. 2007

Major NAICS                                    Retail tr                                                                                                     71,511

Sector in Montana,                          Health care

1997 vs. 2007                        Accom & food serv                                                                   44,472
The chart shows total                                                                                                      45,559
                                             Local govt
employment, both full- and part-
                                            Other serv                                                            39,017
time, for all of the major sectors
of the economy in Montana. The           Prof/tech serv                                                     33,533
24 separate NAICS sectors are                                                                            31,348
                                             Farm em p
ordered in the chart from top to
bottom based upon size, as                  Real estate
measured by total employment in            Adm in serv                                                28,842
2007.                                                                                              25,952
                                             State govt

Two bars are shown for each              Manufacturing                                         23,978

sector. The gray bars are total             Fin & insur                                      22,056
employment for a sector in 1997.                                                          19,535
                                         Arts, ent, recr
The colored bars show levels of
employment in 2007 with                   Wholesale tr                                    19,030

employment including all full and     Transpt/w arehsg                                18,585
part-time jobs. Government
sectors are shown in “yellow”.            Fed civil govt

Business service are shown in                All Mining                    9,592
“teal blue”. Health care is in                Info serv                   9,270
“blue”. Construction and real
estate are in “red”.                       U.S. Military

                                      Ag For. Fish serv                  7,902
Retail trade has the largest                                             7,740
                                                Ed serv
number of jobs at 77,548,
                                                Utilities        3,193
followed by Health care at 65,577,
Construction at 55,000 jobs and          Managm t serv          1,717
Accommodations and food
services at 51,393.                                         0           10,000      20,000         30,000       40,000      50,000         60,000    70,000       80,000       90,000
                                                                                                      Source: BEA, U.S. Com m erce Dept.
Employment                                                          Employment Growth in Montana by Major NAICS Sector, 1997-2007

Growth by Major                            Construction                                                                                                       21,176

NAICS Sector,                                Health care                                                                                15,086

1997 – 2007                                  Real estate

                                             Adm in serv


The upper chart shows the              Prof/tech serv                                                              10,327
change in the total number of             Other serv                                                             9,813
jobs for each major sector over a
                                   Accom & food serv                                             6,921
ten-year period from 1997 to
2007. Construction jobs grew by        Arts, ent, recr                                           6,745
over 21,000 – an increase of 63% -            Retail tr                                     6,037
exceeding job growth in any
other sector. Health care jobs                Ed serv                            3,386
grew by over 15,000 – up 30%.              State govt                          2,969
Real estate is 3rd in job growth,
                                           All Mining                         2,617
up 67%; followed by
Administrative services, up 64%;           Local govt                        2,485
and Professional and technical            Fin & insur                        2,419
services, up by 45% and more
                                        Wholesale tr                   1,567
than 10,000 jobs.
                                       Transpt/w arehsg                1,536
Much of the state’s job growth                Farm em p               1,367
during this period is
                                                Info serv            1,053
concentrated in “growth-
dependent” sectors like                     Fed civil govt           916
Construction and Real estate,
                                          Managm t serv
shown in “red”, which rank 1st
and 3rd in job expansion.               Ag For. Fish serv
Various categories of business                      Utilities
services also expanded
                                             U.S. Military
considerably, shown in “teal
blue”. Health care employment             Manufacturing
also is seeing considerable
                                           -3,000               0          3,000         6,000           9,000           12,000      15,000      18,000   21,000       24,000
                                                                                           Sector Shares of Total Employment in MT, 1997 vs. 2007
Sector Shares of                      14%

Total Employment                      12%
                                              12 .0 %

and Total Labor                       10%
                                                        10 .1%

                                                                 8 .5%

Earnings in                           8%
                                                                         7.9 %
                                                                                 7.0 %

Montana                               6%
                                                                                         6 .0 %
                                                                                                  5.2 %
                                                                                                          4 .8 %
                                                                                                                   4 .6 % 4 .5%
                                                                                                                                  4 .0 %
                                                                                                                                           3 .7% 3 .4 %
The upper chart shows sector                                                                                                                              3 .0 % 2 .9 % 2 .9 %
                                                                                                                                                                                 2 .1%
shares of total employment            2%                                                                                                                                                 1.5% 1.4 % 1.3 % 1.2 % 1.2 %
represented by each of the major                                                                                                                                                                                        0 .5% 0 .3 %

