The Reawakening of Rural America and the Promise for Economic Growth

By Eric Peterson | Dec 07, 2020

Consumer & Lifestyle Supply Chain Colorado

In pursuit of a more rewarding lifestyle, the workforce is increasingly spreading out to rural areas. Many outdoor manufacturers are following suit and trading the big cities for the great wide open.

The stay-at-home orders in 2020 heralded a big adjustment to the definition of "normal."

It's no metamorphosis, but the pandemic has acted as a catalyst for a wide range of ongoing trends: E-commerce grew as much in a month as it had in a decade, live video streaming has exploded, and the remote workforce is growing -- and increasingly rural.

A survey by the Harris Poll at the beginning of the pandemic found that 40 percent of respondents living in urban areas would consider moving to rural areas, as 5,000 households have emptied out of New York City every week since July 2020.

The beneficiaries are all over the map from Truckee, California, to Burlington, Vermont, but the big bullet point is that people -- and companies -- are increasingly looking at smaller communities as lifestyle rises on their lists of priorities.

Jeff Kraft, division director of business funding and incentives at the Colorado Office of Economic Development and International Trade (OEDIT), says this so-called "urban exodus" has buoyed growth in Colorado, and not just on the Front Range.

"Particularly the resort communities, we're hearing about school districts having big increases in their enrollment," says Kraft. "If you can work remotely, why not work from a beautiful spot in Colorado?"

Nathan Fey, executive director of the Colorado Outdoor Recreation Industry Office, couldn't agree more: "We've seen brands move out of the highly concentrated urban corridor along I-25 in the Denver metro area and relocate to more rural parts of Colorado, but we're also seeing brands relocate from places like Houston, Texas, and California that are looking for a little bit of space to grow their operations and expand their workforce, but also grow their workforce in the kind of community that supports the activities they're interested in building their brands around."

Kraft says most inquiries for potential relocations he fields involve questions about workforce and infrastructure. Early-stage companies in many industries, including outdoor, "start out relatively small, so while they need a workforce -- and workforce is a challenge everywhere all the time for everybody -- they don't need 1,000 people," he notes. "They might need just 20 people to start off and grow from there."

Fey points to Montrose, Colorado, as one community that stands to benefit from the new normal. "Colorado tends to sell itself, and when we have visitors exploring the Western Slope of Colorado and the Uncompahgre Valley, I think it's easy to imagine that it would be a great place to set up a small manufacturing center and move your family there," he says. "Because it's surrounded by all of this adjacent natural and built assets for outdoor recreation and activities they want to incorporate into their lifestyle, it seems to track."

As the trend gains steam in Colorado, the Montrose area "seems to have all the best examples [of relocations] at the moment," adds Fey, pointing to recent Texas transplant Geyser Systems as a prime example.

Montrose Mayor Barbara Bynum offers some perspective: "It's not only people who are fleeing big cities. It's people who can work from home that are recognizing they never wanted to be in the big city -- that's just where their job was."

Retirees "have always loved this area when they've driven through in the summer and have chosen it for relocation," she adds, "but now I think we're seeing that more and more with young innovators, entrepreneurs, and small business owners who realize they can locate anywhere if it has an airport."

Bynum calls Montrose "a hidden gem," and points to results from a recent survey conducted to inform an update to the city's master plan. "[W]e heard that the outdoors and public lands and access to recreation is a driving factor for most people who are either relocating here or what they love most about being here, and yet Montrose certainly doesn't yet pop up on the list if you think of great outdoor locations in Colorado," she says. "So I feel we like we have a tremendous amount of potential, and it isn't super well-known yet."

But Sandy Head, executive director of the Montrose Economic Development Corporation (MEDC), says word is getting out. "I've probably got a longer list than I have had in a number of years of companies that we're working with," she notes.

While the rising economic tide has buoyed all industries, the outdoor industry "is a natural because of the tourism," she says.

It's also a good fit for the local workforce. Ross Reels, Scott Fly Rods, Colorado Yurt Company, SOM Footwear, and other outdoor-centric manufacturers have proven the model in Montrose for decades.

Fey points to Montrose's "legacy of manufacturing and working with their hands. Montrose has had a number of outdoor-related lifestyle and manufacturing companies already there, so they do have a workforce that already does it. There's a workforce already in place and an industrial district and a pretty sophisticated economic development organization."

And it typically doesn't require a whole lot of arm-twisting to get people to relocate to the Uncompahgre Valley. "The lifestyle's there, absolutely," says Bynum.

As is the infrastructure, though the perception is often markedly different from reality. "We have broadband and we don't ride horses to work," laughs Head.

Exhibit A: The Delta-Montrose Electric Association offers high-speed Internet access through Elevate for just $79.95 a month. "The whole city has access to one-gig fiber," says Bynum. "I take it for granted, but that's a relatively new thing for us now, and it's awesome."

And those horses? Not even close. Montrose is an endpoint for major trucking routes, and Montrose Regional Airport has seen more than 80,000 annual enplanements in recent years as it emerged as the fastest-growing airport in Colorado. "Montrose really benefits from being so close to Telluride," says Kraft. "You can one-hop almost anywhere in the globe from Montrose."

