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Oregon 20/20.

What will the Oregon economy look like in 20 years? In 40? Economic prediction is especially difficult right now, with things moving so fast and falling so hard. But this is precisely when businesses need to look beyond immediate obstacles and prepare for what's down the road. We've tapped three experts to speculate on the Oregon economy in 2010, 2020, 2040 and beyond.

URBAN DEVELOPMENT: A planning professor looks to the growth boundary of the future.

Portland lands at the top of nearly every nationwide "quality of life" ranking, and it's not for the weather. The sprawl-busting urban growth boundary has created a unique landscape, with mass transit and green space, high-density residential development and bustling downtowns.

But the growth limit has its detractors, and they'll be flexing their muscle this year as Metro considers what new land to open for development. Cities, counties and companies worry about accommodating commercial and industrial expansion; homebuilders say it's hard to make a profit cramming split-levels onto small lots in the suburbs.

Portland State University planning professor Carl Abbott studies the issues in his recent book Greater Portland: Urban Life and Landscape in the Pacific Northwest.

Abbott: The Legislature has required a 20-year supply of urbanizable land within the urban growth boundary. Metro develops its projections, and they get critiqued by everybody under the sun -- by environmental groups for being too generous, by the homebuilders for being too stingy. Every couple of years they're thinking about adding a thousand acres, a few thousand acres. It looks like there will be incremental expansion again this time around rather than adding a big chunk, so it's done for the next 20 years.

How good a case do the homebuilders have?

They don't like the growth boundary because it raises the price of land and forces them to build on smaller lots, do attached housing. They know how to do large-lot subdivisions. Plus, they worry they're being forced to build things there's no market for, or that the profit margins aren't high enough. But some builders have adapted quite nicely.

Will there be a growth boundary in 20 years?

Probably. There might be a more systematic plan -- a relatively tight boundary with growth centers surrounding the area. So, Scappoose absorbs more of the people who want traditional subdivisions, and then you make sure U.S. 30 can handle the traffic. In Portland, I think we'll see the River District built out and a bit more office space develop in the core, southwest Macadam is the single biggest development opportunity. There are brownfield and accessibility problems. But if Oregon Health & Science University gets to build its tram, and biomedical research and medical offices develop in that area, and the streetcar gets extended -- if that can supplement electronics and software over the next 20 years -- it has the potential for strengthening and diversifying the economy.

"Quality of life" doesn't come cheap. Building light rail and trolleys, and putting esplanades on the waterfront instead of more industry -- there's an economic cost. Can you see a scenario in which the consensus to keep supporting all this breaks down?

I think it'll only take about two years of recession. If people are unemployed, they stop worrying about other things until they get a job again. And the electronics industry might say: "To hell with Portland, we're in Washington County. What we need is better highways within Washington County, not this light rail baloney." And low-income Portlanders -- who are being pushed out of inner-Portland neighborhoods -- may decide their taxes are too high, they don't want to spend any more on public works, on sewer and rail systems.

The economy is hurting right now. Looking to history, what can we guess might happen?

Portland hasn't been a boom-bust economy like Seattle, which goes up fast, then down fast. We usually grow with a spurt for a decade or so, then a longer period of consolidation. We're probably going to plateau for several years like the mid- or late-'80s -- things weren't bad, but they weren't moving either.

Each decade or two Portland loses some of its manufacturing base -- wood processing, furniture -- now transportation equipment and aluminum are iffy. So a key question is: Is there enough critical mass in new technology -- software, electronics, health care, biomedical?

In the early '80s, when the timber industry took its big dive, Portland didn't fall as hard as downstate Oregon because it's got a pretty diversified economic base with a regional service function. It's certainly not recession proof, but maybe disaster proof.

What's most promising in Portland's future?

Look across the river -- that's the biggest potential for keeping the region and the city active and vital. So far, Clark County has tended to be a safety valve for people who want a traditional subdivision. But Vancouver -- especially the core -- is a tremendous opportunity for creating a kind of "satellite Portland." It's attracting some of the same kinds of people as downtown Portland, taking pressure off and adding critical mass at the same time.

What would help Portland the most would be if the Port of Tacoma suddenly silted up. I'd like to figure out a way to keep Portland's port viable -- maybe that means terminals on Hayden Island -- and to expand the airport in its current location and begin to pick up more hub activity. I'd vote for that.

High tech: Will it fatten up again?

A venture capitalist weighs in.

Scott Gibson is a darling among the state angel investors. Recipient of the 2001 Oregon Entrepreneurs Forum lifetime achievement award, he's worked at Intel, co-founded Sequent, and serves on the boards of Triquint, Radisys, Webridge, etrieve, Livebridge, CenQuest, and Oregon Health & Science University (OHSU).

Gibson has stuck with high tech through thick and thin. Now, the sector's bleeding, companies are disappearing and jobs are evaporating. And he's seen it all before.

Gibson: Do I think we're in a technology depression? Absolutely not. We're in one of four recessions for technology that I have been through staffing in the mid-'70s. One thing that's really great: They always end. And strong companies prosper again. Thquint, Lattice, FEI, ESI, Intel, Mentor Graphics, Synopsis, Credence -- I see really strong companies that have expanded in good times and bad, even if their revenues are declining at the moment.

Is Oregon too dependent on high tech?

Just as we all learn in finance about asset allocation, Oregon will always be better off with a diversified economy. Having said that, high tech is far and away the largest industry and, in my humble opinion, will remain the largest industry for the foreseeable future.

