April, 2019 by Southern Oregon Business Journal

APRIL 2019

In This Issue: Shiny New Toy Syndrome The Emerging Digital Town Square Tax Changes Under Consideration Medford Feature: History, Business and Change

US Cellular Park, Medford, Oregon

A Few Words Consequences of actions can be a crafty way of moving opinions of the opposition to the favoring side. It is a combat strategy in war and sports. More commonly unintended consequences happen that were not considered when the first action was taken. Since they are unintended the amount of thought involved in their creation is minimal. Often to the planner’s dismay. What happens to domestic economies when tariffs are placed on the imported goods of a trading partner? If you don’t consider that pre-tariff purchases could rise significantly in anticipation of rising prices, you also may not realize that inventories would grow reducing future purchasing and perhaps affecting the production cycles of those manufactured goods, thus causing a change in the financial cycles of the producers of goods. That’s a bit wordy but suggests it may be a good idea to think of all the reactions to most anything we do, good and not-so-good. The 2020 Tokyo Olympics come to mind. Its going to be a really big deal involving over 300 construction companies on a deadline to get things finished. Guess what? They ran out of bolts and the bolt manufacturers said they’re at capacity in production. How could this have been prevented? Hindsight is 20/20 we’re told. Consequences, intended or unintended, are part of the detail of planning. Shortcutting the process is most often the culprit that results in surprises. Imagine the consequences being discovered as this project approaches the deadline?

The message here is that if you are on a planning committee of any kind, and want to avoid consequences of any kind, ask why? or what if? To every detail.

Greg The Southern Oregon Business Journal extends sincere thanks to the following companies for their continued presence as important cogs in the wheels of industry in southern Oregon.

Southern Oregon Business Journal

A JOURNAL FOR THE ECONOMICALLY CURIOUS, PROFESSIONALLY INSPIRED AND ACUTELY MOTIVATED

Contents Inside This Issue

FEATURED

13. Occupations that Pay More

6. Shiny New Toy Syndrome 16. The Emerging Digital Town Square 26. Tax Changes Under Consideration 31. Medford Feature: History, Business and Change

15. Regarding Hemp

37. Stay at the Oval Office in Medford

5. Chamber Questions Need for Rules 10. Updating Your Employee Handbook 12. Florence - Best Place to Propose

18. The Role of Manufacturing in Coos County 22. Amyâ&#x20AC;&#x2122;s Kitchen - Medford Business 30. OMEP Tools for a Thriving Business 38. E c o n o m i c I n d e x e s 39. Aviation Stories make Better Managers 42. Cultural Cluster, Theater, Music, Art

703 Divot Loop Sutherlin, Oregon 97479 www.southernoregonbusiness.com 541-315-6127

Cover Photo US Cellular Park Medford, Oregon

hardeygroup.com

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Bay Area Chamber of Commerce 145 Central

Coos Bay, OR 97420 www.oregonsbayarea.org timmslater@oregonsbayarea.org

Chamber Questions Need for New Rules For Immediate Release The Confederated Tribes of the Coos, Lower Umpqua and Siuslaw (CTCLUSI) have submitted an application for a Traditional Cultural Property Historic District (TCP) to be formed and added to the National Register of Historic Places. This proposal will envelop 26 square miles of surface area within, and contiguous to, the Coos Bay Estuary. The TCP will include large developed and undeveloped areas located within the Cities of Coos Bay, North Bend and Coos County. The Chamber Board of Directors has adopted the following resolution: “Historic and cultural resources are important to our shared heritage as a people. Oregon’s land-use planning laws and regulations, specifically Goal 5, acknowledge that value and provides for its protection. Locally our Coos Bay estuary plan calls for regular consultation when proposed uses might impact such a resource. “ “The Bay Area Chamber of Commerce questions the value of adding another element to this already rigorous regulatory structure. While we support the preservation of historic and cultural resources, we oppose the adoption of unnecessary and potentially onerous regulation.” “Therefore, the Chamber asks the Oregon Parks and Recreation Department and National Park Service either to reject the Traditional Cultural Property application by the Confederated Tribes of Coos, Lower Umpqua and Siuslaw Indians, or to suspend consideration pending a thorough examination of the need for such regulation and the potential impact on local landowners.” The Bay Area Chamber of Commerce is a non-profit, professional business organization made up of the Coos Bay, North Bend, and Charleston communities. The Chamber works for a healthy economic climate of good jobs, more customers and efficient government. The Chamber’s strength lies in the number and diversity of its membership. With more than 525 members representing every aspect of this area’s economy, we use their vast collective experiences and energy to make a positive difference in our community. Contact: Timm Slater Bay Area Chamber of Commerce 541-266-0868

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Does Your City Have Shiny New Toy Syndrome? by Daniel Herriges Everybody, at some point, has known (or maybe even been) that kid who just has too many toys. The one who gets showered with new stuff on every special occasion from birthday to Christmas to 100-on-the-spelling-test. And everybody knows the sad, lonely fate of all the older-but-still-fairlynew toys that kid got last year or even last month. Inevitably they've gone the way of Woody when Buzz Lightyear arrived on the scene, neglected in some box or closet. Because no matter how many toys you accrue, there are the same number of hours in the day to play with them.

suggested that many of us could challenge ourselves to go a year without acquiring anything new. Re-read the books that shaped your world view; find something new in them. Master that instrument you never had enough time to practice. Tend to your garden. The discipline of not acquiring more until we've wrung true value out of what we already possess can make our lives richer and fuller. And this is a lesson we need to apply to our cities as well.

Our "Shiny New Cities" Habit Since at least around the middle of the 20th century, the leaders of most North American cities have had Shiny New Toy Syndrome. We have expanded outward at an unprecedented rate, building vastly more roads, pipes, pumps, and power lines than ever beforeâ&#x20AC;&#x201D;simply because those things are new, and new growth shows as a big win on the budget sheet. What happens if that kid stops getting any new playthings at all for a year or two? Usually, they figure out how to get more mileage out of the ones they already have. They play-act new stories with that set of dolls or stuffed animals, invent whole worlds for them. They form stronger emotional attachments to their toys, transforming a mildly diverting plaything into the kind of priceless token of childhood that their 40-year-old self will be delighted to pull out of a box and reminisce with. Adults, of course, have their own versions of Shiny New Toy syndrome: hunger for the new at the expense of cherishing the familiar. I've heard it

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And it is no coincidence that, in tandem with the onset of this era of shiny-and-new suburban expansion, inner-city neighborhoods across the continent fell into blight and disorder. Jobs vanished. Those who could afford to leave left. Places that had been built with the promise that they would deliver their inhabitants to the American Dream instead left a whole class of Americans shut out of the ability to build inter-generational wealth. Those who bought suburban homes in this era are no more individually to blame for what is a broader societal failing than the 5-year-old with too many toys is personally culpable for his toy habit. After

The expansion of public infrastructure in Lafayette, LA has far outpaced population growth and income growth.

