Given these favorable trends it was no surprise that the Northwest Food Processors’ annual exposition a couple weeks ago was bigger and better than ever before.  I traveled to Portland for this event and helped the Port of Grandview staff a booth in the exposition hall.  The conference provided excellent learning and networking opportunities.  It also afforded the Port an opportunity to market its property to food companies and suppliers.

While the industry is on the uptick it is also facing significant challenges.  Most food companies have an aging workforce and know they will have to replace a significant number of talented employees who are reaching retirement age.  Many food facilities are also antiquated and need investment to ensure they operate safely and efficiently.  Perhaps the biggest challenge is government though.  Zepponi said new regulations are putting extraordinary pressure on the industry.  In particular, the Food Safety Modernization Act (FSMA) is the most comprehensive new food safety law in over 70 years.  It drives significant new recordkeeping and operating requirements for food companies and their suppliers.  The law gives the Food and Drug Administration the power to issue product recalls so repercussions for not following the law are deadly serious.

Quite a few of the breakout sessions at the event were designed to help food industry executives and their employees learn about food safety compliance strategies.  Beyond getting employees up to speed the Food Safety Act will also force companies to modernize their facilities.  No doubt about it, the FSMA is a game changer for food processors.  Add compliance with other safety, land use, water quality, and environmental regulations and you can see why Zepponi suggests that government is the industry’s biggest issue at the moment. 

In our Valley, food processors play a pivotal role within our regional economy.  They employ thousands of people and provide an important supply outlet for local farmers.  Hopefully our local food processing industry will stay on a roll.  Growing markets and better margins are the prescriptions this industry needs to successfully overcome its current challenges. 

Amtech Corporation is also growing again.  The company is leasing a building next to their current facility in the Wapato Industrial Park.  As this older 60,000 square foot industrial building gets renovated, Amtech will use 20,000 square feet immediately and has an appetite to fill the rest of the facility.  Amtech is a diversified manufacturer of composite parts and assemblies.  The company makes products for the military including hardtops for Humvees, as well as cargo trailers and covers.  Amtech also manufactures components for trains, buses, lift booms and recreational vehicles (to name just a few product lines).  As the company moves into a renovated building it plans to add 20 employees this year and another 20 in 2013.  This will bring the headcount up to 220 employees at their Wapato headquarters.

We are very pleased with both of these projects.  While some local manufacturers have been adding jobs over the last year, these are the two most significant job generating projects we have seen over the last three years.  Our office is working with a couple other companies poised to expand as well, so hopefully these are all signs of an economic rebound here in our Valley.

Last week I attended Enterprise Seattle’s (our King County relative) 40^th annual economic forecast event.  At the morning session, three economists shared their outlooks for 2012.  Their sentiments about the year ahead differed somewhat which is hardly surprising given the challenges of predicting an end to our persistently gloomy economy.  The good news was that none of them were predicting that our economy would get worse.

Dick Conway, with Conway Pederson Economics, focused his comments on the Puget Sound and Washington state economies.  Conway cited several indicators to show that the Western Washington economy was picking up steam.  Retail sales accelerated over the last quarter of 2011, personal income is on the rise, and unemployment rates are dropping.  Conway suggested that Boeing’s continued hiring, strong exports, and a significant pay raise at Microsoft combined to boost the Puget Sound economy.  On a broader scale he told the audience that these trends plus an uptick in manufacturing are also helping the state economy rebound.   Looking forward Conway opined that housing prices and sales would rebound this year.  He also suggested that retail sales would notch higher given the stronger Western Washington economy.

Michael Dueker, chief economist with Russell Investments, felt the national economy would improve albeit modestly.  Dueker forecast that US Gross Domestic Product (GDP) would rise 2.5 percent this year.  He also felt that inflation would be benign and the stock market would rise modestly.  Dueker said that Europe may be a drag on the US economy, but he added that the biggest issue affecting our economic growth is the high incidence of household debt.  While American households are getting stronger, there are still too many people that are overly leveraged in term of their income/debt ratios. 

