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Three decades of wins and losses for Oregon business

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Three decades of wins and losses for Oregon business
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As the Tek spins

 

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The most recent version of PSU's Silicon Forest Universe Poster explores the relationships between 894 Oregon tech companies.

For years Oregon’s biggest business employer was Beaverton-based Tektronix, which peaked at 24,000 jobs in the early 1980s. The number of jobs there has dropped steadily over three decades, with the latest blow being a recent decision to transfer production to China. But that is only part of the Tektronix story. The real legacy of the Tek phenomenon is the multi-generational, interwoven ecosystem of technology companies loosely referred to as Silicon Forest.

Dissertations have been written about the complex interrelationships between Oregon’s early tech giant and its spinoffs and their spinoffs. The first big hit was Floating Point Systems, developed by veteran executive Norm Winningstad, who was with Tek from 1958 to 1970. Floating Point, a computing company named for the mathematical concept of digits too small or large to be represented by integers, blossomed like Microsoft in the early ’80s, growing from $42 million in sales to $127 million in three years. By 1985 Floating Point had 1,600 employees and $14.4 million in profits.

Then the company began pouring R&D money into a new type of computer. The project failed, and the company never made another profit. Its stock dropped by 70% in 1987 and it lost $27.7 million in 1988. By the end of 1991 Floating Point’s assets had been sold off in bankruptcy.

During the same year that Floating Point’s stock dropped by 70%, the stock price for another Tek spinoff, Mentor Graphics, shot up 70%. Mentor’s founder, Tom Bruggere, was a Vietnam vet who left Tektronix to launch a startup in a 300-square-foot rented office. In an early interview with Oregon Business he described making all his East Coast calls at 9 a.m. to catch people at lunch and get them to call back on their nickel. Bruggere’s original business plan called for sales of $5 million in 1983; the actual figure came in at $26 million.

Mentor never quite became the Fortune 500 company that Bruggere intended to build, but it did manage to avoid the fate of Floating Point and so many other technology companies that have vanished. The company expects revenues of about $900 million for fiscal 2010 and has mentored its own set of startups. The latest Oregon tech company to score millions in venture funding, Act-On, is a project of Mentor Graphics alumnus Raghu Raghavan.

Another Tek spinoff, TriQuint Semiconductor, narrowly avoided failure in 2002 and has bounced back powerfully since, with lucrative defense contracts and a profitable collaboration with Apple on the computer chips that power iPhones. Other surviving enterprises that grew out of the Tek culture range from Planar Systems to Merix. By the time Danaher Corp. bought Tek for $2.8 billion in 2007, the seeds for the Silicon Forest had been well sown.

Even the dramatic failure of Floating Point doesn’t look entirely like failure in retrospect. The company and its legendary founder pushed forward new technology, spawned a dozen spinoffs of its own and lured new money into the local tech scene from major players including STMicroelectronics and Sun Microsystems. Winningstad died Nov. 27, 2010, at the age of 85.

A mighty wind

 

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Thirty years ago, Pacific Power & Light was pushing a proposal to build Oregon’s first wind farm, south of Coos Bay. The Whiskey Run wind farm was built and operated for a few years.

The catalysts that ultimately got the wind energy business blowing were two key pieces of state legislation. The first was Oregon’s Renewable Portfolio Standard, which required utilities to provide 25% of their power from renewable sources by 2025. The second was the state’s aggressive Business Energy Tax Credit, which was greatly expanded in 2007 and subsidized up to half of the project costs for major renewable energy projects. With utilities scrambling to meet state requirements and investors angling to get in on the BETC windfall, windmills sprouted like wheat stalks in the far-flung properties of Eastern Oregon.

Today Oregon is a national leader in wind power, with more than 1,200 turbines and plans to build the world’s largest wind farm in Gilliam and Morrow counties. The state’s top utilities, Pacific Power and Portland General Electric, have become major investors in wind energy. Two of the world’s biggest players in the wind industry, Denmark’s Vestas and Spain’s Iberdrola, have established North American headquarters in Portland. The wind turbine giant Vestas stood up Oregon in favor of Colorado for its North American manufacturing operations, but recently announced it will build a $66 million super-green headquarters building in the Pearl District. Not surprisingly, that deal is financed in part by public subsidies.



 
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