all, the 5-year-old presumably isn't the one buying the toys. It was easier, for a newly emboldened superpower that had just won a world war, to build the shiny and new than to reckon with wringing value out of the old, to do the hard work of weeding our collective garden. Every incentive was lined up in support of this binge on new stuff: federal financing, bank redlining, the scale economies of mass production, and a surge of demand. And, of course, a colossal campaign of highway spending. Highway construction literally sucks value out of existing developed neighborhoods and transfers it to new, previously undeveloped areas (h/t Angie Schmitt of Streetsblog for tweeting this astute observation). To understand why this is, think about a metropolitan region as a whole. What sets the limits on that region's physical growth? You've got a certain number of residents (plus new arrivals, and absentee property owners). They have a certain amount of disposable income, and they are willing to spend a certain share of it on real estate. Each variable in that equation is a bit stretchy, but like a rubber band, only to a point. If I open a restaurant and I'm hugely successful, it's very unlikely that I'm increasing the total amount that my fellow citizens spend going out to eat by

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any appreciable amount. It's far more likely that they're going to my restaurant instead of another one. If I'm a mayor and I throw tax incentives at a new mall, it's unlikely that I'm increasing the total amount spent on clothing and cosmetics and Auntie Anne's Pretzels by an appreciable amount. It's far more likely that the old mall down the road is going to suffer a rash of store closures. If I'm the transportation commissioner and I build a highway, and that highway shortens the commute from Old MacDonald's farm to downtown Emerald City from 45 minutes to 30 minutes, and that difference makes Old MacDonald's land way more appealing to a developer, and Old MacDonald sells to the developer and retires to Arizona, and the developer names it MacDonald Glen and puts up 500 beige houses....That chain of events didn't cause 500 brand new people to want to move to Emerald City. What happened was that chain of events caused a certain number of peopleâ&#x20AC;&#x201D;probably less than 500, but certainly much greater than zeroâ&#x20AC;&#x201D;who were already going to buy a house in Emerald City to buy one out in MacDonald Glen instead of elsewhere in town. And "elsewhere in town" missed out on that activity, like last year's toy sitting in a box under the bed.

A Practical Limit... But Not Enough of One to Keep Us Out of Trouble There's an objection worth answering here. Building more homes and offices and strip malls doesn't work quite like the parent buying cheap toys for their kid. There's far more of a practical limit, because a house is a huge investment for the builder as well as the buyer, and if house prices start to fall and you can't sell new ones at a profit, builders are very quickly going to take the hint. (The toy analogy here, I suppose, would be that the kid literally hasn't even unwrapped the video game you bought her for her birthday in October, so you're definitely not buying her another one for Christmas.)

"Enough already!" comes too little too late. Or doesn't hit the people it needs to hit. This was true for Northeast Ohio, where Jason Segedy describes devastating levels of vacancy in Cleveland, Akron, Canton, and Youngstown neighborhoods, a direct consequence of the region's building shiny new homes even as its population fell, doubling its physical footprint (and infrastructure obligations) for no net new people over half a century. When we have that much more stuff than we used to, there's a strong argument our growth has made us poorer, not richer. The kid with a mountain of toys isn't happier than the kid with a few cherished ones. But we're actually worse off than that kid. Because at least discarded toys don't come with a permanent maintenance obligation. Roads and sewer pipes, on the other hand, do.

But What If You're Growing? Not wanting your kid to have too many toys doesn't mean you can't buy them something ageappropriate when they're 12 just because they still have the action figure they liked when they were 8. I live in a fast-growing suburban county in one of the fastest-growing regions in the country. We've added over 7,000 people per year for the last 4 years. So naturally, there's a lot of development. Let me be clear: If you are adding thousands of people, you should be building thousands of new homes. If you don't, in fact, you're going to have huge problems. (Read anything about housing costs in California lately?)

But where are you building them? And who gets to decide?

Map by Cuyahoga County, OH Planning Commission. The county had the same population in 1948 (top) as in 2002 (lower).

The problem is the market feedback that tells us,

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Historically, all over the world, cities grew incrementally taller and more intense in the center at the same time as they incrementally expanded their footprints outward. Today, we’re all too eager to do only the latter—horizontal expansion—at the expense of letting existing neighborhoods mature. And often it seems driven by the Shiny New Toy Syndrome of a shockingly small number of decision-makers.

“Historically, cities grew incrementally taller and more intense in the center at the same time as they incrementally expanded their footprints outward. Today, we’re all too eager to do only the latter—horizontal expansion—at the expense of letting existing neighborhoods mature. And often it seems driven by the Shiny New Toy Syndrome of a shockingly small number of decision-makers.”

Let's Cherish What We Have, and Build Only What We Need. We've had decades of unproductive growth. We need productive growth, the kind that makes better use of investments we've already put in the ground. We need to make existing neighborhoods richer, to thicken them up not just with development, but also with life and creative energy and opportunity.

To illustrate that, some numbers from where I live: in the rural eastern two-thirds of my county (Sarasota County, FL) there are four large tracts of land—each the size of a small city, each with a single owner, each slated for a huge masterplanned development. Together they account for a planned 27,600 homes, mostly single-family houses. The county government's own population growth projections have us needing 48,621 new housing units between 2020 and 2040. That means a whopping 57% of that growth is accounted for by already-existing plans for currently rural land that's in the hands of only four owners.

This is not an argument against the construction of new homes and offices and retail spaces: anywhere the population is growing, we are going to be doing that. If you are going to have 10,000 new people in five years, you should expect to have homes for 10,000 new people in five years. But it matters where those homes go.

Those 27,600 planned houses, and the decisions of those four owners and a handful of local officials, threaten other priorities that the public might well care about. They threaten our financial solvency, because they're going to require a lot of new roads, instead of using infrastructure that already exists.

(Cover Image by cattu on Pixabay)

They threaten the stability of our existing neighborhoods. Our cities are full of neighborhoods with aging homes that need some TLC. They're a bit dated, but still perfectly serviceable and in attractive areas that don't inexorably have to tip into decline. But some of them are going to tip into decline, as long as that giant sucking sound of edge growth continues. They threaten our ability to house our growing senior citizen population in existing walkable neighborhoods where they can age in place and retain some independence. They threaten our environment. People where I live drive more annual miles per capita than in 95% of U.S. metro areas, and it'll be hard to reduce that statistic (and associated fossil-fuel emissions) if over half of all new homes are built on the outer fringe of the region.

Shiny New Toy Syndrome threatens our future. Southern Oregon Business Journal

Shiny and new costs us more than we can calculate. Adding value and people and stories and love to places that are already inhabited and loved by someone, on the other hand, is like picking up a favorite old toy and enjoying it anew.

Daniel Herriges Daniel Herriges (Twitter: @DanielStrTowns) serves as Content Manager for Strong Towns and has been a regular contributor since 2015. He is also a founding member of the organization. Daniel has a Masters in Urban and Regional Planning from the University of Minnesota. His love of great urban design and human-scaled, livable places has also been lifelong. Daniel has a B.A. from Stanford University in Human Biology with a concentration in Conservation and Sustainable Development. Daniel is from St. Paul, Minnesota. https://www.strongtowns.org/journal? author=54d91114e4b0740a2a5058d4

How to Update Your Employee Handbook By Jenna Reed, Vice President General Counsel and Compliance Services Cascade Employers Association jreed@cascadeemployers.com

If it’s been more than a year since you’ve given your employee handbook a thorough read, chances are it’s already out of date. I don’t know too many people that jump up and down about the prospect of updating their employee handbook (except some people on our staff), but here are a few tips to help get you started. 1. Have someone not in HR read through your current version and take notes about what doesn’t make sense to them. When I review an employee handbook I always read it through as a new employee would and take these types of notes. What is confusing? What seems unnecessary? What seems inconsistent? This outside lens can be very helpful in identifying things that you may have become blind to because you’re so familiar with the handbook. That’s one of the reasons we always have more than one person review employee handbooks that our team of experts update for companies.