Ken Goldstein, a veteran economist with the Conference Board, saw no economic rebound on the horizon.  He felt the economy has no momentum and suggested that poor retail sales over the holidays were a sign of challenging times.  Goldstein added that the national economy could struggle during the first quarter this year as people pay off debt they incurred during the holidays.  Goldstein felt that a modest economic recovery is still two years away.  The challenge he says is that our society’s disposable income has been squeezed heavily during the recession.  As a result people have less money to spend and they are being a lot more conservative in terms of how and when they spend their discretionary income. 

I enjoyed the panel’s remarks and feel that our Yakima Valley economy will fall towards the middle of their projections.  Our farm economy is doing well and we are seeing an uptick in local manufacturing.  I predict our retail sales numbers for the 2011 holiday season will also be relatively favorable, indicating that folks in the Yakima Valley feel a bit better than most about our local economic situation.  We are not a boom town though so my prediction is that we will enjoy modest growth and ride the coattails of our state and national economy.  I concur with the economists cited above – a broader economic recovery is probably still a year or two away.  There are too many storm clouds on the horizon to feel confident that economies will surge. 

I hope my safe forecast is too gloomy.  At a time when broader economies are getting a bit better I hope that we can better control our own economic destiny in the Yakima Valley.  Happy new year everyone. Let’s all work towards economic improvement at home, throughout Washington state, and around the world. 

Doug Rich

Doug Rich will serve as Chairman of the Board.  Doug is the owner/broker of Prestige Realty and has served Vice Chair and Treasurer for New Vision.  Rich has been a member of the New Vision Board of Directors since 2008.

Jon Smiley

Jon Smiley will serve as Vice Chairman of the Board.  He is the CEO of Sunnyside Community Hospital and has served as Secretary for New Vision.  Smiley has been a member of the New Vision Board of Directors since 2004.

Brad McDowell

Brad McDowell will serve as Board Treasurer.  Brad is the President/CEO of AB Foods Washington Beef in Toppenish.  He served on New Vision’s executive committee for two years.  McDowell has been a board member since 2009.

 

 

Diane Patterson

Diane Patterson will serve as Board Secretary.  Diane is Vice President of Yakima Valley Memorial Hospital.  She served on New Vision’s executive committee this year and she has been a board member since 2009.

Dave Murray

David Murray will serve as New Vision’s Past Chair of the Board.  Dave is Senior Vice President of the Yakima Branch of Wheatland Bank and has served as Chairman, Vice Chairman, and Treasurer for New Vision.  Murray has served on the New Vision Board since 2006.

Biomass Energy Facility

Kip Ramsey and his family will operate the multimillion facility. The Ramsey”s own Tiin-Ma Logging so they are very familiar with Yakama Forests and comfortable taking on this new venture. The Ramsey family also owns the Wolf Den in Wapato and the Cougar Den in White Swan, both popular destinations for gas, food and convenience items.

Construction on the new facility is expected to start next year and the plant should be operational sometime in 2013. The business will employ approximately 50 persons and a lion’s share of the jobs will be technical and pay family wages.

Last week the County Commissioners started Simkwii on a process to secure up to $80 million in tax exempt bonds to help build the facility. Through the Commission’s Public Corporation, a resolution was passed in support of using bonds for the project. Now the company needs to secure underwriters for this bond package. If all goes according to plan, the company will finalize its financing arrangements and start securing permits for the facility next spring.

We are pleased that Simkwii is planning to build this facility. It will create good jobs in an area of our Valley that needs an economic boost. The project will also help eliminate a backlog of forest debris that is a fire danger and breeding ground for pine beetles.

Dr. Ben Winters Accepts Our Check for $10,000!

We are pleased to announce that three emerging businesses were selected as winners of our second annual business plan contest.  These entrepreneurs were selected by seven judges that met with business plan contestants yesterday.

Washington Vision Therapy Center won New Vision’s Enterprise Challenge and received a check for $10,000.  The specialized eye clinic is located in Yakima.  Dr. Ben Winters is a developmental optometrist who specializes in providing vision therapy to clients with a particular focus on helping kids.  Winters and his staff help patients correct vision problems that cannot be corrected with glasses or contact lens alone.  As the business grows, Winters plans to open more local clinics and eventually expand to other areas as well. 

