December, 2018 by Southern Oregon Business Journal

DECEMBER 2018

4 - Should Investors Be Leaving the Forests 8 - ENERGY TRUST Leading the Way Strategic Energy Management

20 - Fish Habitat, Hatcheries & Genetics 34 - Asymmetrical Pricing Upside Outweighing the Downside

A few words… Southern Oregon’s optimists still outnumber the pessimists by what seems to be a large margin. Headlines and national economist’s reports have been saying for several months that our record-setting profits, low unemployment, and low interest rates can’t last. The people and businesses in our end of the state have a different mindset. Whether in conversation with residents and business leaders in Medford, Springfield, Prineville or Grants Pass the reports are the same; “Business is fine, in fact it could be even better if infrastructure and hiring could keep up with our needs.” Witnessing the excitement of educators at Klamath, Lane, or Umpqua Community Colleges, is enough to be confident in the training of our next generation of employees. Removing silos of responsibility between local politicians, educators and business owners, then coordinating training needs with employer needs is vital for sustained growth in the southern Oregon region. That message has been received. Articles in this December issue of the business journal support those claims. Energy Trust of Oregon makes great strides in helping to improve the efficient use of electricity. Even a fishing industry report about discoveries that changes in the way hatcheries produce and release fish in rivers may have dramatically positive results in the near future. 2018 is ending in a positive way and will likely move into the new year on a similar path. To everyone I wish a happy holiday season, Merry Christmas and a memorable Happy New Year.

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. There are 45,000 businesses in southern Oregon and these are among the leaders on whom we depend.

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

Contents Inside This Issue 2. A Few Words 7. Make Space for Justice

FEATURED 4. Should Investors be Leaving the Forests 8. Strategic Energy Management

14. Southern Oregon Business Conference 2019 - Igniting Innovation

20. Fish Habitat, Hatcheries & Genetics

16. Economic Indexes

34. Asymmetrical Pricing

17. Employment Among Veterans 19. Lane County Travel Spending 24. Oregon’s Child Care Industry 28. Kim Daniels - Prineville Chamber 29. Oregon’s Per Capita Income 32. Cultural Cluster Theater, Music, Art 37. Oregon Energy Leaders 38. Century Lighting - “It was so awesome”

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

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COVER PHOTO By permission of Energy Trust of Oregon

Should Investors be Leaving the Forest? Background Over the past several years, there has been growing circumstantial evidence that some institutional investors are cashing out of timberland investments in favor of more liquid, and perhaps better performing alternatives. The well-publicized exit of CalPERSs from much of its timberland portfolio, and rumors of divestitures by other longtime institutional investors supports a narrative of capital flight from the timberland asset class. While it would seem that net capital inflows are significantly less than they were in the first decade of this century, new capital does continue to replace existing capital as properties are cycled to new investors. The sector is more likely experiencing a “re-alignment” of capital with the new reality of timberland’s long-term performance, rather than a rush to the door.

Factors Fueling Re-alignment There is no published information that documents the net flow of capital in and out of the timberland asset class. However, the number of funds and managers reporting results to the NCREIF Timberland Index might be indicative of the development of the asset class. Between 1990 and 2000, the number of funds in the Index increased from 11 to 60, and further increased to 109 funds by 2012. Between 1990 and 2012, the number of reporting managers also increased from 3 to 12. Between 2012 and 2017, the number of funds fell to 96 managed by a relatively stable number of managers. Though only representative, this metric is perhaps indicative of the slowdown in new capital coming into the space. A contributing factor has been the slowdown in the privatization or capitalization of industrial properties around the world since the global financial crisis. A review of transactions points to the fact that major landowners and governments have slowed the pace of offering assets to institutional investors throughout South America, Oceania, and Europe. Investors have cited several reasons for moving out of the timberland sector including valuation volatility and a lack of performance metrics or benchmarks. The two most common complaints,

