Flathead Industry Leaders Brace for a Daunting 2009

By Beacon Staff

Speakers at Tuesday’s Kalispell Chamber of Commerce luncheon spanned nearly every major business sector in the Flathead Valley. But their messages were, by and large, consistent and sobering: Last year was a volatile and difficult one here, and 2009 likely holds even more challenges.

More than 250 people gathered at Kalispell’s Red Lion Inn to listen to industry leaders give quick-hit reports on the status of their respective businesses. Speakers represented nine major industries: agribusiness, construction, finance, healthcare, real estate, technology, timber, tourism and hospitality and retail.

For Semitool Inc. and Plum Creek, two of the valley’s largest employers, 2009 has already been marked by layoffs necessitated by slumping national and global markets. Representatives from both companies painted the rest of the year as an exercise in endurance.

“The economic outlook is pretty grim,” Steven Thompson of Semitool said. “The key thing is survival.”

The company, Thompson said, will have to be sized to remain profitable, control costs and search for new markets as the technology industry grapples with a volatile national market.

Jim Lehner of Plum Creek said new housing starts, a primary focus of the timber industry, have slowed from about 2 million three years ago to only about 600,000 by November of last year. He noted that there were some positives emerging though, including federal economic packages, lower interest rates and a slowly declining home inventory.

“But we don’t anticipate seeing a big change through 2009,” Lehner said, “and probably not until 2010.”

The healthcare industry is bracing for an increase in patients with outstanding debts as the economy continues to sour, Jim Oliverson, vice president of Kalispell Regional Medical Center, said. After adding several doctors and new technology in 2008, he said expansion will likely slow a bit this year.

Work in the construction industry and real estate has already slowed considerably in the Flathead, according to Charles Lapp of the Flathead Building Association and Jim Kelley, a local appraiser. Housing starts are down 31 percent statewide, Lapp said, and 35 percent in Flathead County.

Meanwhile, Kelley said the sales volume of existing homes dropped by about 28 percent, with the average sales price of a home dropping about 9.4 percent locally. Much of the property value, though, was lost in high-end vacation homes, and for-sale inventories of houses priced at $300,000 or less are holding close to the national average.

Foreclosure notices have increased: In 2007, there were 290 notices of trustee sales – a beginning step in the foreclosure process – filed in Flathead County, of which 85 percent were canceled before the foreclosure process was fully completed. Last year, there were 477 notices filed and only around 51 percent canceled.

The local banking industry will reflect some of the changes nationally, Bob Schneider, of First Interstate Bank said, like emphasizing high credit scores and larger down payments. Still, financing remains available and interest rates are lower.

Farmers endured an erratic year where prices for their inputs and outputs alternately skyrocketed and plummeted. “There was opportunity to make some big bucks and opportunity to lose some big bucks,” Doug Manning of Cenex Harvest States said.

And retail, tourism and hospitality, after a fairly steady year are bracing to endure their own trials in 2009 as consumers cut back spending in the face of economic downturn. “We miss those construction workers with bucks in their pockets who couldn’t wait to buy a new pair of skis,” Dave Harvey of Sportsman Ski Haus said.

But, he added, if companies in his sector and others are able to survive these hard times, there is a bright spot: “We’ll emerge a more profitable and leaner company.”