May 2009 eCon Update

Business News in Central Oregon

Call for nominations by May 21 - EDCO Board seeks five dedicated individuals
EDCO is pleased to announce a call for nominations for a total of five elected positions, each serving two-year terms, from July 2009 to June 2011. The EDCO Board meets the second Thursday of each month, from 8:30 - 10:30 am, at locations across the region. The Board sets and shapes the policy of the organization, and provides strategic direction for the region’s economic and business development efforts. Nominations are due May 21st; ballots are emailed to EDCO members May 26th, and voting concludes on June 1st. For more information about serving on EDCO's board and submission requirements, click here.

Federal Stim Package funds to help rebuild Redmond's downtown
Working in concert with the City of Redmond, Redmond Economic Development Inc. (REDI) successfully lobbied for Federal Stimulus Package funding for reconstruction of 5th and 6th Streets, the former Hwy 97 through downtown. The City learned on March 18th that the project had been approved by the Transportation Commission and will receive $2.9 million in stimulus money to complete the $4 million project. Redmond will contribute the remaining funds - $544,000 from local stimulus and $500,000 from local funding. Aiming for an August groundbreaking, the project, which includes one mile of repaving and sidewalk reconstruction, is expected to be bid out by mid-June. Governor Kulongoski was on hand for a March 31st celebration to share the success of the funding which will create local jobs and transportation infrastructure, and help revitalize Redmond’s downtown.

Redmond company fills growing niche
Companies agree it's a great combination -- save 50% on equipment while keeping waste out of landfills.  The medical industry has embraced MEDISISS products that do just that. The Redmond-based company reprocesses single-use medical devices which include disinfection/cleaning, testing and refurbishing for "like new" functionality.  Reprocessed devices are labeled, packaged, sterilized, and shipped back to customers for reuse in their surgical procedures. This enables healthcare facilities to improve their financial bottom line while reducing medical waste otherwise headed for the landfill.  MEDISISS has grown about forty percent the last five months with a three week backlog, compared to the typical one or two day backlog.  Year to date, the company has hired seven people, with nine or ten more slated for May and June. COO Jason Mckibbin says MEDISISS will top 70 employees, nearly doubling its numbers from two years ago, adding “We are very grateful for our success so far in 2009.”

Two respected research institutes forecast end to recession in late 2009
New Hampshire-based Institute for Trend Research (ITR) www.ecotrends.org and New York-based Economic Cycle Research Institute (ECRI) www.businesscycle.com, both of which use dozens of indicators to predict the U.S. economy, are forecasting a quicker end to the recession. Each organization independently predicted the current economic downturn and that it would be longer than any recently – contrary to many other economists and the Federal Reserve.

Economist Alan Beaulieu, with ITR, provided a gloomy forecast at EDCO’s Annual Luncheon in February 2008, where he said the downturn would start later that year and likely not see the bottom until the first or second quarter of 2010. Later in the year, ITR had pushed that forecast for recovery back to the third quarter. Based on recent trends and data, he now believes the nation’s economy could see low ebb by year’s end. ECRI expects that the “Great Recession” will most likely be over by Labor Day. Both institutes agree that the effects will not be immediate, especially with regards to unemployment, and that it may be mid-year before many Americans feel like their economic position is improving. In the short term, ITR says to expect the next one or two quarters to be worse than the last.

ITR highlights several “early recovery” indices including the Purchasing index, its own U.S. Composite Leading Indicator, Corporate Bond prices, and a shoring up of the Industrial Production index all showing the right signs for recovery. The institute expects the national housing market to bottom out in September, but that non-residential construction still has a sorting out period which will result in more defaults on commercial projects. ITR is cautious about inflation due to current monetary policy and record government spending, but does not expect to see dramatic increases until after 2010, when interest rates will also start to creep up. By 2013, both interest rates and inflation could look very different than today. According to ITR, 2010 will be the year for businesses to borrow, build, and hire top people.

Oregon's Workers' Comp rates rank among the nation's best
Sometimes a map says it all!  Oregon continues to fare better than most states by working to keep its premium rates (composite) for workers' compensation low.  On average, Oregon employers pay 17% less than the national median in 2008; in fact, only 10 states have lower rates. Oregon's Department of Consumer & Business Services forecast costs will continue to decrease in 2009; view the recently issued report comparing Oregon's workers' comp rates.  