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2. Make a list of policies that you know need updating because of a change in the law. To do this well, make sure you have great resources that keep you updated throughout the year on all of the employment law changes that could impact your handbook policies and practices. 3. Make a list of policies that you know need updating because they’re inconsistent with your current practices. For example, many attendance policies state that employees must call in and speak with their supervisor if they’re going to be late or absent. However, in today’s world I find that most supervisors allow their employees to text or email rather than call in. Whatever you decide, the practice should be consistent with the policy. 4. Make a list of policies that you want to change for another reason. This is a bit of a catchall. Some policies are fully compliant and consistent with practices, but you just don’t like how they read. Maybe it is too heavy-handed or too

formal for your culture. Make a note to change it.

5. Throughout the year, make note of any policies that employees or supervisors seem to have confusion about. Some of the more common ones that cause confusion are policies about benefits, time-off and leaves of absence. 6. Make sure all point of contact references are correct. For example, I worked with a small employer with less than 15 employees on updating their handbook. Several policies referred to the “HR department.” I knew they didn’t have an HR department, so we changed those references to specific positions such as the Office Manager or General Manager. 7. Now, you should be ready to start making changes. Use the lists you’ve made and dig in. 8. When you have an updated draft, select a few supervisors to review the new draft to see if there is anything that stands out to them that may need to be revised. 9. Make any final (almost) changes. Now, you’re almost there. Just one more thing to do. 10. Before you re-publish your handbook … ALWAYS have your employee handbook legally reviewed by an employment attorney. Not just any attorney will do. You need one with this specialized knowledge. This type of review is one of the most common things we do for employers and it’s incredibly important. Once this step is completed, your handbook should be republished and redistributed to employees. Make sure you get new acknowledgement sheets for everyone.

that back. You can do it with some online tools, but I’ve yet to review one from a company using an online tool or model that doesn’t need to be customized and revised. Again, this is why #9 above is so important. 2. If you review and update your handbook on an annual basis, it generally shouldn’t take more than an hour or two. Still do #9 on an annual basis, too. 3. Remember, if you make a major change to a policy before your annual update, republish that policy at the time and get a new acknowledgement. For example, if your state has recently adopted statutory paid sick leave, update your policy now rather than waiting until the time of year when you do your annual update. You still may not be jumping for joy when you start the task of updating your employee handbook, but having a process to follow should help make it a little less overwhelming. Of course if it is still too overwhelming or you don’t have the time, our team can help you out. Feel free to contact me if you want to chat about your handbook. https://www.cascadeemployers.com/ article submitted by: Sheryl Kelsh Membership Development Manager Cascade Employers Association

Unsurpassed Resources for Great Employers www.cascadeemployers.com 503.585.4320 (Salem) 503.224.5219 (Portland)

A few other helpful points: 1. While there are many sources available for employee handbooks such as models that can be downloaded, or online tools that allow you to develop your own, take caution. Taking a cookie cutter approach can be easy, but it can be dangerous. Every handbook needs to be customized to your specific state, industry, individual practices and company culture. Many online tools don’t account for these things. Trust me, your handbook cannot be fully developed in an hour. Okay – I take

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Quality Information, Informed Choices

Occupations that Pay More in Southwestern Oregon by Sarah Cunningham When looking for a job in your field, determining which region pays the most could be a sound strategy. In 2018, there were 27 occupations where workers in Southwestern Oregon earned higher median wages than in any other region in the state. In 2017, 6 percent of workers in the region, or one out of 17 workers, were employed in one of these occupations.

Source: Oregon Employment Department

The wage gap between occupations where Southwestern workers earned the most and the second

highest-paying region ranged from less than 1 percent to as much as 20 percent. Occupations where the wage gap was most pronounced include machine feeders and off bearers ($18.86, 20% higher than the next highest-paying region), cement masons and concrete finishers ($27.51, 13%), and packaging and filling machine operators and tenders ($18.34, 13%). Although there was a diverse range of occupations for which Southwestern workers earned the most, over one-third (37%) of the occupations were production jobs.

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Roughly 1,400 trade ally contractors and 900 allied professionals help thousands of Oregon residents and businesses save energy and money and reduce their impact on the environment. With the customer referrals, training, resources and cash incentives we provide, joining Energy Trust’s Trade Ally Network is smart business any way you look at it. We’re committed to supporting the contractors, retailers, distributors, manufacturers and others who help make Energy Trust successful. Please refer to the options below for more details on signing up to participate in one of our ally networks: Trade ally—A step-by-step process for contractors interested in becoming a trade ally Program ally—Offered only for our New Buildings and Solar Commercial programs Please email us at info@energytrust.org or call 1.866.368.7878 if you have further questions.

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635 Capitol St NE Salem, OR 97301-2532

March 6, 2019 The Honorable Sonny Perdue Secretary, United States Department of Agriculture 1400 Independence Avenue, SW Washington, DC 20250 Dear Secretary Perdue, The Oregon Department of Agriculture (ODA) is excited by the opportunities provided with the signing of the Agriculture Improvement Act of 2018 (2018 Farm Bill) by President Trump on December 20, 2018. Specifically, the provisions in the Hemp Farming Act of 2018 which removed hemp and its derivatives from the list of controlled substances, established hemp as a legal agricultural commodity, and authorized the production, consumption , and sale of hemp and hemp-derived products in the United States.

The passage of the 2018 Farm Bill was clear: interstate transportation of hemp is allowed, once a stateâ&#x20AC;&#x2122;s implementation plan has been submitted and approved. With the delay in rules until the 2020 crop year, Oregonâ&#x20AC;&#x2122;s hemp industry is being subjected to unnecessary transportation and commerce restrictions and has examples to provide if needed. While USDA engages in the rule making process for Section 10113 and 10114 of the 2018 Farm Bill, having additional guidance to allow the flow of hemp in interstate commerce would be critical to farmers in Oregon. ODA looks forward to continuing our work with the USDA and other federal partners to make hemp a viable industry for farmers in Oregon and across the United States. Sincerely,

Enclosed: Chapter 71 Oregon Laws | Oregon Administrative Rules 603-048: Industrial Hemp

Alexis M. Taylor Director, Oregon Department of Agriculture cc: Deputy Secretary Steve Censky, U.S. Department of Agriculture Under Secretary Greg Ibach, Market and Regulatory Programs, U.S. Department of Agriculture

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The Emerging Digital Town Square By: Matt Sayre reprinted by permission

Picture the small villages and towns of early America. The farmers are selling produce and smoked meat in the market square, while the cobbler and sheriff barter four deerskins for a pound of wheat. The local physician atop his soapbox announces the latest ailments and their remedies, and ways to avoid various plagues. These days, most of our community interactions are not done physically in a town square, but digitally. Community engagement isn’t as simple as it used to be. Digital divides have emerged. Inequality has emerged, with broadband Internet ‘haves’ and ‘have nots.’ Enter the “Digital Town Square” or DTS for short. At the center of the DTS is network infrastructure, where Internet service providers can exchange Internet traffic and interconnect with one another in a neutral way.

