Oregon’s stubbornly high unemployment rate isn’t getting any worse, but it isn’t getting any better either. If it weren’t for the dramatic upswing at Intel, the state’s economy would be in deep trouble. Businesses globally are looking at relocating just as hard as cities and states are working to attract them. So who’s moving where? And why?
I posed that question to John Boyd Jr. last week during an interview at the Portland Marriott Downtown Waterfront. Boyd is a principal in the Princeton, New Jersey-based Boyd Company, one of the nation’s leading site selection firms, representing companies such as PepsiCo, Honda, Hewlett-Packard and Royal Caribbean Cruises, which moved into Springfield a few years ago, creating hundreds of new jobs in Lane County.
It was eye-opening to speak with an expert who deals with the nuts and bolts of moving companies and has numbers on hand to make his points. His operating cost analysis of seven small market cities in the Western U.S. was interesting enough that I’m going to paste it below for the number geeks among you to consider (check out those utility costs in Quincy!). The rest of you should feel free to scroll down to the trends Boyd is seeing in his business.
Bill Bradbury and John Kitzhaber are Oregon leaders who know the state bureaucracy inside and out. Yet they are both running for governor on a platform of transformative change and fresh ideas. What are their ideas on the subject of restoring Oregon’s sickly economy to health?
Bradbury and Kitzhaber made their strongest pitches to the business community Tuesday afternoon at a forum sponsored by the Oregon Business Association, the Oregon Entrepreneurs Network, the Portland Business Alliance and the Software Association of Oregon. Both men spoke with the poise and confidence you would expect from savvy veterans seeking to win key votes, and to their credit they did offer some compelling original ideas. Whether these ideas can become tangible programs producing practical results is a different matter.
Bradbury, who served with the state Legislature for 14 years before becoming Secretary of State and is chairman of the Oregon Sustainability Board, wants to create a new bank to get some money flowing through the state economy. He’s calling it the Bank of Oregon, and from his description it sounds like, well, a state-run bank. “We all pay a lot of taxes in this state, and fees, that go into the State Treasury,” he told the crowd Tuesday. “You can create a bank out of that and partner with community banks to fund small businesses and entrepreneurs.”
Genentech had an amazing research run through the early 2000s, with three new medications approved by the FDA from 2003-2005. Between the need to increase capacity and the earthquake risk at company headquarters in South San Francisco, top execs decided it was time to look for a suitable place for expansion.
They chose Oregon, where they have invested $400 million and created 250 jobs since buying 75 acres of land in Hillsboro in 2006.
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.
The Oregonian took the unusual step this morning of running a front-page business story about an unnamed executive, CEO of “a successful technology company southwest of Portland employing hundreds and boasting a bright future.”
Was he unnamed because he is participating in the witness protection program?
Hardly. He’s thinking of skipping town.
Like Oregon, New Zealand has about 4 million residents, gorgeous beaches and a large and (let’s face it) obnoxious neighbor intent on dominating the regional economy. If you think Oregonians have a bias against California, try talking to a Kiwi about Australia.
Unlike Oregon, New Zealand has a functioning health care system, a low unemployment rate and no sprawl. The Kiwis didn’t avoid recession, but they did avoid getting creamed by it. Unemployment has spiked to 7.3%, the highest rate there since 1999, but nowhere near the double-digit woes we’ve been wrestling with in Oregon.
I’m no expert on New Zealand, but I liked what I saw during my recent travels there. A lot. Here are a few lessons I’m bringing back to Oregon, for what it’s worth.
This just in from Oregon’s ever-growing beer biz: Portland-based startup Indie Hops will donate $1 million to Oregon State University to launch a new breeding program for aroma hops grown in the Willamette Valley. Add that donation to a second million-dollar Indie Hops investment to develop the first hop pellet mill in the Valley along with cold storage and distribution facilities, and you’ve got a new company that could give craft brewers the stability — and respect — that they deserve.
