Chasing Dreams
Bob Cooper spent a fair amount of time last year trying to convince a Puget Soundbased company to open an office in Spokane.
Nothing major.
Just a few folks.
“It would have been something like five to 20 employees as I understood it,” Cooper recalls.
Right from the start, Cooper figured the company’s CEO probably wasn’t going to even let Cooper into his office.
And the corporate people he was able to talk to were a little puzzled as to why someone like Cooper was spending so much time trying to get such a small piece of business.
Cooper admits, “We probably spent far greater time on that effort than we normally would.”
And even after all the effort, Cooper - who is president of the Spokane Area Economic Development Council - is not sure it will ever pan out.
But he’ll keep trying.
Because the company’s name is Microsoft.
“Brand name recognition,” Cooper says, explaining that the Microsofts of the world are far more important to an economic developer and the community he works for than the number of jobs they represent.
“It’s a marketing technique that’s old as kingdom come,” Cooper says. “It’s like an anchor tenant in a mall.”
Boeing’s presence here, for example, has represented a far greater impact on Spokane’s economic growth than just the 500 or so jobs the world’s leading aircraft manufacturer brought here.
“Boeing has done more for name recognition of Spokane than they could ever imagine,” Cooper says. “It’s like the importance of having Nordstrom downtown. Nordstrom means far more than just the number of jobs they provide.
“They are sort of your Good Housekeeping seal of approval.”
That’s why a Microsoft presence here, even a tiny one, would be an economic developer’s dream.
So what is the ideal company to foster Spokane’s ongoing economic development?
First of all, it’s not big. And it’s not a Fortune 500 corporation.
Microsoft gets into Cooper’s dreams because of name recognition and its unique position in the world.
But generally speaking, Cooper calls Fortune 500 companies “dinosaurs from a job creation perspective.”
Given their penchant for downsizing, for shifting manufacturing overseas, and corporate consolidation, Fortune 500 companies have eliminated more jobs than they’ve added in the United States over the past 20 years. Small business has produced the vast majority of job growth during that time.
So Cooper’s ideal company has between 5 and 100 employees, but represents the potential to grow to 250 or 500 or 1,000 workers over several years - a growth rate the community can easily absorb.
It pays its employees at least an average of $28,000, including the value of benefits, especially medical coverage and a retirement plan.
The ideal is a manufacturer or distributor or medical or business service provider whose product is based on future consumption trends rather than the past. It draws on local suppliers and service providers, but the product doesn’t depend on a local market for its success.
“The ideal company wouldn’t rely on sales within the state or the Inland Northwest or even the country,” Cooper says. “The ideal would be a company with international sales, with its principal markets in China, Japan, Europe.
“When you import wealth, you are doing the best thing you can for your local economy.”
Finally, the company is established, and is on firm financial footing. It’s a good corporate citizen that contributes to the overall life of the community and doesn’t degrade the area environmentally.
In reality, of course, nobody’s perfect.
But in Cooper’s mind, at least one new local company comes close to fitting the ideal profile.
Bernard Daines founded Packet Engines Inc. with three employees in December 1994. Today, the company employs 50, and projects growth up to 250 over the next couple of years if things go right.
Packet Engines is among the highest of high-tech firms. It produces intellectual property and products relating to the emerging “gigabit ethernet” industry. Ethernet is a technology that provides the links that hook computers into computer networks. The ideas and equipment - including custom-designed microchips - that Packet Engines produces are aimed at allowing those networks to move and digest information at the rate of one billion bits per second.
The engineers and technicians Daines is recruiting are among the elite of the high-tech industry.
That means these aren’t $8-anhour jobs. They have no problem meeting Cooper’s $28,000 average. Or maybe even twice that.
“Bernard has attracted world-class people to come and live in Spokane,” Cooper says.
In choosing to grow his company here, Daines chose to confront a barrier that would keep many elite high-tech companies away. Few people already living here have the highly specialized engineering skills Packet Engines needs. And people who have those skills tend to stay where the bulk of the jobs are - places like the Silicon Valley, San Diego and Boston.