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however, have been lack of liquidity, and declining post-management fee performance since the global financial crisis. Both are legitimate arguments and reflect a changing investment climate that is currently struggling for returns, and seeks liquidity to rapidly move to and from investment alternatives. One of the casualties of this changing investment climate has been a significant decline in the number of closed-end, co-mingled timberland funds on which the asset class was founded. The illliquidity of such funds has been exacerbated by the inability of managers to liquidate fund assets at appraised values, signaling asset over-valuation in some geographies. In an attempt to address the liquidity issue, the sector has experienced a growing number of investor controlled separate accounts and so-called “open-ended” timberland investment funds. Despite this, timberland remains a relatively ill-liquid asset class. Most timberland markets are not deep enough, and transactions not standard enough, to enable the sale or purchase of a timberland property in less than 6-12 months. Non-core investments in emerging geographies or auction transactions can take longer. As a result, the timberland asset class is likely to continue to be seen as a relatively ill-liquid, long-term investment. Performance of course, is relative. Between 1995 and 2008, the NCREIF Timberland Index returned a nominal 9.33%/year, and handily outperformed both the S&P and Russell 2000 indices. Since the global financial crisis, the NCREIF Timberland Index returned a 4.0% nominal return/year, and significantly under-performed both equity indices. However, over the entire 1995-2016 time period, the NCREIF Timberland Index provided a nominal return of approximately 7.5%/year, outperforming both equity indices, with far less volatility. As buyers and sellers have become more sophisticated, metrics better understood, and markets more transparent, out-sized real returns in the timberland asset class are likely to only be achieved with commensurate risk. Investors seeking PE or VC returns, will probably need to look elsewhere.

The Persistent Case for Timber It is important to recognize that, with reasonable acquisition prices, cash flow assumptions, and minimal leverage, it is difficult to lose capital in local currency in the timberland asset class. Biological growth and product/grade shifts alone support increasing asset values unrelated to market conditions. The few well-publicized timberland investment failures have resulted from efforts to achieve high returns in un-developed markets, overleveraged investments, or investments acquired using unreasonable cash flow assumptions. As the capital structure of the asset class is re-aligned, it is likely that additional investors will withdraw and move capital to other asset classes. New capital from impact investors, generally less driven by returns, is likely to replace some sector participants, as will current investors who will and should remain, as the case for timberland in a diversified portfolio remains persistent. For larger institutional investors in separate account structures, timberland offers improving liquidity, increasingly standardized valuation methodologies, and a proven hedge against inflation as the NCREIF Timberland Index registered a 2.5%/year real return between 2008 and 2017. Although correlations are higher than often advertised due to in-frequent valuations, larger investors also benefit from poorly correlated alpha that contributes to the over-all performance of a broader portfolio. In today’s climate of impact investment, timberland also offers well-established ESG credentials as well as opportunities to target investments for specific purposes such as species, water or ecosystem preservation, or regional sustainable development. For smaller investors, separate account structures or direct timberland investment provides all of these attributes and enables the generational preservation of capital. Direct timberland ownership can also lower management fees and maximizes liquidity, while avoiding the more market-related performance of equity timber ETF’s or REIT structures. Finally, it should be noted that timberland returns over the past 20 years have provided consistent real returns in spite of, rather than because of, real increases in key timberland products such as softwood sawtimber. A recent multi-client study published by ForestEdge LLC and Wood Resources International found that the average

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price of softwood sawlogs for countries producing over 60% of the world’s conifer roundwood fell in real terms by nearly 1%/year between the year 2000 and 2016. This decrease resulted from a global over-supply situation caused in part by government and private investment in softwood plantations and productivity in the 1970’s and 1980’s. Conversely, since the year 2000, the area of softwood plantations in these same countries has stagnated and, in some cases, declined. The study projects that rather than continued real price declines, modest real increases in softwood log prices are likely over the study’s 2016-2030 forecast period.

Conclusion After several decades of exceptional growth, the timberland investment sector would seem to be going through a period of capital re-alignment as some long-time investors exit the asset class, and others enter. The driving forces seem to be an investment climate favoring liquidity, and the evolution of timberland investment returns toward their appropriate risk-adjusted levels. Despite some well-publicized departures, the case for timberland investment within the portfolios of both large and small investors, if efficiently structured, remains strong.

Robert W. Hagler currently serves as Principal of ForestEdge, LLC, a Registered Investment Advisor, and timber investment manager and consultancy serving family offices and direct timberland investors.

ROBERT W. HAGLER Principle, ForestEdge LLC

ForestEdge LLC Registered Investment Advisor 1760 Potomac Greens Drive Alexandria, Virginia 22314 USA 1-703-838-3636 robert@forestedgellc.com

