We should be working from areas where we have demonstrated competencies: semiconductors, nanotech, lumber and wood products, metals, sports apparel and recreation products, nursery products, food processing, creative and professional services. Most important, we should be working hard to understand what our core competencies in these industries really are, and then look for ways to link them together: smart apparel, biomechanical devices, green industries, etc. We need the courage to say 'no' to things that don't advance the competitiveness of our strengths...that is, we need to make progress in areas that help to define us strategically in the global economy, and not all areas of economic development can do that. Finally, we need to pay attention to quality of life and the details: environmental quality, clean air and water, nature in and near the city, high quality public education...all these must be maintained to ensure that we remain a location of choice for the people needed to make the progress we seek. Whenever we focus on industries or economic development targets, we must put these concerns in the same frame, and grow to expect that economic growth will NOT result if we've taken our eyes off what is needed to sustain community quality of life.

1) Business recruitment in 2004 needs to be different than business recruitment of the 1980's. We should not be focused to recruiting fabs and manufacturing, but focused on recruiting "high-value" research and development positions that aligning with existing and/or emerging industry clusters.

2) Part of our recruitment strategy needs to be focus on meeting the needs and identifying windows of opportunities with companies currently located here in Oregon.

3) There are a couple of ways to develop a list....first, the current keepers of the list are the Portland Development Commission, Oregon Economic and Community Development Department and then some key localities...City of Hillsboro does the best job, Klamath Falls and Corvallis both have impressive efforts...but all are limited by dollars.

4) A couple of good sources are: 1. Oregon industry associations; 2. Oregon higher education institutions with strong R&D; 3. large U.S. and global companies that have high R & D spending...For this list go to the December 2002/January 2003 MIT Technology Review 4. companies that may have some Oregon connection; 5. do cross-analysis where we have great air transportation to. Given our ties with Germany and air service how do we leverage this?

I realize this may be counter-intuitive, but I'd be recruiting small businesses with a future for big growth. For example, look at Hollis Eden Pharmaceuticals. They left Oregon and moved to San Diego because they could not raise money. If they had stayed they would be one of our largest and most important bioscience companies. We need to try to nurture small firms with high growth potential through tax incentives, low interest loans, low cost office/lab space, etc.

We should also set up a soft sell ambassador program where the state pays to fly out/wine and dine Fortune 500 CEO's and senior executives. Lead the horses to water. Get a dialog going. Fortune 1000 firms aren't coming here for a lot of reasons; mostly the perception that we are not business-friendly. Perception is reality. Frankly, I think it's fine that we have a heavier tax burden for corporations. It's the price they pay to live in this beautiful place. If East Coast business leaders could just see Bandon Dunes, Black Butte, Plush, etc., believe me they'd find a way to relocate some of their business units.

1. Development of a global satellite/DVD system of free higher education, beginning by taping lectures from the Oregon System of Higher Education and making them available globally via satellite and CD/DVD. Having the core of that system in the state here would likely spin off some very interesting educational and research centers.

2. High speed trains and hypercars/buses

3. Natural healing, Chinese medicine, etc.

4. Businesses and industries based on life-force energy (chi or prana), and the changes that understanding its physics are about to bring to all of our sciences and the technologies based on them.

5. Integrated energy and materials management based on the German "eternal responsibility of manufacturers for the products/chemicals, etc. that they produce"; energy efficiency, demand reduction, and cascading of energy use rather than production of new sources; services rather than product-focussed businesses.

6. Information networking and management for networks of local businesses to allow technical competence exceeding large corporate structures while achieving the economies of local production from local resources for local needs.

7. Intercultural businesses working in other countries and here to improve non-material quality of life, share capabilities of Factor 10 economic development, improving material QOL in less developed countries, and decrease demand and competition for resources.

8. Organic agriculture and permaculture.

From my perspective, Oregon is skilled in three areas: moving atoms, moving electrons and moving quantum states. But we need to develop a fourth area to make attracted industries commercially viable in the long-run.

1. First the atoms: much of the "medical device technology" involves multiscale materials and devices (MMD). For example, one of the most simple chemical functions is the filtering process of a kidney, yet millions of walk-in trips to dialysis centers are required every year by this group of kidney disorder sufferers. This process can be accomplished using MMD, and OSU has devices that can accomplish the basic chemical reactions necessary. But that technology requires capital, development expertise and partnerships to get a working prototype. Artificial kidneys and other implants seem like a likely Oregon innovation. We should offer to relocate as many medical device manufacturers in Oregon as possible, especially with individuals such as Bill New at OHSU and the efforts of a revitalized Oregon Bioscience Association and the 70 or so companies coalescing around the medical device area.

