Businesses leaving Portland represents failed politics
There is a significant degree of economic myopia amongst left-leaning politicians, including Oregon's own public employee dominated Democrats. It is hard to tell whether they don't understand the economic consequences of their approach to government, or they simply don't care.There are two recent events, both predictably centered in Portland but having consequences statewide, that are descriptive of the problem. The first was an announcement by American Steel that is was abandoning Portland and Multnomah County for Canby. For fifty years American Steel has been located in Portland contributing substantially to the economic base, the employment and the tax base. Now it is relocating to Canby because of lower taxes, lower utility rates and a pro-business climate by Canby's city officials.
Craig Schwartz, the company's CEO, said, "They have a dedication to grow their city. They don't throw a lot of barriers at you." American Steel will move its $20 million in assets out of Multnomah County and by doing so will reduce their property tax bill by about 25 percent - going from slightly over $21 per $1000 to about $16 per $1000. In addition it will shed the burdensome Business Income Tax imposed by Multnomah County - the only county in the state of Oregon to make such a charge. Because Portland and Multnomah County tend to treat their businesses as if they are lucky to be allowed to operate, those two governments are going to lose a substantial amount of tax revenue.
American Steel's announcement was familiarly reminiscent of Columbia Sportswear's departure from Portland to Washington County, when company officials decried the high taxes and the fact that local government had become too bureaucratic. Rumor has it that the final straw for Columbia was when Multnomah County government blocked Columbia's plans for a new business complex on the shores of the Willamette River because local government coveted the same site for its own offices.
The second event was the announcement by Israeli based Zim Integrated Shipping Services, Ltd. that it was abandoning the use of Port of Portland and focusing its West Coast business on Vancouver, B.C. only. Zim's taste of Portland was short-lived - about fourteen months - and its departure will damage a port which had just begun to recover from the departure of all but two other overseas carriers. Much of Oregon's economic well-being is dependent on container shipments. Everything from sporting goods to furniture and hazelnuts to electronics. The lack of a robust overseas carrier market means higher prices for both import and export goods and puts Oregon's producers and manufacturers at an economic disadvantage in the global market.
And that is the point. In today's global economy both businesses and people have choices. State and local governments are free to court or castigate the business community as they see fit. And the business community is free to respond in kind. They can choose to locate or leave, expand or contract, grow or close. For every Portland that abuses its business community there is a Canby or a Vancouver, WA, waiting to embrace them. For every Multnomah County who thinks that government's desires are more important than its taxpayers, there is a Washington County waiting with aid and assistance. And, quite frankly, I kind of like that balance. Business shouldn't be able to dictate government policy, but government should be aware of the adverse impact government policy has on business.
When I was head of U S WEST in Oregon, we tried to deploy high speed internet access through DSL. The Oregon Public Utility Commission attempted to delay that deployment claiming that we should wait until others were ready to enter the market with competing products. I told the commission that it should make its decision as to what conditions it would impose and then I would make a decision as to whether we would deploy the service. There was dead silence and the hearing, for all intents and purposes was over. U S WEST had a choice. It was prepared to exercise it. By doing so it restored the balance between government and business. The conditions imposed by the OPUC were not overly burdensome and DSL was deployed on a timely basis.
That is the same choice that every business and person has in Oregon and, with increasing frequency, that choice is being exercised. Businesses continue to leave Portland and Multnomah County. Some go to surrounding counties and many go across the river to Vancouver, WA. They join a host of individuals, including former heads of the Portland Business Alliance, who have left the state to avoid high personal income and capital gains taxes.
In a global economy, the actions of government have consequences for them as well as their citizens.
Craig Schwartz, the company's CEO, said, "They have a dedication to grow their city. They don't throw a lot of barriers at you." American Steel will move its $20 million in assets out of Multnomah County and by doing so will reduce their property tax bill by about 25 percent - going from slightly over $21 per $1000 to about $16 per $1000. In addition it will shed the burdensome Business Income Tax imposed by Multnomah County - the only county in the state of Oregon to make such a charge. Because Portland and Multnomah County tend to treat their businesses as if they are lucky to be allowed to operate, those two governments are going to lose a substantial amount of tax revenue.
American Steel's announcement was familiarly reminiscent of Columbia Sportswear's departure from Portland to Washington County, when company officials decried the high taxes and the fact that local government had become too bureaucratic. Rumor has it that the final straw for Columbia was when Multnomah County government blocked Columbia's plans for a new business complex on the shores of the Willamette River because local government coveted the same site for its own offices.
