REPORT: GREAT FALLS REGION TRADE AREA ANALYSIS July 2008 www.angeloueconomics.com
INTRODUCTION AngelouEconomics was contracted by the Great Falls Development Authority to perform a Trade Area Analysis and Identification for the Great Falls region. The goal of this analysis is to determine the overall reach that the Great Falls core metro has on workers, consumers and residents living in the outlying areas of the Sweetgrass region. To determine this, our goal is to identify a conceptual ring around the Great Falls area from which individuals tend to gravitate to Great Falls for shopping, healthcare, employment, etc. versus traveling to another core metro area. This analysis will help leadership at GFDA understand the true breadth and reach of the Great Falls metropolitan area and aid them in their economic development planning. 2
APPROACH To determine the trade area, AngelouEconomics conducted a three part analysis. This presentation is divided accordingly into the following three sections: 1 Regional Purchase Flows -- Analysis of the Great Falls regional economy and the origins of commodity purchases by Great Falls industries 2 Retail Gravitation -- Analysis of Great Falls retail pull versus area cities 3 Regional Commuting Patterns -- Analysis of Great Falls commuter and labor shed to determine distances traveled by residents and workers 3
PURCHASE FLOWS
GREAT FALLS TRADE FLOWS Great Falls Regional Economy Composition GREAT FALLS INDUSTRY PURCHASE FLOWS REGIONAL, NON-REGIONAL, AND FOREIGN PURCHASES MADE BY TOP 15 GREAT FALLS INDUSTRIES, 2006 Industry/Category TOTAL OUTPUT GROSS INPUTS REGIONAL INPUTS GROSS IMPORTS FOREIGN IMPORTS Petroleum refineries $951.44 $915.09 $146.54 $768.55 $691.86 Wholesale trade $225.06 $73.76 $29.66 $44.10 $2.21 Hospitals $201.94 $99.77 $37.54 $62.24 $7.36 Offices of physicians $188.73 $54.49 $23.00 $31.49 $2.62 New residential 1-unit construction $178.43 $123.62 $41.99 $81.63 $14.74 Food services and drinking places $158.25 $90.23 $30.81 $59.42 $6.01 Real estate $133.42 $39.79 $19.64 $20.15 $0.37 Other ambulatory health care services $101.96 $54.49 $22.67 $31.82 $4.08 Insurance agencies and related $100.49 $14.73 $5.75 $8.97 $0.11 Telecommunications $99.15 $57.99 $27.97 $30.02 $2.10 Flour milling $97.89 $84.70 $35.57 $49.14 $2.90 Monetary authorities and depository credit $95.05 $27.09 $14.93 $12.15 $0.19 Truck transportation $84.71 $49.88 $29.66 $20.23 $3.11 Soft drink and ice manufacturing $84.55 $73.83 $22.09 $51.74 $3.02 Securities investment $81.18 $47.67 $26.99 $20.68 $0.25 Source: IMPLAN 5
GREAT FALLS TRADE FLOWS The Great Falls region is a $5.89 billion economy Great Falls top private industries (by total output) include petroleum refineries, wholesale trade, hospitals and physicians offices, and single-family home construction The top 30 industries (of approximately 170) account for more than 60% of the Great Falls economy Most of the top industries purchase the majority of their supplies from companies outside the region: petroleum refineries (84% of purchases made outside region) soft drink and ice manufacturing (70%) single family housing construction (66%) food services and drinking places (66%) 6
SWEETGRASS TRADE FLOWS Sweetgrass Regional Economy Composition SWEETGRASS DEVELOPMENT REGION INDUSTRY PURCHASE FLOWS REGIONAL, NON-REGIONAL, AND FOREIGN PURCHASES MADE BY TOP 15 SWEETGRASS DEVELOPMENT REGION INDUSTRIES, 2006 Industry/Category TOTAL OUTPUT GROSS INPUTS REGIONAL INPUTS GROSS IMPORTS FOREIGN IMPORTS Petroleum refineries $951.44 $915.09 $211.21 $703.88 $629.26 Wholesale trade $287.41 $94.25 $38.49 $55.76 $2.82 Real estate $248.70 $74.17 $40.45 $33.72 $0.69 Hospitals $244.94 $124.45 $50.19 $74.26 $9.18 New residential 1-unit construction $222.14 $153.99 $52.49 $101.50 $18.43 Offices of physicians $206.96 $59.92 $26.60 $33.32 $2.88 Food services and drinking places $188.97 $108.85 $39.00 $69.85 $7.25 Telecommunications $169.65 $98.46 $47.49 $50.96 $3.57 Grain farming $163.09 $84.74 $33.37 $51.37 $7.40 Drilling oil and gas wells $162.61 $116.82 $42.53 $74.29 $11.07 Monetary authorities and depository credit $122.30 $34.85 $19.50 $15.36 $0.24 Truck transportation $114.56 $66.16 $39.19 $26.97 $4.10 Insurance agencies and related $113.24 $16.60 $6.72 $9.88 $0.13 Other ambulatory health care services $111.11 $59.34 $25.62 $33.72 $4.44 Power generation and supply $98.46 $18.42 $5.08 $13.34 $5.93 Source: IMPLAN 7
