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A workers makes final repairs on a cutter head for a dredge at Esco's Northwest Portland manufacturing facility.
(Michael Lloyd/Staff, 2013)
Esco Corp.'s announcement this month that it plans to close a production plant in Northwest Portland and lay off almost 250 people is merely the latest example of weakness in Oregon's manufacturing sector.
Manufacturing layoffs are hardly unique to Oregon. But because of the state's traditional reliance on manufacturing to power the economy and its emphasis on "clean" jobs for the future, Oregon faces particularly high obstacles as it searches for ways to create opportunities for blue-collar workers.
Let's review setbacks this year:
* Last month, Newberg's SP Fiber Technologies announced plans to indefinitely close a pulp and paper plant recently acquired by WestRock Co. of Richmond, Virginia. The move could result in about 200 layoffs. The decisions in Newberg have to concern employees of other manufacturers that have been sold recently. The list includes Precision Castparts, Planar Systems and NexPlanar.
* Portland Mayor Charlie Hales, after originally applauding Pembina Corp.'s choice of Portland as a site for a propane export terminal, revoked his support and asked the company to pull its application. Since then, he has been working tirelessly to send the message that fossil fuels companies should stay away -- culminating in a City Council vote to oppose any new infrastructure for the storage or transportation of fossil fuels.
* The Port of Portland lost its two largest container shipping lines as a labor dispute that started in 2012 continued to make it difficult for companies to get ships loaded and unloaded in a timely manner. The loss of service affects a wide range of businesses, including manufacturers who export products.
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Some of the factors contributing to the manufacturing slump are beyond the control of local decision-makers.
"It's a reflection of the markets that we're in and the weakness of where we're at in a market cycle," Esco Chief Executive Cal Collins told Allan Brettman of The Oregonian/OregonLive. Esco makes mining, drilling and excavation equipment, one of the less attractive markets to be in these days. But even manufacturers of in-demand product face challenges -- from low-price competitors to unfavorable exchange rates -- that are putting pressure on bottom lines.
On paper, Oregon's manufacturing economy still looks stronger than that of most states. Manufacturing accounts for 10.4 percent of state jobs, above the 8.8 percent national average and highest among Western states, according to the Economic Policy Institute. Also, Oregon manufacturing workers earn more than 30 percent above the state average, according to the Oregon Office of Economic Analysis. However, the Office of Economic Analysis points out, the manufacturing wage premium "is entirely driven by strong wage gains in computer and electronic(s)" employment. The transition into that industry, and especially into the best-paying jobs, is difficult for many employees of heavy manufacturers such as Esco.
Oregon faces challenges in holding on to manufacturing jobs outside the computer and electronics industry, much less creating new ones. It has limited land in the Portland area suitable for heavy manufacturing, and neighbors aren't eager to see heavy industry on the land that is available. Keep an eye on Esco's land in Northwest Portland if you want to observe those tensions.
Companies have to navigate more regulations to operate in Oregon, especially in Portland, than they do to conduct the same business in some parts of the country, particularly the South. It's worth noting that some of the Esco production in Portland will be shifted to a plant in Mississippi, as well as overseas locations. A substantial increase in the minimum wage and higher business taxes, issues that will be addressed by the Legislature and/or ballot measures next year would only add to the cost of operating in Oregon.
When companies can shift production to the South or overseas while still finding qualified workers and meeting customers' needs, Oregon is at a disadvantage. Realistically, the state is not positioned to be a lowest-cost provider of labor and facilities -- and that's not the best model for building an economy anyway.
But if Oregon wants to have a blue-collar middle class, it does have to find a balance that allows companies to be competitive. That means improving schools, and especially vocational education, so that the workforce here is clearly superior to that available in lower-cost states.
And, at the very least, the city and state need to make sure that sites like the one Esco is abandoning remain designated for industrial use.
-- The Oregonian/OregonLive editorial board