“Make Space for Justice” Lane County Courthouse WORKING ON SOLUTIONS -The County is considering the challenges the current Courthouse building poses. Inspections and reviews of the current building have made one thing clear: the old building can’t responsibly be salvaged for this use – it would cost more to work with the existing building and there’s simply not enough space to make it work. Instead, discussion is focused on building a new center for justice on the downtown block to the east of the Public Service Building. FUNDING IMPROVEMENTS -The County expects to receive state match funding for up to half of the cost to construct the court-related parts of the building — a significant part of the overall cost. The remainder of the cost would be paid by Lane County through a variety of sources, including one-time funding, potential grants, and possible community support. GET INVOLVED -Although the building is used by more than 600 people every day, many Lane County residents have never been into the Courthouse, and from the outside, the challenges aren’t clear. Over the coming months, watch for opportunities to tour the building or participate in community conversations about the project. To be notified of these opportunities, or to receive updates, please sign up for email updates on our website: lanecounty.org/ courthouse. Interested in learning more about the connection between building design and justice? The 130-page Lane County Court Facility Needs Assessment by the National Center for State Courts provides details about our Courthouse, what is standard and why, and recommendations for improvement. You can find the report online at: lanecounty.org/courthouse Services Provided in the Courthouse • Circuit Court • District Attorney’s Office • Lane County Sheriff's Office • Emergency Operations Center • Records and Archives • Rural police and Search and Rescue Dispatch Courthouse Statistics: • Built in 1959 • Four stories • 15 courtrooms • 33,000 cases processed each year • One operable public elevator • One entrance • 274 full-time workers • 600 daily visitors (not including those visiting the Lane County Sheriff’s Office) ABOUT THE LANE COUNTY COURTHOUSE Current Lane County Courthouse 125 E. 8th Avenue

MAKE SPACE FOR JUSTICE LANE COUNTY COURTHOUSE UPDATE “This isn’t just any building – this is the public’s Courthouse – where people seek justice and resolution. Making sure it is safe, accessible and allows the justice system to proceed efficiently is essential to democracy in Lane County.” — District Attorney Patty Perlow“

Lane County’s Courthouse is in need of replacement, and the County is likely to ask voters to consider a bond measure for partial funding. Before it goes to voters for a decision, the County wants to be certain that all residents understand the situation and have the information they need in order to make an informed decision. From: http://lanecounty.org/cms/one.aspx?pageId=5642347

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Strategic Energy Management (SEM) Helping Organizations Identify & Improve Energy Resources By Susan Jowaiszas, Energy Trust of Oregon

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Strategic Energy Management gives businesses the power to cut operating costs By Susan Jowaiszas, Energy Trust of Oregon Four years ago, Medford School District enrolled in Strategic Energy Management (SEM) — an Energy Trust of Oregon offering that helps organizations identify no- or low-cost operations and maintenance improvements that deliver significant bill savings and provides training on developing comprehensive energy management practices. Today, the district has slashed total annual operating costs through simple actions like making sure refrigerators are unplugged when schools shut down for the summer.

The district is not alone. In the past year, Umpqua Community College, Oregon Air National Guard Kingsley Field in Klamath Falls, Oregon Shakespeare Festival, the City of Talent and Adapt also participated in SEM, reducing their annual energy costs by thousands of dollars. Energy Trust services and cash incentives are available for customers served by Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas and Avista. SEM, which is provided at no cost to eligible customers, brings together a cohort of area organizations that meet regularly for workshops over the course of a year. Led by Energy Trust technical experts, participants receive training and tools, share information with each other on strategies, develop long-term skills to find and eliminate energy waste and receive cash incentives based on documented savings. “SEM offers something for everyone, whether you’ve been at it for a while or just getting started like we are,” said Jerry O’Sullivan, director of

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operations, Adapt, which has primary care and behavioral health facilities in three Southern Oregon counties. “It helps you find the low-hanging fruit that offers the biggest savings for the least cost.”

Before SEM, Adapt was thinking of investing in capital energy projects, such as solar and replacement windows, for its headquarters in Roseburg. SEM changed their focus. “It’s fairly easy to trim annual energy use by 5 to 10 percent by taking steps like removing lamps in areas that are over-lit,” said O’Sullivan. “During SEM, we found offices with light levels on par with an operating room!” Establishing an energy team and an energy SE participants acquire new skills throughout their engagement year by participating in workshops with their peers and having regular check-ins with their SEM coaches, often resulting in a bit of 9

“homework.” They learn how to establish an energy team with representatives from throughout their organization. These teams meet monthly to discuss and implement strategies identified during their SEM engagement. An energy champion coordinates the team’s efforts and tracks progress with support from Energy Trust.

a big eye opener,” said Ted DeLong, general manager, Oregon Shakespeare Festival. “We found thermostats that weren’t set properly, and the settings on outdoor lights weren’t adjusted for when it gets dark. Our building is fairly new, but we still came away with a long list of improvements that deliver savings.”

The City of Talent’s energy team includes a representative from each city building. Oregon Air National Guard did the same — adding energy to the formal duties of those responsible for each building on the base.