NAICS sectors in 1997 and 2007.       0%
Retail trade is 1st, accounting for


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at 10.1% and the 1st largest share                                                       Sector Shares of Total Labor Earnings in MT, 1998 vs. 2008
of labor earnings at 12.3%.               14%
Some of the sectors are
increasing their shares of both           10%              8.9%
employment and earnings,                                                   7.8%
                                          8%                                       6.9%
including Health care,
                                                                                           5.7%5.4% 5.3%
Construction, Professional and            6%
                                                                                                                    4.5% 4.4%
technical services, Real estate,                                                                                                   4.0% 3.8% 3.7%
                                          4%                                                                                                               3.1% 2.9%
and Administrative services.                                                                                                                                            2.5% 2.2%
                                          2%                                                                                                                                                        1.3% 0.9%
                                                                                                                                                                                                                0.8% 0.6%0.5%
Others are declining in both
categories and these shifts reflect
“restructuring” of the state’s

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                                         Subsector Labor Earnings by Sector Grouping in Montana, 2007 (Mil. of 2005$)
      Ambulat. Health serv                                                                       $1,084
                     Hospitals                                                            $977
       Nursing & Care facil
         Social Asst Health
           Prof & Tech serv                                                                                  $1,331
                 Admin. Serv
       Banks & Credit Inst.                                $438
         Insurance Carriers
       Membership organiz
                    Educ serv
              Managmt serv
              Waste services
    ISP, Search, Data Prcg
            Motion Pictures
        Funds & Trusts, etc
              Other Info serv
              Central Banks
   Food & Drinking places                                           $584
                  Repair serv                          $395
              Motor Veh retl
          Gen Merch stores
         Hotels, motels, etc
             Food & Bev retl
               Personal serv
      Bldg Mat/Garden retl
            Amus, Ent, Recr
           Gas Stations retl
                Miscel Retail
        Furniture/home retl
Sporting, books, music retl
          Health & Care retl
                Clothing retl
Performing Arts, Spectator
               Nonstore Retl
            Elec/Applian retl
       Priv household serv
      Museums, parks, etc
                Wholesale Tr                                                       $910
                  Real Estate                      $353
     Rental & Leasing serv
 Lessors of Intang. Assets
          Spec Trade Const                                                                         $1,126
                Heavy Const
                  Bldg Const                                         $605
                   Local govt                                                                                                             $1,856
                   State govt                                                                       $1,142
               Fed civil govt
                 U.S. Military                             $441
                    Food mfg
                  Miscel mfg
                Machine mfg
             Fabr metal mfg
               Chemical mfg
            Nonmet min mft
                Printing mfg
           Prim metals mfg
               Furniture mfg
              Beverage mfg
           Comp & elec mfg
                Mot Veh mfg
                Plastics mfg
              Elec Equp mfg
         Other Transpt mfg
                Apparel mfg
           Textile prod mfg
                 Leather mfg
              Truck Transpt                            $380
                 Rail Transpt
           Couriers Transpt
      Transpt Support serv
  Transit & Ground Tranpt
                    Air Tranpt
            Pipeline Transpt
                       Utilities                $303
              Petro/coal mfg
          Mining exl oil/gas
       Mining Support serv
                Oil & Gas Ext
                   Paper Mfg
            Wood Prod Mfg
                    Net Farm                        $367
               Ag & For serv

