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Northwest is Near the Middle in a Wobbly New World

November 19th, 2011 by dk

As the world turns, it also shifts. The spin is more of a wobble. Mark Twain explained it this way: “History doesn’t repeat itself, but it does rhyme.” The latest shift has placed the Pacific Northwest nearer the center of the world. After generations of obscurity here on the “upper left edge,” this is going to take a little getting used to.

Who could have anticipated that Oregon would fit the world’s new definition of “centrally located?”

As the center of the world’s consumer gravity shifts to China, with a billion people reaching for their middle class dreams and two billion more waiting for their turn, what we used to call the Far East is linking up with what we used to call the Old West. Meanwhile, NAFTA has tripled the north-south corridor of free trade beside the Pacific Ocean. Plot both of these shifts on a globe and Oregon starts to look like the new center.

So it makes sense that each Oregon governor makes an annual foray to Asia to promote trade with our state. Portland’s mayor just returned from a 10-day diplomacy trip to Asia. Mayors haven’t typically worried about global economic opportunities, but that was then. Now is just beginning.

The shift has happened slowly, but look back a quarter century and it’s clear to see.

Oregon commissioned an economic development study. After the local depression of the early 1980s, we did a lot of studying. Extraction and harvesting of natural resources was beginning to look “over.” The study recommended that Oregon shift its economic incentives toward manufacturing, since that sort of industry offered good wages and relative stability. The report followed up with an intriguing question: what should we be manufacturing?

The report offered a myriad of answers, but among them was one little nugget that now borders on the profound. Oregon should set its sights on building stuff that doesn’t weigh much. Oregon is tucked into the least populated corner of the nation. The largest California market is 850 miles away. Transportation costs increase with each ounce, and with it the temptation to relocate a successful manufacturing business to be closer to its customers.

That study became a revelation. It has guided planning and policy for a generation.

Few noticed that Oregon’s only Fortune 500 company manufactures something that weighs literally nothing. Nike admitted as much when it declared it is not technically a manufacturer. Nike doesn’t manufacture shoes. Nike manufactures demand for the shoes they pay others in Asia to make.

Phil Knight brilliantly perceived that manufacturing in the East and selling in the West tilted the economic formula profoundly in his favor. Software development also is weightless, so Bill Gates could pick the quietest corner of the country to become the nation’s richest man. Lorry Lokey’s benevolence to the University of Oregon was inspired by research and commercial opportunities we expect from nanotechnology. Designing solutions atom by atom isn’t exactly weightless, but as close as you can get to it.

“Light” was the new might.

The curve that brought us inexpensive consumer items from Asia is about to become a boomerang. Prosperity in China and other Asian countries has begun creating demand that flows in the opposite direction. They see what America has and they want it. Ships heading west across the Pacific are no longer traveling empty.

China is on pace this year to spend $1 billion on Oregon and Washington lumber, shipped from Astoria to be milled in China for a housing boom that could last decades. This dramatic surge of demand is driving the price of raw materials up. Extraction and harvesting being “over” appears to be over.

Our challenge today is to manage our natural resources sustainably, while continuing to build on the new industries we have fostered over the past two decades. If we can ship high-end technology east (and north and someday, south) over land and raw materials west over sea, we’re bound to reap unique benefits from being at the crossroads of the two.

Freighters out of Astoria and soon from Newport will bring us new-old economic opportunities. The Old West is becoming new again.


Don Kahle ( writes a column each Friday for The Register-Guard and blogs. He’s traveling this week to Japan to see the wobbly world for himself.

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