Hop Central Brewing Company placed second in the contest and received a check for $5,000.  Hop Central will be a new microbrewery in downtown Yakima.  The company plans to handcraft uniquely hop centered beers which choice hops for the Yakima Valley. 

Milt’s Original Gourmet BBQ Pellets took third place in the contest and won $2500.  The Grandview-based company manufacturers flavor enhanced barbeque pellets made from tree fruit wood and food processing wastes.  The company sells one and twenty pound bags of pellets through farm stores, barbeque dealers and other outlets. 

The other five final contestants received consolation prizes that can be redeemed for legal or accounting support from local businesses.  We are thrilled with the results of our business plan contest. All our contestants have enormous potential in terms of launching or running successful local businesses.  If these emerging companies get off the ground according to their plans we should see them add opening or expanding facility and adding a significant number of jobs.

Dr. Ben Winters, owner of Washington Vision Therapy, was excited to win the contest:  “We benefited tremendously from participating in the business plan contest.  Having over 40 business leaders review our plan and evaluate our business was invaluable.  We learned a lot and the contest gave us very favorable exposure within our community.  The funds we won will be plowed into our business and support our growth over the next year.”

New Vision’s Enterprise Challenge started in September and featured several educational events where contestants could learn more about managing a business.  There was also a coaching round for final contestants where they could get advice from local experts.  The development association is planning to run the contest again next year.  The contest helps anchor our initiative to support local entrepreneurs and we are confident our 2012 contest will be even better.

At the end of the day though several key factors fell in favor of keeping the 737 in Washington State. Working towards a favorable agreement with the International Association of Machinists (IAM) was the biggest issue.  IAM and Boeing announced a tentative deal to extend their contract ten months ahead of schedule. This accord is huge as one of Boeing’s big gripes was with IAM surrounding the strike and related challenge they had getting a contract approved a few years ago.  Another factor in Washington’s favor was that Boeing already enjoys a huge and talented workforce here.  Relocating this production would challenge other states to deliver the talent Boeing needs and put the company at risk in terms of ramping up production.

The state legislature must also take action to help Boeing.  To develop a future pipeline of aerospace workers, the state is working on a $10 million package of investments that include creation of a new aerospace curriculum at 12 high schools, a new science and mathematics problem-solving course at 10 high schools and a $7.6 million program to enhance engineering education at the University of Washington and Washington State University.  The governor is also asking legislators to put $1.5 million towards a new Center for Aerospace Technology Innovation at UW and WSU.  On top of these workforce and education investments the legislature will also be working to resolve regulatory and transportation issues of import to Boeing.

Boeing and its suppliers are located in almost every county in the State – it is no surprise this is one of Washington’s most important industries.  In our Valley, both GE Aviation and Pexco are key Boeing suppliers. These companies employ over 400 well compensated people at their local facilities.

Boeing’s 737 decision also helped drive key elected officials to focus on our state’s business climate.  We are still not perfect, but the state has taken measurable steps to improve conditions for businesses thanks to Boeing.  Let’s celebrate Boeing’s decision to double down in Washington State but also take care to not grow complacent as a result.  More efforts are needed to improve our business climate so when the party is over let’s all get back to work and create conditions that help our state’s key companies and industries thrive.

We need to dramatically improve student achievement so that more of our kids succeed and our local companies find the talent they need to support their success.  Part of our challenge and opportunity revolves around STEM (an acronym for science, technology, engineering and math).  STEM is an important national intiative that underscores the need to increase student interest and success in these fields.  This initiative also underscores the importance of teaching these subjects in an interdisciplinary manner.  By mixing student work in math and engineering or technology and science, classrooms best represent how these disciplines actually work in real world settings.  Integrated science, technology, engineering and math curricula must be a central part of improving local schools.

Local school districts are dabbling with STEM education.  Districts like East Valley and Toppenish have used special grants to boost student exposure to STEM most typically integrating these dollars with their career and technical school programs.  This is a good start but these resources are far too limited to suggest they will help our Valley integrate and push STEM education to the point where it has a larger impact.  Our challenge is to somehow ramp up STEM when funding for local schools is on the decline.

