BILLINGS – Who better to escape the Great Recession with only a few scratches than the town known as the Magic City?
With a little luck and hefty contributions from the oil, coal, health care and agriculture industries, Billings has slipped through the recession with none of the scars suffered by the state’s other economic leaders.
Consider this: Unemployment in Yellowstone County hit 6 percent for just three months since the recession began. And those months – January through March of this year – were bookended by unemployment rates of 5.1 and 5.2 percent.
“The recession has been relatively mild in Yellowstone County,” said Patrick Barkey of the Bureau of Business and Economic Research at the University of Montana. “Growth has been slow, but it hasn’t been negative.”
There have been layoffs and store closures along the way, and some jobs lost in hard-rock mining have come back, but the worst seems to have passed. Barkey sees the economy growing even if by only a couple percentage points.
Billings has gotten by with help from coal – the $408 million development in the Bull Mountain Mine by Signal Peak Energy fired up just as the recession began to clobber other state economies. The mine is 50 miles away, but like so many natural resource projects in the community, money has flowed into Billings.
The community has also benefited from better-than-expected farm prices. Wheat has posted prices above $5 a bushel, as well as record high yields, for three of the last four years. And this year benefited from a late-developing drought crisis in the countries of the former Soviet Union that pushed U.S. grain prices upward more than 60 percent just as Montana harvesters rolled into fields.
Cattle prices are at their highest level in at least three years and the parking lots of the Billings Auction yards are full. Sugar prices are holding steady and none of the region’s sugar beets were lost to weather.
Economists are taking note because rarely do so many agriculture sectors do so well at the same time. The convergence even had Gov. Brian Schweitzer suggesting in September that agriculture would be pulling Montana’s economy into recovery as those farm profits got spent in town.
Allan Holliday, who runs a Billings-based fertilizer business, is hoping an agriculture windfall breaks his way. Many farmers scrimped on fertilizer last spring because prices weren’t promising. They didn’t need it in the fall when prices improved.
Next spring could be a different story. And if it benefits Holliday’s company, Terra Logics, it will benefit several city businesses as well.
“There are myriad businesses we deal with,” Holliday said. “Our payables list is probably 200 vendors. It’s everything from concrete workers and electricians to carpenters and plumbing suppliers.”
Holliday suspects it’s the heavy-machinery mechanics who might benefit from the improved farm economy, but at Yellowstone Valley Parts and Equipment, owner Jeff Dyk said it’s the oil boom hundreds of miles to the east that is driving his business.
The Bakken oil formation on the Montana-North Dakota border is producing 300,000 barrels of oil daily. The play, a half-day car ride east of Billings, is putting people to work in Billings.
“The Bakken formation and the bentonite guys, that’s what feeds us,” said Dyk. “Bentonite is used primarily in kitty litter. No. 2 is mascara. No. 3 is drill stem mud. This summer all hell broke loose and they’re all working again digging bentonite.”
Dyk services and sells heavy equipment and offers a unique used parts service to those in the business of moving dirt. The business activity is a welcome change from 2009 when Dyk’s customers, lacking confidence in the economy, stopped buying new pieces of equipment and instead bought just the basics, transmissions and running gear to keep their operations on life support.
Manufacturing locally has also remained strong, as the community’s three oil refineries have stayed busy.
But the big player locally has been the medical complex. Billings has the largest medical economy in the state and health care overall has weathered the recession well, even experiencing modest growth statewide.
Hospitals, clinics and elderly care businesses were part of the only private Montana economic sector to increase its work force, according to federal Current Employment Statistics, which measure employment data based on direct survey responses from employers.
From 2007 through October, health-related businesses added 1,600 new jobs. The only other growth sector was utilities and transportation, which added 700.
Government spending, via Medicare, has a lot to do with the stability of the health care industry, said Barbara Wagner, senior economist for the Research and Analysis Bureau of the Montana Department of Labor and Industry.
And for Billings, that stability ripples through the rest of the economy.
Billings is a hub for medical and social services, serving 40 Montana counties and portions of Wyoming and North Dakota. Its largest employer, Billings Clinic, has 3,500 workers mostly based in Billings, with a few hundred spread across clinics in eastern Montana. St. Vincent Healthcare, the community’s other regional medical provider, has 2,100 employees.
There has been some growth, said Kellee Fisk, vice president for people resources at Billings Clinic.
“On average, we’ve hired about 350 people over the last two years,” said Fisk. “They’ve come from all over, but we’re mainly a regional employer for a five- or six-state area.”
Some of the jobs opened up as medical services expanded. Billings Clinic rolled out a new cancer treatment center in 2009, which was followed by the Frontier Cancer Center and Blood Institute in August. Four smaller specialty surgery centers are also in the works and two new clinics, including a new walk-in facility at St. Vincent Healthcare, are opening.
But expansion in facilities doesn’t mean purse strings aren’t tight. St. Vincent, while aggressively hiring new nursing staff, also laid off 28 employees in clinical and non-clinical positions. A third of the people laid off were in management.
At Billings Clinic, Fisk said the staff is very conservative in estimating its needs for new employees. No position is filled without a serious evaluation of the need.
Health care in particular is seen as a growth industry because Montana’s population is disproportionately older than the national average. The state’s population older than 65 is expected to double in the next
20 years as baby boomers age, according to economists at Montana State University.
But those increases in demand for medical services will take place over years. Until then, there just may be enough rabbits in the Magic City’s hat.
Reporter Tom Lutey can be reached at (406) 657-1288 or at email@example.com.