We're very early in the technology expansion, in mobile computing and mobile information. Broadband will revitalize the PC. We've got at least another 20, 30, 40 years of expansion in the area. We also have a critical mass here -- in display technology, semiconductor technology, specialty software, specialized computing. Once you have clusters of core competence, you really can build on those strengths.

Is Oregon going to do the right thing to feed its technology clusters?

A hollowing-out of high technology had already begun before this recession because it's so difficult to expand here. After the upturn comes, more hollowing-out will occur, unless we get a little smarter.

It's easy for me to make a top-10 list of companies that have their act together. They're clean industries, they're happy to adhere to environmental laws, they're great neighbors, they pay double Oregon's average wage or higher. But they can grow elsewhere if Oregon isn't friendly to them. That may mean decisions that are cast in stone ought to be reconsidered for the sake of those companies.

Here's a recent example: Applied Materials is a world-class company. They have 400 to 500 people here, and they want to expand because Intel -- their biggest customer -- is so huge. They can barely find any industrial land. They finally find half the amount they want, and it's right next to the urban growth boundary. They think: "Well, we can eventually move across the growth boundary and expand."

I don't think they realize what a sea change that would take, for the region to say: "We're not going to willy-nilly change the urban growth boundary, we're not going to cast it aside, but do it on a rifle-shot basis." We have to be really smart about not turning a company like Applied Materials away to expand elsewhere. I'm not advocating doing that for all companies, but there are 50 companies around the country and 10 within Oregon that I think are right. That kind of talk is revolutionary, but it's the way we'll get this region to prosper further without screwing up the great quality of life.

If someone gave you $20 million to invest in Oregon companies, and you couldn't cash out for 20 years, what would you put it in?

For maximum investment return, I'd put it into companies that are involved in the cluster areas. If it was to help Oregon's future, it would be in the biosciences. We have this huge engine of intellectual property -- OHSU. The state needs another very diversified growth industry to smooth out the economic cycle, and health care and biosciences have a different cyclicality than high tech. And OSU and the University of Oregon have quite a bit of intellectual property around agricultural bioscience. By 2020 I'd love to see those industries and universities buddied-up, looking for competitive advantage.

Oregon is way behind places like San Diego, Seattle, Raleigh-Durham and Stanford in creating bioscience hubs linked to university powerhouses. Why are you so hopeful?

In terms of the number of companies, Oregon is starting really far behind. In terms of the engine for producing new companies -- the amount of research funded by the National Institutes of Health -- we're 29th now. We were 175th or so in 1985, so the growth rate at OHSU has been phenomenal. I think we can move into the top 15 by 2020. If we just get the seed venture, the venture capital and tech transfer dollars, and the facilities, the rest will happen just as it has in Seattle.

This sounds great for the Silicon Forest. But what's here for the rest of Oregon?

The argument for rural Oregon is: There are no important businesses or markets that Oregon participates in that shouldn't embrace technology. Take agriculture, where a lot of farmers are using GPS and satellite imaging: They're custom-planting, custom-fertilizing everything. Take timber: One of the cutting facilities in La Grande is using unbelievable imaging technology that looks inside, sees the knots, calculates the most efficient cutting pattern for that precious log. If the person cutting that lumber doesn't have an information system that buddies up to Home Depot and can do just-in-time replenishment of 2x4s, they're not going to be competitive.

In the past few decades, Oregon has lost many of its biggest corporate players to mergers and relocation. Will that continue?

For every big company that's being taken over, such as U.S. Bank or possibly Willamette Industries, I see companies like Lattice and TriQuint and FEI that are rushing toward the Fortune 500. Their close-rate is well within 2020, more like 2010 or 2007. New ones are being born, others are being bought and taken off the map.

Marketing: Companies will reach out to the Northwest's natural crowd.

The shrinking economy and post-Sept. 11 consumer cautiousness make these "interesting times" for University of Oregon marketing professor and consumer psychology expert Marian Friestad.

Friestad: It's possible that Sept. 11 is a sea change, a crystallizing event where folks who had already been feeling like they wanted to stop consuming, live simpler, buy local -- this would be a time to do that. But I think only a very small portion of the population will go toward simplification and antiglobalism. It'll be people in the older consumer groups.

I come into contact with a lot of 18- to 22-year-olds, and they have been profoundly affected by what has happened -- in their sense of patriotism and what it means to be an American. It's almost like the 1950s again. And kids always reject the former generation's views. So when they're in their peak buying years -- 10 to 20 years from now -- they're not going to be in the same place as older consumers.

Could Oregon's unique mix of hardscrabble ruralism and nature-loving urbanism be a catalyst for green marketing?

Sustainability is a very long-term trend for us -- thinking about how products are manufactured and used, how long they last, how they end their lives, how natural resources are extracted. It isn't new, it goes well beyond the environmental movement, and Oregon and certainly Eugene are very concerned with it. In fact, the timber industry has done wonderful things working with byproducts and after-products in this way. Oregon is well-positioned to be the place where some of the technological developments in physics, chemistry and biology will be made.

How do you sell it?

The first step might be designing something that provides an added value -- let's say, an enclosed mailer for sending your empty ink cartridge back to the printer company. You need to bring the consumer along step by step -- it's not something that would be accomplished in a single ad or ad campaign. In the end there's a whole new standard by which consumers judge companies and competitors and make choices. But if we're right about the kind of people who live in Oregon, it won't take as long here as in other places.
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Title Annotation:economic forecasts
Publication:Oregon Business
Article Type:Statistical Data Included
Geographic Code:1U9OR
Date:Jan 1, 2002
Words:2251
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