It is fitting that the only U.S. hop merchant dedicated entirely to aroma hops for craft breweries is based in Oregon. Oregonians have been growing first-rate hops and brewing excellent beer since statehood, but for reasons involving the corporate dominance of the Anheuser-Busch InBevs of the world, hops and beer have remained surprisingly disconnected here. Hops are grown in the Valley but processed in Yakima, Wash., where they are sold as commodities, with unpredictable and occasionally maddening price swings. The 18-month-old Indie Hops aims to improve on that inefficient system by purchasing quality hops from Valley farmers, processing them into pellets at a newly completed mill between Hubbard and Mount Angel, and selling them to brewers all over the West Coast. The mill will employ just a few people to start, but if the new local supply catches on there is huge potential for growth.
Indie Hops’ co-founders are Roger Worthington and Jim Solberg, high school football buddies from Corvallis who decided to take the start-up plunge over the course of an evening sampling the wares at the Hopworks Urban Brewery in Portland. Worthington was a successful asbestos litigation attorney who was looking for a worthwhile and fun investment. Solberg was a 16-year Nike veteran who quit his job to sail the Pacific Coast in a craft he built himself and help out with a variety of start-ups including Nutcase Helmets and Hammersurf.
Almost exactly one year ago, Laika’s first feature film, Coraline, made its world-wide debut in downtown Portland. Now comes the news that this dark but endearing work of stop-action animation has been nominated for an Academy Award, launching a small, independent Oregon studio with a 36-year-old CEO into the big-leagues with Disney, Pixar and DreamWorks.
This is excellent news for Oregon’s film industry and a validation for the father-son tandem of Laika chairman Phil Knight and CEO Travis Knight. They took bold risks on Coraline, financially and artistically, and their risks are being rewarded. The film has already grossed more than $120 million (twice what it cost to make), and the publicity and gravitas of an Oscar nomination will boost sales as Coraline hits theaters in animation-crazy Japan and tackles the DVD and paid-television markets domestically.
“Five years ago when we were trying to find a partner for Coraline, nobody had heard of us,” CEO Travis Knight told me yesterday afternoon. “Obviously that changes with this nomination. This will make things easier for the business. But it also increases pressure on us creatively. We’ve set the bar high for what we’re capable of doing and we’ve got to live up to that now.”
Maybe it’s just the crazy El Nino weather patterns, but I swear I’ve been noticing some green shoots popping up through the mud in Oregon.
A year ago at this time I was researching a story about Oregon’s underground economy, and the conclusions I was drawing were downright bleak. The job market wasn’t just down, it was dead. I remember tracking Craigslist Portland for a week and estimating that scams and under-the-table services outnumbered legitimate jobs by about 10 to 1.
That's no longer the case. The ratio is still bad, Craigslist being Craigslist, but job postings have improved from about 200 per day to about 250 per day. And far fewer of them strike me as scams. Metal fabrication operator, therapist and automotive title clerk are the top three entries I see as I browse through right now. These are real jobs with real businesses that are hiring.
Portland General Electric’s proposal to phase out Oregon’s sole coal-burning power plant 20 years ahead of schedule means the state will soon be losing its largest source of pollution from greenhouse gases, sulfur dioxide and nitrous oxide. It also means we will lose a reliable workhorse that has helped keep electricity rates relatively low in Oregon. Replacing the Boardman coal plant will not be easy.
The seemingly obvious solution for making up for that lost power would be to build a new power plant fueled by natural gas. Gas releases about half as much carbon dioxide as coal, and it is extremely reliable and easy to fire up on demand, to back up renewable resources when the wind is not blowing and the sun is not shining.
But I don’t like the idea of replacing one imported fossil fuel with another. I don’t trust natural gas prices. They are low because of the recession but they have a long record of volatility. Cranking up another cookie cutter gas plant may be tempting, but it is far from innovative. And it would cut jobs rather than creating them, because coal plants provide more jobs than gas plants.
