January 2011 eCon Update

 

Business News Around Central Oregon

EDCO’s unmanned aerial systems (UAS) initiative moves forward
When EDCO’s aviation recruitment committee first met more than a year ago, the goal was to look for creative solutions to bring aviation jobs back to Central Oregon. Out of many meetings and discussions came the idea of providing test airspace for the rapidly growing unmanned aerial vehicle (UAV) market. The committee believes that a general test area in our region would be a major benefit for the following reasons:

• UAS represent the one major growth area in aviation for the foreseeable future, both in military and private use.
  
• The Department of Defense has designated the Pacific Northwest as the technical development cluster for UAS. However, the entire region has only two or three small restricted areas where UAS can be tested, and these are booked up.
  
• A dozen companies have already said they would use a UAS test area in Juniper Military Operations (MOA) area, shown to the right, and will provide letters of support. The testing crews of these companies would bring immediate lodging and restaurant business to our region.
  
• A test area will lead companies to establish satellite facilities in the region. It is likely that these satellite facilities will become the springboard for full-scale design/certification, flight testing, and manufacturing of UAS. A UAS test area is the critical missing link for any firm involved with UAS or seeking to become involved. Any new operations are likely to start as close to a test area as possible.
  
• A UAS test area provides a significant asset to the aerospace firms already here seeking to obtain UAS design, manufacturing, systems, or assembly work.
  
• If the state captured just 5% of the R&D spending, the economic benefit would be $75 million per year.

With the Bend city council’s 5-2 vote to approve a support letter for UAV testing in the Juniper MOA, the initiative is one step further in a very long process.  The intent is to garner support from Central and Eastern Oregon cities and counties, hold public meetings to receive input, and work with Central Oregon's aviation community to ensure the best possible scenario for regional pilots.  Read EDCO's UAS proposal and frequently asked questions about the proposal.

Region's first large-scale biomass plan clears key hurdle
Last week the La Pine city council cleared the way for Biogreen Sustainable Energy Company to continue its plans to build a $75 million, 24.9 megawatt plant in the community's long-established industrial park.  An appeal was filed by a union-backed Portland attorney that is seeking an exclusive contract with organized labor to build the facility.  Councilors rejected that appeal.   

This most recent victory for the project follows others over the past 18 months in a series of milestones that are common to most biomass projects.  Last year Biogreen reached agreement with the La Pine Sewer and Water District for delivery of water and wastewater services. The partnership will benefit both the district and company.  The Oregon DEQ has also approved the needed air quality permit for the plant.  The perhaps the most critical and elusive element - long term supply of woody material - was the basis on which Biogreen began the project, which company president Rob Broberg says is solved by securing supply from private forest holdings in the La Pine vicinity.     

Construction of the plant is expected to require 14-16 months and Biogreen has plans to start in the first quarter of 2011.  When in operation, the plant will employ 22-25 people directly and up to 75 more indirectly that will keep the plant supplied with fuel stock and running smoothly.  The company would almost immediately become one of the largest traded-sector employers in the La Pine area.  EDCO, the La Pine Industrial Group (LIGI), and Business Oregon will continue to work publicly and behind the scenes to help make this important project a reality for southern Deschutes County and the region's growing renewable energy industry. 

Local staffing companies report uptick in temporary hires - a positive sign when demand is typically lower  
Two prominent local staffing agencies in Central Oregon have recently seen an increase in companies choosing to hire temporary workers. Greg Lambert, President of Mid Oregon Personnel, which has locations in four Central Oregon cities, reported an increase in year-over-year monthly temporary payroll for nearly all of 2010, including December. As a leading indicator for the Oregon Economic Index published by the University of Oregon, temporary payroll increases are one of the signs of a recovering economy. “We are seeing more companies adding temporary or flex-force workers,” shared Connie Druliner, Owner of Express Employment Professionals, which is part of over 550 International Franchise offices. According to Jon Stark, Manager Redmond Economic Development Inc., the uptick is even more positive than it might appear, because demand for temporary employees is typically lower in fall and winter than other seasons.