SWEETGRASS TRADE FLOWS The Sweetgrass region is a $7.68 billion economy The top industry for the Sweetgrass region is the Great Falls petroleum refinery industry, at $951 million in total output Other top Sweetgrass industries include wholesale, real estate, hospitals, and single-family home construction Most of the top industries purchase the majority of their supplies from companies outside the region: petroleum refineries (77% of purchases made outside region) Power generation and supply (72%) single family housing construction (66%) food services and drinking places (64%) 8
GREAT FALLS/SWEETGRASS COMPARED INDUSTRY PURCHASE FLOWS COMPARISONS TOP 5 INDUSTRIES BY OUTPUT, GREAT FALLS REGION VS OTHER SWEETGRASS DEVELOPMENT REGION*, 2006 GREAT FALLS REGION Industry/Category TOTAL OUTPUT 1 Petroleum refineries $951.44 1 2 Wholesale trade $225.06 2 3 Hospitals $201.94 3 4 Offices of physicians $188.73 4 5 New residential 1-unit construction $178.43 5 OTHER SWEETGRASS* Industry/Category TOTAL OUTPUT Drilling oil and gas wells $162.61 Grain farming $141.31 Real estate $115.28 Oil and gas extraction $75.26 Telecommunications $70.49 *Includes Glacier, Toole, Teton, and Pondera counties The top industries for the non-great Falls segment of the Sweetgrass economy are substantially different yet integrated with the top industries for Great Falls The Great Falls petroleum industry makes $62.6 million in purchases from the Sweetgrass oil extraction industry; this represents 88% of all oil extraction industry output The Great Falls flour milling industry makes $1.89 million in annual purchases from Sweetgrass industries 9
GREAT FALLS/SWEETGRASS COMPARED Altogether, Great Falls represents 77% of the total Sweetgrass regional economy The Sweetgrass Region makes $3.84 billion in annual purchases, $840,000 of which are made by industries outside Great Falls GREAT FALLS VS. SWEETGRASS DEVELOPMENT REGION ECONOMIES, AT A GLANCE Great Falls Sweetgrass Total Output Gross Inputs % Imports % Foreign Imports REGIONAL COMPARISON $5.89 B $3.00 B 66.6% 27.7% $7.68 B $3.84 B 37.8% of Sweetgrass purchases are made within the Sweetgrass region, meaning $2.4 billion go to outside firms 33.4% of Great Falls purchases are made within the Great Falls region. By extrapolation, roughly 4% of goods and services purchased by Great Falls firms come from the Sweetgrass region 62.3% 22.3% 10
GRAVITY MODELING
RETAIL GRAVITATION RETAIL TRADE AREA MAXIMUM DISTANCE WILLING TO TRAVEL TO SHOP IN GREAT FALLS, BY CITY City Population Distance Breaking Point* Great Falls 55,248 --- --- Billings 95,558 219 94.6 Bozeman 33,023 188 106.0 Butte 31,804 155 88.1 Havre 9,078 114 81.1 Helena 25,757 91 54.1 Kalispell 16,134 226 146.7 Lethbridge 81,692 184 83.0 Lewistown 5,452 106 80.7 Missoula 59,081 166 81.6 RETAIL TRADE AREA GREAT FALLS RETAIL TRADE AREA VS. MAJOR MONTANA CITIES, 2007 Source: Census, DecisionData Source: Census, DecisionData 12
RETAIL GRAVITATION Reilly s law of retail gravitation measures the point between two cities at which an individual will decide to shop in one city over the other The point at which consumers prefer to travel to Great Falls over Billings is 95 miles or less from Great Falls. The breaking point for other major cities includes 106 miles for Bozeman, 82 miles for Missoula, and 83 miles for Lethbridge (Canada) Due to the relative strength of the Canadian Dollar, the retail trade area for Great Falls actually extends further north than indicated by Reilly s law, capturing residents of Alberta who travel to Great Falls to shop Great Falls retail gravitation area relative to other major cities forms a non-circular polygon 13
COMMUTING PATTERNS
