Oct 16, 2013
by ROLAND WHITE CBN Feature Writer
The manufacturing climate for larger companies in the Central Oregon region are showing some encouraging signs of stability and growth. The economic mood for the High Desert is restrained optimism even in light of national fears and concerns for the U.S. economy and the fear of the dreaded Fiscal Cliff that is tipping nearer as Congress fails to set a budget and the ongoing debt ceiling showdown.
Recent failures in congress to agree to a budget have worsened the economy after the sequester which according to a Federal Reserve report negatively affected the overall U.S. economy by 1.75 percent.
But according to Jan Hatzius, Global Economist for Goldman Sachs, “2013 is the year that the U.S. would be over the hump,” and is forecasting that, “Following 2013, the U.S. will see growth above three percent, which is not amazing, but far better than what we’ve seen since the economy began recovering in 2009.” Hatzius' complete article on the subject is The U.S. Economy in 2013-2016: Moving Over the Hump, and the gist is that 2013 will be the last year of sub-trend growth.
In a complex report showing some speculative signs of economic optimism Hatzius points to a little known economic model which recognizes that private sector surpluses (rising corporate and household savings) is the mirror image of public sector deficits.
Although this sounds complex, broken down it means that the private sector is finally beginning to drive U.S. economics through re-investment into manufacturing, industry and commerce. Hatzius explains that, “...after 2013 the U.S. economy will be getting significant benefits from a re-levering private sector (lower savings) with the worst of the fiscal drag coming to an end. An update of our financial balances model suggests that growth is likely to improve starting in the second half of 2013. Homebuilding looks set to recover strongly, the corporate sector should start to spend a larger share of its cash flow.”
The big question is how does this broader national economic speculation of private sector investment fit into the equation for manufacturing economics to grow in Central Oregon? Especially since Damon Runberg, Central Oregon regional economist for the Oregon Employment Department says, “Despite GDP gains, Central Oregon still hasn’t fully recovered from the recession.” Runberg reports that, “Recently released numbers from the U.S. Bureau of Economic Analysis confirm what many in Oregon had already guessed - that economic activity in Oregon cities is starting to pick up. The numbers show economic growth in Oregon’s metro areas.”
Believe it or not many folks in the High Desert consider our lifestyle rural and countrified because of the distance separation from the larger Western Oregon metro population centers. But the truth be known, the Tri-County area has several cities that qualify as metro areas including Bend, Redmond and Prineville.
Runberg explained that, “In the Bend, Redmond metropolitan area, for example, the combined value of all the goods and services produced increased by 2.9 percent last year after accounting for inflation. That’s the largest year-over-year gross domestic product, or GDP, growth for the region since the recession.”
This 2.9 percent figure for our area is consistent with Jan Hatzius of Goldman Sachs, projection of a three percent increase for U.S. economic growth for the remainder of 2013 and beyond.
The answer to the big question of how national economics correlates to High Desert economics is that private sector investment is already taking place in our region. According to the Manager for Redmond Economic Development Inc. (REDI) Jon Stark, “Private investment led the way for new projects in 2013, some of which were started in 2012 and will ultimately also create potential new job growth in Central Oregon.”
That sentiment is echoed by Roger Lee, executive director of Economic Development of Central Oregon (EDCO)when he says, “The most exciting thing I see happening in the manufacturing sector in our region is that we have not just a handful of large companies rebounding, but dozens of small and mid-sized businesses that are adding jobs, investing capital and gaining market share in their respective industries.”
LOCAL MANUFACTURERS EXPANDING
The progress shown by EDCO and REDI in 2012 and 2013 is a high point for manufacturing companies and examples of the re-investment that needs to take place for a complete economic recovery. Several companies in Bend, Redmond and Prineville have expanded or built new facilities and all were driven by private sector investment.
The manufacturing scenario may become quite a bit brighter, said Stark, “We cannot divulge at this time the potential clients but we are involved in discussions with two to three larger manufacturing firms with potential for creating 200-300 new job opportunities for Central Oregonians.”
The larger Redmond companies that have built new or added to their existing facilities are Medisiss (a registered third-party medical device reprocessor with 150 employees), LHM Industries, producing quality cable assemblies with 100 employees, PCC Schlosser with 265 and Pape Kenworth with 11 employees.
As for other progress shown in the high desert region for 2013 some of the largest manufacturing firms have maintained a stable workforce of employees and others have added jobs this year with most reporting steady and improved sales and revenues.
Keith Covlin from PCC Schlosser in Redmond said, “We have added 45 new jobs making a total of 265 in 2013 and expect our job force to be between 280-300 by the end of 2014. Currently we are very busy and expect our production to increase for the next year.” PCC Schlosser is a global manufacturer of investment cast structural components and they specialize in complex titanium investment castings.
Jeld-Wen Window Division in Bend reports that sales have been increasing throughout the year stabilizing the employee base of 290. Although Jeld-Wen hasn’t added jobs this year it has maintained a steady workforce.
The Opportunity Foundation of Central Oregon has one of the largest bases of employees with over 400 employees, approximately 200 for staffing and 200+ for the job disability program. Sherman Curtchmeir, reports, “We remain flexible in our manufacturing projects and strive to meet the customers expectations and requirements for new products that utilize our employees.”
One of Central Oregon’s largest Wood Products manufacturers, Bright Wood, Quality Millwork is one of the world’s largest manufacturers of wood components and millwork.
Dallas Stovall of Bright Wood says, “We have added 100 positions this year and business has increased. We are now at approximately 700 total employees.”
This is a decrease from previous years prior to the economic downturn when Bright Wood had 900 plus employees but does mark an improvement for jobs in 2013.
If you say micro-brew in Central Oregon you might have to ask which one, with some 20 new breweries in production and several more in the wings preparing for their new brew breakout.
But Deschutes Brewery starting in 1988 has seen steady growth since getting the first foothold in the micro brewers craft market that has now grown to national stature with award winning brews and sustainable industry and employee standards.
Currently Deschutes Brewery has grown to 403 total employees from brewery production to pub servers. The brewery has added additional brewing tanks for increased production and added 4,000 square feet to the pub restaurant in Bend. New markets have been increased from 17 states to 22 as they continue to accumulate national and international awards in Brewing.
In regards to Central Oregon’s future perhaps it is good to revisit the past when recessions have dramatically hit the High Desert with serious economic impacts.
With a large influx of new Central Oregon residents in the last decade opinions have changed from an outdated economy reliant on timber and wood products to facing a future that embodies a diversified and sustainable economy.
For the Tri-County area many new positive changes reflect a trend to this way of thinking and for operating the economics of the region. Many new types of businesses have vaulted into the picture. There are bright spots in the region like Facebook and Apple in Prineville, tech savvy entrepreneurs, rebounding destination resorts, the recreation/tourism industry and the micro-brew revolution are here to stay and are leading Central Oregon to an exciting new economic future with a diversified and sustainable economic base.
Companies Featured in this Article
PCC Structural • PCC Schlosser, Redmond
345 NE Hemlock, Redmond, OR 97756
Jeld-Wen • Windows and Doors
62845 Boyd Acres Rd, Bend, OR 97701
Opportunity Foundation of Central Oregon
835 E Hwy 126, Redmond, OR 97756
Bright Wood Corporation
335 NW Hess Street, Madras, OR 97741
901 SW Simpson Ave., Bend, OR 97702