Chip Makers Flock To Oregon’s Version Of Silicon Valley Trained Workers, Tax Advantages Lure Companies
With the quiet persistence of its rains, Oregon has turned itself into a major West Coast semiconductor manufacturing center.
Several chip makers, including Intel, Fujitsu and Hyundai, have announced plans since early last year to invest nearly $7 billion in the state. And four other chip companies, including LSI Logic, Samsung and Toshiba, are seriously considering Oregon for projects valued at more than $3.5 billion.
The expansions that are definite will add more than 4,000 direct, permanent jobs and double the number of indirect jobs as the effect of the investments ripple through the economy. Soon electronics will pass natural resources as the state’s leading provider of jobs.
Because of intelligent planning and investment by its electronics companies, schools and state and local governments, Oregon has positioned itself to take full advantage of the semiconductor industry’s need for more manufacturing capacity. By the year 2000, chip makers expect to build about 50 fabrication plants around the world. Each will cost $1 billion or more.
Some of the reasons for the state’s attractiveness to chip makers aren’t new: relatively inexpensive land, power and wages; an abundant, reliable water supply; the quality of life; and Oregon’s location, which is relatively convenient for the many chip companies based in Silicon Valley and Asia.
But two other elements, combined with the industry’s need to expand, are largely responsible for the sudden boom.
The first - which gets the most attention - is Oregon’s Strategic Investment Program, passed in 1993. It allows counties to cap the assessed value of a project at $100 million for 15 years, which reduces substantially the property taxes on an expensive plant.
Even though companies that take advantage of the program must pay a “community service fee” equal to a quarter of the tax savings, builders of a $1 billion plant can come out millions ahead. Without the program, “We wouldn’t have looked at Oregon,” said one executive whose company wants to expand there.
More important than the Strategic Investment Program, however, is the remarkable effort Oregon has made to prepare its workers for chip industry jobs.
Electronics has played a role in Oregon at least since 1946, when Tektronix was incorporated there. Hewlett-Packard opened an Oregon plant in 1973, as did Intel in 1976.
As these and other electronics companies grew, they recognized the need for trained employees and worked with community colleges and state and local governments to develop appropriate courses for actual and potential workers.
Because of the growth of Intel and other chip companies in the last 10 years, schools throughout the state now offer curricula that teach Oregonians - whether high school students or lumberjacks in their 40s - the skills and attitudes they need for a semiconductor career. These programs work, say chip executives already in Oregon.
As a result, chip makers can expand in Oregon confident they’ll find a trained work force and schools eager to work with them. That gives Oregon an important competitive advantage.