Through SEM, Adapt discovered that comfort complaints at its headquarters weren’t about temperature at all. “The airflow was higher than necessary, causing occupants to feel cold,” said O’Sullivan. The solution? Adapt simply ramped down the air handlers.

Each organization also establishes an energysavings goal. Most organizations, like the City of Talent, start with 5-percent savings. “We hit our goal in the first year, and expect to repeat that in 2019,” said Sandra Spelliscy, Talent city manager.

Going on a treasure hunt Early in the process, Energy Trust experts meet with participants at their facility to do a Building Opportunity Assessment — a treasure hunt that looks for energy waste. They come away with a list of action items to address. “Walking through our production facility in Talent, where we build sets and store costumes, was

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When Medford School District conducted its first treasure hunt back in 2015, the energy team discovered unnecessary plug loads left on during the summer — everything from computers to mini-

fridges to cellphone chargers. As a result, the district expanded its summer shutdown procedures to make sure faculty members “pull the plugs” before they turn in their building keys. Implementing those procedures saved the district about $50,000 in annual energy costs the first year alone. “We’re still perfecting our summer shutdown and

finding new savings even in our fourth year of SEM,” said Ron Havniear, facilities manager, Medford School District. “We keep getting better at it.”

Keeping an eye open for capital projects It’s not uncommon for SEM participants to uncover the opportunity for energy-saving capital projects.

Monitoring and reporting on progress SEM provides participants with tools and training that allow them to track energy use over time, with adjustments built in for weather, occupancy and other variables.

“SEM helped us see how much our inefficient 20year-old chiller was costing us,” said Senior Master Sergeant Ruel Gadbury, Oregon Air National Guard. “We installed a new chiller, doing all the work in-house to save dollars.”

“The Performance Tracking tool we use is a big help to monitor not only the physical changes to our facilities but also those intangibles that have an effect on energy usage” said Jess Miller, director of facilities and security, Umpqua Community College. “They quantify our progress and highlight the value of the program to decision makers, faculty and students. And if there’s an unexplained increase in energy use, we can investigate and remedy it immediately. SEM really works for our campus. Last year we realized an 8% savings on our energy costs. That was a $48,000 savings we were able to transfer to our general fund.”

Almost all of the participants in this cohort either embarked on upgrading to LED lighting as a result of SEM or are considering it.

UCC POOL

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Energy Trust helps determine what capital projects pencil out and offers cash incentives, based on energy savings, that can help offset the cost. Employee/occupant engagement is critical Because SEM focuses on lasting organizational behavioral change, it’s critical to get employees and occupants involved. Energy Trust’s experts help organizations develop an energy policy — an important step in promoting culture change. Participants use newsletters, signs and fairs to

promote involvement and highlight success.

Medford School District recognized that one of the best incentives for action is to share in the rewards. “When we first started SEM, schools that helped us with summer shutdown received $1,000 to use toward a program of their choice,” said Havniear. “This year, we gave a similar incentive to custodians to use at their school. Custodians are our boots on the ground and are critical to success.” Medford School District recognized that one of the best incentives for action is to share in the rewards. “When we first started SEM, schools that helped us with summer shutdown received $1,000 to use toward a program of their choice,” said Havniear. “This year, we gave a similar incentive to custodians to use at their school. Custodians are our boots on the ground and are critical to success. Why take the time to participate in SEM? All of these organizations seek to trim energy costs in the face of ever tightening budgets, and it’s paying off. As Senior Master Sergeant Gadbury puts it: “In three years of SEM, we’ve saved thousands of dollars, and we should see even bigger savings next year.” But there are other reasons at play — everything from environmental stewardship, to using taxpayer money wisely, to being seen as a leader and setting an example for the community.

Here’s how to get in on the savings Businesses, nonprofits and government organizations are welcome to join SEM when another Southern Oregon cohort begins in January 2019. If you're ready to join the team and get in on the savings, call 1.866.605.1676 or email energymanagement@energytrust.org.

Energy Trust also offers Strategic Energy Management for industrial companies.

Susan Jowaiszas. Sr. Marketing Manager/Commercial & Industrial at Energy Trust of Oregon, Inc.

“Oregon Shakespeare Festival’s values include a strong stewardship component,” said DeLong, “And we’re committed to doing what we can to mitigate the effects of climate change.”

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Energy Trust of Oregon is an independent nonprofit organization dedicated to helping utility customers benefit from saving energy and generating renewable energy. Our services, cash incentives and solutions have helped participating customers of Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas and Avista save nearly $3.2 billion on their energy bills. Our work helps keep energy costs as low as possible and builds a sustainable energy future.

http://energytrust.org/

Happy Holidays !

