August 30, 2010

State Tax Incentives for Business Need Overhaul

Washington State’s toolkit to support new or growing businesses is paltry at best. Our state simply does not have a modern mix of thoughtfully designed incentives that can support key industries or companies. Given the economic challenges facing our state now is the perfect time to reform state incentive policy. As lawmakers reopen tax and spending discussions and attempt to fix another budget hole we should have the courage to also reexamine current incentives and look for change and improvement.

Tax incentives in Washington State are always somewhat limited by our State Constitution which prohibits the lending or gifting of funds to private companies. This exclusion means the state cannot give away the farm to business, but it does not mean we cannot do more to support business growth.

The bigger challenge is that we have created a broad mix of tax incentives over the last few decades to help a wide variety of Washington industries. Each year lawmakers tend to add a few new incentives, but rarely do legislators go back to clean up or eliminate older incentives.

It will not be easy to go back and eliminate or scale back older incentives. Each program has a built-in constituency that will likely scream loudly if their tax breaks are threatened. At the same time though, we must have the guts to exchange older marginal incentives for newer tools that can better impact economic development.

Other states offer effective breaks that we should consider:

Incentives that can be monetized. Oregon offered incentives that alternative energy companies could sell to help them fund their enterprises. These programs helped the state become a magnet for emerging companies within this sector. Missouri also offers incentives that translate into cash.
Discretionary and/or negotiated incentives: Some states like Michigan and Utah offer key growing companies incentives based on the specific firms’ tax impacts. Tailoring incentives based on a company’s specific taxes generated provides both flexibility and accountability; And
Worker Training funds. Many states provide more funding and flexibility to companies that are hiring and training new employees.

At a time when we are paying new taxes on bubble gum, candy and bottled water it is obvious that lawmakers are willing to tinker with our state tax code. In this environment I hope our legislators also have the fortitude to reopen the book on state business tax incentives. We need to quit adding marginal tax incentives incrementally and instead develop a deeper more effective tool kit that helps our industries of the future grow and compete.

August 23, 2010

Fall Prospecting Trips – New Vision Poised to Hit the Road

We are packing our bags in the weeks ahead, poised and ready to raise our Valley’s image as a business location. New Vision staff will be making three trips over the next couple months to meet with prospective businesses and corporate site selectors. I will be departing for California in September and plan to meet with at least five expanding companies during the trip. We are joining forces with associates from Grant County and Spokane on the California mission, as it allows us to share upfront prospecting costs more effectively.

In October, New Vision staffer Lisa Smith heads to a site selector conference in Tuscon, Arizona. She will have sales appointments with six to eight of these real estate professionals who help large companies choose new facility locations. Maintaining and building relationships with these professionals is important. Site selectors typically are involved in 30+ percent of all corporate expansion projects in the United States (and we thank them for bringing Wal-Mart Distribution and Whirlpool to the Yakima Valley).

After Lisa returns I make another prospecting trip with our partners from Moses Lake and Spokane. This time our team heads up to British Columbia. Again we expect to meet with at least five companies on this trip – perhaps more.

These are the first marketing excursions we have taken in 2010. We purposely delayed some of these trips until later in the year because of economic uncertainty. It seems like business is faring better now than it was at the start of 2010 so it will be interesting to see what these prospecting missions yield. We are targeting companies whose competitive needs dovetail with our region’s strengths so hopefully our travels will help us discover some new business development opportunities.

August 4, 2010

Business Plan Contest Can Help Region Create Jobs

Our office announced this week that we are staging a business plan this fall to identify the most innovative business ideas and solid business plans. The Enterprise Challenge will be a three month multi-round business plan competition. The competition will unfold from September through December and feature several cuts along the way when judges choose contestants to move on in the contest. The top three entrepreneurs or business teams at the end of the Enterprise Challenge will win $10,000 (1st Place), $5,000 (2nd place and $2,500 (3rd place).

We are excited about this new intiative and feel confident that we will identify and tangibly support several local entrepreneurs that have the potential to grow their enterprises. New Vision is banking on these emerging companies’ potential to create jobs as well. It may take a while for new enterprises to hire employees but we know from experience that small businesses are a key driver of payroll growth in the Yakima Valley.

We designed the business plan contest to nurture all of our entrepreneurial contestants, whether they win our top prize or not. The Enterprise Challenge features some tremendous educational seminars and field trips for our contestants so everyone participating should take home knowledge that should help them develop and sustain their ventures.

A couple years ago New Vision recognized that supporting entrepreneurship is a fundamental part of economic development. Initiatives to support emerging businesses are equally important to recruiting new industry or helping existing companies expand. Since we embraced entrepreneurship New Vision has discovered some great public and private partners that can help support emerging companies. By working with these partners New Vision has developed a better “safety net” for small business AND we have been able to organize the Enterprise Challenge, a contest that we feel can identify local companies with gazelle-like potential for growth.

Stay tuned for more details about the Enterprise Challenge by visiting our entrepreneur support website, www.yakimavalley.biz Also plan to attend our kickoff half-day workshop, MBA in a Day, on September 15^th. I think we are at the start of an interesting and productive journey that can help us build our local economy.

July 30, 2010

Liberty Bottleworks To Produce Sports Bottles in Union Gap

A new manufacturing venture that produces sports bottles from 100-percent recycled aluminum has begun operations in the Yakima Valley and will create nearly 20 new jobs this year. Liberty Bottleworks expects to deliver its first shipment of bottles in October and plans to make 300,000 by the end of the year, said Tim Andis, the company’s founder. It has leased a 35,000-foot-building in Union Gap, Wash., just outside of Yakima, installed a manufacturing line and begun hiring workers.

“We’ve done something very unique and very special to create a bottle completely from recycled aluminum,” Andis said. “We believe that most people want to do the right thing when it comes to helping each other, our environment and providing sustainable solutions.” Liberty Bottleworks is the only U.S. producer of bottles made completely from recycled aluminum. It has deals in place with outdoor retailer REI and grocer Whole Foods to sell its bottles nationwide. The bottles come in 24 and 32 ounce sizes and will retail for $16 to $18.

Liberty Bottleworks will employ about a dozen people initially and grow to 18 by yearend, Andis said. Workers will be a mix of accounting, sales, marketing and shipping employees, and manufacturing technicians. Andis, who has worked in the outdoor industry for 20 years, praised the Yakima Valley business community for its support and encouragement. He moved to the area 14 years ago with his wife to be near her family and has been impressed by all the region has to offer.

Tim Andis

“I fell in love with Yakima,” Andis said. “We have some tremendous opportunities because of a lower cost of living and close proximity to major markets. We have some really great cost efficiencies, a good workforce, lower facilities costs and easy access to shipping routes.”

Our office helped Andis secure tax credits for his company and provided advice and connections to potential sources of funding for the business. We have put a lot more focus on growing our own companies. Liberty Bottleworks is a great example of an emerging enterprise that has found a supportive Yakima Valley business community, bottom-line value and competitive advantages from lower business costs and work-ready employees.

Production has begun in limited quantities at Liberty Bottleworks and will ramp up over a couple months, Andis said. At full capacity, the company will make 1,200 bottles per hour. Using a deep-drawn aluminum manufacturing process, large coils of recycled aluminum are punched, trimmed with a neck and finished with a BPA-free, food-grade powder coat. The process leaves the bottle walls with a very consistent thickness that creates a stronger, more durable container.

Our organization is excited about Liberty Bottleworks and what they bring to our community as a manufacturer and employer. They are proof that the Yakima Valley is right place for businesses ready, willing and able to grow.

July 16, 2010