                                   $0   $200      $400            $600      $800    $1,000          $1,200   $1,400     $1,600   $1,800        $2,000
                                       Growth in Subsector Labor Earnings by Sector Grouping in MT, 1997-2007 (Mil. of 2005$)
      Ambulat. Health serv                                                                                   $456
         Social Asst Health
       Nursing & Care facil
           Prof & Tech serv                                                                                                        $603
                Admin. Serv                                                 $256
       Banks & Credit Inst.
         Insurance Carriers
       Membership organiz
                   Educ serv
              Managmt serv
             Waste services
    ISP, Search, Data Prcg
       Funds & Trusts, etc
             Other Info serv
            Motion Pictures
              Central Banks
   Food & Drinking places
                 Repair serv
          Gen Merch stores
            Amus, Ent, Recr
         Hotels, motels, etc
              Personal serv
      Bldg Mat/Garden retl
              Motor Veh retl
               Miscel Retail
        Furniture/home retl
          Health & Care retl
            Food & Bev retl
              Nonstore Retl
           Gas Stations retl
Sporting, books, music retl
                Clothing retl
       Priv household serv
      Museums, parks, etc
           Elec/Applian retl
Performing Arts, Spectator
               Wholesale Tr                                              $233
                 Real Estate
     Rental & Leasing serv
 Lessors of Intang. Assets
          Spec Trade Const                                                                                                        $597
                 Bldg Const                                                           $304
               Heavy Const                                 $163
                  Local govt                                                                          $398
                   State govt                                                                  $371
               Fed civil govt                                                        $297
                 U.S. Military
               Machine mfg
             Fabr metal mfg
              Chemical mfg
                  Miscel mfg
                   Food mfg
                Printing mfg
          Comp & elec mfg
                Mot Veh mfg
              Furniture mfg
            Nonmet min mft
             Elec Equp mfg
                Plastics mfg
                Apparel mfg
         Other Transpt mfg
           Textile prod mfg
                Leather mfg
              Beverage mfg
           Prim metals mfg
              Truck Transpt
      Transpt Support serv
           Couriers Transpt
  Transit & Ground Tranpt
                   Air Tranpt
           Pipeline Transpt
                Rail Transpt
             Petro/coal mfg
           Mining exl oil/gas
       Mining Support serv
               Oil & Gas Ext
                   Paper Mfg
            Wood Prod Mfg
                   Net Farm
              Ag & For serv

-$100                             $0          $100               $200              $300         $400                $500        $600      $700
 Recent Employment Projections for the U.S., 2008 – 2018
Slower population growth and a decreasing overall labor force participation rate are
expected to contribute to a slowdown in labor force growth. The labor force is projected to
grow by 8.2% for 2008-18 versus 12.1% for 1998- 2008.

Projected employment growth will be concentrated in the “service-producing” sector,
continuing a long-term shift from the goods-producing sector of the economy. For 2008-18,
service-producing industries are projected to add 14.6 million jobs – 96%of the projected

The two industries projected to have the largest increases are: Professional and Business
Services, and Health Care Services … together adding over 8 million new jobs, over half of
all new jobs in the U.S. economy.

At a more detailed level, 3 of the 10 detailed industries projected to have the largest job
increases are in Professional and Business Services, including: management, scientific,
and technical consulting; computer systems design; and employment services.

Four of the top 10 are in Health Care Services, including: physicians’ offices, home health
care, services for the elderly and persons with disabilities, and nursing care facilities.

Of the 10 detailed industries projected to have the largest declines, 4 are in manufacturing.
But the one with the single largest decline in jobs is “department stores”.

                           U.S. Bureau of Labor Statistics, Dec. 10, 2009
                                   Major Sectors of the Economy
                        Goods Producing vs. Services Producing
Goods-producing Sectors:
Construction – construction companies, electrical contractors, other special trade contractors, etc.

Manufacturing – manufacturing of all types of goods

Natural resources & mining – farms and ranches, oil and gas extraction, other mining, etc.

Services-producing Sectors:
Educational services – local, state, and private schools and other education providers

Financial activities – firms providing financial, and insurance services, and real estate and rental services

Health care & social assistance – public and private providers of health care including hospitals, doctors’ offices, and
assisted living facilities

Information services – print, software, and data publishing firms; movie, video, and sound production and distribution;
broadcasting and telecommunications providers; and information and data processing firms

Leisure & hospitality services – hotels and other lodging, restaurants, sports teams, theme parks, performing arts, etc.

Professional & business services – consulting services, accountants, legal services, engineering, temporary help firms,

Public administration – government establishments (federal, state, local) administering programs (except education &

Trade, transportation & utilities – wholesale and retail trade establishments, airports, messenger services, power plants,
         Lessons to Learn from Emerging Economic Patterns
Look Forward Promising strategies for economic improvement must reflect where the economy is going,
not where it has been.

Customize Strategies Needs, opportunities and even attitudes vary widely from place to place in Montana.
Goals and strategies for economic advancement must likewise vary.

Cities Matter Cities, even small ones, have become the “settings” if not the “engines” of economic
growth, diversification, and advancement. In Montana, we need to assist cities, not deny that we have any.