You can’t accuse John Kitzhaber of thinking small. After seven years of tilting at the windmills of our hopelessly inefficient national health care system, he is running for governor on a platform of transformational change. The theme of systemic transformation has permeated his public speeches since his last stint as governor, and it is also the central idea behind his economic strategy for Oregon, which he presented to the public yesterday at the Portland offices of the International Brotherhood of Electrical Workers.
If ever there was a time for transformational change in Oregon, it is now. Joblessness is rampant, wages are stagnant, and scarcity has given birth to increasingly ugly partisan battles. Big change is in order, but what exactly to change, and how?
Kitzhaber’s economic strategy, developed in collaboration with Robert Young, an assistant professor of planning, public policy and management at the University of Oregon, contains strong ideas for building on Oregon’s strengths. It calls for aggressive investments in areas where Oregon has a distinct edge already, such as energy efficiency and woody biomass. A statewide campaign to retrofit all public buildings to make them more efficient would create jobs immediately and sharpen the state’s green edge. An effort to thin forests responsibly to reduce fire risks while feeding the state’s growing biomass industry could bring new hope to Oregon’s struggling timber towns.
UPDATE (April 7) : Figures released today by the Oregon Brewers Guild show that 2009 was the best year ever for craft brewers. For the first time, total production topped a million barrels of beer, a 15% increase over 2008.
It’s always good to start the New Year on a positive note, so let’s dispose of the leftover faux champagne and talk Oregon beer. The Eugene Register Guard reported yesterday that Ninkasi Brewing has become the first Oregon brewer to earn regional brewery status in a decade. Ninkasi, which added 10 jobs in 2009, is on track to crank out 30,000 barrels of beer this year, about 10 times the amount it brewed when it first launched just three years ago. By crossing the threshold from brewpub to regional brewer, this growing business joins Oregon icons such as Rogue Ales, Full Sail Brewing and Deschutes Brewery in an industry as resilient as it is quirky.
Oregon continues to buck the national trend by opening new breweries from the Caldera Brewpub in Ashland to Mt. Emily Alehouse in La Grande and Mutiny Brewing in Joseph. The market for craft beer in Oregon is four times as strong as the national average, boosting an industry with more than 5,000 jobs. Portland leads the nation in urban brewpubs, with more than 40 and counting. Most other states have experienced a net loss of brewpubs during the recession, but Oregon has gained several dozen including, I am thrilled to report, two soon to open within walking distance of my home.
Locally crafted beer is just the latest in an amazing string of improvements that have transformed NE 28th into one of Portland’s most vibrant neighborhoods. This once-dumpy business district is now overflowing with great restaurants, lively cafes, bike racks and unusual shops. If you want to feel better about Oregon’s economic prospects, take a stroll along 28th from Glisan to Stark some evening when it isn’t raining and stop into a few places at random. The place is hopping, and it will only get better with the addition of Migration Brewing and Coalition Brewing.
One of the advantages of working for a monthly publication is the week-long holiday we all take to recharge for the new year, a little time to step back and let others feed the media beast. It's a nice perk any year, but after 2009 a few days of rest and reflection are more vital than ever. I can't say I enjoyed 2009, but I did survive it. You know things are iffy when you feel fortunate just to have a job that isn't getting chopped and a home that isn't getting sold out from under you through foreclosure. I believe it was Einstein who said that it's all relative.
For better or worse, I'm entering my 22nd year of journalism in 2010. I've covered deadly dull town board meetings in Guilderland, NY, surreal street demonstrations in Seattle and commercial fishing on Lake Malawi. As careers go it's been borderline when measured by pay. Another way to look at it is that I've gotten front-row access to great events and amazing people, and I've gotten paid to hunt things down and write about my findings. There are worse ways to go through life than following your instincts from story to story.
