► On the Record

“I’ve never seen them as unified… they can smell blood in the water.”

– Rep. Jim Moeller (D-Vancouver), on his Republican colleagues in the Washington state Legislature.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

“Targeted” taxes and cuts, or cherry-picking?

No one said balancing a state budget $2.8 billion in the red was going to be easy.

And indeed, legislators in Olympia are set to work through this weekend in an effort to pass budget cuts and revenue increases – i.e. taxes – to plug the deficit and keep the state on a sound financial footing through the next biennium.

These are tough decisions, and to be sure, it’s easy for office chair quarterbacks like yours truly to question all of the moves made by the Washington Legislature lately.

But I still think it’s a priority for most Washingtonians that the budget that will likely pass next month be a fair and just compromise for all of its citizens, including businesses and the workers they employ.

However, a fair and just budget may ultimately be in the eyes of the beholder.

Currently there are at least three budget proposals before both chambers that could dramatically affect the way some Southwest Washington companies do business.

First up is Gov. Chris Gregoire’s proposed one cent per ounce tax on bottled water. Together with a five cent tax for every 12-ounce soft drink, these additional revenue proposals, if instituted, would dramatically affect operations at state bottling distributors like Corwin Beverage, a longtime Clark County firm employing around 110 people.

Second is a proposal to eliminate the state’s Washington State Tourism program, drastically scaling back the chief advocate for an estimated $14.2 billion industry just as our neighbor to the south continues to benefit from a well-branded and organized Travel Oregon. That’s bad news for hoteliers, restaurant and shop owners, especially on the Washington side of the Columbia River Gorge, many of whom compete directly with Beaver State venues.

And last, we come to the resurrection of a proposal to scrap the sales tax exemption for out-of-state residents, this time in the state Senate.

Regardless of one’s position on the tax breaks, which mostly benefit Oregon residents, it’s hard to deny the likely adverse impact on Vancouver retailers, particularly those selling so-called “big-ticket” items. Further, since a similar proposal in the House exempted car dealerships operating in the state, the removal of the tax exemption has the potential to be similarly and unequally applied.

Which gets down to the crux of the matter: are these tax increases and budget cuts “targeted,” or are they, as many of our readers contend, an effort to cherry-pick victims of a historic state deficit?

In the end, the answer to that question may rest in one’s definition of what is fair and just in a time of record-low state revenue, high unemployment and a lingering economic downturn for many business owners.

Correction

In my column appearing Wednesday, I mistakenly pegged the estimated number of Clark County unemployed at 334,000. That unemployment figure was for the entire state of Washington.

The actual number of Clark County unemployed as of last December is 30,230, according to WorkSource Washington.

My apologies for the error.

Business around the Northwest

Bigger budget, more loans at SBA, Spokane Journal of Business

Housing starts up, but sales down, Oregon Daily Journal of Commerce

NW Natural reports record earnings in 2009, Portland Business Journal

► On the Record

“Government must live within its means. Just as so many families and employers in my district have had to sacrifice to make ends meet, so should state government.”

– Rep. Jaime Herrera (R-Ridgefield) on House passage last week of a temporary repeal to voter-approved Initiative 960, which requires a public disclosure period and a two-thirds vote by the legislature to raise taxes. Gov. Chris Gregoire (D-Wash.) is expected to sign an amended version of the bill later today.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

The decline of cities

I come from a town full of history, a place dotted with crumbling landmarks, old graveyards and mansions that pre-date widespread English settlement on the North American continent.

When my grandparents were teenagers, it was a teeming burg of about 160,000, the center of region buoyed by industrial powerhouses like General Electric, still part of a vital trade route between the Atlantic and the Great Lakes via the Hudson River and the Erie Canal. Today, it’s a city of around 95,000, surrounded by a Rust Belt region in persistent economic decline.

The place I’m speaking of is Albany, New York – my hometown and the city where my parents, grandparents, and in some cases, great-grandparents grew up and spent most of their lives.

I live here.

If there’s a true barometer of the economic health of a community, it’s in the percentage of high-school and college graduates it manages to keep close by. Back home, rubbing shoulders with the ghosts of departed local institutions like GE and Key Bank (once called the Bank of Albany, now a conglomerate based in Cleveland) most new grads faced two options: work for the State of New York, or try your luck elsewhere.