A Digital Town Square, or DTS, is infrastructure that enables a community's digital assets and ideas to be directly exchanged. The DTS builds on that infrastructure to better enable a community’s digital assets and ideas to be exchanged directly, expanding beyond what is currently offered from regional Internet service providers today. An increasing number of homes, businesses and schools in Eugene and Springfield have gigabit Internet; however, from an infrastructure standpoint they each exist like islands. A DTS could interconnect many of those gigabit islands. This would enable our community’s digital data to stay local, instead of needing to traverse the wider Internet just to travel relatively short physical distances. This matters for three key reasons.

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Internet resilience A DTS can increase the resilience of the Internet in our region, providing another way for public agencies to connect to each other in case of natural disasters. If there’s a big earthquake and our regional Internet connections to California are interrupted, the DTS could enable local communications.

Better performance Another advantage of the DTS is that new applications and online services can use it to respond instantaneously, quickly streaming extremely high-quality immersive video including 3D and virtual reality. It also could connect local tech firms with research tools at the University of Oregon, including its new super computer — which could lead to discoveries such as drugs to cure cancer.

Heidi Larwick, executive director at Connected Lane County, echoes that vision. “A Digital Town Square could be an additional catalyst to a coordinated, smart community education system. Educators and students would be supported by highly responsive technology and infrastructure that inspires collaborations, and ensures the connectivity of our rural students to the innovation taking place at the core of Eugene and Springfield. Our system’s resilience would grow exponentially; students who need additional support would be able to have their needs met in real time, increasing everyone’s bandwidth for learning.” Sharing new ideas One potential focus area for accelerated innovation using a DTS that’s already getting a ton of attention locally is education.

The state of schools in Oregon is a hot-button issue, with many challenges around educational attainment that won’t be solved overnight. We need to work smarter to bridge these challenges, including innovating the way we deliver education itself.

of being built. With support from the Technology Association of Oregon, the Lane Council of Governments, the Eugene Water and Electric Board and the city of Eugene, our community’s DTS is scheduled to come online in the first quarter of 2019. Learn more at http://thewix.net*

Distance learning and alternative forms of education delivery offer potential respite for funding constraints and opportunity gaps, providing consistent world-class access to career technical education (including computer science) to schools and students regardless of their ZIP code. By leveraging a DTS to help bridge the opportunity gap, the disparities between high-income and lowincome schools will be reduced and inequities could shrink. We need to empower all students to be successful in our quickly evolving economy.

Gigabit applications Firms that are innovating in the educational technology industry include local startup VR Training Solutions, a Mozilla Gigabit Community Fund and US Ignite grantee. VR Training Solutions’ product provides VR implicit-bias training. Within a virtual classroom with misbehaving students, teacher’s interactions are observed; how they reacted to students with different racial backgrounds and genders are evaluated.

Matt Sayre is vice president of the Technology Association of Oregon, and he serves as the local US Ignite Smart Gigabit Cities technical lead. Craig Wiroll, the local US Ignite community lead, contributed to this column originally published in the December issue of Blue Chip. *The Wilamette Internet Exchange OREGON'S DIGITAL TOWN SQUARE

US Ignite's mission is to foster the creation of next generation Internet applications; the organization held a final video conference interview with the local community representatives who were seeking to secure grant funding for local implementation. [Athena Delene]. Wendy Morgan, from VR Training Solutions, sees value in a DTS. “In order to provide a high-quality interactive VR training environment for multiple participants in different geographic locations, consistent high-throughput and low latency network connections are vital,” she says. The Digital Town Square is transformative technology that can be built for the public good. Thanks to grant funding from US Ignite, a nonprofit whose mission is to foster the creation of next-generation Internet applications, one is already in the process

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The Role of Manufacturing and Coos County by Annette Shelton-Tiderman Is manufacturing still important? This is a question often asked by people in both urban and rural communities. As an industry, manufacturing has always been a hub for job creation and the development of new technologies. We have seen the industry shift from an infancy where steam and water power supplanted hand-operated production, to the use of electricity and assembly lines. More recently, computerization has increased workplace efficiencies resulting in new products as well as changes in worker skill sets. Today, we have entered the Fourth Industrial Revolution where computerization is promoting the further implementation of smart technologies. The development of technology-enabled platforms is

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creating a work environment where interconnected machines, not workers, directly determine production decisions and processes. Manufacturingâ&#x20AC;&#x2122;s importance is more than its total employment level; it also includes overall community impact in terms of wages, skill sets, and ripple effects across the local economy.

Location Is a Cost Factor Manufacturing depends on access to resources. Inputs include labor as well materials such as timber for wood manufacturing or computer components building products that are more advanced.

needed as raw product used in

Economically obtaining input materials and distributing products depends on type and location of transportation networks, communications systems, proximity to suppliers, and nearness of suitable markets. Rural areas, once home to extensive sawmills and related plants, are finding themselves farther and farther away from needed materials and markets. Rural communities having ready access to rail and ships, especially important for transporting bulk materials, are more likely to attract and retain manufacturing businesses than those towns located in more isolated parts of the state.

Oregon has seen a shift in manufacturing from rural areas to its urban centers. This reflects, in part, increased transportation systems, development of distribution centers, and clustering of similar and supportive businesses that provide a pool of workers with complementary and transferable skill sets. The synergy generated within a community of manufacturing operations ripples across the urban landscapes. In 1990, rural Oregon

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was home to nearly one out of five manufacturing jobs. By 2017, rural Oregon’s share had declined to 14 percent. In contrast, the Portland metropolitan area grew from providing manufacturing jobs to nearly half of the industry’s employment to 58 percent. In addition to the shift in location, the employment footprint of manufacturing has changed. In 1990, the goods-producing sector accounted for nearly 18 percent of all payroll jobs. By 2001, it accounted for 14 percent; and by 2017, manufacturing employment provided only 10 percent of Oregon’s jobs. In contrast to an overall industry decline in employment, food manufacturing gained 7,600 jobs (+34.4%), and the beverages arena gained nearly 4,000 jobs. Food manufacturing includes frozen food manufacturing, bread and bakery products, fruit and vegetable canning, seafood product preparation and packaging, dairy products, etc. The beverage sector includes Oregon’s rapidly expanding wineries and breweries. All these products require efficient transportation networks

to carry produce from fields to processing plants and finished products to local and worldwide markets.

the county’s economy that has continued to offer relatively stable employment levels before, during, and after the recession.