Southern Oregon Business Journal

SOREDI Hosts 2019 SOBC: Igniting Innovation: Building High Impact Communities By: Codi Spodnik (541) 773-8946

Southern Oregon Regional Economic Development, Inc. (SOREDI) will host their 16th Annual Southern Oregon Business Conference (SOBC) on Thursday, January 31, 2019, from 1:00 – 5:00 pm. Registration begins at 12:30 pm. Held at Inn at the Commons in Medford, this conference seeks to unite municipal partners, educators and private sector business leaders to cultivate vibrant communities in Southern Oregon. Registration is open now at www.soredi.org/events. Tickets are $60 for SOREDI Members and $75 for non-members. If you register before December 31, 2018, you’ll be entered into a drawing for an Early Bird Prize package from Eagle Point Golf Course, worth $500. This prize includes an overnight stay, meals at the Talon Grill and a golfing package. Register your team for an innovative afternoon with our speakers. SOBC 2019 is made possible by SOREDI’s generous sponsors: KeyBank, Avista, Moss Adams, Allcare, Pacific Power, KDRV Newswatch12 and Rosebud Media.

Sponsored by KeyBank, Tim Duy, Senior Director of the Oregon Economic Forum and the author of the University of Oregon Statewide Economic Indicators, returns to give us another High Content Economic Forecast. Duy received his BA in Economics in 1991 from the University of Puget Sound and his MS and PhD in Economics in 1998 from the University of Oregon. Following graduate school, Duy worked in Washington DC for the United States Department of Treasury as an economist in the International Affairs Division and later with the G7 Group, a political and economic consultancy for clients in the financial industry. Duy returned to University of Oregon in 2002. Mary Hebert, WAVTEQ’s Senior VP for North America, will join us from Scottsdale, AZ, to share how Communities Attract High Tech Companies and a High Value Workforce. During her tenure with WAVTEQ, a spinout of The Financial Times, Hebert has worked with the Greater Phoenix Economic Council and headed the international strategy effort to attract business to Arizona. She holds a Master’s Degree in Public Administration from Arizona State University, where she focused her efforts on tax policy and government incentives. Hebert will look at the Southern Oregon region as a professional site selector and will discuss trends in rapidly growing technology companies and what they are seeking in communities. She will also share insight she’s gleaned from international technology firms and the special considerations they have when evaluating locations in the US.

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John Darrow, Senior Principle Engineer at Amazon, will join us from Seattle. He will share High Intensity Trends from Inside Amazon. Darrow grew up in Mt. Shasta and joined Amazon early on, when it was just a scrappy bookstore on the internet. Initially, he spent his time writing code for the systems that process orders, customer data and email. Now, after working for Amazon for 21 years, Darrow plays an executive role in the Fulfillment Technology group, leading the engineering that powers inventory, warehousing and logistics. Darrow is engaged with much of the research science community at Amazon and enjoys working on problems involving resource optimization, planning and execution involving people and machines. He will help our audience grasp the challenges of working with a younger, diverse workforce, utilizing new technologies and distribution channels.

Rob Oâ&#x20AC;&#x2122; Neill, CPA and Partner at Moss Adams Portland, will join us to discuss High Relevance Tax Law Changes. Oâ&#x20AC;&#x2122; Neill has practiced public accounting since 1998 and provides state and local tax and credit, and incentive advisory and compliance services to large multistate and multinational companies. He also advises clients on state income tax and incentives related to corporate expansions, acquisitions, dispositions, reorganizations, and entity simplification projects. Throughout his career, Rob has managed several large multistate reverse sales delivered voluntary disclosure services and/or audit defense services in most states. Rob and his team have assisted with the monetization of over $800 million in transferable tax credits.

About SOREDI:

Southern Oregon Regional Economic Development Inc. is private,

membership-based, non-profit organization, governed by a board of directors. Serving 13 incorporated cities, SOREDIâ&#x20AC;&#x2122;s mission is to help businesses prosper and advance economic opportunities compatible with community values. Its eight- person staff is charged with local business expansion and new business recruitment efforts, financial assistance to start-up companies through its business loan fund, and management of Enterprise Zones in Jackson and Josephine Counties. The agency was formed as a regional economic development agency in 1987. Learn more at https://www.soredi.org.

Southern Oregon Business Journal

Employment Among Oregon’s Veterans by Felicia Bechtoldt In 2017, the unemployment rate for veterans in Oregon was 4.3 percent, according to the Current Population Survey. This was the lowest unemployment rate for veterans since 2007, when the unemployment rate was 3.5 percent. Overall, Oregon’s unemployment rate was 4.1 percent in 2017. Across the U.S., veterans had a lower unemployment rate of 3.7 percent.

