Trend Will Continue for 2015 & Result in New, All-Time Employment Highs for Bend, Oregon & The Deschutes County Metropolitan Statistical Area.
The economic events of the past decade remind us that the business cycle, with its four phases of accelerating growth, slowing growth, recession and recovery are real. It is not a question of whether we will experience these phases in the future; rather it is a question of when and to what degree. On a macro scale for the nation, nearly all indicators are showing that we are in either the accelerating or slowing growth phase. Not every industry sector by itself is in these two phases – a few are still in recovery and fewer yet are in recession. Let’s take a closer look.
U.S. Economic Trends
By far the most interesting thing happening in the national economy is oil prices. While consumers rejoice every time they fill up at the gas station, OPEC’s (Organization of Petroleum Exporting Countries – i.e., Saudi Arabia, Iran, Iraq, UA, Venezuela) bold move to crush domestic production in North America is having profound impacts. You may recall that so called “energy states” led the U.S. recovery with oil and natural gas extraction in places like Texas, Oklahoma and North Dakota. These states now stand to lose tens of thousands of jobs as crude oil commodity prices have plummeted below production costs. The supply chain for the oil and gas industry – everything from manufacturers of pieces and parts used in the industry (think steel, heavy machinery, building products) to all the service industry required to keep it running (transportation, refinement, etc.) – is already being impacted.
At the same time, a host of other industries benefit from lower fuel prices so the duration of OPEC’s dumping and how it impacts the US economy is still uncertain. One thing that can be assured, petroleum prices will not stay at these prices forever. Expect the overall U.S. economy to continue to expand, albeit at a more modest (slowing) rate of growth for 2015 over 2014.
Oregon’s Economy
Oregon hit a milestone at the end of 2014, posting record employment and with it officially adding back all jobs lost in the recession. Keep in mind that not all specific jobs lost have returned as businesses continue to automate and improve efficiency. Increasingly, job seekers will have to come armed with specific skills, education and/or be able to demonstrate work capabilities. Those without these to offer will find the job market increasing challenging to secure employment.
IHS Global Insight, a contributor to Oregon’s Office of Economic Analysis (OEA) is bullish on our state’s economy – predicting that in 2015 Oregon:
• Will be the third fastest state in the nation for GDP growth (Gross Domestic Product).
• Will be the 10th fastest employment growth state in the U.S.
• Will lead the nation (#1) with the fastest manufacturing employment growth.
Urban areas have led growth in the state for the past several years, but forecasts are for more rural areas to share in that trend. Statewide, the Bend Metropolitan Statistical Area (MSA) and Salem are forecast to have the highest employment growth rates.
The Central Oregon Region
The tri-county area (Crook, Deschutes and Jefferson), in many respects, is mirroring what we see on the national stage. Some sectors are booming – hitting all-time highs for sales and employment (brewing & distilling, health services) while others are in contraction (financial services), while yet others are in recovery (aviation/aerospace).
Overall, however, the positives are clearly outweighing the negatives and as a result, our tri-county economy is adding new jobs, new employers and new residents faster than any region of the state. In fact, each month an average of 300-400 new people call the region home. Net in-migration to Central Oregon that persisted even through the Great Recession years has only accelerated today.
Over the past year, the region added more than 3,300 new jobs and despite in-migration (many of which moved to the region without jobs), overall unemployment dropped by one percentage point (an 11 percent decline) to 8 percent overall, which remains above state and national rates. EDCO expects an additional 3,000-4,000 net new jobs to be added in 2015.
Activity Level at EDCO Remains Brisk
EDCO is a non-profit organization dedicated to helping improve the region’s economy through job creation in the traded-sector, which is economic development jargon to describe businesses that export a majority of their products or services outside our borders. In this work, we help move, start or grow companies in targeted industries to Central Oregon.
Relocation activity for EDCO has remained strong. In the past 24 months, we have helped 15 companies move to the region that have created or are in the process of creating nearly 450 new, well-paying jobs. Currently pending in our pipeline are 41 companies that together would create more than 650 jobs and invest in excess of $500 million in new capital. Some are already executing on relocation decisions while others are still in the research phase.