As overall manufacturing employment has declined, Oregon’s wood product manufacturing, a traditional mainstay of many rural communities, has been hit hard. In less than twenty years, this sector dropped more than 10,000 jobs (-31.2%, 2001-2017). In addition to the costs of siting and building mills and processing plants, natural resource-based manufacturing requires expansive transportation networks capable of handling often-bulky input materials. Whether products are shipped directly to consumers or to other industrial sites, transportation to and from Oregon’s rural communities tends to be far from resources and markets.

The employment percentages of the manufacturing sector mask an underlying loss of jobs. True, manufacturing appears to be holding its own. In reality, not only does Coos County’s total nonfarm employment remain 4 percent below pre-recession peak levels (-980 jobs), manufacturing is about 110 jobs below peak. In welcome contrast, wood product manufacturing has recovered its former employment level (+100). As new products such as cross-laminated timber (CLT) and mass plywood panels (MPP) make their way into the marketplace, rural wood product manufacturing is positioned to take advantage of these new technologies and markets.

The transportation networks moving raw materials and processed materials from rural sites to consumers are not the only costs associated with location. Distance from populated, urban centers also affects labor costs. Although rural manufacturing is keeping pace with urban industrial trends, such as increasing automation and reliance on sophisticated technological changes, recruiting and retaining workers with appropriate skills sets adds to the expense of doing business.

Manufacturing in Rural Coos County Differs from Oregon In 2001, Coos County manufacturing accounted for 8 percent of the county’s employment base. Although the percentage of employment dropped to roughly 7 percent during the recession, today, it still accounts for 8 percent of the county’s employment. Within this sector, two arenas traditionally have dominated the scene. Twenty years ago, wood product manufacturing made up 48 percent of county manufacturing employment, and food manufacturing accounted for 20 percent of the sector employment. By 2018, wood product manufacturing generated 52 percent of overall manufacturing employment. Within this subsector, veneer and engineered wood product manufacturing increased its employment levels. Food manufacturing held relatively steady at 18 percent. In contrast to other manufacturing subsectors, food manufacturing is one of a very few sectors across

Southern Oregon Business Journal

In contrast to Coos County’s total nonfarm employment and its manufacturing sector, Oregon’s total nonfarm employment is now more than 10 percent above the prior peak. Manufacturing is 6 percent below, and the state’s wood product manufacturing employment is more than 28 percent below its high point in 2005.

Importance in Jobs, Wages, and Benefits Manufacturing’s importance is more than the employment it provides. Even as the industry’s employment steadily declines, reflecting increased automation and technological advances, the wages are higher than those paid in other industry sectors. Oregon’s annual average wage (2017) is $51,117. Statewide, manufacturing wages average $68,152. This ranges from $131,053 in computer and electronic manufacturing (not typically located in rural areas) to $42,828 in food manufacturing and $49,430 in wood product manufacturing. Coos County’s overall average annual wage is $38,032. Manufacturing wages average $47,940. Food manufacturing, which has historically paid less than other sectors, averages $24,336. Wood product manufacturing, accounting for roughly half of county manufacturing jobs, averages $50,587. Based on wages, for every one manufacturing job, there are 1.3 all-industry jobs; 1.7 retail jobs; and

2.4 leisure and hospitality jobs. Wages tend to vary with workers’ education and skills; their ability to critically evaluate processes and make sound decisions; use of technology; and the business’s ease in recruiting and retaining qualified employees. As such, average annual wages are a rough proxy for education or skill requirements. Not only do these higher-than-average manufacturing wages affect the area, job-associated benefits provide additional value. A recent benefits survey by the Oregon Employment Department found that 69 percent of Oregon’s manufacturing employers provided health benefits to full-time employees; 58 percent offered health benefits to full-time employees’ dependents. Fifty-seven percent provided dental benefits to full-time workers, and 50 percent provided vision insurance. Sixty percent of manufacturing employers offered retirement benefits to full-time employees, and 20 percent offered those benefits to part-time workers. Additionally, manufacturing employers provided 70 percent of full-time workers with paid holidays; 58 percent with annual pay raises; and 58 percent with paid vacation. Research shows that an employer’s ability to offer benefits is not only a recruitment tool but affects employee retention – all contributing to the overall economic stability of the workforce and the community.

Looking Ahead – Manufacturing Processes, Skills, and New Products As the Fourth Industrial Revolution changes today’s economic landscape, manufacturing’s capacity to lead technological innovations will continue to propel the industry from its roots as a processdriven sector to a knowledge-based one. The ripple effects, quantified as multipliers, measure how changes in one industry cascade across the rest of the economy. Although specific to a given region and industry, manufacturing not only has a higher multiplier effect than service industries in the same region, it has the highest multiplier effect of all sectors. Broadly speaking, every dollar spent in manufacturing adds at least $1.89 to the economy; every one manufacturing employee results in the addition of nearly four employees elsewhere in the area (National Association of Manufacturers).

Southern Oregon Business Journal

Rural Coos County’s focus on natural resourcebased manufacturing will continue to be influenced by its location. Being several hours drive from Interstate 5 complicates reliance on truck transport. However, easy access to the International Port of Coos Bay, a major deep draft coastal harbor, facilitates movement of such bulk cargo as raw logs and wood chips. The industry’s need for reliable, efficient transportation networks; high-speed communication systems; and successful recruitment and retention of qualified workers will also be affected by public environmental policies and regulations. Manufacturing’s innovation, use of new technologies, development of new products, and influence on economic systems offer the manufacturing sector unparalleled opportunities in the days ahead.

Annette Shelton-Tiderman Regional Economist Coos, Curry, and Douglas counties annette.i.shelton-tiderman@oregon.gov 990 S 2nd Street Coos Bay, OR 97420 Annette Shelton-Tiderman was born and raised in Moscow, Idaho, and attended the University of Idaho (BS, MS, JD). She spent many hours of her childhood “helping” in the family bookstore where she developed a long-lasting appreciation of small business and community focus. After graduation from the University College of Law, Annette moved to Oregon where she focused on economic-related research and writing. She went to work for the Oregon Employment Department as the Salem Area Workforce Analyst (1999) – a job that eventually took her to eastern Oregon and then to southwestern Oregon. Annette has been southwestern Oregon’s Regional Economist since 2016. She has recently retired from state service (May 2019).

Southern Oregon Business Journal

Amy’s Kitchen Amy’s Kitchen

was created 30 years ago from the belief that great tasting food should be available to all. It all started when founders Rachel and Andy Berliner were pregnant with their daughter Amy, the namesake of the company. When Rachel was on bedrest during her pregnancy, Andy went looking for ready-made meals at their local natural grocery store. He couldn’t find anything organic and vegetarian that satisfied their taste so they decided to make their own. Turns out they were not the only ones in search of delicious, organic food. Today, Amy’s takes pride in cooking great tasting, ready-made, organic and vegetarian meals for more than 14 million consumers, serving more than 210 million meals each year. Amy’s Kitchen has remained a family-owned company and our food is made with the same care as the first day we started, just with slightly larger pots and pans.