Bynum touts "an economy that continues to diversify and a community that is really willing to invest in itself." In the last six years, voters have approved new taxes and bonds to build an 83,000-square-foot recreation center, a middle school, and an events center. "All of those things wouldn't have been possible without tax dollars," she says. "We've also seen a tremendous amount of investment by private dollars as well."

Case in point: Colorado Outdoors, a new outdoor-focused commercial and residential development on the Uncompahgre River. "It has received a lot of notoriety from the state and on a national level. It brings people here," says Head. "It has done an amazing job of bringing a greater awareness of Montrose and what we have."

It's also bringing in new jobs. A company that provides logistics to its own outdoor brands as well as those of customers, Wedge Brands had too much distance between its Reno warehouse and its core markets of Colorado and Utah.

CEO Jarka Duba says the arrival of Tesla Motors and other big companies in Reno led to the search for a new site. "Warehouses went from 65 percent occupied to 98 percent occupied in Reno," he adds. "Prices went up and it's difficult to find staff."

As he explored alternative locations, Duba says he was looking for a spot with great access to outdoor recreation, an affordable cost of living, and proximity to UPS and FedEx shipping hubs. Montrose checked all of the boxes, and construction on Wedge Brands' new warehouse at Colorado Outdoors is set to commence in 2021. Duba projects an initial staff of 12 employees; the plan is to grow it to about 30 employees.

Incentives can make or break relocation decisions, and Head recognizes that dynamic. "We just try to put a package together," she says. "Do we have carrots that are bigger and better than everybody else? I think that, with what the city does, we do."

Located in a Colorado Enterprise Zone, Montrose will often match state incentives, she notes, and the county has abated property taxes. Kraft also highlights OEDIT's Rural Jump-Start Program as a vehicle for tax relief for companies relocating to or hiring in rural areas in Colorado.

The Greater Colorado Venture Fund is another useful tool, he adds. "The state is a limited partner in a private venture fund that invests in rural Colorado, and they have invested in some outdoor recreation and outdoor experience type of companies."

Additionally, workforce development programs like OEDIT's Skill Advance Colorado help rural communities by providing businesses with grant funding for job training, as LONE (Location Neutral Employment) Incentive helps spread job creation around the state by incentivizing companies to foster a remote workforce beyond the Front Range. "Obviously, it's gotten a lot more interest and we're seeing a lot more attraction post-COVID," says Kraft of LONE.

Duba says the clincher for Wedge Brands' move to Montrose was the fact that Mayfly Outdoors -- the Montrose-based fly-fishing gear company that spawned the Colorado Outdoors project -- had already proven the concept with its own brands. "The guys at Colorado Outdoors understand what we're trying to do, because they do it themselves," says Duba.

David Dragoo, president of Colorado Outdoors, and founder of Mayfly -- the parent company of the Ross Reels, Abel Reels, and Airflo brands -- says that his outdoor industry experience led to the vision for the project. "In 2014, when we acquired Ross Reels, I didn't know where Montrose was. We said, 'Let's find a location where we can run this business better and make a difference in the community.'"

He adds, "The perception was: You had to be in a big city to be a successful business. You had to be where everybody else was -- it was the fear of missing out."

After considering several major metropolitan areas across the Southwest, Dragoo says Montrose started looking better and better. "There was this bias that small towns don't have infrastructure," he notes. "They don't have what you need to grow your business. Those were both absolutely incorrect."

When Mayfly was "busting at the seams" in its former facility, the idea for the project took root. "One reason we started the project was simply because we needed more space," says Dragoo. "We weren't going to do this grand project. Then we realized there was a tremendous opportunity to create a compelling environment for the community along the river."

After buying the first parcel -- a former gravel pit with a pond -- Dragoo and his partners bought 160 adjacent riverfront acres with a plan to create an outdoor industry-centric manufacturing hub. Mayfly's 41,000-square-foot facility is the first to open, a hotel is on track for construction in 2021, and apartments are in the pipeline.

Prospective tenants can buy, lease, or enter into a joint venture with Colorado Outdoors. "With real estate, it feels like a hard sell all the time," says Dragoo. "With our approach, it's more teamwork. We ask a lot of questions on what kind of environment people want and what their needs are."

As a new, post-pandemic normal takes shape, he remains bullish on the strategy. "I think what's happened with the pandemic is that it's accelerated trends that started beforehand," says Dragoo. "We're talking about the urban exodus, consumer buying behaviors, and an overall business strategy which points entrepreneurs to new areas where both founders and employees are going to safely enjoy their lives."

And Montrose is just that kind of place. Dragoo says he didn't realize it when he was growing up in Colorado Springs, but his move to the Western Slope opened his eyes. "Now you have these gems of locations like Montrose where you realize, 'Dang, this is the Colorado I was promised. I want to be there.'"

This story was sponsored by Colorado Outdoors as part of a series of features examining economic trends in the outdoor industry. Find the other stories in the series here.