As for the path I took, well, that should be pretty apparent.

But what does the future hold for the thousands of young men and women poised to graduate from local high schools like Hudson’s Bay and Union or Clark College and Washington State University Vancouver?

When publications like the VBJ cover issues of job creation, infrastructure improvements and the tax climate for businesses in the region, it’s partly to gauge the prospects of these graduates, to cover the emerging industries which might provide them with a living wage so that they can continue to be part of this community.

On the jobs front, there was some encouraging news yesterday with an announcement by Intel Corp. of an effort to double the hiring of college grads, creating more than 10,500 positions, according to this Reuters report.

That’s an excellent start; however, our problem is much, much bigger than any single job-creating initiative. With an estimated 334,000 Washington state residents out of work as of last December, we need jobs for both older and younger workers – a tall order for an economy still looking to stop the bleeding-out of available positions.

Despite this monster challenge, there is a heavy cost in not at least trying to keep a greater share of young people in Clark County – one not measured solely in added telephone charges and airfare for the occasional trip home to see the folks.

Instead it’s the steady loss of talent, energy and ingenuity that presents the biggest danger. It’s a lesson learned elsewhere… and one Southwest Washington would do best to avoid.

Business around the Northwest

Keyera Energy gets new port site, Portland Business Journal

Some fear bridge will lead to sprawl, Oregon Daily Journal of Commerce

Nampa eyes Google high-speed Internet project, Idaho Business Review

► On the Record

“This is approaching a record, so it’s kind of scary.”

– Randy Graves, executive director of the Southwest Washington Contractors Association in Vancouver, on the approximately 150 individual commercial construction jobs currently up for bid at SWCA’s nonprofit plans center – well over the average of 120 jobs normally seen during the height of the summer work season.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com


One local take on “Why we are not hiring”

Joe Foggia, president and managing partner of Vancouver luxury yacht-builder Christensen Shipyards, has done more than most employers to keep his workers on the job.

Last fall, he devoted a large chunk of his manufacturing space to the design and production of vertical wind turbines, allowing Christensen to diversify its operations and rehire some of the workers it laid-off when orders for its custom-made ships began to slip with the onset of a worldwide recession.

But like the majority of firms across the U.S., Foggia has been reluctant to hire more employees – even as new orders at the shipyard have begun to trickle in.

What’s wrong with this picture?

Fundamental economic indicators place the U.S. economy firmly in recovery. Across the economic spectrum, save for the still-lagging commercial real estate sector, firms are increasing production, serving more customers and investing in new equipment.

However, the jobs situation looks more and more like a Catch-22. As businesses wait for a full recovery to take hold to rehire workers, the economy remains stuck in a twilight half-recession that isn’t likely to end until we get the greater share of the thousands of unemployed Clark County residents back to work.

“We are definitely looking forward to bringing some of these people back at some point,” Foggia said. “It’s just taking longer than anyone anticipated.”

As for other businesses that took state assistance to keep more workers on the job through the depth of the recession, there could be another storm lurking on the horizon that could stymie job growth even as a full-fledged recovery takes hold.

In a New York Times blog post yesterday, Missouri business owner Jack Stack wrote about how his unemployment insurance per-employee-costs tripled after his manufacturing firm tapped funds from the state’s coffers to retain most of his staff.

Along with uncertainties in the corporate tax code and in employee healthcare costs, the added expense prompted these questions from Stack: “Is the hit we would take to income worth adding new people? Or should we just pay overtime as needed to the people we already have?”

The conundrum confronting execs like Stack begs another question: how long will it be before firms in Washington state are put in a similar situation?

Maybe some are already there.

If you will excuse the self-promotion, this lingering uncertainty in regards to taxation, healthcare and all the other barriers to job creation is exactly why VBJ plans to continue its weekly coverage of state legislation of interest to the business community, found here.

There may be little doubt that firms like Christensen will eventually begin to hire again. But as for the degree and duration of a jobs recovery – that’s a question likely to be decided in Olympia and Washington, D.C.

Business around the Northwest

Poll: Is your company planning to hire this year?, Portland Business Journal

HR firms get creative with outsourcing in sluggish economy, Idaho Business Review

Opus NW says it’s up for sale, Oregon Daily Journal of Commerce

► On the Record

“Washington state is proving that the Recovery Act is working.”