If you had told me 25 years ago I would end up working as managing editor for a business publication, I would have suggested you put down the crack pipe and guess again. But here I am. I had not covered business fulltime before taking this job almost exactly two years ago, and in my fervor to embrace my new beat I started reading The Wall Street Journal every day and talking to as many executives and analysts as possible. That's when I started getting this strong sense of impending doom. One of my first major stories for the magazine was The Party's Over, a dark look at group denial, the housing market and the Oregon economy.
It's the holiday socializing season, and that means a lot of catching up with friends and acquaintances, no small percentage of whom are looking for work in a job market that is simply not improving. The conversation can turn complicated quickly when you ask the old standard, "What are you up to these days?"
I wish I could start a company with the people I've spoken to randomly over the past week or so who are struggling in their search for work. They include two top-notch copy editors, an apparel expert, a Reed College grad with a great attitude and awesome baking skills, an attorney specializing in intellectual property rights, a hot-stuff investigative reporter and a college graduate with cafe and bar experience who has yet to receive a single response for her job applications through Craigslist. OK, so this would make for a highly unusual business team. But you get the point: Oregon is packed with smart, talented people who are eager to work — if only there were jobs. No doubt you know plenty of people in similar situations.
The latest unemployment figures show that the state has lost 84,300 private sector jobs from November 2008 to November 2009. That's a 6% decline overall, with construction jobs down 15.1%, manufacturing jobs down 14% and real estate jobs down 14.2%. Those numbers seem even worse when you think of where Oregon's economy was a year ago. Things weren't exactly popping then, and they've skidded downhill from there.
State labor economist Art Ayre took the stage before Portland’s City Club last Friday to try to explain Oregon’s persistent problem with high unemployment. It’s easy enough to understand why statewide unemployment shot up from 5 percent in early 2007 to 12 percent in early 2009. The economy was crashing and jobs were vanishing everywhere. But why was Oregon among the hardest hit, once again? Why has Oregon exceeded the national average for unemployment for 25 of the past 31 years?
Ayre would seem to be the perfect person to answer that question. He’s been Oregon’s employment economist since 1999, and he is one of the most studious and well-informed public servants we have. His inquiry into the matter ran deep and broad. But his answers were disappointing.
Ayre’s research found that population growth, demographic trends and state tax policies have limited if any impact on jobless rates. He also reported that in his opinion, Oregon’s higher-than-average minimum wage has minimal effect, and the same goes for the decline of the timber industry.
I caught up with Nick Furman while he was driving up the Oregon Coast this morning, and it didn’t take me long to figure out that he was liking what he was seeing: a gorgeous, clear day out on the water, boats working relatively calm seas, fishermen hauling in pot after pot boiling with Dungeness crabs.
“It’s a great sight,” said Furman, executive director of the Charleston-based Oregon Dungeness Crab Commission. “We’re off to a good start.”
With the unfortunate exception of the Manatee, a small wooden boat that sunk in Coos Bay (everyone was rescued, thankfully), Oregon’s healthiest fishery is looking healthier than ever this December. The price to the fisherman is starting at $1.75 per pound and expected to rise as the season progresses. The weather has been cooperative and boats are coming to shore early, loaded to the decks with big, meaty crabs.
I launched Jobs Watch during the darkest days of the recession with the goal of identifying businesses that are strategically positioned to lead Oregon out of the recession. I’m not talking about cutting jobs to achieve higher profits in the manner of Hewlett-Packard, but rather creating jobs by smartly tapping into hot markets. It’s no easy task to grow in an economy still wobbling near a precipice, but it can be done.
So who’s doing it in Oregon?
I attempted to answer that question in our December cover story by focusing on six companies that are charging into 2010 with a profound sense of optimism. The companies I chose are Ziba Design, Smarsh, New Seasons Market, TriQuint Semiconductors, HemCon and SolarWorld. Obviously, that list is by no means complete, but it makes for a compelling lineup. The niches these companies are exploiting and even reinventing are hardly uniform (everything from natural foods to radiofrequency technology) but as businesses they share some common strengths: inspired leadership, a sense of purpose and a savvy understanding of what lies ahead.