Why Medford? How did Amy’s choose Medford? In the early 2000’s, Amy’s was experiencing significant growth - quickly outgrowing our Santa Rosa, California production facility. As we looked at where to open our next kitchen, it was important to keep production close to home, maintaining a strong connection with our culinary and sensory teams in order to ensure we upheld our high quality standards. With Oregon’s friendly business climate and close proximity to California, Amy’s began exploring potential opportunities in the region. Medford quickly moved to the top of the list with unmatched cost advantages and a workforce that was already skilled in agriculture and food manufacturing, which we knew would help ensure a seamless transition for new employees. The local Economic Development agency was also

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an instrumental part of Amy’s adoption into the community, guiding Amy’s through business opportunities and incentives and supporting our arrival in the region. In 2006, Amy’s was delighted to open our doors in the Medford region, specifically in White City, with a 188,000 square foot facility, making 25 products (all pizza) and employing 250 employees.

How has Amy’s grown in Medford? Since 2006, Amy’s has grown significantly in Medford, growing our employee base to 980 people and expanding our footprint to 450,000 square feet. We’ve added two entrées line, a fresh pasta line, a tofu production area, as well as a canning line to make Amy’s soups, chilis and refried beans. In addition, Medford is proudly the sole producers of Amy’s gluten-free burritos. In 2014, we also expanded our storage capabilities to match the growth in production with a 125,000 square dry and frozen food storage warehouse. We’ve also invested in improving our environmental footprint in Medford – building a waste water treatment facility on site and incorporating cardboard and plastics recycling equipment in the plant. Today in Medford, Amy’s has six food production lines, making 218 different products each year, including pizzas, soups, chilis, refried beans, entrees, gluten-free burritos and non-dairy frozen desserts.

What is Amy’s doing to support the local area? One of Amy’s core values is to ‘take care of each other.’ This extends not only to our employees, but also to their families. One of the important ways we do this is by providing comprehensive benefits for our employees and their families. In 2014, we were

delighted to open our on-site Amy’s Family Health Center operated by Vera Whole Health next to our Medford Plant. The health center provides Amy’s Kitchen employees and their families free, quality primary care with no-cost medical prescriptions as well as ongoing health coaching. Amy’s Kitchen has been one of few employers nationwide to offer this level of free, convenient, high-quality, ongoing health care on-site. Beyond our benefits program and onsite-healthcare, Amy’s also offers college scholarships to the children of our employees. Last year, for example, at a community awards ceremony, Amy’s co-founder, Andy Berliner, personally presented the scholarships to 34 students, all children of our White City employees. In addition, Amy’s is committed to contributing to the broader local community in Medford - supporting the education community in and around Medford by hosting ten local teachers for an externship to learn more about the company and career opportunities that exist for their students, as well as volunteering and donating to Kids Unlimited, the North Medford High School and Jackson Elementary schools.

Finally, as a company whose purpose is to ‘make it easy and enjoyable for everyone to eat well’, Amy’s is passionate about ensuring low-income residents and people with dietary restrictions have access to the food they need. To help support this effort, we work closely with the Oregon Food Bank and ACCESS to locally donate food that goes to those in need. Over the last 12 years, Amy’s has truly thrived in Medford and we look forward to continuing this journey with our employees, their families and the local community in the area for the long-term.

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Page 2: Mark Hass, Nancy Nathanson Letter to Sandra McDonough

OREGON STATE LEGISLATURE

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MEDFORD From the Portland-Seattle and San Francisco - Sacramento metropolitan centers, draw a 500-mile radius North and South and they cross in the Rogue Valley. We have the good fortune of being a day's drive from either major economy. Businesses in our area are connected to both economies. Being on the I-5 corridor is a life line for our economic wellbeing. Our excellent air service from Medford only adds to the ease of doing business. The Rogue Valley is home to over 400 small to medium sized manufacturers. Our diversified economy crosses every major economic type, with the advantage of not being overly connected to any one economic sector.” William "Bill" D. Thorndike, Jr. President Medford Fabrication...CSC, Inc.

“Medford is home, not a stopover.” Bill Thorndike Jr. “Visitors to our region can count on an authentic, collaborative, and passionate spirit of giving back and giving big. The City of Medford’s leadership stance spills outside its borders to the entire region. Despite the fact that Medford is the largest, most prominent city in Southern Oregon, they continually demonstrate consideration for the entire region as a whole. They understand that the beauty of our region flows among all the communities and that together we are stronger and more resilient. For example, when faced with the need for their own updated economic strategy, they recognized that limiting such a strategy to just the City of Medford would be short sighted. They have approached the state legislature asking for financial support of a robust regional economic strategy, one which would benefit all of Southern Oregon.” Colleen Padilla Executive Director Southern Oregon Regional Economic Development, Inc. 1311 East Barnett, Ste. 301 | Medford, OR 97504 https://soredi.org/

From Jacksonville on Medford’s westside to Eagle Point to the east is about thirty miles. From the south of Medford lies Ashland twelve miles away. Central Point is about five miles north of Medford. That means in roughly 510 square miles with Medford the primary city in population are a number of communities sharing in and responsible for the region’s economy. The cooperative region of smaller communities with the center of commerce and government in Medford turns an 80,000 person city into a metropolitan area of 220,000 residents. Identifying the region’s brand is an exercise in imagination at work. Want art and theater? We think of Ashland and the Shakespearian Festival. Want small town history and wine tasting? You may consider Jacksonville. Golfing and new business excitement might point you in the direction of Eagle Point. Manufacturing and blue-collar employment must include White City. Central Point has industry and agricultural production. The city of Medford is where Jackson County government is located and the retail focus of malls and shopping will satisfy needs of many residents of all surrounding communities.

Southern Oregon Business Journal

The City Incorporated in 1886, The City of Medford utilizes the Mayor/Council form of government. Medford is divided into four wards, with two Council members per ward. The Mayor is elected at large by the community for a four-year term. Council members also serve four-year terms, with one Council position in each ward

up for election every two years. Medford is a full-service city with 11 operating departments including City Manager/Mayor and Council, Medford Urban Renewal Agency, Finance, City Attorney, Human Resources, Police, Fire, Park, Recreation and Facilities, Public Works, Planning, and Building Safety. A Water Commission, while separate from the City, purchases from and coordinates with various Medford services. The Community Located in Jackson County, the City of Medford has a population of 80,375 and serves as the County seat. Medford is the demographic and economic hub of the southern Oregon region. With the continued growth in healthcare, retail and manufacturing along with retires discovering this great region, the City anticipates a continued growth rate of 1.8% per year and is currently the fourth largest metro area in Oregon. Medford is known throughout the country and the world for its pear orchards, and is home to Harry & David, one of the world’s largest shippers of fruit and food gifts. The region offers endless outdoor recreation opportunities including beautiful city, state and county parks, championship golf courses, hiking, cycling, fishing, birdwatching, skiing, and other snow sports, whitewater rafting and other activities on the world famous Rogue River, which is only minutes away. Crater Lake, known as the deepest lake in North America, is just an hour and a half drive from Medford, and Oregon’s only national park. Medford is also conveniently located just two hours from the Oregon Coast and 30 minutes from the Mt. Ashland ski area. Medford’s economy is driven primarily by the healthcare industry. The area boasts several major and community medical centers and physician groups, with the Asante Health System and Providence Medford Medical Center being the largest healthcare employers, employing over 2,000 people.