-- Gov. Chris Gregoire (D-Wash.), on a report showing 7,300 public-sector jobs created as a result of $7.4 billion spent in ARRA funds, which were released to the state by federal legislation signed into law by President Barack Obama one year ago today.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

Office space

Call them the “digital nomads” of the business world.

Mostly of the technologically-astute variety, these are the firms that could look into Velcro as a cost-effective way to affix their company’s nameplate onto their office doors.

They are the companies staffed by employees from places as diverse as Bangladesh, Boston and Beaverton – the software designers, electrical engineers and mobile phone app developers driving the 21st century economy from anywhere with an Internet connection, at any given time.

Including right here, right now in Clark County.

With county Class A office vacancy rates hovering around 20 percent, there are few Southwest Washington building owners who would pass up a new revenue stream – even if that tenant isn’t willing to sign a multi-year lease.

But to attract a piece of this growing tech sector, flexibility in lease terms may be only part of the equation for a local commercial real estate sector looking to rebound from an epic slump.

What’s also likely to be required is a reevaluation of what that time-honored white-collar American institution – the office – might look like in a 21st century economy.

In Friday’s edition of the VBJ, we explore a new model for building owners in our coverage of last week’s opening of Executive Center Northwest in Vancouver.

The result of a unique collaboration between three Vancouver entrepreneurs, this potentially innovative facility looks to create a connection not only with its physical tenants, but with an outside network of regional service providers as well.

While the opening of facilities like Executive Center Northwest does not mean the end of the American office as we know it today, for those who have perhaps toiled for decades in an 8-by-8 foot cubicle can at least dare to dream.

Business around the Northwest

BofA loan modifications quadruple, Portland Business Journal

Internet access an economic issue, says ISP owner, Idaho Business Review

Social Media Conference NW 2010, Bellingham Business Journal

► On the Record

“It seems clear to me that when all the facts are put before them, people will make mature, workable decisions for their community.”

-- State Rep. Jim Moeller (D-Vancouver) on voter passage of six local school district levies this week. Moeller said the levies’ approval provided momentum to pending Washington state legislation overturning Initiative 960 – a measure approved in 2007 requiring a two-third “super majority” vote to raise taxes.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

Google, meet the ‘Couve

It was an announcement by a major Silicon Valley player that opened up the possibility of transforming the way we use the Internet forever.

No, we’re not referring to the debut last month of Apple’s unfortunately named iPad tablet device. Instead, it was Google’s relatively low-key release this week of an “experimental” plan to create an ultra high-speed broadband network in select trial locations across the U.S. that promised to have the greatest potential impact.

If Google’s initiative succeeds, the technology will transform the way we do business, communicate with each other and entertain ourselves.

And if we make a strong play for it now, Vancouver could be on the leading edge of this historic innovation.

In a rare move, Google announced plans to test the ultra high-speed network, not in Los Angeles, New York or Silicon Valley, but in small communities throughout the nation. The company even posted a call for proposals and nominations from local municipalities on its official blog, found here.

As reported by Seattle blogger Goldy this week, Pasco in the Tri-Cities region has already started working on its online application, which includes information requests relating to collaboration, community support, facilities and resources, construction methods and regulatory issues.

Given the potential benefits of the new service, the city of Vancouver has absolutely nothing to lose by devoting a few working hours to the cause of bringing Google into the Clark County fold. As one Just Business reader, Jake Engle of Wealth Planning Management, pointed out to me yesterday, Vancouver’s compact downtown is an ideal testing ground for the web search giant’s experimental broadband service.

And with zero risk, there’s still a lot to gain.

With county Class A office vacancy rates hovering around 19 percent, according to a January Market Report compiled by Eric Fuller and Associates, the prospect of Internet service 100 times faster than traditional broadband networks would provide a much-needed incentive for firms to relocate downtown.

And then there’s the prestige factor. Currently, Portland enjoys an outsized reputation for innovation and progressive thinking that draws talented engineering, programming and software designing firms from across the nation to the banks of the Willamette.

If we make a firm commitment to the job-creating industries of the future, Vancouver can also be on the shortlist of livable, affordable and tax-friendly destinations for the tech sector.