2. Regional technologies require a readily accessible ecosystem for commercial success and for years I've observed "non-fossil energy" -- the creation and efficient moving of electrons. Robert McCollough, the Portland energy economist, informs me there is only one city in America where four energy utilities have their primary administrative facilities. That city is Portland, Oregon, with PacifiCorp, Portland General Electric, Northwest Natural and Bonneville Power Administration in residence. This provides a ready install-base for innovative non-fossil technologies. Only because BPA purchased the fuel cells from companies like IdaTech, can they now show a robust set of actual data from a working install-base for their technology.

These utilities form the critical ecosystem for commercial success. Oregon has the workforce for this sector, as there are more electrical engineers per capita than most cities in America. Energy venture capitalists, such as Nancy Floyd, of San Francisco-based Nth Power, are resident in Oregon and diligently are looking for financial opportunities in search of the solution to energy independence as the security and economic drivers of this issue are more dear than ever. Further guaranteed capital is available from the Oregon Energy Trust. There is great promise in alternative energy because of the innovation engine of Oregon State and Pacific Northwest National Laboratories regarding the MMD work (e.g. the famous fist-sized heat pump that will cool and heat a 2,400-square-foot home from OSU). Boeing's work on fusion technologies remains active and truly breathtaking. The macroeconomic effects of climate change on energy efficiency and its inherent risks are metered by the economists and consultants at Good Company, Inc. in Eugene (for example, their work regarding tolerances in the transmission lines that lead to efficiency issues and corporate risk).

The future solution to America's energy problem has more to do with Portland than Houston. The issue is getting our Congressional delegation to put energy efficiency and conservation in the plank of all political parties and bring home federal dollars. The nation's largest non-fossil energy companies should actively be wooed here by aggressive tax reform, dramatic increase of the R&D tax credit (recently increased to a paltry $750,000), extension of research carry-forward credits, tradability of R&D tax credits and a full-time lobbying team representing the interests of Oregon on Capitol Hill and in the doors of twelve critical federal agencies.

3. "Imaging (display) and processors" will still be a mainstay of Oregon for some years. However, Oregon companies using analog and quantum mechanic principles to commercialize new disruptive technologies are the future. The days of silicon and pixels may be numbered but quantum processing (very powerful processors using quantum principals) will be needed for complex applications (e.g. aerospace, bioinformatics, climatics, 3-D).

4. The last critical need that will determine the success of the above three is the area of financial services. Oregon must dramatically deregulate capital formation inhibitors, totally reform its tax structure and stabilize our referendum process to attract headquarters. Attracting a signature financial products industry is an absolute necessity. Instead of going out of state for various financial products, we need to accumulate capital here by being known as a capital-friendly haven. An energy, R&D or environmental credit trading floor perhaps. The Oregon Legislature can create such industries by allowing R&D and environmental credits to be traded, as many believe growth in financial services industry is the fastest way to allow per capita income to dramatically increase. The vision is for New York to trade securities, Chicago for commodities, and Portland for R&D, environmental and energy.

I understand that economic developmentt efforts typically do focus on industry segments. In that regard I would offer up the following:

1. High-end craft industries, such as custom lampshade bases hand-tooled from wood (classed as secondary wood products, perhaps, but significant as to the skill required of the craftsmen).

2. Sporting goods products (existing talent base to draw from).

3. High-end food products (using our first-rate raw materials and creative skills and good brand image)

But I would urge consideration of a fresh approach. I think that Oregon's strongest suit is the strength of its communities. Those social and economic relationships among Oregon businesses provide a nourishing environment. In them, firms can grow their businesses in ways that are not available to them in a less caring place without strong community. In an ideal business community, firms can support each other through strategic alliances, collaboration to share expenses and pool scarce resources, as well as buy and sell from one another and exchange information and ideas. As participants in a community with strong social capital, businesses gain economic value, evidenced by a stronger bottom line,

This translates to businesses placing a premium on location in such a community. So I would identify areas of the country with weak communities and recruit small to mid-sized businesses. I would engage our own communities as the pitchmen -- the principal lure. At the same time, I'd seek to strengthen communities with a strategy of social capital development. Both activities would also naturally serve to retain existing businesses as a bonus.