COIC provides reimbursable on-the-job training funds for hiring the unemployed
Central Oregon Intergovernmental Council (COIC), the local contracting agency that services the On-the-Job Training National Emergency Grant, is now offering a new training program. Private employers that hire full time workers who have been on unemployment for at least 19 weeks may receive up to 50% wage reimbursement to improve workers' skills through internal on-the-job training programs. Contracts for training must be made prior to hire and do not include brief employee orientation programs. Learn more about your company’s eligibility for this COIC program, or call Leslie Mitts at 541-322-2434.

Please participate in local survey and help set child care priorities in Deschutes County
The Deschutes County Children and Families Commission (CFC) is working with employers to gain insight to identify the needs and demands for child care for their employees. Access to quality child care is essential to workforce availability and employer costs related to turnover and absenteeism. CFC is conducting an employer/employee survey in order to help prioritize regional childcare needs and to document the status of childhood care and early education in Deschutes County. The fact that CFC supports a number of our local employer related child care programs, like the Bend and Redmond Child Care Networks, EDCO encourages you to participate in the survey by calling Mary Lorence at 541-385-1405. This online survey for employers is only three questions and only takes five minutes. 

Whippersnappers enters 2011 with an additional online strategy and funding
2010 was a very busy year for the Bend-headquartered Whippersnappers team. If you’re not familiar with the unique photos they produce from their Bend studio, you can look forward to online capabilities in 2011 that transform an ordinary photo into an extraordinary one. After highly praised presentations at EDCO's PubTalk, the Willamette Angel Conference and the Bend Venture Conference, owners Lisa and K.C. Flynn have now successfully completed $350,000 of a $500,000 round of financing. EDCO’s Venture Catalyst advised Whippersnappers on strategic direction and financing terms, and provided connections to potential financing sources. The current round consists primarily of accredited angel investors in Central Oregon. If you're interested in learning more about Whippersnappers, visit their website at www.whippersnappers.com or contact Venture Catalyst Scott Larson at EDCO. Read the executive profile of Lisa Flynn in The Bulletin for more details. 

New Bend / Deschutes County incentives paying off
In July 2010, three separate business incentive programs kicked off: the Bend Enterprise Zone (offering property tax abatements to export businesses), and the Bend Forgivable Loan Fund along with the Deschutes County Forgivable Loan Fund (both offering loans to expanding companies that are adding jobs). In the six months since the programs began, close to a dozen companies have applied or been awarded funds. In a competitive economic development world where communities spend millions to keep and lure companies, these incentives are a first step in assisting local companies through expansion phases and providing support to potential recruits. Loan recipients must pay back the loan if they fail to meet and sustain its requirements for job creation. 

“We are excited about these programs because they accelerate our expansion,” said Marshall Crew, president of startup Agere Pharmaceuticals and recipient of two forgivable loans. “Now we can add jobs and expedite improvements to our new facility. At this early stage in our growth, the loans are a huge help.”

Company awards are shown below (those in italics are in the application process):

Bend Enterprise Zone
CLS Fabrication
Bend Broadband Vault
Commercial Powder Coating
Agere Pharmaceuticals

Bend Forgivable Loan Fund
Manzama, Inc.
Agere Pharmaceuticals
Nashelle Jewelry
Dent Instruments
Play Outdoors

Deschutes County Forgivable Loan Fund
Agere Pharmaceuticals
G.L. Solutions
Navis

Prineville city council to lower sewer SDCs
The cost of building and developing in Prineville becomes cheaper in 2011. The city council is expected to adopt a new wastewater treatment plan this month that will directly impact the amount of system development charges a builder pays for sewer. Prineville has had one of the highest sewer SDCs in all of Oregon, because plans called for an expensive mechanical treatment plant with a $65 million price tag. City staff has come up with an alternative wetlands project that’s estimated to cost about $15 million. Currently, builders are charged over $8,000 in sewer SDCs for a single-family home in Prineville. Once the new sewer plan is adopted, the cost will be cut in half.

Intern program could connect high schoolers and Jefferson County businesses
Assisting high school students to become knowledgeable about specific career opportunities is important for students and employers. Culver and Madras High Schools, along with many traded sector businesses in Jefferson County, plan to develop an internship program where students work alongside professionals to gain an in-depth perspective of these careers and industries. The goal is to motivate high school students to complete their high school diploma, select appropriate elective courses and plan for advanced education for the career interest of their choice.    