About 305,000 veterans lived in Oregon in 2017. Half of veterans (153,000) were not in the labor force. This figure could be related to the age of veterans. According to the American Community Survey, more than half of Oregon’s veterans were age 65 years or older and served in the military at least four decades ago: Vietnam War (110,668 veterans), Korean War (23,024), and World War II (9,491). Gulf-War I and II veterans accounted for 90,412. Around 145,000 of the 152,000 veterans in the labor force were employed, with 123,000 being employed full time and 22,000 part time. About 6,000 veterans were unemployed, which accounted for 7.2 percent of the unemployed population (83,000) in the state. Over the last two decades, unemployed veterans made up between 6.9 percent and 14.6 percent of the overall unemployed population in the state.

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Veterans are employed across all industries. In the United States, manufacturing (12.1% of veterans); professional and business services (10.8%); retail trade (8.6%); and education and health services (8.2%) are industries where a large number of veterans are employed. About 21.7 percent of veterans work in government. Veterans work in various occupations. About 20.1 percent of veterans in the U.S. work in professional and related occupations; 19.3 percent work in management, business and financial occupations; 13.9 percent in service occupations; and 10.2 percent in transportation and material moving occupations. In 2017, Oregon’s veterans earned a higher median income ($37,556) than nonveterans ($29,592). Education could be one of the factors influencing veterans’ higher median income. Among Oregon

veterans ages 25 years and older, 41.6 percent have an associate’s degree or some college compared with 33.2 percent of nonveterans. About 5.6 percent of veterans don’t have a high school diploma, while 9.4 percent of nonveterans don’t have a high school diploma. Higher educational attainment generally translates into higher earnings.

Veterans are more likely to have a disability, but less likely to be in poverty than the general population. About 32.8 percent of Oregon’s veterans reported having a service-connected disability, compared with 15.1 percent of the total civilian population. About 8.1 percent of veterans were in poverty compared with about 12.8 percent of the total civilian population.

Female veterans, who represented 8.2 percent of Oregon’s veterans, earned a median income of $28,538, less than male veterans’ median of $38,501, but higher than female nonveterans’ income of $24,353.

More information about veterans is available in the U.S. Bureau of Labor Statistics’ “Employment Situation of Veterans”.

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Lane County Travel Spending Continues to Grow by Brian Rooney Data from research firm Dean Runyan indicate that spending in the travel and tourism industry continued to grow in 2017 in Lane County after dropping off during the Great Recession. The graph shows that travel spending in Lane County grew throughout the 1990s and peaked in 2008 at $717.0 million. As the Great Recession took hold in 2009, travel spending dropped $39.7 million, or 5.5 percent, to reach $677.3 million. Since then, travel spending has grown each year, reaching $954.6 million in 2017. The growth rate over the recovery period since 2009 was 40.9 percent, which was well ahead of the U.S. inflation rate of 14.2 percent, meaning that travel spending is growing beyond the rate of inflation. During the most recent year, from 2016 to 2017, travel spending increased $24.0 million, or 2.8 percent. This is slower growth than the 2016 rate of 6.9 percent.

The largest share of spending in 2017 was in food service (28.8%) followed by accommodations (19.6%); retail sales (13.5%); arts, entertainment, and recreation (12.4%); local transportation and gas (9.5%); food stores (9.4%); and visitor air transportation (6.8%). Most travel spending occurred in the eastern portion of the county, which includes the Eugene-Springfield area, at $817.7 million (85.7%). The remaining $136.9 million of travel spending occurred in the coastal portion of the county.

Quality Information, Informed Choices

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Fish & Wildlife News 'World Class' Research Is Answering Questions About Fish Habitat, Hatcheries, and Genetics By: John Harrison The ISRP reviewed 25 research projects. Schroder said the review showed there is collaboration occurring among the projects, that uncertainties in 13 out of the 14 major topic areas in the 2017 Research Plan are being addressed, and that results for many of the projects had been extensively published.

Two Chinook salmon spawning. Photo: Kevin Belcher

Fish and wildlife research sponsored through the Council’s Columbia River Basin Fish and Wildlife Program into the effects of the ocean, estuary, hatcheries, and habitat on salmon and steelhead survival not only is producing interesting and useful results but is some of the best of its kind in the world, the Chairman of the Council’s Independent Scientific Review Panel (ISRP) said at the Council’s October 2018 meeting. “The research that’s going on in the basin is terrific,” ISRP Chair Steve Schroder said. Schroder, who lives in Olympia, is a former research scientist with the Washington Department of Fish and Wildlife.