So let’s call, email and talk face-to-face with our city council members and Mayor Leavitt to place a bid on this potentially game-changing technology of the future, today.

Business around the Northwest

Oregon innovators, entrepreneurs honored, Portland Business Journal

Contractors' bids flood trickle of jobs, Spokane Journal of Business

Countrywide settlement will finance foreclosure efforts, South Sound Business Examiner

► On the Record

“She should be proud at what she has achieved.”

– Billy Henry, power lifting coach and Northwest Blind Athletes Association founder, of 18-year-old Rachel Talley’s missed attempt at the 230 lbs. deadlifting Washington state record in her age and weight class at the Jerry Capello Memorial Championships in Medford, Ore. last weekend. A student at Hudson’s Bay High School and the Washington State School for the Blind in Vancouver, Talley plans to make another attempt at the record at a tournament in Portland later this year.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

Don’t give up on the jobs of tomorrow

Contrary to depictions in films and in some history books, most revolutions do not happen overnight.

Take the French Revolution, an event most famous for the storming of the Bastille and the proclamation of The Rights of Man, but in reality punctuated by decades of bloody conflict, ending with the temporary restoration of the French King and the old order.

Hopefully, we get off a little bit easier than the French in the midst of our own current economic revolution.

Yes, you heard right: this downturn isn’t just an incredibly painful recession, it’s also likely to be an economic game-changer as well. According to economists from the public and private sector interviewed by the VBJ over the past couple of weeks (amazing thing, economists, in their ability to counterbalance dry facts and figures with quite impressive senses of humor) the U.S. is headed toward a transformative shift away from being a consumer-driven import economy to one more reliant on exports from the manufacturing sector.

That prospect holds great promise for our region and the rest of the Evergreen State – already an established manufacturing base in one of the most trade-reliant states in the nation.

But though the manufacturing plants of tomorrow like SEH America and WaferTech, as well as the continued strong demand for renewable energy equipment, remain bright spots in an otherwise dismal regional economy, some have expressed frustration that the promised jobs of tomorrow have not yet arrived. Or at least in great enough numbers to fill the thousands of positions lost in Southwest Washington since September 2008.

But merely lamenting and dwelling on lost jobs won’t create more of them.

Ironically, what is needed to expand on the technological roots already embedded into the region’s economic landscape is already happening all around us.

For some, the story of the last year-and-a-half has been one of factory, store and bank closures. But if you look closer, there are also the small stories of start-ups like Ryno motorcycle testing out new technologies in a Vancouver warehouse and big developments like the Port of Vancouver’s Terminal 5 – which according to the public agency’s expectations, could place the region on the forefront in a burgeoning worldwide trade in wind turbine parts.

The economic revolution of today promises to be one of fits and starts, with the old economy mingling with the new. It is a sea change in regional, national and global markets that will take decades to ripple through society.

So let’s learn from the lesson of violent conflagrations past by putting away the guillotine, by passing up calls for the blood of bankers, business execs and politicians.

Let us be patient.

Business around the Northwest

Micron signals $1.27B purchase of Swiss chip firm Numonyx, Idaho Business Review

Coffee Bean International adopts direct trade program, Portland Business Journal

Better Than New runs on tried-and-true model, Bellingham Business Journal

► On the Record

"We've had a few bumps here and there, but who hasn't?"

-- Larry Paulson, executive director of the Port of Vancouver, in his State of the Port address at Red Lion Hotel at the Quay on Thursday. For details on Port developments outlined in Paulson’s speech, read VBJ’s story here.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

Bipartisanship in Peril

When I think of the rapidly disappearing American tradition of bipartisanship, I think first of my high school history teacher, Mr. Karl.

History was by far my favorite subject, full of intrigue, back-stabbing and partisan strife seemingly worlds away from what I saw as the intolerably dull, peaceful suburban American existence of my young adulthood. So it was with great relish that I sat through Mr. Karl’s lectures, focusing on centuries of bloody squabbling over hereditary rights, religion and ideas on a divided European continent.

But America, he told us, was a different story.

Far from clinging madly to the outdated ideologies of the Old World, our republic had always sought to find common solutions for common problems, he said.

And Mr. Karl was right: save for four years of Civil War, America has found a way to survive in times of crisis, guiding itself through dozens of economic recessions, a Depression, racial strife and two world wars.