With tight capital markets, REDI collaborates to unearth funding
It’s an ironic contrast: increasing numbers of entrepreneurs with solid ideas and business plans but a dearth of capital. REDI Manager Jon Stark reports he’s collaborating behind the scenes to identify new funding sources for businesses facing cash flow and working capital issues. Meeting with early stage companies, Stark is using the services of Clark Jackson, Central Oregon's local representative of Oregon Economic and Community Development  Department (OECDD), to help minimize the risks held by the private lending institutions through state loan or guarantee programs. Additionally, REDI is actively connecting early stage firms with groups like SCORE and COCC’s Small Business Development Center to help them develop comprehensive business plans and identify financing requirements.

May 21 PubTalk features keynote presenter Chris Van Dyke
Chris Van Dyke, founder and former CEO of the first eco-friendly clothing company, Portland-based Nau, is our May PubTalk keynote speaker. The story of how Van Dyke, a marketing and merchandising expert with Nike and Patagonia (although an attorney by training who served as AAG of Oregon) launched a new retail concept merging business with social and environmental change is a fascinating one. You guessed right if you see a strong family resemblance to entertainer Dick Van Dyke!   

Van Dyke will share his struggle to find late-round funding in 2008's treacherous capital markets, offer insights from Nau's innovative store "webfronts" and how-to's on creating distinctive branding, and reveal pitfalls in implementing Nau's customer-directed corporate giving program. Contact EDCO at 388-3236 to reserve your spot. 

Prineville taps private sector for next city manager
Prineville native Steve Forrester has been selected by the City Council to lead Crook County’s only incorporated city – a process that took nearly a year to complete. Forrester was one of two finalists who went through a series of interviews with members of the public and the Council. The other finalist had considerable public experience, but a majority of the councilors felt Forrester’s knowledge and connection to the community was the right fit. Most recently the general manger of Woodgrain Millwork in Prineville, Forrester has spent much of his life in the wood products industry. Many community leaders believe Forrester's private sector experience will create a more business friendly environment, and bring a fresh set of eyes to a struggling city budget. “I’m actually surprised I made it as far as being a finalist,” says Forrester. “I’m very honored that the council has faith that I can lead the City.” Forrester will replace interim City Manager Wayne Van Matre, who plans to retire on June 30.

Jefferson County E-zone benefits expanded to encompass Culver
The Jefferson County Enterprise Zone was officially expanded to include the City of Culver with an authorization letter from Tim McCabe, Director of Oregon Economic Community Development Department (OECDD). Expansion of the zone became effective in March and remains in effect for four years, at which time the zone may be extended. Enterprise zones offer important property tax breaks to new or expanding employers in exchange for job creation and capital development. 

Butler Aircraft facility underway in Madras
Construction has started on the new 39,000 SF Butler Aircraft hanger for maintenance of heavy aircraft at the Madras Airport. Grading and foundation work has begun and assembly of the structure will begin soon with a completion date targeted for the beginning of October. COIC is working with the City of Madras for securing additional funding for paving Airport Way.

Jefferson County businesses show support for Madras COCC campus
COCC is working with multiple Jefferson County organizations as the college prepares a grant proposal for U.S. Department of Commerce EDA (Economic Development Administration) funding to construct a Madras Campus of COCC on land donated by the Bean Foundation. In April, the Madras business community was asked to augment COCC's outreach to EDA. EDCO’s Jefferson County program, along with major Jefferson County companies, wrote letters expressing how a local campus would serve as an essential component for new business recruitment in the County and identifying specific ways a local campus would assist in workforce training.

Employment lawyers at Karnopp Petersen offer helpful resources for business
If you’ve felt barraged with all the recent changes in employment law, you’re not alone. Check out Karnopp Petersen’s latest newsletter that covers recent COBRA changes, a new clarification from BOLI on lunch requirements, potential changes to Oregon’s Family Leave Act (OFLA) in light of federal FMLA revisions, and a reminder regarding employee wage discrimination claims.

Governor's pilot program for lean manufacturing training launches with two Central Oregon companies
Funded by the Governor's Strategic Training Fund (GSTF), a pilot program to provide small businesses with lean manufacturing training, has selected two Central Oregon companies - Goody's Chocolates, and Advanced Machining Services - to lead the way. Although lean training is typically associated with large businesses, 96% of Oregon's business community in 2007 had less than 50 employees. Oregon Manufacturing Extension Partnership (OMEP), the recipient of the governor's funding, has adapted its proven training and implementation approach to small businesses and will work closely with the two selected companies for six to eight months. For more information about the program, visit Central Oregon's lean manufacturing group, HiDEC and click on OMEP Rural Lean Program on the right. 