Urban-Rural Relations Matter Pursuing economic development town-by-town or county-by-county is
difficult. Influencing local economies sub-region by sub-region with healthy urban-rural partnerships has

Become “Learning Communities” Successful businesses are adaptive businesses. Successful
communities are adaptive communities. Adaptive communities must be “learning communities,” keeping
abreast of change and understanding the story of local and regional change. Learning among key
leadership is particularly important.

Think about “Regional Positioning” Local economies can’t be remade by local leaders. But local leaders
can find ways of better positioning area businesses, schools, work forces, governments, families, etc. for
future change. Anticipate future change and position yourself for it.

Human-Resource Based Economy The economy is more and more “human resource based” and
“knowledge-based”. Well-designed, well-funded, adaptive systems for education and work force
development are indispensible centerpieces for future economic prosperity.

Environment as a “Key Economic Asset” In the new economy, protecting and enhancing environmental
qualities is not the enemy of economic development. It is essential for economic prosperity.

                      - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of MT
Challenges for Workforce Development & Adult Education Programs
In an increasingly “human-resource based” economy, workforce development and education have
become centerpieces of any strategy for community economic improvement. They are essential for area
economic prosperity.

Regionally-based and Customized: Workforce development programs must be grounded in the
regions and communities served .. tailored to particular needs and opportunities of area employers.

Inter-coordinated: Workforce development and training and education more generally, must be inter-
coordinated with business technical and financial assistance, marketing and promotion, infrastructure
development, and other aspects of community economic development.

Well-designed and Adaptive: The economy is continually restructuring and changing. To be
successful workforce development programming must reflect where the economy is going, not where it
has been. Be “forward-looking” and “opportunistic”.

Life-long: The pace of economic change combined with the aging of the workforce require that
workforce development itself be life-long. Develop programming for workers of all ages and for workers
who are continually learning and upgrading their skills.

Workplace-oriented: Workforce development is something workers need while they work. It is not
simply something workers do between jobs or early in life. Make it easy and flexible. Place programming
in or nearby the workplace.

Well-funded: To be successful, workforce development programming must be well-funded. For an area to be
competitive, such programming cannot be done “on the cheap.”

                      - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of MT
         What increasingly really counts in local area
        economic development in this new economy?

The Quality of your community .. infrastructure, schools, neighborhoods, commercial
development, streets, parks, arts and cultural amenities, identity, energy, vitality, multi-
dimensionality, visual appeal, surrounding environs, …

The Quality of your work force .. diverse, appropriately educated, and adaptive with
training and education opportunities at all levels and nearby multi-faceted, well-delivered
programs in workforce development, along with opportunities for life-long learning.

The Quality of your surrounding environment .. not just parks and attractive, well-
planned neighborhoods, downtowns, and commercial districts, but landscapes and
natural amenities like streams, lakes, mountains, forests, open spaces, etc.

Although most forces driving change in the economy are supra-community in nature –
technological change, transportation developments, new products, major demographic
shifts, global financial forces, etc. - so much of what really counts in area economic
vitality .. is within the reach of community leaders and decision makers .. they can help
create and sustain the types of positive attributes that attract, nurture, and stimulate
economic energy and vitality over time.

              - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of Montana
    Framework for Community & Regional Economic Advancement
Develop Sub-state, City- and Region-based Strategies Successful ED initiatives must reflect underlying and
emerging area strengths and weaknesses. Don’t look to “one-size-fits-all” development strategies to pursue your
future. Look to yourself.

Attend to Key Foundations of Future Economic Success These extend beyond business development and
assistance. For cities and regions to be competitive, they must have:

            Quality Infrastructure: streets, water, sewer, schools, parks, neighborhoods, office buildings and
            complexes, business centers, communications, transportation, educational facilities, cultural
            amenities, etc. Develop a “vision” for what you want and put it into place.

            Quality Workforces: adaptive well-stratified workforces, with access to good training and education,
            flexible and tailored to particular needs and opportunities of area employers, devised by area
            education and ED providers working in tandem.

Devise “Side-by-Side” Strategies for Business Development and Workforce Development using Clusters
Don’t try to decipher business assistance and workforce needs of hundreds of employers all as one. Stratify
current and potential employers in the area into “clusters” and customize strategies for each cluster.