Have encouraged Oregon Department of Agriculture to get a list of the top 20 natural food processing companies in California. With such high workers compensation, water & electricity rates in California, Oregon suddenly looks attractive. It is not likely we will target large commodity players in Oregon. I believe we could have immediate results with this list, as many of these companies have gone from profitable to red ink in the past three years due to these three key issues in California. Oregon will need to identify it's "selling points" & be aggressive, as Utah, Idaho, and Nevada have stronger "tax & economic development" selling points. I would believe that many of these Western States see California as a primary target.

I would believe that each industry has these target players. I don't believe Oregon is well served to try and hit the "home run" with the large companies. I believe we should target the mid-size and smaller players that bring our economy great diversity, strength and protection from the "cycles" that we can't seem to avoid in this state.

Here's a target list of industries/companies that would enhance our economy right now:

1) Vertical Software companies - Like Inspiration Software and Timberline Software. These are software companies that produce and support application software for target markets.

Why: Globally, businesses need technology, but in specific focused areas. Microsoft dominates the general software market and the semiconductor/drivers market is being lost to offshore, cheaper, commodity labor. Vertical software is an emerging business opportunity. These companies employ both technical people and sales and marketing people. They sell nationally and internationally so they bring export dollars into the Oregon economy.

2) Oregon should focus on small and mid-sized companies that sell nationally and internationally.

Why: The core of Oregon business growth isn't in large companies -- we only have one Nike here. The core growth potential is in small and mid-sized companies that serve a national or international market. These types of companies would employ locally, but sell nationally and internationally, thus bringing money into Oregon and spending it here. State and local government should regulate to support the growth of these types of businesses.

3) Medical devices and unique emerging markets like smart clothing (clothing with things like temperature gauges, tracking devices and medical monitoring in them).

Why: We can capitalize on the OHSU research and presence, and the apparel companies like Nike and Columbia Sportswear. We can also capitalize on the expertise of software and hardware engineers previously employed by Intel, HP and other embedded software companies. Again, these types of companies would employ locally, but sell nationally and internationally.

Just a side note, I believe some of the biggest obstacles to growth for emerging companies are:

1) Lack of expertise and Resources familiar with target markets. (In Inspiration Software's case this primarily evolves around business service expertise such as marketing, public relations and sales knowledge in speaking to, and working with, our education technology vertical market. The business service expertise in the Portland area has traditionally been around speaking to a hardware engineering technical market or local, regional businesses.)

2) Lack of a Leading Business School Locally. The Portland Metropolitan area needs a quality B school with a focus on developing and growing national companies.

3) Funding for good ideas. There is a real lack of start-up capital in Oregon.

4) Rules & regulations that affect running the business of mid-sized companies. If Oregon really wants to attract and self-generate new business growth, they need to create a tax base that supports their info. structure, but evens out the taxes. My vote is for a combined sales tax and reduced income tax and to create a reserve fund in good years to support the bad years.

I'll pick the following businesses, which have great growth potential in the 21st Century and which fit Portland's image well.

1) Green tech industries: They include fuel cell R&D and production, wind power system R&D and manufacturing and green building architects and engineers.

2) Computer forensics software development and training: Portland is known as a computer forensics town along with San Francisco and Washington, D.C. We already have companies which solve crimes including terrorist acts and develop antivirus software.

3) Nanotechnology: among the three major public universities and PNNL, there are over 100 researchers working in nanotechnology. Except for the micro device group, they are not working closely together to advance the technology in a systematic manner. This market is already quite large ($10 billion), and it will explode in the next five to ten years in the area of micro devices, fuel cells (nanotubes), ultra hard surfaces (nanocones), emulsifying agents, semiconductor chip design (cmoss), etc.

4) Biomedical: Oregon may not have the critical mass to develop new drugs or to become a biotech capital, but Oregon has the workforce and training needed to manufacture new-generation drugs made of peptides and other small molecules. A large number of these drug candidates are in the pipeline (Phase I through III stages in clinical trials). Many of these drugs are produced by fermentation. As they are approved by FDA, there will be a severe shortage of manufacturing facilities.

Copyright 2003 Oregon Business magazine