Legislative Update

OSU Cascades Campus funding in question at Legislature
Oregon legislators rarely have an easy task in assembling the state’s two year budget, and this session is certainly no exception. Facing a potential $3-4 billion shortfall from the previous two-year cycle, deep cuts are expected across many agencies. The Oregon University System (OUS), received 6.4% of the state budget for the current biennium (just under $900 million) for operation of seven (7) institutions. OSU Cascades receives approximately $7 million over two years of State of Oregon funding passed through OUS – a literal drop in the bucket compared to other state expenditures in Dept. of Human Services (DHS), Dept. of Corrections (DOC) and Dept. of Transportation (ODOT).

Amidst talk of cuts, there have been specific conversations within the state capitol about eliminating OSU Cascades funding entirely or to a level that would make its operation unfeasible. EDCO’s Executive Director and several prominent community leaders testified before the joint Ways & Means Committee last week during a hearing held in Bend to preserve the modest funding the branch campus receives. Advocates that testified included: Rod Ray, Bend Research CEO; Ron Foerster, Chair of the COCC Board of Directors; Oran Teater, Bend City Councilor and member of the Governor’s Economic Advisory Board; Kathie Eckman, Mayor of Bend; Ron Wilkinson, Bend-La Pine School District Superintendent; Patti Moss, Bank of the Cascades CEO, and John Shelk, Ochoco Lumber President. Approximately 500 people attended the hearing, filling the hearing room, three classrooms and a common area.

For more than a decade, the establishment of a four-year university/college was the number one priority project for Bend and other communities in the Central Oregon region. With the region’s population nearing a quarter million residents, Central Oregon would be one of the only areas its size in the country not served by a university or college were the OSU Cascades Campus to close. The next budget forecast on May 15th will give legislators a better idea just how much will need to be cut from state expenditures over the next two years.

Legislative Summary – Bills impacting economic development
In past eCon Update newsletters we have tried to keep readers abreast of proposed legislation impacting Oregon’s enterprise zones. Several bills have been introduced that would go a long way to dismantling the effectiveness of this economic development incentive. HB2429 originally proposed that any private company investing more than $5 million in construction activity would have to pay prevailing wages (the same requirements of public entities including cities, counties and schools) if the enterprise zone property tax exemption were used. Without a mechanism or funding to monitor those construction wages within HB2429, this language was “gutted” from and “stuffed” into HB2699 along with new fees and specific oversight by the Bureau of Labor & Industry (BOLI). The Oregon Economic Development Association (OEDA), Association of Oregon Counties (AOC), Central Oregon Cities Organization (COCO) and EDCO all oppose both bills. Unions and those legislators with campaign support from them have supported the bills.

For most projects, the bill would change the enterprise zone from incentive to disincentive. By using the e-zone, companies investing over the $5 million limit would be financially penalized, not to mention the new regulatory oversight added by BOLI. EDCO has several current pending projects that would be negatively impacted by the legislation. HB2699 was passed by the House last week and is now headed to the Senate.  Disappointingly, two Central Oregon legislators, Rep. Gene Whisnant (R, Sunriver) and Rep. Judy Stiegler, (D, Bend) voted in favor of the bill.

Meanwhile, the authors of HB2429 replaced language now in HB2966 with a laundry list of provisions designed to further dismantle the Oregon enterprise zone program. New language in the bill provides for individual districts to opt-out of property tax exemptions offered by the zone. Were some districts to opt out, the resulting administrative paperwork for county tax assessors could very burdensome, especially in places like Deschutes County that has two zones encompassing four distinct areas – all with a different mix of taxing districts.

Other language would make zone sponsor (typically cities, counties or port districts) discussions with companies in the recruitment process a part of the public record. Companies often discuss details of the value of enterprise zone benefits with zone sponsors or managers as they evaluate numerous competing sites. Companies involved in expansion or relocation efforts routinely eliminate from consideration communities where their discussions are not kept confidential. The reasons for this are manifold – not to raise community expectations, not to cause disruption in their workforce and not to provide competing companies with their plans for expansion or relocation. At this point, HB2429 does not seem imminently headed for a House vote. However, that there are legislators aggressively seeking to dismantle one of Oregon’s best incentives to recruit or keep new jobs and investment in the state is very concerning, especially considering that Oregon leads the nation in unemployment in one of the deepest recessions in generations. View this YouTube video for perspective of committee discussions of HB2966.  

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