Erik Merrill, who coordinates the work of the Council’s two independent scientific groups, the ISRP and the Independent Scientific Advisory Board (ISAB), said the purpose of the ISRP research status review was to look at the progress of addressing the critical uncertainties identified in the Council’s 2017 research plan. While not a part of the Fish and Wildlife Program, the Research Plan serves as guidance to federal agencies with legal responsibilities under the Northwest Power Act in implementing the research measures and priorities of the Program.

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The 25 projects are in three categories: 1) the growth, survival, or migration, and genetic diversity of fish populations; 2) limiting factors and the effectiveness of habitat restoration efforts; and 3) fish propagation – methods to improve fish culture and assess how successful hatcheries have been in supplementing populations of steelhead and spring Chinook salmon. “Research that is occurring in the basin is innovative and often leads the way for other similar studies around the world,” Schroder said. Growth, Survival, and Genetic Diversity Consider Passive Integrated Transponder (PIT tags). These tiny devices, the size and shape of a grain of rice, are inserted in the bellies of juvenile fish and have been used for years to track the survival, abundance, and migration rates of both juvenile and adult fish. “But recently, there is a decline in the capacity of the detection system in the mainstem Columbia and Snake rivers to pick up PIT-tagged fish,” Schroder said. “Detection rates have dropped from almost 100 percent down to about 50.” A PIT tag, which is small enough to be inserted in the gut of a juvenile fish, contains information about where the fish was raised and released. The answer, research showed, has to do with increased spill. As more juvenile fish are passed over dam spillways to avoid passing through

A PIT TAG

sockeye, and for most wild and hatchery steelhead, Chinook, and sockeye in the middle and upper Columbia rivers. That’s not true for all species, according to the study, notably steelhead in the John Day, Umatilla, and Deschutes rivers, which have consistently higher SARs than other species and meet the Council’s goal more often, if not every year.

turbines, they are diverted away from bypass systems where their PIT tags would be detected. “Right now there is really no way to detect fish that go through spillways,” Schroder said.

However, he said the Corps of Engineers is going to try “a kind of amazing” experiment with PIT tag detection in a spillway at Lower Granite Dam using an array of 11 detectors. “I want you to imagine that you’re a fish and that you are going 40 to 50 miles an hour down this spillway, and the water depth is about two and a half feet. Can you imagine what that must be like?” he said. “And, imagine the challenge of trying to detect the PIT tag in a small fish going 50 miles an hour.”

A new device, developed through research, is a vertical wand detector that can record PIT tags as fish pass at different depths. The device is being tested in the Walla Walla and Yakima rivers, and in the lower Columbia downstream of Bonneville Dam, where Schroder said “detection has been a real black box for many, many years,” adding, “it’s real exciting stuff that’s going on.” Another big black box, he said, is the ocean. NOAA Fisheries began conducting ocean surveys in 1998 to examine how ocean conditions affect the survival, growth, and migration rates of juvenile salmon. “We knew ocean conditions were affecting survival, but we didn’t know how or why,” he said. “Ocean conditions really are one of the overwhelming drivers of salmon survival. If the fish go out in poor ocean conditions they survive very poorly.” According to the Comparative Survival Study, neither Snake River wild spring/summer Chinook nor wild steelhead populations, nor hatchery fish of these species, appear to consistently meet the 2-4 percent SAR goal in the Council’s Fish and Wildlife program. The same can be said for Snake River Southern Oregon Business Journal

This figure from the 2018 CSS Report shows the decline of smolt-to-adult survival rates (SARs) over time.

“The expansion of genetic methods has been extraordinary,” Schroder said. “Scientists in the basin can now address questions that would have been impossible to answer in the recent past.” Genetic samples collected from salmon and steelhead as they pass Bonneville Dam are being used to track fish migration timing and abundance. Genetic baselines also have been established for white sturgeon and Pacific lamprey in the Columbia and are being used to characterize the genetic properties of populations in these species. He said the Hagerman, Idaho, lab of the Columbia River Inter-Tribal Fish Commission has been on the forefront of this research and has developed “some wonderful genetic baselines for populations and have been using them to estimate the arrival time and abundance of Chinook, steelhead, sockeye, and coho as they go over Bonneville Dam. As genetic samples are collected during fisheries in the mainstem Columbia they are using those samples to look at harvest rates of those populations.” Laboratory research is improving knowledge about fish genetics, which improves understanding of which species are best suited for particular habitats. Researchers also have been looking at landscape 21

