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Jobs Watch: Moving into Oregon

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Ben Jacklet
Wednesday, March 31, 2010

Clearly I hit a nerve. Responses to last week’s Jobs Watch column on the alleged-but-not-yet-proven exodus of Oregon businesses from Oregon set new standards for vitriol. Some readers went so far as to suggest that the job I should watch out for is my own. Sorry, guys. Even the most hard-nosed CEOs don’t get to fire other people’s employees.

Well if can dish it out I’d better be able to take it. So swing away and take your best shot. I am here to be pummeled. The point of a free press is to encourage an open and honest discussion of the important issues of the day, and clearly to our readers this is a very important issue. So let’s discuss it openly and honestly.

However, I have to point out that for all of the great and not-so-great responses last week’s column elicited, I still am lacking the name of a single job-creating investor or executive who is in fact leaving Oregon because of Measures 66 and 67.

Once I get such a name, on the record, I promise to explore in great detail the specific reasons behind that person’s departure, along with a mathematical analysis of the cost-benefit decision to leave Oregon for a new location, taking into consideration individual and business taxes, incentives, moving costs, educational systems, infrastructure, residential and commercial real estate values and overall quality of life, plus whatever other factors may have been involved. I think that would make a great story, but to get started I’ll need some proof that people are indeed leaving because of the taxes.

In the meantime, here’s some news about businesses moving into Oregon, creating jobs and investing in our state.

The first is Genentech, the California-based pharmaceutical giant that plans to open its packaging and distribution center next week in Hillsboro. Genentech was recruited heavily and with generous subsidies to come to Oregon, and the company has invested $400 million in Oregon and created 250 jobs. It isn’t doing any R&D in Hillsboro, but that could change over time, since Genentech owns the 35-acre parcel of land next door and is keeping it handy for future expansion.

Then there’s Facebook. The social networking phenom has selected Prineville as the site of its $175 million data center, and it has chosen Portland-based Fortis Construction, one of the state’s fastest-growing private companies, to build it. This is a major score for jobs-hungry Prineville and for super-savvy Fortis, which was delving deeply into data server farms back when other construction companies didn’t even know what they were.

The last example for today is Ferrotec, the Japanese manufacturing company that’s planning to open a new plant in Gresham this summer, employing 30 people to build build quartz and silicon crucible for solar cells. Though not as well known as the other global giants to choose Oregon for their solar plants in recent years such as SolarWorld and Sanyo, Ferrotec is a well-regarded global producer that adds another key ingredient to a solar energy cluster that grows richer and more complex by the year.

I’m confident that plenty of other fine businesses will follow the road into Oregon well worn by welcome newcomers SolarWorld, Sanyo, Facebook, Ferrotec and even Fortis Construction (which started out as the Portland office of a California firm, then decided to start up a new company in Portland). As for the alleged exodus of business talent out of Oregon, I'll believe it when I see proof.

Ben Jacklet is managing editor of Oregon Business.

 

Comments   

 
j
0 #1 Great Follow Upj 2010-03-31 11:56:32
Thanks Ben for an open and honest response to your previous article. I like the way you've put your cards on the table for all to see. This type of follow up is rarely seen and deserves our attention.
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Keith Gibson
0 #2 Time Will TellKeith Gibson 2010-03-31 12:11:22
Good business people know better than to "knee-jerk" a response to governmental issues on taxation, and as mad as it makes many, the fact of the matter is that I, for one, am now willing to at least consider the information about alternative locations to Oregon that I never would have looked at before.

Doesn't mean that I'm gone, but my business can frankly be located just about anywhere, so it will come down to dollars and cents. As long as business taxation in Oregon is comparable to other options, they won't have any exodus problem.

Regarding the examples of companies moving into the state... again, these were decisions that were made long before Measures 66 and 67, so you can't realistically consider them "proof" of anything.
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David
0 #3 Location, location, locationDavid 2010-03-31 12:25:25
Any good business owner knows that knee jerk response isn’t good. My business is studying the best locations throughout the Pacific Northwest and beyond. Maybe I’m already where I need to be, but trust that I’m in this to win. It’s not about feel good or waiting for it to come to you. You need to know that someone somewhere wants what you have to offer and if you’re in the wrong place, than you should move. That’s how wise business operates. Prepare for change, its coming your way whether you like it or not.
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Ken
0 #4 For the RecordKen 2010-03-31 14:32:04
We are a 25 year Oregon Corporation. We are in the process of doing everything possible between us and our accountants to NOT BE an Oregon Corporation. That's for the record.
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B
0 #5 Not much for the record there, KenB 2010-03-31 14:52:03
I am confused, Ken. What is the name of your corporation?

In fairness, you can't claim to be "on the record" if you can't even tell us who you are.

Mr. Jacklet asked for basic specifics (like your company's name!) so he can then understand the cost basis for such a theoretical exodus.

More info, please.
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One Who Is Leaving Too
0 #6 Common SenseOne Who Is Leaving Too 2010-03-31 20:50:04
Those of you who don't own a business can't appreciate the complexity of relocation which starts with a very confidential analysis of location options that you don't want your company to be aware of before a final decision to move is made. Otherwise you end up with a premature exodus of your key people which could happen if someone was dumb enough to expose their company to the taunting of Ben Jacklet for an "on the record" expose which would most likely be skewed to make them look stupid for leaving since Ben has already been exposed as one in favor of these new taxes on those that create the jobs in the first place.

