Business

High-Tech Passing Timber As Oregon’s No. 1 Industry `Silicon Forest’ Expanding As Timberland Shrinks

By the end of this year, this farm town at the flat heart of the Tualatin River Valley will become the bridge between the 19th and 21st centuries, from evergreen forest to the “Silicon Forest.”

Outside a quiet Main Street little changed since the 1950s lie acres and acres of new campus-style corporate parks sporting the logos of the world’s computer and electronics leaders: Intel, Fujitsu, NEC and Tektronix.

By the end of 1995, these high-tech manufacturers and others like them are expected to employ more Oregonians than the timber industry for the first time.

Intel is spending $2.2 billion on a new plant over the next decade, the largest single industrial expansion project ever planned in the United States. The computer chip maker already is the largest single employer in Oregon.

Integrated Device Technology Inc. has announced an $800 million expansion project near the new Intel site.

Both Intel and IDT are based in Santa Clara, Calif., pioneers in the fabled “Silicon Valley.” But both have been migrating to an area west of Portland, nicknamed the “Silicon Forest,” to invest heavily in their future production capacity.

The timber industry has been in decline since the early 1980s, when a major recession cut back on construction and left loggers with a huge surplus of uncut trees.

By the time the economy recovered and loggers were working in the woods again, scientists declared the northern spotted owl a threatened species and a federal judge decided to protect the bird by closing down vast tracts of Northwest forest for more than three years.

Although a Clinton administration forest management plan approved last year has lifted the logging ban, other changes in the timber industry, including modernization of mills and shifting export and import markets, have contributed to reductions.

Paul Warner, the state economist for Oregon, predicts the timber industry will harvest 400 million board feet next year, just one-tenth of the peak production of 4 billion feet in 1988.

About 54,200 people worked in the timber industry in Oregon last year, compared to about 51,300 working in the computer and electronics industries. Before the end of 1995, certainly by 1996, those figures will exchange places, Warner said.

By the year 2000, he projects lumber and wood products will account for 20.8 percent of total manufacturing employment in Oregon compared to 27.7 percent for high technology. In 1980, it was 32.4 percent for timber and 21.8 percent for high-tech jobs.

Warner says timber always will be an important part of the state’s economy, with Oregon accounting for 7.5 percent of the nation’s wood products jobs last year.

By comparison, he predicts Oregon will provide only 1.3 percent of the total jobs in high-tech industries nationally by the year 2000.

Still, the American Electronics Association says Oregon already is home to more high-tech companies than any other state except for the two giants, California and Massachusetts.

Most are clustered around Hillsboro in Washington County, where Tektronix set up shop about 40 years ago.

Tim Thorsteinson, a Tektronix vice president, compares the era to the days of the pioneers. The company had to do everything, from making its own tiny metal screws to scooping up sand to make glass.

But all that has changed, with rapid growth coming after the Portland area attracted enough manufacturers and suppliers to begin spinning off smaller companies.

But the expansion may exact a price on the area’s quality of life and boost demand for water, always a scarce resource in the West, because the population is outgrowing the water supply and making silicon chips is a thirsty business.

Doug Johnson, who owns the 127-year-old Hillsboro Pharmacy, foresees the same kinds of problems with the environment, escalating real estate prices and traffic that forced companies out of California.

“I kind of get jaded because I don’t realize how much we take for granted about the small-town feel of Hillsboro,” said Johnson. He wonders how the city will prevent “the high-tech business from completely swallowing it up and making it into a Silicon Valley-type town.”

Another concern is a bidding war by Oregon counties to offer huge tax breaks that will attract new companies, or encourage established high-tech plants to expand.

Washington County gave multimillion-dollar tax breaks to Intel and IDT last year, and neighboring Multnomah County is working out details of a formal tax policy in hopes of snaring new high-tech plants from Fujitsu and SEH America Inc.

Keith Thomson, who manages Oregon operations for Intel, defends the tax breaks. He says the company’s $2.2 billion expansion project should boost state income taxes by $97 million over its 10-year development.

The high-tech spillover stretches from Portland southward along Interstate 5 almost to the California border.

In Corvallis, a Hewlett-Packard Co. division has grown to 4,500 people after it moved to Oregon in 1976 from Palo Alto, Calif., with only 175 people.

The 174-acre H-P campus, now almost half the size of the nearby Oregon State University campus, houses the company’s inkjet printer supply and computer workstation divisions.

The growth includes software companies, also clustered in the Portland area with the largest, Mentor Graphics, based in Wilsonville in neighboring Clackamas County.

The Oregon Software Association estimates about 1,400 software companies in Oregon employ up to 10,000 people and generate $1.5 billion in annual revenue.

Warner, the state economist, agrees that the high-tech industry has concentrated to the point that it is self-sustaining.

“In Washington County, we have built up a large enough pool of labor and infrastructure that it’s feeding on itself. We’re really benefiting from that clustering effect and will continue for a number of years,” he said.



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