“It is a significant issue,” Daines says.
If someone moves here, invests several years of their lives and Packet Engines does not succeed, the engineers might find no other local employers who need or could afford their skills.
“It’s an opportunity-risk-reward kind of issue,” Daines says.
All it takes, though, is that first success story, Cooper points out, to pave the way for others to follow. And, Cooper adds, a company like Packet Engines holds a hidden asset. The people it brings here provide a rich pool of potential entrepreneurs.
“They see opportunities,” Cooper says. “You’ve got the interest and the money to create a new company. You don’t have to go out and recruit them. They’re already here.”
Daines agrees.
“A number of people we’ve interviewed have stated that in five or six years, they want to have their own company,” Daines says. “And I don’t hold that against them at all in considering hiring them.”
Daines also agrees that Packet Engines’ success would result in similar companies being more willing to come here.
“And that puts tremendous pressure on us to not only be successful,” he says, “but to be wildly successful. That’s all right, though. That’s what we’re all about.”
Another local company, Cooper says, that has the potential to usher Spokane across the high-tech critical mass threshold is Johnson Matthey Electronics.
Spokane is the world headquarters of the electronics division of Johnson Matthey Plc, a 175-year-old British company with operations worldwide that exceed $3.5 billion in annual sales.
Since it came to Spokane via the acquisition of a Cominco Ltd. manufacturing facility in 1989, the electronics division has grown from an inconsequential blip in the vast Johnson Matthey conglomerate, to a full division with more than 3,000 employees at more than 20 sites world-wide.
The company’s electronics operations sales totaled $35 million in 1986. In 1996, it did $610 million in sales globally, and some company officials have said that figure could reach $2 billion by the turn of the century.
In Spokane, Johnson Matthey employs about 500 people, some of whom are involved in the most cutting edge research that is taking place in the Inland Northwest. The company has almost 30 people employed here who are devoted entirely to research and development, says Nigel Davey, president of Johnson Matthey Electronics’ assembly products group who has been in Spokane for eight years.
One of the long-range considerations confronting the electronics division is whether to establish its own independent research and development facility.
When Cooper learned that such a facility was under consideration, he was quickly in contact with Davey and other Johnson Matthey officials.
A high-tech research and development center would be the absolute crown jewel of economic recruitment, Cooper says.
“Several of Johnson Matthey’s businesses have dedicated research centers around the world,” Davey says. “And Spokane, already having the largest number of dedicated research scientists within the electronics division, well could be our first research center.
“But we haven’t made that decision. We’ve gone through four or five years of absolutely phenomenal growth, and we are still catching our breath a little bit.”
The biggest barrier to locating such a facility here, Davey says, is the lack of a university in Spokane with first-rate research and engineering programs. The proximity of such academic resources are invaluable to private industry. And establishing formal programs from a distance with Washington State University or the University of Washington just isn’t the same thing.
“The interface that spawns the bright ideas is difficult to cultivate under those circumstances,” Davey says. “The lovely marriage of industry and academia occurs over coffee, or having a beer after work.”
Davey, a great proponent of Johnson Matthey expansion in Spokane, adds almost apologetically, “Spokane is situated in one of the most lovely parts of America. It is a wonderful environment. Once people are here, they love the place. But it is fairly remote, and getting people to come here can be quite difficult.”
The critical mass issue is important to the high-tech world, Davey says, and 500 to 1,000-employee facilities like Johnson Matthey or Key Tronic or Hewlett-Packard are not large enough to spawn that critical mass.
A single 2,000-employee high-tech employer, though, would immediately attract the suppliers and services to feed a thriving high-tech community.
“I’d love for Johnson Matthey to be the first 2,000-employee high-tech company in this area,” Davey says, “and believe me, we’re working on that.”
But all the necessary elements simply aren’t yet in place.
That doesn’t mean, though, that Bob Cooper can’t dream.
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