Building bolsters economy

Booming construction has increased more than the number of buildings in the Flathead Valley.

It has also contributed heavily to employment. Directly and indirectly, construction is responsible for almost 20 percent of all employment in the area, according to Gregg Davis, professor of economics at Flathead Valley Community College. Davis discussed construction's impacts at the fourth annual Flathead Forecast, a seminar hosted by Montana West Economic Development. More than 100 people attended the seminar at the WestCoast Center in Kalispell Tuesday morning.

More than 3,100 new jobs were created in 2004 thanks to new residential construction and remodeling, Davis said. Of these, 1,626 were in construction; the rest happened as a result of construction.

Other sectors that saw new jobs thanks to construction included retail, which gained nearly 530 jobs in 2004; scientific and technical employment, which increased by almost 140 jobs; and manufacturing, which grew by about 125 jobs, Davis said.

Over $72.2 million in employee compensation was added in 2004 as well, thanks to construction. Again, construction and retail saw the greatest increases in salaries, with about $36.7 million and $10.8 million in total wages, respectively.

The average wage in construction was about $31,400 in 2004, compared to the average wage in all private industries in Montana, which was about $26,600.

Data is not yet available for 2005.

While construction pays above-average wages and stimulates a variety of sectors in the economy, Davis cautioned that the sector was not without problems.

The biggest of these was what he called "the interest rate conundrum" - the fact that long-term interest rates remain "stubbornly low" despite other increases.

"Ask me to explain long-term interest rates, and I can't," Davis said. "Ask Alan Greenspan to explain long-term interest rates and he can't."

Davis also disclosed the results of an energy impact survey that local business people took on his Web site, the Center for Business Information and Research (http://oxygen.fvcc.edu/~gdavis/cbir.htm). He had hoped for as many as 2,000 responses but only got 60, so the information may not be indicative of the overall business market, he said.

Cost of inventory and supplies has been the most impacted by rising oil prices, Davis said. Eighty-one percent of the businesses surveyed reported an increase in this area. And while 44 percent of businesses said these increased prices have already forced them to increase their own fees, nearly a quarter did not expect to have to do so.

In 2005, gas prices increased by nearly $1.30 per gallon, Davis said. In January, gas averaged $1.78 per gallon. By September, largely because of Hurricane Katrina, that price was $3.07 per gallon.

To end the seminar, Steve Anderson, vice chairman of Montana West Economic Development, presented a new award to Don Farris, head of Resource Label Group. Farris was named "Champion of the Economy" for what Anderson called the "outstanding contributions" his company has made to the Flathead Valley economy.

Originally from Memphis, Tenn., Farris built a label-making plant just north of Whitefish in 2003. Since then, Farris has invested some $5 million, created 30 new jobs and brought national and international attention to the region.

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com