Flash forward to today’s divided and entrenched political landscape, seemingly content to “sleeping dogs lie” as a sputtering economy continues to wreak havoc across the national and regional economy.

While Democrats and Republicans continue to squabble, access to credit remains a luxury for those businesses that don’t need it, healthcare inflation costs continue to spiral and 20,000 jobs were lost in an economy that has shed a total of 8.5 million positions, according to January numbers released by the federal government today.

In the latest sign of this deep partisan divide, Republican Alabama Sen. Richard Shelby this week blocked the appointment of as many as 70 appointees to crucial federal posts because of a rejected earmark request – an act bad enough by itself, but for the fact that Democrats tried similar tactics while in the minority during former President George W. Bush’s term.

The erosion of this spirit of bipartisanship has been so complete, I almost did a double take during Thursday’s State of the Port address when Port of Vancouver executive director Larry Paulson thanked both Presidents Bush and (gasp) Barack Obama for funding the Columbia River Deepening Project – essential for regional economic development and financed through both Republican and Democratic administrations.

Paulson’s remarks are a reminder that in tough economic times we need to focus on results, not political gamesmanship if we are truly to emerge from this recession stronger, more flexible and prosperous than before.

As Mr. Karl would say, the time is not one to retreat into the –isms of the right and the left, but instead should be an opportunity to revisit our guiding American political philosophy, best boiled down to two words: Just business.

Business around the Northwest

Army Corps plans to fix Columbia River jetties, Oregon Daily Journal of Commerce

West Coast Bancorp seeks to raise $10M, Portland Business Journal

Credit union ranks swell in light of large bank failures, Bellingham Business Journal

► On the Record

“It took a lot of verification to cash that check.”

-- Larry Moore, chairman of Vancouver-based Haiti Foundation of Hope, regarding a check sent in late 2008 for $2,000 to the faith-based organization from then President-elect Barack and Michelle Obama. Look for our story on Clark County businesses and nonprofits stepping up in Haiti’s time of need, in the Feb. 5 edition of the VBJ.

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com

The dark side of Facebook

With an estimated 350 million users and growing, it’s sometimes easy to forget that Facebook first made its mark as an exclusive social networking “club” – with the price of admission sometimes up to $80,000 in private college tuition fees.

Today, Facebook profiles might as well be set up at the moment of birth, potentially serving as an electronic collage of a life lived through status updates, likes and the occasional “poke.”

This widespread phenomenon is at the heart of an escalating war over privacy, with consequences for the casual user at work, at home and on the go.

That list of potentially affected users, incidentally, includes many of the friends on this editor’s Facebook page, found here (don’t worry Facebook friends, this profile has been set to the highest privacy protection setting).

So it was with great interest that privacy rights advocates greeted news this week of a proposed settlement in a case against the social networking giant brought by 19 users of the site’s Beacon program, which allows Facebook members to view details about their friends’ transactions with outside online retailers.

Before Facebook changed the status of the program to “opt-in,” users automatically had potentially embarrassing or compromising information regarding, for instance, movie rentals of “Cheech and Chong,” listed on public, Google-searchable web pages belonging to bank executives, teachers or working mothers of two.

Under the proposed settlement, Facebook – which is also a private corporation expected to take in $710 million in revenue this year – will put aside the bulk of a $9.5 million fund to create a “privacy foundation.”

That’s good news for most users, on the condition that the money is spent educating the public about the risks involved in posting certain information on social networking websites.

Tops of on the list of potential pitfalls is the experience of many Facebook users finding notes, photos and even status updates included in search engine results, sometimes even with privacy settings limited to certain networks, family and friends.

It’s an issue of particular importance to the business community, especially in a close-knit one as ours.

It’s also important for the legions of jobseekers, perhaps unaware of the widespread practice among human resource professionals and small business owners of checking an applicant’s email with available Facebook pages.

Even for those thinking they have nothing to hide from public view, controlling the amount of available information obtainable through Google searches a continent away cannot be a bad idea.

Business around the Northwest

Measures 66 and 67: What now?, Oregon Daily Journal of Commerce

Columbia State Bank takes over American Marine Bank, Kitsap Peninsula Business Journal

IBR unveils 2010 Idaho Women of the Year honorees, Idaho Business Review