Establish an “Area Economic Development Roundtable”            Area economic success requires a combination of
strategies for business assistance, education and workforce development, infrastructure and city planning,
marketing and communications. Key leadership across this array of activities must regularly meet for this type of
multi-faceted approach to be conceived, inter-coordinated, pursued and continually assessed and improved.

Chart and Assess Your Progress using “Peers”     Understanding change and measuring progress in your own
community requires understanding change and conditions in the larger region and among cities and regions like

                       - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of MT
                     What Can Be Gained from
                Cluster-based Education Programs?
What Colleges can gain . .

Having more relevance to local and regional economic needs and the needs of area
businesses and being able to attain true excellence in areas of specialization tied to local
and regional needs, opportunities, and potential strengths.

What Students can gain . .

Learning from better, deeper and locally relevant programs that contain better
employment information and deeper understandings of industry and business context,
and more informal learning opportunities in the community where they live. And
opportunities for continual advancement of their skills throughout their work lives.

What Businesses can gain . .

Having access to larger and more specialized labor pools and more opportunities for
nearby training networks and providers. A steady supply of skilled, educated and
motivated workers. A labor force that understands their work environment.

“Most business clusters organized to address common needs almost always place
workforce development as their top priority.”

                       Stuart Rosenfeld, Regional Technology Strategies, No. Carolina
    What are Area and Regional “Clusters”?
Clusters are not like business associations. They are firms and institutions located in
somewhat close proximity that have common interests and needs. They are simply
geographic concentrations of interrelated companies and institutions of sufficient scale
to generate externalities.

Clusters are made up of businesses and employers who have access to bankers and
accountants who understand their needs, marketing and advertising companies that
know their markets, and small business assistance centers that know how to help them.

Once clusters and potential clusters of an area are better understood, strategies can be
devised for each that may involve customized workforce development programs, special
programs in business finance and capital investment, programs in research and
development, and a range of business development initiatives targeted and customized
for each cluster.

“By knowing your clusters, you can better know how to grow your economy.”

                 Stuart Rosenfeld, Regional Technology Strategies, No. Carolina
 Promising Economic “Clusters” for Montana
                             according to Stuart Rosenfeld

Several years ago Stuart Rosenfeld - an international “guru” on the identification and study
of business clusters - did a study to identify promising clusters for the State of Montana.
He was asked to examine these state-wide, rather than for different places and sub-regions
of Montana. These were identified:

                       The Creative Enterprise Cluster

            The Experience Enterprise and Tourism Cluster

                      The Wood-Based Product Cluster

                         The Food Processing Cluster

                    The Information Technology Cluster

                           The Life Sciences Cluster
                                                                                                                                                                      Prof.,Bus., Fin.
Recent Trends in                    $700
                                                                                 Major "Segm ents" of the Missoula Econom y, 2001-07 (Mil. 2005$)                     Serv

                                                                                                                                                                      Health Care
Growth by Major
Segment of the                      $600
                                                                                                                                                                      Retl & Whol
Missoula Economy,                   $500                    $498
                                                                                                                                                                      Fed & State

2001 – 2007                                                                                                                                                           Govt

                                                                                                                                                                      Construction &
                                    $400                                                                                                                     $408
                                                                                                                       $390                                           Real Estate
The chart at the right shows                                                                                                                                 $378
labor earnings for each major                               $343
                                                                                                                                                             $342     Primary
segment of the Missoula                                     $310                                                                                             $310     Industries
economy. New industry                                                                                                                                                 Local Govt
codes are now being used to
compile these data and these
                                                                                                                                                             $160     Hotels,
sectors are grouped into                                    $135                                                                                             $136     Restaurants,
“segments” in the chart.            $100                    $96
                                                                                                                                                                      Arts, Ent, Recr
                                                                                                                                                                      Farming & Ag
The single largest segment of                               $26                                                                                              $31
the Missoula economy is now             $0                                                                                                                   $5       All Mining
“Professional, technical,                             '01                  '02                '03                '04           '05              '06    '07
                                                                              Source: Sw anson, using BEA, U.S. Com m erce data
business, and financial
services.” This segment also
                                                                             Labor Earnings Growth by Major Segment, 2001-07, Missoula Co.
had the greatest growth in
recent years, as shown in the                    P ro f .,B us ., F in. S e rv                                                                                             $123
                                                      F ed & State Go vt
lower chart.                                                                                                                              $65
                                                              H e a lt h C a re                                                           $65