I would encourage all other business owners to keep it to yourselves till your homework is done and then walk out the door, shake off the dust on your shoes and never look back at this hostile state again.
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Boogieman
0 #7 Ghost StoriesBoogieman 2010-04-01 09:41:03
"Otherwise you end up with a premature exodus of your key people"...

You mean they might leave before you have a chance to ceremoniously announce to them that their jobs are toast because you're shipping your operations to some backwater state that they'd never move to?
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Rick
0 #8 More on TaxesRick 2010-04-01 11:46:42
We are an 'S' Corp in Oregon and as such are subject to the personal tax rates (11%). This is also the rate for capital gains taxes which is also a concern.

Our lease will be over late in 2011, and we are looking into a northward migration as a real possibility. We would, of course, try to move as
many of our 100 employees with us as we could.

Our rents would be lower in Clark County, and there are state tax credits available for R&D.

Of further concern is the ability of the
State of Oregon to meet it's future obligations
without additional taxes. It's very hard to forcast future expenses when the state has the ability to impose retroactive taxes.
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Tegan
0 #9 Comments from last weeks column were a hoot!Tegan 2010-04-01 19:15:13
I loved the comments from your column last week. It was basically the opposite of what some of these right wing nutjobs would tell you if you had a problem with America: "Well, you don't like America, then get the hell out of this country!" Now we have Measures 66 and 67 put to a democratic vote which passed by a majority of Oregon citizens and since they (the negative commentators) don't like it they're screaming: "We're getting the hell outta this anti-business state!" If only they would follow their own advice! Empty promises, such empty promises! HA HA!
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Jody Wiser
0 #10 It is true, businesses are leaving the stateJody Wiser 2010-04-01 23:05:10
....well at least one anyway.

The departing company, Fog Cutter, is leaving for California -- not exactly a low tax state, but I'm sure Ben will uncover the reason.

According to the Business Journal, it's largest subsidiaries — Fatburger restaurant chains in California and Nevada — have entered Chapter 11 bankruptcy reorganization. Fog Cutter has been involved in several lawsuits over unpaid bills, and CEO Andrew Wiederhorn, jailed from 2003-2005 for tax fraud, has missed payments to federal and local tax authorities.

In a series of disclosures filed Tuesday with the S.E.C., the company disclosed financial results for 2008 and the first nine months of 2009.
It also disclosed that Wiederhorn received a $4.3 million bonus in 2008 even though the company lost $12.2 million that year

It’s awful to be losing Wiederhorn, an innovative business man. Ok, so this last line is an April Fools joke.
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Douglas John
0 #11 Oregon still has the lowest cost of living on the west coastDouglas John 2010-04-02 15:59:02
Can't really comment about business taxes, but coming from California, I can tell you that if businesses consider cost-of-living for employees, the Portland metro area is significantly less expensive than any other west coast metro market.

First off, home prices. Most Oregonians think its expensive here. Well, compare Portland to Seattle, SF Bay Area, LA or San Diego. All of those areas have detached home prices in the $250-$350/SF average range...Portlan d is more like $140-$160/SF. I mean its not even close.

Second, no sales tax. I suppose this has to be offset w/ personal income taxes which are high in Oregon, but have you ever thought how much you would pay each year if you tacked on another 9%-10% on items you purchased? Note: Groceries are not taxed in California but fast food, restaurants and just about everything else is.

What I think would give Oregon and Portland a huge economic shot in the arm would be if a large Fortune 500 company moved a significant amount of their operations to Oregon even if they don't move their headquarters. I really think this would make economic sense to some California based companies (similar to Intel), even w/ Prop 66 & 67. Our location, our quality of life and our lower cost of living is alot more advantageous than we give it credit for.
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Teresa Reinhardt
0 #12 "... each new assault on the business climate in Oregon"Teresa Reinhardt 2010-04-05 12:19:29
I think the owner should leave the hype to others and let the pros do their job. (I'm referring to today's/Monday' s post from your boss. It's obvious whose corner he's in.)
Couldn't agree more with Douglas John's post; and that's true not just for big West Coast cities. If companies in Boston or NYC knew what the benefits are, they'd be falling all over each other to get here. BUT IT RAINS ALL THE TIME! (This is to keep them where they are.)
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Quality of Life
0 #13 Why not locate in the middle of the desert?Quality of Life 2010-04-06 12:00:24
"Doesn't mean that I'm gone, but my business can frankly be located just about anywhere, so it will come down to dollars and cents. As long as business taxation in Oregon is comparable to other options, they won't have any exodus problem. "

Well, in my mind, clean air, pure water, lush forests, and easy access to beaches and mountains are worth something; in fact, to me, they were worth moving to Oregon many years ago. It's why I'm not in Searchlight, Nevada (no disparagement intended).
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trent
0 #14 mdtrent 2010-04-20 20:56:58
Fact is the top state personal income tax is now tied for highest in the nation.
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