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Business is Good tour: The new economies

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Thursday, November 01, 2007

Finding the future in what grows in timber’s shadow

By Abraham Hyatt

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ONCE, OREGON WAS A ONE-ADJECTIVE state.

Timber, with its jobs and its history, not only defined the state’s economic base, it defined how Oregon and its cities thought about themselves: timber country, timber economy.

Then came the slow-motion coup that deposed natural resources as that blanket adjective, that singular statewide identity. Being a physically isolated city, which had never been a drawback under the timber-is-king economic model, was suddenly deadly. Innovation, which had never been required of small rural towns, was suddenly imperative. It’s taken years, but cities around Oregon are beginning to successfully reinvent and develop their own industries. And along the way, they’re creating new identities for themselves.

Medford has become a health-care hub for a region that stretches over two states. Astoria saw approximately 48,600 cruise ship passengers and crew members pass across its docks this year. After the collapse of the aluminum industry, The Dalles has created 500 jobs in its port district. Cities around Oregon have benefited as the state’s nine federally recognized Native American tribes have created dozens of service and manufacturing jobs. Bend is perhaps the biggest success story of all, an economic engine that’s changed the face of Central Oregon. City after city holds examples, some big, many small.
NewEconomies.jpg But in nearly all of the cities that have begun shaping new economic identities there’s a feeling that they’re being ignored by the state’s largest economic center. It’s a common complaint: “Why isn’t Portland paying attention to the great things we’re doing? Why doesn’t the rest of the state care about the strides we’ve made?”

That’s not a new sentiment. The classic urban-versus-rural conflict is ingrained in Oregon, an almost historical trait. And it’s not unique to Oregon: In Utah, Salt Lake City faces off against the rest of the state. The dynamic is the same for Seattle and Boise. In fact, some economists say that California, thanks to its sheer size, is the only Western state that’s the exception to the rule.

But the creation of community-specific identities around Oregon is a new facet in how rural and urban interact. So the question is, does it really matter what Portland — whatever that word represents — thinks of smaller burgeoning economic centers? And what does the creation of those new economic identities mean for Oregon and its role in the global economy?
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A GENERALIZED DESCRIPTION of how cities outside of Portland and the northern Willamette Valley are changing is by necessity crude and overly simplistic. Each city is unique. But Oregon economists and researchers who’ve studied urban and rural interactions agree that the one-identity-becoming-multiple-identities concept is an accurate overall portrait.

What are some specific changes? Point somewhere on a map of the state and you’ll find an example. In the most rural areas, an attempt at reinvention often involves tourism. For instance, cities all along the coast have — successfully and unsuccessfully — spent the last decade transitioning from timber to the tourism industry. In the northeast, the Wallowa-Union Eaglecap Excursion Train shuttles fishermen from fishing hole to fishing hole along crystal clear rivers. Joseph’s bronze foundries are both an employer and a tourist destination.

Manufacturing is also playing a role in reinvention in rural regions. Reedsport, halfway between Florence and Coos Bay, lost 700 mill jobs in the late 1990s. It’s trying to play up tourism thanks to its proximity to the Oregon Dunes. But in 2003, it also brought in American Bridge with its 50 jobs, and more recently, a contract to build part of the new San Francisco Bay Bridge. A new zeolite (a volcanic mineral with ultra-absorbent characteristics) plant near the conjoined twins of Burns and Hines will partially make up for the 92 jobs lost in their latest mill closing this last summer.

To find an example of a city making a bigger impact as it changes its economic identity, visit The Dalles. The arrival of Google’s server facility is only a small part of that shift. The city’s attempts to diversify its job base after the collapse of the aluminum industry has seen the creation of 500 jobs in the port district over the last 10 years; to foster more tourism business, they’ve secured partial funding for a $2.3 million cruise ship dock. The recreation of the Gorge doesn’t just draw tourists, it also helpNewEconomies1.jpg ed pull in companies that are part of the growing aerospace and high-tech cluster in The Dalles and Hood River. Hood River may have one of the best examples of industry reinvention: Carbon fiber manufacturers from the windsurfing industry are now working with local high-tech unmanned aircraft companies.