EDCO is seeing a proliferation of startups and young companies in our region. It seems a high percentage of residents have some enterprise or venture they’ve started in their free time, launched on the kitchen table and which is taking over their garage. More and more, we are talking to new residents that actually chose Central Oregon as a place to start their venture over other places in the country.Over the past year we met with more than 200 entrepreneurs and young companies to connect them with our Stable of Experts for mentoring, referred them to other organizations such as the Small Business Development Center or connected them with debt or equity capital to help them launch and/or grow.
Growing our own traded-sector employers is perhaps the most fruitful effort in which EDCO can be involved. It’s a driving reason why our local managers in Redmond, Prineville, Madras, Sisters, La Pine and Bend meet every year with 300-400 local companies, one-on-one, to uncover challenges and opportunities. Over the past two years, we’ve worked closely with 33 companies across the region to complete expansion or retention projects that added $80.8 million in capital investments and created or kept 750 jobs here in Central Oregon.
Industry Development
EDCO works not only on a company-by-company basis, but on initiatives that help lay the strategic foundations for Central Oregon’s economy.
Efforts on this front take many forms – from formal initiatives to more ad-hoc committees, each involving scores of volunteers, which will provide the necessary infrastructure to make company recruitment or expansion more feasible. We have seen activity on this front proliferate over the past year. Below is a list of the various organizations, associations, alliances and groups congregating throughout Central Oregon:
• SOAR Oregon is a statewide organization that grew out of EDCO’s efforts to establish a national foothold in the growing UAV (Unmanned Aerial Vehicle)industry. SOAR is helping ramp up national test ranges at the Warm Springs Reservation in northern Jefferson County, Pendleton and Tillamook as well as to foster new sense-and-avoid technology that we believe will be required for drones to be integrated into the national airspace.
• Oregon Outdoor Alliance (OOA) is a new, volunteer-led association for the outdoor gear and apparel industry that grew out of a joint effort between EDCO and BEDAB (Bend Economic Development Advisory Board) called the Outdoor Roundtable. Additionally, OOA members formed a new accelerator/incubator called Bend Outdoor Worx designed to help young companies in the industry navigate the marketplace more successfully.
• High Desert Enterprise Consortium (HiDEC) is a volunteer-led effort to bring best practices around Lean and general continuous improvement to help employers in the tri-county area reduced waste, increase productivity and better compete on a national and global basis. A broad range of industries activity participate in HiDEC workshops and learning tours including manufacturing, health care, telecommunications, and professional services.
• Central Oregon Research Coalition (CORC) is yet another volunteer-led effort focused on bringing more health research projects to the region. With nearly $2 billion in health research planning between OSHU and OSU alone, this group is focused on seeing some of that economic activity come to the tri-county region.
• Bend Bio is an effort of local company leaders to better capitalize on bioscience (pharmaceutical development to medical device) opportunities with the help of the Oregon Bioscience Association and OTRADI (Oregon Transitional Research and Development Institute), the official signature research center for the industry.
• Tech Alliance of Central Oregon is a group EDCO help get started years ago, but which has for several years operated independently. This group is taking a major leap forward in 2015 with major expansion of its co-working space in Bend at a new location, 1001 Emkay, and with a satellite co-working space in downtown Sisters. Talks are already underway about a third location in Redmond.
As you may know EDCO also plays a key role in team effort called COAST (Central Oregon Air Service Team) that works to retain existing and recruit new commercial air service to our region. Together, we have been successful in retaining all direct flights to international airports in a business environment where small airports like Redmond elsewhere in the country are seeing reduced service.
With these and other efforts, EDCO continues to be bullish on what the future holds for the year ahead. The national business cycle looks to be favorable for the next two to three years and our state economy is expected to be a strong performer as well. Now, more than ever, we have the people, capital and critical mass in place to take Central Oregon’s economy to new heights in terms of strength, diversification and ability to produce well-paying employment for its residents.
Roger Lee, Executive Director
EDCO (Economic Development for Central Oregon)
www.edcoinfo.com
541-388-3236