The second event was the announcement by Israeli based Zim Integrated Shipping Services, Ltd. that it was abandoning the use of Port of Portland and focusing its West Coast business on Vancouver, B.C. only. Zim's taste of Portland was short-lived - about fourteen months - and its departure will damage a port which had just begun to recover from the departure of all but two other overseas carriers. Much of Oregon's economic well-being is dependent on container shipments. Everything from sporting goods to furniture and hazelnuts to electronics. The lack of a robust overseas carrier market means higher prices for both import and export goods and puts Oregon's producers and manufacturers at an economic disadvantage in the global market.
And that is the point. In today's global economy both businesses and people have choices. State and local governments are free to court or castigate the business community as they see fit. And the business community is free to respond in kind. They can choose to locate or leave, expand or contract, grow or close. For every Portland that abuses its business community there is a Canby or a Vancouver, WA, waiting to embrace them. For every Multnomah County who thinks that government's desires are more important than its taxpayers, there is a Washington County waiting with aid and assistance. And, quite frankly, I kind of like that balance. Business shouldn't be able to dictate government policy, but government should be aware of the adverse impact government policy has on business.
When I was head of U S WEST in Oregon, we tried to deploy high speed internet access through DSL. The Oregon Public Utility Commission attempted to delay that deployment claiming that we should wait until others were ready to enter the market with competing products. I told the commission that it should make its decision as to what conditions it would impose and then I would make a decision as to whether we would deploy the service. There was dead silence and the hearing, for all intents and purposes was over. U S WEST had a choice. It was prepared to exercise it. By doing so it restored the balance between government and business. The conditions imposed by the OPUC were not overly burdensome and DSL was deployed on a timely basis.
That is the same choice that every business and person has in Oregon and, with increasing frequency, that choice is being exercised. Businesses continue to leave Portland and Multnomah County. Some go to surrounding counties and many go across the river to Vancouver, WA. They join a host of individuals, including former heads of the Portland Business Alliance, who have left the state to avoid high personal income and capital gains taxes.
In a global economy, the actions of government have consequences for them as well as their citizens.
I think you paint only half the picture. There will always be ways any local and state government can better encourage business development. I have traveled to many American cities and I don't know one where the business community does not complain about local government being "anti-business." There is no monolithic "business climate." Some business will thrive in Portland because of the public infrastructure investments and the regulations that keep businesses from externalizing their costs of doing business on the community. Other businesses that employ a business model that relies on shirking responsibility (escapting low taxes and regulations) will not thrive in Portland. That's fine. There are enough business in the former category that Portland is never going to be economically disadvantaged.
But there are larger global problems raised by the "balance" that so clearly works in Mr. Huss's economic favor. A world where capital is infinitely mobile and labor is constrained by arbitrary government borders creates the race to the bottom that should be a legimate concern of everyone. Internationally mobile capital can wip-saw populations of workers who have no ability to cross the same international borders. If a state or local government tries to ensure a basic, humane standard of doing business in a certain industry to favor those who have a more humane and responsible business model, that community is out of luck. But we all loose from that dynamic. It is becomes an uneven playing field for those who have wealth and those who have only their labor to trade in the global marketplace.
There are consequences for us all in blithely accepting this imbalance as a reality and those consequences go far beyond the Portland or Canby even if they affect both these relatively affluent first world communities who can still be played against each other by companies like American Steel. THis is nothing against American Steel. They are doing the rational thing in an irrationale system.
The solutions are somewhere between more liberalized immigration so that workers can get a fair shake in the global economy and leveling the international playing field by establishing and enforcing minimum labor and environmental standards for all communities.
Jeri
for doing business in 2007:
http://www.inc.com/magazine/20070501/features-boomtowns-07-large.html
In it's catagory according to your article that combined area rated 139 nation wide.
With Washington county / Vancouver / Beaverton in the mix (3 of the fastest growing areas in the North West) it no doubt that there would be a decent rating masking the fact that Portland itsself is losing families and businesses to these areas.
Next time don't just count down the list, you'll get more out of the article if you actually read it.
No misinformation intended. Just information. You are right that the study included a broader geographic area but there is no question Portland is central to that area.
Also I have heard you and others complain about how Metro and land-use planning is a dirge to our economy here the Portland-Metro region. But the broader portland-metro community is doing something right, it's cooperating as a region in managing growth and economic development making our entire region competitive relative to other metropolitan regions. That's smart and it would not happen without our elected leaders in Portland who appreciate that the fate of urban and suburban communities is linked.