“Medford offers breathtaking scenery in every direction, a growing economic base, a moderate climate, and an excellent quality of life. We have a lot of exciting things happening at the City and throughout Medford. Our Council is currently going through a visioning process in an effort to identify values, goals, and aspirations for our community. Once completed, the results from the visioning process will be shared with community members who will then have an opportunity to share their thoughts and ideas to create a community plan,” said Medford City Manager, Brian Sjothun.

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Finding a Better Way There are remnants of World War II era “pill boxes” in White City. As America was preparing to enter the European conflict with the Nazis this would serve to prepare 50,000 soldiers for battle in a place on another continent thousands of miles from home. Camp White was named after the general who ran the training operation – someone called it the “Alcatraz of military training” for its ferocious intensity. At the time, the military population would rank Camp White the second most populous town in Oregon. Today, downtown Medford is about nine miles away.

https://bootsonthetrail.blog/2019/01/03/the-pillboxes-of-camp-white-oregon-03-jan-2019/

But, there was a time before Camp White. It was 1843. Jesse and Cynthia Applegate reached the Columbia River with their 13 children hoping the journey would become less difficult on boats and rafts with 100 cattle and 13 children in tow. Treacherous rapids had other ideas when rafts were swamped, drowning four passengers including one of their children. The courage to join a wagon train across the plains to Oregon is big enough; adding supplies and farm animals is nothing compared to a family that included 13 children. Heat, storms and concern for water and food in the trudge through what someday would be called the Heartlands of America makes the ease of travel on paved highways in luxurious powered vehicles seem an embarrassment of comfort in today’s America. From tragedy was borne the idea of the Applegate Trail, an easier and safer way to southern Oregon. From Fort Hall on the Snake River in Idaho the Applegate Trail began. At Fort Hall the trail travels south east meeting the Black Rock Desert of Nevada, semi-arid, treeless and over 314,000 acres. With his brother Lindsay, Jesse Applegate found the route that would become the Applegate Trail making the settlement of southern Oregon possible. The Applegate experience would influence decisions made by Eugene Skinner who led his family and Oregon Trail caravan through the Klamath River basin to what is now Sacramento, California and northwestward through the Rogue River valley. He is known for his wife’s suggestion that the place they settled should be called Eugene. And so, it is.

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Brad Hicks, CEO of the Medford Chamber of Commerce, says Medford doesn’t have new problems, just ongoing issues to address; lack of affordable housing and homelessness, aging infrastructure, dwindling land supply, workforce development challenges. “On the flip side of the coin, one of the great advantages we have in southern Oregon is that the old way of job-seeking and transplanting companies has been changing around us for some time,” Hicks says. “It used to be that people went where the jobs were located without much thought as to the place itself. Today, jobs are inclined to go to places people want to live, and people want to live in southern Oregon.” https://www.oregonbusiness.com There are businesses in the Rogue Valley with roots going back over 100 years. Others are relatively new, but have found a place with all the necessary advantages for making a business successful for years to come. The climate is hard to match. A determined and talented workforce is a great asset, with local colleges and training resources for building a better team regardless of industry. Affordable housing and recreational opportunities add more to the selection of the area by young families for setting down roots. Medical facilities increase the favorability factor manifold. Local business is not shy about telling their stories about living and working in Medford and the surrounding communities.

HISTORY

https://www.lithia.com/

Walt DeBoer founded Lithia Motors in 1946 as a Chrysler-Plymouth-Dodge dealership in Ashland, Oregon. Following Walt's death in 1968, Walt's son Sid along with Dick Heimann, grew the business to include 5 stores and 19 franchises in Southern Oregon. In December 1996, this collection of dealerships was transformed into Lithia Motors, Inc., a publicly traded company (NYSE stock symbol-LAD). They envisioned a company that would continuously grow, provide great customer service, and opportunities for employees.

TODAY Lithia is one of America's largest automotive retailers featuring most domestic and import franchises. Stores serve urban and rural populations throughout the United States. Lithia is focused on providing customers with an honest and simpler buying and service experience. They give customers straightforward information so that they can make confident decisions. They believe that local communities are their lifeblood. In addition to the employment opportunities provided in each of their neighborhoods, they also provide contributions to charitable organizations that serve families, friends, and customers.

Southern Oregon Business Journal

https://www.asante.org/ Like a tourism advertisement Asante Medical’s website, southern Oregon’s largest medical provider, make you wonder why you aren’t already here, or explains why you are not likely to ever leave. -Greg Henderson “Our medical facilities are located in the picturesque Rogue River valley. Nestled between the Cascade and Siskiyou Mountains, the valley is in the “rain shadow” of the mountains and avoids much of the famous Pacific Northwest moisture. The mild, four-season climate offers warm summers, mild winters, beautiful springtime displays, and exquisite fall colors. Attend world-class theater at the Oregon Shakespeare Festival, spend a day touring local wineries, or take a trip to Redwood National Park or Crater Lake National Park.”

https://www.harryanddavid.com/harryanddavid-home

Our Home in Medford, Oregon Harry & David was founded in Medford and to this day is headquartered here as Southern Oregon's largest employer. The extensive 55 acre campus is comprised of numerous buildings, each housing some aspect of the vertically integrated operations which are the strength and tradition of Harry & David's companies. The most visible landmark is the 1937 art deco packing house, a local attraction prominently located along the main highway. The campus consists of administrative offices, an information technology building, packing houses, storage facilities, a candy kitchen and bakery complex, an employment and education center, customer service call center, marketing offices, an in-house advertising agency and much more. Additionally, there are 2,700 acres of orchards located around the Rogue Valley. Here, the normal workforce of 1,700 swells to over 6,700 at the peak of the holiday season, with as many as 100,000 calls received in a single day.”

Southern Oregon Business Journal

Jacksoncountyor.org/airport

About Rogue Valley International-Medford Airport The Rogue Valley International-Medford Airport is located in southwestern Oregon on 855 acres adjacent to the city of Medford, Oregon's central business district. The Airport is located north of the I-5/Highway 62 interchange. The Airport serves the Southern Oregon/Northern California region, with the majority of the Airport's users residing within Jackson County. In 2016, over 822,000 passengers used air transportation and aircraft operations totaled over 39,000. The management system at the Rogue Valley lnternational-Medford Airport consists of an Airport Advisory Committee/Director System. The Airport Advisory Committee is comprised of nine members appointed by the Jackson County Board of Commissioners. The goal of the committee is to act as an advisory board to the County Commissioners working through the Airport Director on matters of public concern.

Need a Special Place for a Meeting? Try the “Oval Office” at the Airport?

The Rogue Valley International-Medford Airport opened the Airport’s “Oval Office” on Wednesday, July 4, 2012. Over 25 local sponsors contributed to the project which was completed just in time for the 4th of July celebration. The airport’s Oval Office has since been available to rent and has seen a significant amount of activity including, a wedding, film shoots, business meetings and catered dinners. One of the most identifiable pieces in the Oval Office is a smaller version of the Resolute Desk. The wood flooring replicates the same pattern that exists in the actual Oval Office. The three-dimensional wallpaper gives the impression of being able to step out into the Rose Garden. If you would like more information on renting the Oval Office for your next meeting or gathering, please contact airport administration at 541-776-7222.