Missoula also has growth                             R e t l & Who l T ra de                                                  $49
                                 H o t e ls , R e s t a ur, A rt s , E nt , R e c                                       $39
concentrated in Federal and
                                                                Lo c a l G o v t                           $25
State government (including
                                      C o ns t ruc t io n & R e a l E s t a t e                      $19
the University), Health care,
                                                    F a rm ing & A g s e rv              $4
Retail and Wholesale trade,
                                                                  A ll M ining           $3
and Hotels, Restaurants, Arts,
                                                     P rim a ry Indus t rie s
Entertainment, and Recreation.
                                                            -$20                    $0              $20            $40              $60          $80   $100         $120           $140
                                                                Sub-sector Labor Earnings by Major Grouping in Missoula, 2007 (Mil. of 2005$)
Components of                                     P ro f e s s & T e c h s e rv                                                                   $201
                                                   A dm inis t ra t iv e s e rv                                     $110
the Missoula                                         Ins ura nc e C a rrie rs
                                        B a nk s &C re dit Ins t it ut io ns
                                        M e m be rs hip A s s o c ia t io ns

Economy – Sub-
                                         T e le c o m m unic a t io ns B us .
                                                            M a na gm t s e rv
                                          S e c urit ie s & Inv e s t F irm s
                                              P ublis hing B us ine s s e s
sector Groupings                                 Wa s t e M a na gm t s e rv
                                                          E duc a t io n s e rv
                                                     B ro a dc a s t ing B us .
                                       IS P s , D a t a P ro c e s s ing B us
                                             A m bula t o ry H e a lt h s e rv                                                                    $202
There are about 70                H o s pit a ls & N urs ing C a re s e rv
                                                     S o c ia l A s s is t s e rv
individual sub-sectors of                                        State Go vt
                                                       F e d C iv ilia n G o v t                                            $126
the economy and these are                                      U.S . M ilit a ry
                                                                Lo c a l G o v t .                                                 $160
shown by major grouping                                       Who le s a le T r
                                            F o o d & D rink ing P la c e s                             $72

and by size as measured in                        M o t o r V e h/ P a rt s R t l
                                                     G e ne ra l M e rc h R t l
                                                         R e pa ir s e rv ic e s
2007 labor earnings.                              B ldg M a t / G a rde n R t l
                                                        H o t e ls & M o t e ls
                                                    F o o d/ B e v e ra ge R t l
                                   A m us m t , G a m bling, R e c r s e rv
Thirteen sub-sectors make-                                    M is c e l R e t a il
up the “Business and                            G a s o line S t a t io ns R t l
                                S po rt g G o o ds / B o o k s / M us ic R t l
Professional Services”                      P e rs o na l & La undry s e rv
                                                    F urnit ure / H o m e R t l
                                                          C lo t hing R e t a il
grouping. The largest is                             E le c / A pplia nc e R t l
                                          H e a lt h/ P e rs o na l C a re R t l
Professional and Technical        P e rf o rm ing A rt s & S po rt s s e rv
                                                         N o ns t o re R e t a il
Services at $201 million. All               P riv a t e H o us e ho ld s e rv
                                                   M us e um s , e t c . s e rv
13 together total $572                            M o t io n P ic t ure B us .
                                                        R e a l E s t a t e B us                                  $102
million, 21% of all labor                            S pe c . T ra de C o nt r                                 $94
                                                              B ldgs C o ns t r                   $58
earnings in the county.                                      H e a v y C o ns t r
                                                            T ruc k T ra ns pt                           $78
                                                               R a il T ra ns pt
                                               T ra ns pt S uppo rt A c t iv
The Wholesale and Retail                       C o urie rs / M e s s e nge rs
                                                                 A ir T ra ns pt
Trade sub-sectors together                          P a s s e nge r T ra ns pt
                                                                      Ut ilit ie s
total $576 million, also 21%                                     M is c e l M f g
                                                          F o o d P ro d M f g
of the total. The Health                                     C he m ic a l M f g
                                                             F urnit ure M f g
Care sub-sectors total $408                                 B e v e ra ge M f g
                                                        F a br M e t a ls M f g
                                                               P rint ing M f g
million, 15% of the total.                         N o nm e t a l P ro d M f g
                                                           M a c hine ry M f g
State and Federal Govt.                                          P a pe r M f g.           $42
                                                         Wo o d P ro d M f g
total $342 million (13%).                                             A g s e rv
                                                     F o r & lo gging s e rv
                                                                     N e t f a rm
                                                                  A ll M ining