GREAT FALLS LABOR SHED GREAT FALLS REGION LABOR SHED WORKERS COMMUTING TO GREAT FALLS (CASCADE COUNTY) BY PLACE OF RESIDENCE, 2004 15
GREAT FALLS LABOR SHED GREAT FALLS REGION LABOR SHED TOP GREAT FALLS COMMUTER NODES (OUTSIDE CASCADE COUNTY) BY # WORKERS 5 1 2 3 4 5 6 Yellowstone = 1,315 Missoula/Ravalli = 893 Lewis & Clark = 618 Gallatin = 538 Flathead = 484 Silver Bow = 417 2 3 6 4 1 16
GREAT FALLS LABOR SHED 30% 20% 10% 0% 21.2% 12.5% 9.9% Yellowstone Missoula Lewis & Clark LABOR SHED % CASCADE COUNTY WORKERS RESIDING OUTSIDE CASCADE COUNTY, BY COUNTY, 2004 8.6% 7.8% Approximately 6,200 workers (21%) in the Great Falls region come from outside Cascade County 98.4% of Great Falls workers commute from within the State of Montana. The largest concentration of workers outside Cascade County lives in Yellowstone County, with 21.2% of the total Substantial numbers of workers also commute from Missoula (12.5%), Lewis and Clark (9.9%), Gallatin(8.6%), Flathead (7.8%), and Silver Bow (6.7%) counties 6.7% 3.6% Gallatin Flathead Silv er Bow Teton Source: Census 17
GREAT FALLS LABOR SHED GREAT FALLS REGION LABOR SHED 5 1 2 3 4 5 6 Yellowstone = 1,315 Missoula/Ravalli = 893 Lewis & Clark = 618 Gallatin = 538 Flathead = 484 Silver Bow = 417 2 3 6 4 1 18
GREAT FALLS COMMUTER SHED GREAT FALLS REGION COMMUTER SHED WORKERS RESIDING IN GREAT FALLS (CASCADE COUNTY) BY PLACE OF EMPLOYMENT, 2004 19
GREAT FALLS COMMUTER SHED GREAT FALLS REGION COMMUTER SHED TOP GREAT FALLS COMMUTER NODES (OUTSIDE CASCADE COUNTY) BY # RESIDENTS 5 1 2 3 4 5 6 Yellowstone = 1,483 Missoula = 1,186 Lewis & Clark = 913 Gallatin = 576 Flathead = 555 Silver Bow = 291 2 3 6 4 1 20
GREAT FALLS LABOR SHED 30% 20% 10% 0% 22.5% 18.0% 13.0% Yellow stone Missoula Lew is & COMMUTER SHED % CASCADE COUNTY RESIDENTS EMPLOYED OUTSIDE CASCADE COUNTY, BY COUNTY, 2004 Clark 8.7% 8.4% 4.4% 3.4% Gallatin Flathead Silv er Bow Teton Source: Census Approximately 6,600 residents (22%) of the Great Falls region are employed outside of Cascade County Yellowstone, Missoula, and Lewis and Clark counties combined account for 54% of residents employed outside Cascade County Similar to the Great Falls labor shed, other high concentrations come from Gallatin (8.7%), Flathead (8.4%), Silver Bow (4.4%), and Teton (3.4%) counties 21
GREAT FALLS COMMUTER SHED GREAT FALLS REGION COMMUTER SHED TOP GREAT FALLS COMMUTER NODES (OUTSIDE CASCADE COUNTY) BY # RESIDENTS 5 1 2 3 4 5 6 Yellowstone = 1,483 Missoula = 1,186 Lewis & Clark = 913 Gallatin = 576 Flathead = 555 Silver Bow = 291 2 3 6 4 1 22
CONCLUSIONS
CONCLUSIONS 1 Regional Purchase Flows The Great Falls and wider Sweetgrass economies are integrated via substantial purchases made by the Great Falls petroleum refinery industry; approximately 4% of Great Falls industry purchases are made to companies within the Sweetgrass region, while a majority of purchased goods come from other regions 2 Retail Gravitation Great Falls retail trade area extends an average of 58% of the distance to major Montana cities, encompassing a wide area that includes numerous smaller towns 3 Regional Commuting Patterns The Great Falls labor and commuter trade area extends northwest and southeast in an elliptical pattern; significant numbers of workers and residents come from communities such as Billings, Missoula, and Bozeman 24
CONCLUSIONS Based on the foregoing analysis, combined with an examination of an analysis performed concurrently 1, AE recommends an extension of the existing Great Falls trade area that better aligns with the extended reach of Great Falls retail, commuter, and trade flow influence The following counties would be included under the revised trade area definition Cascade Teton Pondera Glacier Toole Choteau Blaine Meagher Judith Basin Liberty Lewis and Clark Hill Fergus REVISED TRADE AREA Sweetgrass Development Region AE Suggested Greater Great Falls Region 1 See Great Falls Primary Trade Region and Labor Market Area Report, Dr. Larry Swanson, July 2008 25
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