Like Peter DeFazio, I’m no economist. And I have some serious questions about some of the ways our public money has been spent in the name of rescuing the economy. But I completely disagree with DeFazio’s call for the resignation of Treasury Secretary Timothy Geithner.
DeFazio, the hard-nosed veteran Democrat from Springfield, offered up his view that Geithner should be fired during an interview Thursday with the Wall Street Journal. His reasoning: “All the gambling on Wall Street is doing nothing to put people back to work in America and rebuild our economy.” This made immediate news because a lot of people, myself included, are fed up with hearing about how well the economy is recovering while the nation — and Oregon — continue to lose jobs.
But let’s pause for a minute and consider what Geithner inherited, and where we stand today. I don’t know about you, but I had a strong case of economic doom one year ago. Between the headlines oozing out from the Lehman collapse and the AIG “rescue,” and the impending potential collapse of Fannie Mae, Freddie Mac, Bank of America and Citigroup, I was losing faith in the financial system. I don’t have that feeling today. The markets are coming back and Oregon’s unemployment rate is finally easing back down, albeit painfully slowly.
The economy must be picking up again, because the focus in Portland has shifted from hanging on for dear life to Utopian exercises in rebuilding. There are now three redevelopment projects in the works midway between my home and my office, and each has potential. Taken as a whole, they could provide a nice boost to a job market that needs all the help it can get. Or they could represent the latest in a series of misguided attempts to use public money to create private-sector jobs.
In addition to the Blazers and Nike and their compelling ideas for turning the Rose Quarter into JumpTown, the Portland Development Commission is also dusting off two long-delayed proposals to upgrade under-used chunks of land near the Willamette River.
The first project involves the old Centennial Mills waterfront property, between the Fremont and Broadway Bridges downriver from Union Station. I’ve read the project proposal from developer LAB Holding LLC of Costa Mesa, Calif., and I have to say that other than the excessively cute quotes praising food, I am impressed. The idea is to connect the Pearl District with the river through a mix of food market stalls, gardens, retail shops, kayak rentals, restaurants, galleries, a culinary school and offices. A pedestrian bridge would span SW Naito Parkway. An amphitheater would face the river. There are plans for an orchard, a grain garden, a greenhouse, even a tree-house and an outdoor fireplace. No one can accuse this team of lacking ideas.
Andrew Revkin, the great environmental writer for The New York Times, was in town last night, and once I got over his nearly unforgivable mistake of referring to Oregon as “Ore-a-Gone,” I had to admit he had some compelling things to say. One line that stuck with me in particular was, “We don’t have time on Planet Earth for impeded potential.”
My first internal response was, what do you mean we don’t have time for impeded potential? That’s like saying there’s no time for procrastination. Anybody who writes for a living can tell you that there is always time for procrastination.
Take the Rose Quarter: 35 acres in the heart of the city, with two major entertainment venues next to a busy transit station. The place should be hopping 365 days a year, right? It should be as much of a part of the Portland fabric as are the Blazers.
The Rose Quarter lies roughly halfway between my home and my office, and every time I roll past I wonder how such a prime piece of urban property can manage to be so very lame, in so many ways. Where are the quirky cafes, the funky breweries, the dance halls and the music clubs, the bike shops and the pool halls? Nothing but chain restaurants and endless parking lots: visionary urban planning circa 1975. This is not the Portland I know and love. It makes sense for the city and the Blazers to redevelop the quarter into something that reflects the soul of the city, because there’s really nowhere to go but up. The neighborhood just hasn’t been the same since it got bulldozed.
J.E. Isaac, the Blazers’ senior VP of Business Affairs, has a name for the neighborhood to come: JumpTown, a “green, vibrant and economically viable Rose Quarter.”
Can’t argue with that. But how to get there?