Homegrown companies staying local as they grow
December 17, 2015

By Cate Huisman
Sandpoint Magazine

Five years ago, Timbersled founder Allen Mangum, out joyriding in the winter backcountry, found that he had arrived at the top of a snowy slope way ahead of his companions. That’s when he realized that the kit he had made – which converts a dirt bike to winter use with a rear track and front ski – was a major game-changer in the power snowsports industry. Within a few years, the vehicle he had ridden that day was so popular that the term “timbersledding” had been born.

Timbersled had been making and successfully marketing high-performance snowmobile suspensions since 2002, but once the snow bike system – called the Mountain Horse – came on the market, sales really took off. Sales of the Mountain Horse have doubled every year since it first went into production in 2011.

That performance attracted the attention of Polaris, a Minnesota-based manufacturer of power sports vehicles, including snowmobiles. They bought Timbersled last spring and simply told them to “amplify everything we do,” according to Brett Blaser, Timbersled’s director of sales and marketing.

Being purchased by a bigger company can provide a lot of advantages and options for Sandpoint’s smaller, homegrown success stories. Becoming part of Polaris gave Timbersled access to the larger company’s marketing, sales, development, research, and other resources.

“I’m no longer the legal department, which is awesome,” said Blaser.

It’s a good deal for the purchasing companies, too. For Polaris, buying Timbersled added a key element to their line of products. “Our common culture and shared passion for the powersports industry and consumer will create an exciting platform for continued innovation and accelerated growth,” said Scott Wine, Polaris chairman and CEO, in a press release announcing the purchase.

Blaser’s description is more plain-spoken: Polaris is like Timbersled in that “they’re aggressive, honest, hardworking and do not like being second place to anyone.”

If Timbersled were to stay in Sandpoint, the rapid growth also meant it had to find resources locally to make more Mountain Horses. Finding the right people wasn’t a problem, said Blaser: “Here in North Idaho, people know how to work with their hands, they’re smart and their work ethic is extremely high.” But finding space was more of a challenge. “Our hunt for land was very difficult,” said Blaser. “Correctly zoned land that is priced right is difficult and time consuming to find here.” It took a year-long search and a significant investment in fill before they finally had a piece of land for their new facility, which will enable them to triple their square footage.

Raphael Barta, president of the Selkirk Association of Realtors, echoes Blaser’s concern in accessing available land in Greater Sandpoint. “We have not allowed enough space for new commercial and especially industrial uses,” he said. In addition, much of the inventory has problems with water and drainage, and “underground streams are everywhere.”

Quest Aircraft, which makes small planes for backcountry uses, is another local success story. Back at the turn of the millennium, Quest cofounder Tom Hamilton was working in Priest River when he was approached about manufacturing a small airplane for backcountry use. “The goal was to design a utilitarian rugged airplane that could be easily maintained in the field, because often the pilot is also the mechanic,” said Julie Stone, Quest’s marketing and public relations consultant. The resulting company, Quest Aircraft, started in Priest River in 2001 but soon moved to Sandpoint to have access to two important resources: a larger airport and adjacent land on which to build a production facility.

Since then, worldwide sales of Quest’s Kodiak airplane have taken off. The company was actively looking for investors to provide capital to support its growth, and last year it found what it needed in Setouchi Holdings of Tokyo, Japan, which purchased Quest last winter.

Like Timbersled, Quest is committed to staying in Sandpoint. It broke ground on a new facility near the airport this fall that will enable it to nearly double its production. By the end of 2015, it will have added 95 jobs to the 165 it already provided in Sandpoint, and it needs to find people to fill those jobs.

Providing housing for these incoming workers is another challenge as local companies grow. Bonner County’s residential real estate costs are high relative to those in other parts of the state due to its recreational opportunities and resort amenities. There is “absolutely not” enough housing available at prices the growing workforce can afford, says Barta. The rental market is tight, and as for purchasing a home, “There is a huge gap between what people can buy and their incomes.”