PSU Center for Population Research Releases 2010 Estimates

Portland State University released late last month its updated population estimates for Oregon cities and counties. The estimates precede release of this year’s Census data, which will be made available sometime in mid 2011. According to PSU researchers, the state grew by 20,730 residents over 2009 estimates.

For the first time this decade Deschutes County was not in the top spot for year-over-year growth, which was held by Washington County with a 1.04% increase or 5,480 residents. Deschutes was second in the rankings with .788% growth or 1,345 net new residents. Third was Multnomah followed by Marion and Yamhill to round out the top five.

For the decade, Central Oregon counties still dominated state population growth with Deschutes, Crook and Jefferson ranking #1, #2 and #3 respectively followed by Washington and Jackson. The rate of population growth has been slowing in Central Oregon for several years, but until this past year it has remained well above other counties and the state as a whole. Even with this slowing trend, the tri-county area still accounted for nearly 8% of Oregon’s estimated growth last year, though the region accounts for roughly only 5% of the state’s total population.

Fastest Growing of 36 Oregon Counties
(By Rank)		2000-10*	2009-10*	YOY Rank
1	Deschutes	49.1%	0.8%	2
2	Crook	42.2%	0.3%	16
3	Jefferson	20.3%	0.7%	6
4	Washington	20.0%	1.0%	1
5	Jackson	14.6%	0.4%	15
6	Morrow	14.6%	0.4%	12
7	Yamhill	12.9%	0.7%	5
8	Clackamas	12.8%	0.5%	9
9	Marion	12.6%	0.8%	4
10	Columbia	11.6%	0.4%	13
OREGON		12.4%	0.5%
*PSU Estimates for 2010 data, 2000 Census data

PSU estimates included cities as well. Bend, Redmond, Culver, La Pine, Sisters all added residents, while Madras and Prineville populations were estimated to be unchanged. Metolius was the only Central Oregon city researchers thought to have lost population – and at that only five residents. At 83,125 residents, only six other cities in Oregon are larger than Bend. See all the numbers at PSU’s Population Research Center.

Central Oregon Power Summit & Our Top Ten Takeaways

Increasingly, power supply and cost are playing a more prominent role in the site selection process for some industries – including some among EDCO’s targets. Data centers are well known for their appetite for electric power and renewable energy equipment manufacturers often require large capacity for production and testing. To help get a better handle on what the future holds for both prices and availability, an expert panel was assembled for the December EDCO Board Meeting that drew more than 100 attendees.

The Power Summit featured a distinguished panel from public and private industry: Hal Reitmeier, Site Selector Project Manager, CH2MHill; Bill Kopacz, General Manager, Midstate Electric Cooperative; Dave Markham, President & CEO, Central Electric Cooperative; Pat Egan, Vice President of Customer & Community Affairs, Pacific Power; and Eric Taylor, Transmission Account Executive, Bonneville Power Administration. We invite you to view panelist slides on EDCO’s website and offer below our top ten learnings from the summit:

Ten Takeaways:

1. Prices increasing. Power is going to get more expensive—nationally and in Oregon, across all categories of customers.

2. No averages. Power prices are highly localized and vary by utility districts, even in the same geographic area. (See CH2MHill slide titled “Average Industrial Electricity Price”).  

3. More sources. Our power sources will be more diverse in the future. Meeting renewable energy mandates (possible federal Cap &  Trade, Oregon Renewable Portfolio Standard, and Oregon Carbon Reduction Plan) will definitely impact pricing.

4. Current renewables expensive. Power pricing varies tremendously by generation source; below is the comparison in cents per kilowatt hour (excluding all incentives):

5. Large power users. The most power dependent industries are data centers, solar panel/suppliers, and the semiconductor industry. When building new plants that consume large amounts of power, current pricing is dominant in site selection criteria. Equally important though are “quality” factors such as power system reliability, future capacity and sourcing, as well as proximity to the regional grid and major weather impacts.

6. Worldwide competition. Central Oregon should recognize that its competition in recruiting power-dependent industries is global. International builder CH2MHill is developing enormous projects in Brazil and India for large power users and the renewables industry.

7. Regional transmission upgrades.  BPA, which provides the transmission backbone for electricity in the Northwest, is undertaking a number of infrastructure projects to bolster Central Oregon’s transmission capabilities (see slides 7 and 8 for current projects and those under review).