Tom
The only real industry keeping Portland afloat is construction -- much of it at the expense of the taxpayers. And I'd like to know, after all the subsidy, tax breaks and publicly funded infrastructure, has the Pearl even begun to meet ROI.
oh, and hey, look, tax payers just subsidized the developers putting homes in pleasant valley to the tune of what? 26 million i think?
But let’s look at some of the other anecdotal evidence.
What is now the Pearl district, which has contributed billions of dollars in economic value to the city in the last decade, used to be a distribution warehousing area for Portland. But it was abandoned years ago because distribution needs changed and trying to move huge volumes of goods in and out of the downtown core became inappropriate as population swelled and roads became busier and outlying areas economic activity increased.
When I moved here, Hawthorne was dreary. “Trendy-third” was a backwater with a seedy alternative movie theater. Pearl didn’t exist. Waterfront wasn’t nice. There was no need for a tram.
While a “host” of individuals may left for low-tax climes, never-the-less, the Portland area population has boomed. And done so by, among other ways, revitalizing stagnant areas instead of abandoning them.
Downtown Portland is a vital place because of continuing investments in public infrastructure and policies to encourage redevelopment.
So, in spite of nay-saying for decades, continuously trotting out the same old complaints about execs moving to Washington, etc. Portland remains healthy, but isn’t a perfect fit for every business and every homeowner. Duh. Canby wants to make itself more attractive to some of those. Good, that’s how it is supposed work -- different communities offer different tradeoffs.
I’ve had and invested in businesses in and out of Portland, even moving one out of Multnomah County because of the costs for that business. That doesn’t make it universally bad for business, just not good for that one. Its been great for others. Is it perfect? Of course not. Is it a good enough tradeoff, with nearby good alternatives? Yes.
Portland businesses will continue to leave and no one will really notice until it is way too late.
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I'll gladly throw some rude disrespect your way.
Since you said "
But the broader portland-metro community is doing something right, it's cooperating as a region in managing growth and economic development"
"managing growth"??? Only in brochures. In reality litterally every aspect of growth is being retarded, obstructed and ignored.
"Managing growth would mean accomodating the needs of growth.
Nothing could be further from the truth and you deserve "rude disrespect" for echoing the perpetual misrepresentation that our communitites are providing for the needs of growth.
Currently the enitre region is scrambling to find a miracle to:
Bail us out of the rising shortage of affordable housing;
Bail us out of the worsening regionwide congestion;
Bail us out of the funding shortage for the new experiments in Damasacus, North Bethany and other planner's plans;
Bail us out of lagging infrastucture capapcity and maintenance;
AND are planning for the sake of planning while plans provide no plan for any of it.
Yet people like you trot out the promo rhetoric every chance you get.
If I were even more rude I'd have middle finger for you.
there is plenty or room for growth, the market just doesn't want it. pleasant valley has been in the UGB since 1998, but developers haven't had a need for it. bethany has barely been touched since coming into the UGB. obviously there is too much land or they would be in the process of developing right now wouldn't they?
half teh congestion in the metro area is because developers and builders are TOO CHEAP to pay thier true cost to the infrastruture. if a development that plops 1000 homes down had to pay for the widening of the roads and construction of new ones, then cars wouldn't be stacked up - BUT, they don't want to eat into thier profit.
As a foot note, the quality of the untrained illegals work is sub-par at best. I have a friend who is suing his home contrator because of this............his $400,000 house is literally falling apart on him due to the work not being up to code.
Slowly but surely all those PDC give aways to developers will come back to bite the taxpayers here in the butt BIG TIME. Thank heaven we're moving out of state to a place where I can see the sunshine at least 75% of the time. Will be happy to tell Potter and the rest of the jerks on the City Council to kiss my grits when we're gone from this toilet.
I wonder if you're aware that there are many cities that haven't sold out to planner idiots and bureaucrats; as Portland has? Or that there are places that don't spend the bulk of their transportation dollars on choo choo trains and trolleys?
I check the RMLS for where I come from in Minnesota. I can get twice the house and still have money left over for the price I can sell my place for.............and the property tax was about $300 a year, lower car ins. , lower house ins. less chance of being accosted by herion addicts.
I'm not moving back anytime soon but will when I retire, it is nice to know that there are still places to move to without the corruption and waste that is self evident here.