Quest and Timbersled illustrate a truism about employment in Sandpoint: We grow our own jobs, much more than we bring them in from outside. A 2013 study of the Bonner County economy pointed this out: “Much of the business formation has come from within the local economy rather than by the relocation of businesses to the county.” Only 2 percent of growth came from businesses moving into the county.

For this reason, city and county economic development efforts are focused less on attracting new companies and more on providing homegrown companies with the resources they need to stay local as they grow.

While state law does not allow Sandpoint to build a facility for a company, it does allow using public funds for “public improvements,” such as investments in infrastructure and publicly owned facilities, and the state provides some funds for this purpose as well. For example, last year Sandpoint was able to use urban renewal funds and reimbursements from the Idaho Department of Commerce (IDC) to fund utility hookups, fencing, paving and other infrastructure improvements at the Sandpoint Airport for a hangar for Tamarack Aerospace. Tamarack is another local startup that builds “active winglets” that increase airplanes’ fuel efficiency. Growing demand for the winglets meant that Tamarack needed 12,000 more square feet to accommodate workers in 50 added jobs.

The community is also trying to build an educated workforce for growing companies. The Idaho Department of Labor (IDL) provides workforce training grants to companies that create threshold numbers of jobs. To support growing industries over the longer term, North Idaho College has paired up with the Idaho PTECH network to provide training for workers in three “pathways” – aerospace, health care and technology. They are working with Quest, for example, to include “A&P” (airframe and/or power plant) training that will help prepare workers to work on Quest’s aircraft. Quest, being a PTECH partner, has agreed specifically to interview and consider graduates of this program for its job openings.

Barta believes land use planners and local governments should also be making it easier to build workforce housing – by waiving some development fees and getting urban renewal support to prepare appropriate land.

Even with these resources – and some tax incentives from the state as well – it’s sometimes a scramble to compete to keep a growing company local. Other states can offer enticements that Idaho can’t, such as reimbursement of moving costs and cash incentives. “It’s an incredibly hostile competitive environment,” said Jeremy Grimm, Sandpoint’s former director of planning and economic development: “a race to see who can subsidize a company to the greatest degree.”

A tale in this genre is provided by Biomedical Innovations, formerly Lead-Lok, a company started here in 1986 that makes custom medical devices for a rapidly growing market. This company was looking to expand after it was acquired by Graphic Controls of Buffalo, New York, in the summer of 2014, and both New York and Vermont, where Graphic Controls had other facilities, offered some appealing incentives to move.

Space for increased production was a particularly urgent need. To hold on to Biomedical Innovations and its 62 jobs, plus more it anticipated adding as it grew, the City of Sandpoint decided to empty out its business incubator and lease the entire facility to the one company. “The city made a tough decision to evict the smaller, non-job-creating businesses,” said Aaron Qualls, now in Grimm’s former job at the city. “Biomedical Innovations was the only tenant that was creating jobs, and that’s kind of the idea of the incubator.”

The city also made improvements to the incubator, allowable because the city owns the facility, paid for in part by an IDC program that provides funding to help rural communities plan and implement economic development projects. Sandpoint also helped the company get approved for a tax reimbursement incentive, and the IDL awarded it $55,000 for workforce training.

After all these efforts, Biomedical Innovations is already outgrowing its new space. It now employs more than 70 people and plans to add 30-plus jobs next year, but it needs another 10,000 square feet of production space to do so. Qualls and his colleagues continue to scramble, hoping to use urban renewal funds and matching grants from IDC to help with further expansion.

Grimm admits that we’re unlikely to keep all the jobs we grow. Some processes are not scalable, he points out, and some companies are acquired simply for a specific technology or intellectual property. “I don’t think you’re ever going to lose the churn,” he said, of companies coming and going. But giving them a place to start – and grow as much as possible – gives our area a more dynamic and sustainable economy, and makes it a more exciting place to live as well.