8. Business: pay your own way. Cooperatives, such as CEC and Midstate Electric, were originally constituted to bring at-cost power to sparsely populated areas. They now face unique challenges as communities expand into their districts and larger power users come calling.  Because coops are owned by the consumers they serve, any system upgrades must be paid entirely by the new business. Similarly, regulated investor-owned utilities can't operate on the “build it and they will come” approach; each new industrial customer, such as Facebook in Prineville, must bear all system expansion costs.

9. Tiered pricing less stable. Power companies that purchase electricity from BPA (e.g. Pacific Power, CEC, and Midstate) are adapting to a two-tiered pricing structure. Tier 1 creates predictable prices over the life of a long term contract with BPA. Tier 2 introduces volatility in pricing as remaining power demand must be made up with purchases from the spot market or the coop’s own generation capabilities. 

10. Wind stalemate. In terms of wind production, there’s a timing mismatch between peak wind generation and peak electricity demand -- meaning the wind blows less when when consumers use the most energy (see slide 13 in the CEC deck).  For greater commercialization of wind, the mismatch will require breakthrough power storage solutions. 

Recap of Oregon Business Council's December Business Plan Summit - Not Business as Usual

Nearly 1000 leaders from across Oregon attended the December 13th Business Plan Summit at the Portland Convention Center. Central Oregon was well represented by a contingent of public and private leaders including a panel of local speakers that attended a regional breakfast meeting to kick off the Summit. Local speakers included Becky Johnson, VP, OSU Cascades Campus; Dan Eilers, Partner, Vanguard Ventures; Wes Price, Harrigan Price Fronk CPAs; and Roger Lee, EDCO Executive Director (view the Central Oregon presentation here).

The theme of the summit “Not Business As Usual” sought to encourage discussion about solutions to Oregon’s public budget and jobs woes outside conventional thinking. The Plan and summit were organized into focus areas:

1. Maximizing the value of the limited tax dollars we have available in state government over the next decade.

2. Ten ideas to spark job and income growth

• Improve product and process innovation and technology commercialization
• Address gaps in capital availability
• Simplify and streamline regulatory and permitting processes
• Improve “Product Ready” industrial land supply
• Advocate for active forest management (state and federal); utilize woody biomass for renewable energy
• Accelerate energy efficiency efforts
• Advance job creation infrastructure products
• Train Oregonians for high demand jobs
• Authorize water withdrawal from Columbia River during high flow conditions
• Make targeted tax changes to spark growth

Specific action items for each idea are outlined in the plan and additional initiatives were discussed at the meeting. A central message of the summit was for leaders to get behind efforts to create an environment and framework for private sector job creation. With more than 85% of state general fund tax dollars derived from Oregon personal income taxes, creation of quality jobs is directly tied to getting Oregonians back to work in promising industries. For more information, visit the Oregon Business Council to learn more about their analysis of where Oregon is heading and how it needs to change course for a more prosperous future.

Upcoming Events in Central Oregon

Jan 26 EDCO Membership Forum 
Join EDCO staff and board members for our next bi-monthly Membership Forum on Wednesday, January 26th at The Oxford Hotel in downtown Bend. We’ll feature EDCO Entrepreneur of the Year, Lisa Flynn, of Whippersnappers Studios. Flynn will share how she’s grown her studio-based business to an exciting new online concept with funding connections and strategy guidance from EDCO. (Read The Bulletin's January 3rd executive profile of Lisa if you missed it.) This event is free to all those interested in learning more about economic development activities in Central Oregon. EDCO members are expected to invite and accompany non members. The forum is from 4:00-5:30 pm.  Please contact Dayna Dudkowski to register or for more information. 

EDCO News

We thank the members below - new and renewing alike - who fund EDCO’s efforts to recruit new companies to the region and help local companies grow their operations.

Renewing Members
Platinum Level: Mid Oregon Federal Credit Union (1986)
Financial Institution: Sterling Savings Bank (2004)
Silver Level: SunWest Builders (2006)
Bronze Level: 14 Hands (2008), Bratton Appraisal (1998), LB Engineering (2008), Outback Manufacturing (2008)
Individual Level: Corporate Growth Associates (2009), Povey & Associates (1987), The Kozak Company (1986)

New Members

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