                                          -$60                                        $0         $60                 $120                 $180           $240
Recent Growth in                             Sub-sector Labor Earnings Growth by Major Grouping in Missoula, 2001-07 (Mil. 2005$)

the Missoula                                     P ro fess & T ech serv
                                                   A dministrative serv                                                             $39
                                         B anks &C redit Institutio ns                  $10
Economy by Sub-                          M embership A sso ciatio ns
                                                Waste M anagmt serv
                                                    Insurance C arriers

sector Grouping                                           M anagmt serv
                                              P ublishing B usinesses
                                                         Educatio n serv
                                          Securities & Invest F irms
                                        ISP s, D ata P ro cessing B us
This chart shows “labor                             B ro adcasting B us.
                                         T eleco mmunicatio ns B us.
                                             A mbulato ry H ealth serv
earnings growth” by sub-            H o spitals & N ursing C are serv                                             $23
                                                    So cial A ssist serv                             $16
sectors between 2001 and                                       State Go vt                                                          $38
                                                      F ed C ivilian Go vt                                $17
2007. The Business and                                        U.S. M ilitary
                                                              Lo cal Go vt.                                         $25
Professional Services sub-                                  Who lesale T r
                                                       H o tels & M o tels
sectors (shown in Teal at                   F o o d & D rinking P laces                           $14
                                                    General M erch R tl                     $11
the top) together grew by            A musmt, Gambling, R ecr serv
                                                   F o o d/ B everage R tl
$125 million, inflation-                         B ldg M at/ Garden R tl
                                                   F urniture/ H o me R tl
adjusted, accounting for                                R epair services
                                          H ealth/ P erso nal C are R tl
                                                         C lo thing R etail
32% of all labor earnings           P erfo rming A rts & Spo rts serv
                                            P erso nal & Laundry serv
growth in the economy.                            M o tio n P icture B us.
                                                    Elec/ A ppliance R tl
Growth in Professional and                         M useums, etc. serv
                                                 M o to r Veh/ P arts R tl
Technical Services and                      P rivate H o useho ld serv
                                       Spo rtg Go o ds/ B o o ks/ M usic
Administrative and Waste                                N o nsto re R etail
                                                            M iscel R etail
Services alone accounted                        Gaso line Statio ns R tl
                             -$19                      R eal Estate B us
for 22% of all growth.                                      B ldgs C o nstr                    $13
                                                           H eavy C o nstr                    $13
                                                    Spec. T rade C o ntr                $10
                                                   P assenger T ranspt
Growth in the Wholesale                                        A ir T ranspt
                                              C o uriers/ M essengers
and Retail Trade sub-                                         R ail T ranspt
                                               T ranspt Suppo rt A ctiv
sectors - $94 million –                     -$11           T ruck T ranspt
accounted for 24% of all                                   C hemical M fg
                                                               M iscel M fg
growth. Growth in the                             N o nmetal P ro d M fg
                                                           B everage M fg
                                                       F abr M etals M fg
Health Care sub-sector                                    M achinery M fg
                                                             P rinting M fg
grouping and in the State                                F o o d P ro d M fg
                                                           F urniture M fg
and Federal Government                                         P aper M fg.
                                      -$14              Wo o d P ro d M fg
grouping each accounted                                              A g serv
                                                    F o r & lo gging serv
for 17%.                                                           N et farm
                                                                 A ll M ining

                             -$20                   -$10                         $0   $10                   $20               $30   $40   $50
Key Components of and Factors in Missoula’s Economy
Candidates for “Key Economic Clusters” in Missoula

              Professional, Technical & Business Services
 Lawyers, Engineers, Accountants, Architects, Computer programmers & techs, Insurance
    providers, Financial services, Management & Administrative services, Membership

                                  Health Care Services
        Hospitals & Clinics, Health care providers, Support services, Care providers

                              Adult Education Services
  The University of Montana, UM College of Technology, Missoula Adult Education, Other
                                 Education providers

                  Wholesaling, Retailing & Services Trade
Focused in three differentiated centers or sub-areas: Downtown, Southgate Mall & Mid-town,
                                         Reserve St.

