World-Class Communities -- Portland's Juggling Act

Dec. 21, 2004
Former timber town faces issues of growth, quality of life.

When people from Portland, Oreg., hit traffic, they like to blame it on bad California drivers. When homeowners had to pay higher energy prices this winter, they cussed Californians. Ironically, many Portlanders have roots in California. Oregon draws migrants from the south when the Golden State's economy sours, and these transplants bring vitality and new ideas. They join newcomers from Tokyo, Seattle, New York, and other cities, people who seek a certain quality of life -- good public education, world-class windsurfing and skiing, and a manageable pace -- that puts Portland among the nation's most livable cities. But harnessing the good ideas of transplants, and the development that their numbers demand, may be the biggest challenge facing the timber town turned high-tech hub. James B. Johnson, part Californian, part Oregonian, and plenty ambitious, studied electrical engineering at the University of California, Berkeley, computer science at Stanford University, and business at Intel Corp., where he has worked since 1974. Johnson's title -- vice president, Technology and Manufacturing Group, and manager of the company's Oregon site --belies his responsibilities and passions. Since December he has devoted most of his work hours to lobbying Oregonian government and business leaders. He wants them to dedicate more money to higher education. "Our state is not well prepared for a high-tech future," he insists. Johnson has spent most of his career in Portland where Intel employs more people than in the Silicon Valley or any other place in the world. It runs eight corporate campuses, and with 15,500 employees is the metropolitan area's top private-sector employer. Intel is the largest grove in Silicon Forest, a cluster of more than 2,000 computer, electronics, instrument, and software firms, according to Stories of Change: Industry Clusters in the Metropolitan Portland Economy, published by Portland State University. With a population of 1.8 million, the Portland metropolitan statistical area, a six-county stretch that reaches across state borders to include Vancouver, Wash., is remarkable for what it lacks. It is one of the few world-class manufacturing communities without a leading engineering school. It also lacks the extensive venture-capital community of San Jose or Boston, and Portland's high-tech firms pay much lower salaries on average than those two cities, according to Cybercities, an annual report put out by the AeA (formerly known as the American Electronics Assn.). Intel recruits 80% of its engineers from outside the state. It lures them with visions of working on leading-edge research and with quality-of-life arguments. Portland is a good place to live. Its downtown -- marked by giant sculptures separating art-house movie theaters from music clubs and eclectic restaurants -- draws young professionals late into the night. Urban lore has it that the city boasts more brew pubs per capita than any other place in the U.S. An emerald necklace of forests surrounding the urban core appeals to hikers, even in the pouring rain. Housing prices are cheaper than other high-tech hubs, and Portland lacks the overwhelming traffic of Silicon Valley, at least for now. Johnson would like Intel and other employers to be able to hire more home-grown talent and has made it his mission to establish an educational system to enable them to do so. He wants to bring the best of California's public university system to Oregon and create a major institute of engineering to serve Portland's high-tech-manufacturing community. He will have to work fast, because the metro area grows technology jobs much faster than it trains technologists to fill them. Portland ranks 10th nationwide in rate of high-tech job growth, according to the Cybercities report. Portland's history is sprinkled with executives like Johnson and corporations such as Intel that play significant roles in shaping the community. They have turned the area into a world-class-manufacturing center specializing in high technology. With 157,125 workers holding production jobs, Portland employs more people in manufacturing than traditional strongholds such as Pittsburgh. And Portlanders are some of the nation's most productive workers. They added $107,059 in value to goods manufactured in 1998, the latest available data from the U.S. Commerce Dept., compared with the $73,217 average value-added by all manufacturing workers nationwide. Some credit for these results goes to the manufacturing pioneers who formed small companies more than 50 years ago to serve Portland's earliest economic engines -- the forest and farming industries. Inventors created companies around devices such as small portable radios used by smoke jumpers or equipment developed to control the sawdust in furnaces. "These were the pioneers that would start the transition from natural resources to a high-tech economy," says Ethan P. Seltzer, director of the Institute of Portland Metropolitan Studies, Portland State University. Tektronix Inc. was one such pioneer. Founded in 1946 to make devices that could measure and display high-speed electrical signals, by the 1970s the manufacturer employed thousands of engineers in Portland. Its progress drew attention from other firms looking for clusters of technical talent as well as cheap land, energy, and plenty of fresh water. Intel bought its first parcel of land in Portland in 1974. In the 1980s a wave of Japanese investment led to sprawling corporate campuses owned by NEC Corp., Seiko Epson Corp., Fujitsu Ltd., and others. They in turn lured suppliers including Kanto Corp. and Toshiba Corp. Japanese investment slowed during the Asian crisis of the 1990s, but interest picked up again in the new millennium. In November 2000 Sumitomo Electric Industries Ltd. announced plans to move its U.S. headquarters to Portland from New York. The $13 billion corporation also began building its first U.S. factory to produce compound semiconductor materials in the metropolitan area. Entrepreneurial Growth As leading technology firms grew in Portland, they also helped to spawn new companies. Technologists with an entrepreneurial bent left large firms for start-ups. Balaji Krishnamurthy arrived in Portland from Bombay (now Mumbai) by way of the University of Massachusetts Amherst, where he earned a Ph.D. in computer science. He moved to Portland to join $1.1 billion Tektronix, where he worked for 15 years. "I give them a lot of credit for bringing high-tech people to the area," says Krishnamurthy, who now serves as president and CEO of Planar Systems Inc., a $169 million manufacturer of displays used in medical equipment, digital phones, and industrial controls. There is more to Portland than flat-panel displays and silicon. The metro area is a leading producer of ornamental shrubs, Christmas trees, and other nursery products made by small firms that generate annual sales of more than $500 million. It's also a mecca for producers of sporting goods. Sneakers are designed at Nike Inc.'s headquarters in Beaverton, while less than a half hour away leading competitor Adidas-Salomon AG runs its U.S. headquarters. Columbia Sportswear Co., the $471 million seller of ski jackets and other athletic clothing, also calls Portland home. Tim Leatherman chose Portland to start his manufacturing business, Leatherman Tool Group Inc., which makes pliers and other high-quality pocket tools, because he was raised in the city. "People who live in Portland are happy outside work, so there's a better chance you'll have them happy at work," he observes. Portland is a different place than the one Leatherman enjoyed as a child. The CEO worries about the burdens that come with growth. Among them: The power crunch that began in California has spread to Oregon and other Western states, and threatens to increase Leatherman's production costs. The entrepreneur also detests the automobile traffic that accompanies development. Leatherman doesn't blame Californians for the problems, but like Johnson realizes changes are required. "If Portland grows much larger, we'll need to improve the infrastructure so it is still as livable as it is now," he warns.

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