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Flying Lessons: How stories from Aviation can make us better Managers

Boeing 737-9 Airliner

In this, the second installment of our six part series, we look at the role of communication in business and examine, through the lens of lessons learned, an example of communication from the field of aviation and how it can improved enterprise performance. The picture of Boeingâ&#x20AC;&#x2122;s iconic 737 airliners above represents a culmination of aviation lessons for business managers. In microcosm, the 737 is the result of five activities all organizations must do to be viable. Boeing observed their environment and communicated, organized and delivered a product that it has improved over time. The ability to Observe, Communicate, Organize, Deliver and Improve are critical to business success. Moreover, the business that does these five activities well moves beyond mere viability towards enterprise excellence. Last month we discussed Observation and how using mathematician Abraham Waldâ&#x20AC;&#x2122;s methods for analysis of aircraft battle damage can improve management decision making by focusing on observational accuracy. Communication is important for a business because it allows for the collection, transfer and value added application of data and information. We can think of knowledge as a natural extension of data (raw facts, figures, observations) and information (relevant data organized, and accessible, in a useful manner). Data is important because it provides the raw material used in creating information. Information is valuable because it is data organized and accessible with the potential to be useful. If we think of this as a natural hierarchy, Data lies at the base, in huge quantities, Information is next and at the top is Knowledge (See the diagram Knowledge Hierarchy). The intent of Communication is the creation and/or exchange of knowledge between people, be they team members, customers, suppliers, partners or other stakeholders. Knowledge is the awareness,

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understanding or benefit obtained by sharing information. Letâ&#x20AC;&#x2122;s look at how a lesson from aviation provides a tool to create knowledge via the capture and sharing of information. From humble beginnings with the Wright 1903 Flyer airplane first flown at Kitty Hawk North Carolina, aviation grew quickly. Aviation harnessed all the advances found in motive power, materials science and aerodynamics. These advances were at times substantial successes and at other times miserable failures. With each step forward, new challenges arose. A big challenge was the communication about, and the complexity of, aircraft as they advanced, grew larger and more intricate. Fast-forward from 1903 to 1935 and there are vast improvements in aircraft. By 1935, advanced aircraft had enclosed cockpits, possessed multiple engines and had hydraulic controls and aluminum structures. These replaced single engines, manual controls and wood and fabric aircraft construction of the prior era. In development since 1930, Boeing had just delivered the Model 299, a four-engine bomber destined to become the famous B-17 bomber, to the US Army Air Corps for evaluation. Unfortunately, even with the best of crews, tragedy struck. The prototype Model 299 crashed on take-off killing both pilots and injuring crew in the fire that followed. After the crash, an investigation ensued. The investigating team found a controls required to make a successful transition to flight at takeoff was inadvertently locked in place, resulting in the crash. Traditionally, aircraft pilots trained in operational basics and moved on to refine their skills through practice. Each pilot developed their own methods to address the multitude of activities required to safely take-off, fly and land a particular aircraft. In this case, the conclusion was that the Model 299 was so complicated it exceeded the

capabilities of even the best Army pilots. The solution was to develop and implement a

standardized list of actions, in their proper sequence, to aid pilots in operating increasingly complicated aircraft. The Checklist was born (see

B-17 Cockpit Checklist below). Checklists standardize routine tasks, improve the precision of activities and lower the amount of time and attention required to accomplish them. Today, Checklists are ubiquitous. In fact, they are everywhere where people’s activities benefit from standardization. Eventually, checklists covered all aspects of aircraft operation to include take-off, landing, fueling, maintenance, and even emergency procedures in case of system failure. Beyond aviation, Checklists have been found useful in such diverse applications as medical procedures and litigation. While some would say that checklists simplify operations, and to some extent that is true, but upon observation other benefits become clear. If communication is left to word of mouth, or individualized instruction, tasks become ‘customized’ based upon the myriad of choices people make along the way. Checklists provide organizational value on multiple levels:

First, they improve operational safety by codifying standardized activities and therefor prevent overlooking routine activities.

The Lesson for Managers: The intended outcome of communication is knowledge. Knowledge being the awareness, understanding or benefit we obtain by sharing information. In the tragic case of the Model 299, even the most talented individuals can overlook the routine while fixated on more pressing issues. The Checklist, as both an instrument of consistency, depositary of best practice, and precursor for safe operation reduces the intellectual load associated with complicated tasks. This sets people up for success by lowering the immediate demands associated with routine tasks and allowing them focus on urgent needs. Why is this important? First, skilled and capable team members a valuable commodity. Any distraction preventing their full engagement in unpredictable variation lowers their ability to react. Second, the knowledge held by those same skilled and knowledgeable people is valuable and needs to be shared. The Checklist, by prioritizing known tasks and predictable outcomes multiplies the knowledge held by capable people by creating common knowledge. Finally, the Checklist is tangible evidence that managers are committed to effective communication. Understanding and applying the knowledge hierarchy model with Data at the bottom, Information in the middle and Knowledge at the top, we can apply the Checklist to support continuous improvement and effective communication in our business.

Second, they improve quality by providing consistent adherence to explicit standards when completing individual tasks as well as when the same tasks are completed at different times. However, Checklists offer the most value as a depository of human experience. Checklists allow organizations to capture and share knowledge that might otherwise be lost. As we saw with the Model 299, even experts can become overloaded and unintentionally overlook the obvious – even when to do so jeopardizes their success, and safety. When dealing with complicated tasks, careful study of successful activities in your business and their documentation evolve into organizational best practice. When codified into Checklists, they ensure that best practice is widely disseminated. As a result, routine activities are consistently executed. As improvements evolve, updated Checklists capture, codify and share improvement throughout the organization. Southern Oregon Business Journal

Further Reading: 1. New Yorker Magazine: Gawande, The Checklist (https://www.newyorker.com/magazine/2007/12/10/the-checklist) 2. From the Ashes of the Model 299 (http://fly.historicwings.com/2012/10/from-the-ashes-of-the-model-299) 1

ÂŠ 2018 Praxis Analytics, Inc. All Rights Reserved. Attribution: Jim Myers is the principal and founder of Praxis Analytics, Incorporated. Jim serves as a trusted advisor to business leaders in their quest to operate efficiently, improve continuously and prosper. His background includes two decades working in manufacturing, supply chain, customer service and maintenance management roles within markets that range from capital equipment to aerospace and defense. Jim balanced his practical operations experience with theory and served as the Associate Dean of the Atkinson Graduate School of Management (AGSM) at Willamette University where he led projects to improve school operations and taught graduate courses in Operations and Information Management, Strategy Alignment and Project Management. Jim can be reached at jim@praxisanalyticsinc.com | Praxis Analytics web site: https:praxisanalyticsinc.com

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Southern Oregon Business Journal 703 Divot Loop Sutherlin, OR 97479

SOU Small Business Development Center (SBDC) in Medford, OR, provides in-depth, one-on-one guidance to federally legal for-

profit businesses at no fee by appointment. https://inside.sou.edu/sbdc/index.html