We are not alone facing these challenges.  Schools around the state and country recognize the importance of STEM but struggle to integrate and make these disciplines part of  a mainstream curricula.  For me, implementing and prioritizing STEM education requires a combination of funding and education reform.  We must find the funds to prioritize STEM education for all students not just those in certain classes or discliplines.   At the same time though there will never be enough grant funding to make STEM a part of every student’s education.  We need to also reprogram and reform current school curricula to free up financial resources that can support STEM implementation.

Do not get me wrong - just because I am advocating STEM does not mean that english, art and other disciplines are not important.  All courses of study are important and they are often the prerequisite for success in STEM fields.  It is clear though that STEM is a fundamentally important focus for our schools:

• Workers with associate’s degrees in STEM fields out-earn 63 percent of people who have bachelor’s degrees in other fields;
• Almost half of workers with bachelor’s degrees in STEM fields out-earn workers with Ph.D.’s in other fields; and
• Jobs in STEM fields will continue to grow and outpace job availability in other diciplines.

To embrace STEM and make it work for students, schools and local employers we need to be sensitive to a few issues.  We need to make sure STEM is not the province of just our best and brightest students or those kids pursuing the tech school option.  How we get our disadvantaged students into these courses is a key to the region’s economic future.  We must also work to ensure that our girls in particular gain exposure to STEM.  Gender inequity in STEM fields is well documented and we need to get our younger ladies involved and interested in these career paths.  And finally, we need to take a view that STEM skills become basic skills in the labor market much like a liberal arts education was seen as a basic requirement for high-paying jobs in past years.

In our Valley, our Education Service District (ESD 105), is poised to implement a planning project that creates a roadmap for increasing STEM education in Central Washington.  Working in concert with Washington STEM, ESD 105 will draw business, education, and citizens together for important conversations about STEM and how we build these programs within the Region.  This planning process will unfold next year and give our community an excellent opportunity to learn more about STEM and map out its incorporation into our local schools.

Stay tuned for more local discussions about STEM in the Yakima Valley.  This is an important initiative and we need your awareness and input as ESD 105 shapes how our region embraces and implements STEM at local schools.  To learn more about ESD 105′s STEM planning effort or to get involved contact Terrie Geaudreau at Terrie.Geaudreau@esd105.org or (509) 454-3124.

• Hop Central Brewery – planning to open a brewery in downtown Yakima;
• Resource Recovery Group, aka Milt’s Gourmet BBQ Pellets – manufactures flavor laden BBQ pellets made from local fruit wood;
• IQ Tax Center – providing full service tax, bookkeeping, and financial support to consumers and small businesses;
• Yakima Food Coop – working to establish a cooperatively owned and managed healthy foods store in Yakima;
• Creme – planning to start a dessert cafe and coffee bar in downtown Yakima;
• Washington Vision Therapy Services helps patients address vision problems that cannot be corrected with glasses or contact lens;
• Serenity Falls – providing general landscaping and specialized waterfall landscaping services; and
• K5 Contracting – a specialty contractor that sells and installs various home and commercial insulation products.

It was very difficult to cut our field down to the eight finalists.  We had a stellar group of entrepreneurs involved in the Enterprise Challenge this year and we know that several contestants who did not make our cut will nonetheless launch very successful enterprises. 

Next week our finalists travel to Seattle to participate in Entrepreneur University.  This daylong workshop is a great experience for small businesses and our contestants will bring home lots of valuable advice and information.  After the Seattle road trip our entrepreneurs will have about three weeks to finalize their plans.

Our office is working to pair each contestant up with a coach or coaches that can advise them in areas where they need additional help.  These coaching activities will unfold between now and early December.

Final judges will meet the contestants on December 8th and help us select our contest winners.  We will announce our prize winning entrepreneurs at our awards luncheon on December 9th. 

We are very pleased with the 2nd running of our Enterprise Challenge.  Our office has discovered yet another group of local entrepreneurs that have the talent and energy to start successful companies in our Valley.  If we can support these entrepreneurs and work to see them succeed, these small business people will certainly generate jobs, wealth, and new tax revenues for Yakima Valley communities. 

Stay tuned for more Enterprise Challenge updates and mark your calendars to join us at our award luncheon on December 9th.