Astoria has built up its cruise industry as well: In the 1980s and 1990s it pumped about $10 million into upgrading parts of its docks. Each year since, there has been a steady increase in ships, with 18 ships carrying aproximately 48,600 passengers and crew members stopping this year. Next year there will be 19 ships. Manufacturing and even fishing are getting stronger. Lektro, one of the nation’s largest makers of the vehicles that tow large airplanes around on the runway, recently went through a $2.7 million expansion. Last year, the Port of Astoria was ninth in the nation for the amount of fish (164.1 million pounds) that moved across its docks. That’s due in part to the booming sardine industry, which has allowed companies like Bornstein Seafoods to construct 46,000 square feet of new facilities and grow to 100 employees. But tourism —
estimated as having a $400 million impact in Clatsop County — is a key focus. Bornstein is building a museum-style interpretive center alongside its plant. The Cannery Pier Hotel has been built on an old cannery pier. The restored Liberty Theater continues to be major player in how the city revamps its downtown.

Drive 230 miles southwest from Astoria and just outside of the city of Prineville you’ll find an Oregon State University lab that’s creating new strains of potatoes and new ways of marketing them. Contact Industries, like other lumber companies in Oregon, kept its Prineville mill open by switching to making laminated wood products. The city-owned railroad, which only recently has begun recovering from the timber decline, is about to begin a $2 million expansion of it freight operation. The 2,951-unit mixed-use development IronHorse started construction this year — a testament to the region’s, but particularly Prineville’s, growth in the coming decades.

Medford may be the classic example of a city that’s reimagining itself as it reinvents its industry base. The tree fruit inNewEconomies2.jpg dustry — which supplies pears to, among others, Harry & David (with 6,500 seasonal employees) — still makes up about 10% of the region’s economy. Timber has not disappeared, either. But over the last decade, the city has turned itself into a regional health-care mecca that serves nine counties in two states and currently employs about 10,600 people in the Medford area.

The backbones are Providence Health Systems and Asante Health Systems’ hospitals and health-care facilities. It’s an industry that — combined with the city’s central location, good weather and growing tourism industry — is turning Medford into a retirement destination.  Interwoven in that regional growth are cities such as Grants Pass and Ashland, each with it own existing and emerging economic centers. Tom Becker, CEO of Rogue Valley Manor retirement community, says the region has one of the nation’s highest percentages of seniors. It’s going to increase — “We’re trying to get ready for the tidal wave,” he says — and it’s going to turn Medford, like Bend, into an economically powerful niche destination.


DOES IT MATTER if the rest of Oregon pays attention to these cities as they reinvent themselves? It depends on whom you ask. One argument says a city’s successful transformation of its economic identity adds to the success of the state but is really most important to the community itself. And the more you’re successful, the less outside opinion should matter.

Then there’s the argument that cities are proud to be Oregonians and want to feel part of a family. And they want respect. While he was getting his doctorate in forestry at Idaho State, Max Nielsen-Pincus studied how people in small communities in Western Oregon saw the world around them. He calls the changing nature of rural cities “an evolution of community.” The links that connect regions, he says, are fundamental and important. How those links can be strengthened, however, is a difficult question.

But whatever the answer, it’s unanimous among economists and researchers that strong regional identities are good for the state. And while disparate, they make Oregon more competitive in the global marketplace. Oregon’s geographical size means that another blanket economy is improbable at best. Smaller states can find one industry and make it their own, attracting similar business and adjunct industries. The trick for Oregon is to develop the big, little and tiny economic resources that have been discovered following the fall of timber and fishing, says Tim McCabe, the governor’s economic development policy adviser. In the global picture, diversification not only protects against the single-industry boom and bust we know so well, but it gives Oregon more ways to compete, whether it’s with zeolite, tourism or potatoes.

Will Portland — or Salem or any other bigger city — ever notice those changes as much as some people would like? If the historic urban vs. rural bellyaching dance is any indication, no. But some small cities are destined to become future Bends. And with or without the current emphasis on clusters and interconnectivity of industries, it’s undoubtedly true that they’ll play a major role in the future of Oregon.

Then it will be up to them to decide what their adjective will be.

Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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