                               Assorted Manufacturing
Mainly relatively small-scale, niche manufacturing and manufacturing that entails significant
    R&D and technology components or dimensions; some tied to regional “branding”

               - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of Montana
 Determining an area’s clusters requires more than data analysis. As Albert
    Einstein noted, “Not everything that can be counted counts, and not
                  everything that counts can be counted.”

                                  Conservation Cluster
 U.S. Forest Service, University of Montana, Rocky Mountain Elk Foundation, Clark Fork
Coalition, Five Valleys Land Trust, Boone & Crockett Club, Other Non-profit Conservation-
                   related organizations, Forest product companies, etc.

                                 Arts & Culture Cluster
   Children’s Theater, Missoula Art Museum, Missoula Symphony, UM Museum of Art,
   Private Galleries, Ft. Missoula Museum, International Wildlife Film Festival, Choral
                Festival, Bookstores, Convention & Visitors Bureau, etc.

                Entertainment, Recreation & Tourism Cluster
  Missoula isn’t a “resort” area or destination, per se, but because of its amenities and
 central location, it can be a growing center for entertainment and outdoor recreation for
                                 both residents and travelers.

             - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of Montana
Importance of Arts and Cultural Activities to Community Quality,
             Appeal, and Economic Advancement
Many ED agencies are recognizing the importance of “quality” of place in the development
process and are giving more attention to the arts and cultural activities as part of the cluster
support structure.

For one, many businesses highly sought by regions rely heavily on talented and educated
workers .. workers who are quite discriminating in where they choose to locate to work and
to live. They tend to seek out communities that are high in amenities and in diversity.

At the same time, some places have recognized that arts and culture represent a value
added cluster in its own right, with specialty businesses, networks, and support structures.
Much of the migration from big cities to smaller places is to places recognized for their arts
and culture, tolerances, physical attributes, and environmental amenities.

Our industrial base has shifted from being able to compete through the 1970s simply by
“making things cheaper” to “making things better”, to “making things more appealing”.

The sectors most likely to grow and create jobs are those knowledge-intensive companies
that employ highly talented and creative workers, the companies that depend on art and
design, and those that produce artistic and designer goods or services.

                      From Stuart Rosenfeld, The Art of Economic Development
            Best Assuring Missoula’s Economic Future
Focused, Energized Workforce Development and Enhancement of Education
 Nothing will have more impact for the better in helping to assure Missoula can grow and adapt to
change successfully than having the very best programs in workforce education and training that we
can imagine and afford. What’s more, education at all levels in the community – primary, secondary,
higher, and lifelong – needs to be continually re-imagined and re-designed, with greater coordination
across levels.

Forward-looking, Strategic Infrastructure Planning, Development and Enhancement
 Across the country and world, this is the “Age of Infrastructure” and a great deal of money is being
spent and will be spent on all types of community infrastructure in the future. Missoula needs a
comprehensive and visionary plan for future infrastructure spending and investment.

Accelerated Development of the “Arts” in Downtown Missoula
 What “fits” Missoula extremely well is its growing identity as an Arts Community. A diverse and
robust arts sector helps retain and attract young and talented people for Missoula’s changing work
force and contributes directly to employment and income growth in the community. It helps in
presenting the community well to visitors. Missoula needs to put into place as soon as possible the
proposed new “arts district” in downtown Missoula envisioned in the new Downtown Master Plan to
help in channeling new investment into the arts.

Conception, Design, Development of a Central Business, Financial & Education Complex
A central place for businesses and organizations, both large and small, particularly those offering a
myriad of professional, technical, scientific, financial, and lifelong education services, to co-exist,
synergize, and thrive within a common inter-coordinated development with state-of-the art
technological and communications infrastructure, inspired design and architectural detail, and
complementing amenities for the most discriminating firms and workers in the new economy.

    - Larry Swanson, O’Connor Center for the Rocky Mountain West, U. of M (Missoula Business Forum, Dec. 2009)

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