News

Hills economy in transition
By Dan Daly, Journal Staff Writer

RAPID CITY -- If an optimist sees each setback as an opportunity, then the Black Hills have had a number of opportunities in recent years.

The region is in the midst of a complete economic makeover - and not completely by choice. The economy is making the transition from traditional jobs in mining, food processing, military and rubber-tire tourism to a new economy based on ... well, we're still working that one out.

The mining industry, symbolized by the big Homestake Mine in Lead, has all but disappeared after a 130-year run. Homestake Mining Company closed its namesake mine in 2001.

Western South Dakota lost its only large-scale meatpacking facility, Federal Beef Processors, to a fire in early 2002. The plant's owners decided not to rebuild. And this year, ConAgra closed the doors on its Rapid City flour mill.

Sawmills, once a fixture on the edge of town in about every Black Hills community, are gone for the most part. A few large, automated mills do nearly all of the milling these days.

Now, with Friday's announcement that the Pentagon wants to shutter Ellsworth Air Force Base east of Rapid City, the Hills economy could lose its biggest, most reliable employer.

But there is optimism out there. It could be found Friday night during Black Hills Community Economic Development's annual meeting and banquet. Much of the talk among the banquet tables in La Croix Hall was about Ellsworth.

And Sen. Tim Johnson, D-S.D., Rep. Stephanie Herseth, D-S.D., and Sen. John Thune, R-S.D., each in turn stepped up to the podium to talk about the prospects of getting the base off the Base Realignment and Closure list. And if the base does close, each vowed their help in the region's economic recovery.

But otherwise, representatives from the 14 communities that comprise the Black Hills Community Economic Development were there to celebrate. A table full of glass trophies and plaques slowly disappeared as small-business owners took their turns on the stage receiving awards for their accomplishments.

The future of the Black Hills economy might rest in the hands of small, innovative firms such as the Pacer Corp., one of Friday's award winners. The Custer-based company has figured out a way to find new, technology-based applications for locally mined minerals such as mica and feldspar.

Its products end up in automotive paints, drywall, ceramic tile and other products. It has 27 workers and is involved in a $7 million expansion, which could help the firm double its workforce.

Pacer won the Industrial Small Business of the Year award during Friday's banquet. In his acceptance speech, Pacer president George "Duff" Kruse compared the base announcement to Pacer's position several years ago.

"I know people are down in the mouth about the base," he said. But a few years ago, Pacer found itself selling raw, unrefined minerals in an increasingly competitive international market.

Instead of giving up, he said, Pacer Corp. made a conscious decision to get into a technology-based line of business in which mica and feldspar are refined and adapted to a variety of industrial uses. "We turned it around," he said.

The top award winner could be even more important to the future of the region's economy. Black Hills Vision, an effort that began two years ago to raise $3 million to help five ongoing economic initiatives, recently reached its fundraising goal.

However, one of its five initiatives - securing Ellsworth Air Force Base's future - might not be accomplished.

The other four are:

* Convert the former Homestake Gold Mine into a national underground laboratory. This will be a key step in establishing a Black Hills Technology Corridor.

This project is currently stalled in the National Science Foundation process.

* Improve air service to Rapid City Regional Airport. Local groups are making progress on this one: United Airlines this summer will launch nonstop service to Chicago, and Allegiant Air will begin twice-weekly, year-round service to Las Vegas in July.

* Develop a business incubator. Plans are under way to build such an incubator on the campus of South Dakota School of Mines & Technology.

* Establish quality low-income housing.

Also, Black Hills Vision is part of a Hills-wide effort to create and promote the creation of a technology corridor - with or without an underground lab.

Research-and-development activity tends to create its own momentum in regions that have worked hard to promote it.

The local Black Hills Vision folks use Oak Ridge, Tenn., as their model. The region is home to more than 1,000 technology-based companies.

Most are clustered around the Oak Ridge National Laboratory, the University of Tennessee, the National Transportation Research Center and other institutions near Oak Ridge, Tenn.

Other award winners Friday night:

* Ranchers' Feed and Supply in Edgemont won the Small Business of the Year Award. Owners Ken and Verna Barker, with son Kelvin, bought the grain elevator in Edgemont and turned it into a diverse retail operation that has a wide range of products such as hardware, building materials and ranch supplies.

* The Small Business Administration honored Pioneer Bank & Trust with its 504 Loan Partner Award, Robert Buche of Buche Foods in Wagner with its Family Owned Small Business Award, Joann Walker of the Department of Veterans Affairs Black Hills Health System in Hot Springs as its Veteran Small Business Champion, and Keith Willard of First Financial Bank USA in Dupree as its Financial Services Champion.

* Ken Wetz, head of Butte Electric Cooperative and mayor of Newell, won the Black Hills Volunteer of the Year Award from Black Hills Community Economic Development.

* Dan Mayer and Dale Hanson of Sturgis won the Governor's Office of Economic Development's top regional award for their work on the Sturgis Industrial Expansion Corp.

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com