The New Trickle Down Economy?

By Kelly Yarns

Despite hearing daily reports about credit crisis and tough times for business, it hasn't seemed very real to me. I'm a student, I don't have a retirement account and I only work part time. Being on the bottom of the financial food change I have largely missed the anxiety and fear experienced by many....until it starts to hit those close to me.

We have a friend who has been doing well as a building contractor for both big developers and small remodelers. On the edges of the housing contraction he finds he can't stay in business. The large developers he's already completed work for aren't paying and the lumber suppliers aren't extending any more credit. His business is at a standstill even though he has enough small contracts lined up to survive. If you can't buy supplies because your completed jobs can't (or won't?) pay, and your credit is maxed out, you can't stay afloat. I wonder how other small business owners are weathering this storm?

This is exactly what has taken down some of the big guys. Lehman Brother's failed in part because their daily operations where financed by JPMorgan. When JPMorgan denied Lehman Brothers access to its accounts on September 12, Lehman's lost its access to cash. Is this today's version of trickle down economics?

One local small-business owner told me that credit cards are a key source of short-term credit for small businesses. Unfortunately these credit lines are not secure. Banks often change the credit limits without warning. Imagine your chagrin to find yourself with a closed sale, going to your supplier to buy materials, plopping down you credit card only to have it rejected. What are you supposed to tell your clients?

Small business owners are talking about what it will take to survive these times. Small business owner Devin Moore wrote "The ability of a small business to react quickly and fill a localized need is perhaps their greatest strength." This optomistic view expresses the challenge ahead for us all. To find and fill a niche. My favorite tip is to diversify your business services to include counter-cycle elements. These are business activities that thrive during contractionary economic cycles. Job skills training and anything that increases operational efficiency are some examples.

The big picture economic crisis seems abstract and a little surreal from where I sit. My life hasn't really changed very much. Talking to people in the thick of it helps bring me into the real world where most of you live. It also makes me think a little harder about graduate school. This may be a good time to stay out of the job market for just a little bit longer.

Change is Green

By Marcy Allen

In the wake of a monumental election in the United States, the word ‘Change’ keeps ringing in my ear. No matter who you voted for I think we can all agree that with our current economic condition we are in need of some change. Change is always something we can count on. It is not always something that we revel in or even feel comfortable with. I often have to remind my self that with change comes opportunities.

My point being that with the current economic downturn, rising fuel prices, and upcoming 'Change' we have opportunities. I believe that one of those opportunities is the Green Building Industry. The green building industry is HUGE! It is projected that the green building industry will reach 60 billion dollars 2010, and approximately 10% of commercial construction starts are expected to be green by 2010. In our region we currently have two LEED certified commercial projects underway totaling 40 million dollars. The green building industry offers a wide range of job opportunities for our region from blue collar and professional positions. Green can come in the form of HVAC installer, builders, engineers, computer scientist, architects, and loggers. This is the reason that I like green industry, you can be a PhD in computer science and be developing energy informatics application or you could be a skilled carpenter offering your customer green building. It offers Rural Urban business opportunities, Good Wood is a great example of this, logged throughout the region, milled in Superior, and sold in Missoula.
'Change' will come in the form of green house gas reduction and green job policies and regulations. We can be prepared and grow our local economies from this “Change” and my suggestion is through green industry. My next post I will discuss how at a recent presentation my notion that with change and distress can come opportunities where reinforced. Sustainable Venturing coming soon.

Small-diameter Wood: Supply and Demand

By Kelly Yarns

When searching for my economics undergrad thesis topic I wanted to find something relevant to our local economy. I think the trend in forest management toward providing certain desirable forest conditions and away from providing timber is changing the wood products industries in Western Montana. Much of the wood thinned off western forests is small-diameter under-utilized trees. In our region, there is substantial effort to create and encourage value adding businesses to utilize this supply of small trees.

I’m going to try to create a supply and demand model for small-diameter timber in Western Montana but I need certain types of data that occurs over the course of at least five years. I need information on the prices value-adding business pay for small-diameter timber, an estimate of the quantities they used and data on other factors that influence supply and demand. I’m thinking that wildfire occurrence, fuel costs and housing industry trends impact how much of this stuff gets used. If anyone out there has any suggestions on where to find data or other what some other important factors that influence supply and demand for small-diameter timber might be, I could use your input.

I hope that my analysis of this market can help target economic development efforts to encourage innovative efforts to use small-diameter wood to create jobs, local products and sustainable economic growth.