effects on the genetic composition of these populations, and they’ve been finding that, for Chinook in particular, migration distance, precipitation, and water temperature have a strong effect on the genetic makeup of those populations. “If you think about this,” Schroder said, “if you want to reintroduce a population into some place where it’s been extirpated, and if you have knowledge about what types of genetic profiles would be suited for that habitat, then you can make some reasoned selections about the stocks you might put back into those areas.” Effectiveness of Habitat Restoration Through the Council’s Program, more than 733 miles of streamside habitat have been improved through efforts including realigning channels, planting vegetation, and installing fences to keep livestock from trampling the shoreline. Work is progressing on 12,124 additional miles. Habitat research in the Program focuses on fish, and broadly asks three basic questions: 1) What factors are limiting the growth of fish populations, 2) how effective are the actions at each habitat project site, and 3) what is the combined effect of multiple actions across an entire watershed? As an example of an answer, he pointed to work in the Grande Ronde River watershed of Northeastern Oregon. Using a computer model that assesses causal relationships among factors such as riparian vegetation or water temperature or stream velocity and juvenile fish abundance in a stream, the researchers identified three critical factors that were limiting the increase in fish populations: scarcity of large pools where fish can rest and rear, high water temperatures in August, and high stream power or erosive potential from high-volume flows. “Using the model they were able to predict what the consequences would be if they went ahead with restoration actions,” Schroder said. “The model predicted almost a 600-percent increase in juvenile spring Chinook in the upper Grande Ronde River if they went ahead and did everything they wanted to do to address the limiting factors. At the same time, they did not get nearly the same results from modeling nearby Catherine Creek, and so this allowed them to prioritize their restoration work.”

Southern Oregon Business Journal

Placing large woody debris in a stream helps slow the flow velocity and improve spawning and rearing conditions for fish.

Fish propagation In the Columbia River Basin the purpose of hatcheries has changed over the last several decades, from primarily providing fish for harvest to raising fish from endemic broodstock to repopulate rivers where fish have declined over time or been extirpated. The 14 hatcheries funded through the Council’s Program that are located upriver of Bonneville Dam have this process, called supplementation, as part of their focus. Ten are operated by tribes. Supplementation is considered an ongoing experiment. “One of the big questions has been can we use hatcheries to produce fish that can spawn under natural circumstances,” he said. “So the question is, what can we do to improve the reproductive success of these fish?” Schroder said. “One of the things they are doing is using 100percent natural-origin broodstock in hatcheries. The Nez Perce and Yakama tribes both are experimenting with 100-percent natural-origin fish. For spring Chinook this appears to be a very powerful way to increase the capacity of these fish to actually produce progeny at a rate comparable to natural-origin fish.” Steelhead, he said don’t seem to do as well. Typically, it takes wild juvenile steelhead two to three years to get large enough to become smolts.

In hatcheries, the growth of these fish is accelerated and they reach the smolt stage after one year of rearing. Michael Blouin of Oregon State University has hypothesized that steelhead hatchery environments select for aggressive and surfaceoriented fish. This occurs because food is broadcast to the water surface. Fish that are aggressive and surface oriented have greater access to food and achieve higher growth rates than less aggressive individuals. It turns out that surface orientation and aggressiveness are heritable traits. Thus, the offspring of hatchery steelhead spawning in nature may exhibit these behaviors, and this would put them at risk particularly to avian predators.

In a hatchery, fish are raised quickly to reach the size when they can be released, but this accelerated rearing has downfalls. “Doing that really disrupts their natural growth patterns, and influences their behavior and Photo: Curt Knudsen, Oncorh Consulting their rates of maturation,” Schroder said. “In fact, one of the big problems we have in the basin that is really kind of unidentified is we are potentially releasing millions and millions of precociously maturing male salmon." These fish, called minijacks, are destined to mature at age two. Upon release some will stay in their natal streams, many will migrate in mainstem reservoirs and others may even briefly enter seawater. In these environments they will compete with other fish for food and other resources. He said NOAA researchers studied the propagation techniques at 10 hatcheries and discovered that anywhere from 7 percent to 71 percent of all male yearling Chinook that were released from those hatcheries were precociously maturing. To resolve the problem of precocious maturation, researchers are focusing on a couple of things to change at hatcheries: reducing the growth of young fish in the fall, and providing fish feed that has a low lipid (fats) content – hence, lower-energy foods. The theory is that these changes could slow fish growth and lead to fewer mini-jacks. Other potential solutions are hatchery-specific, such as adjusting the temperature of a hatchery’s water supply.

Southern Oregon Business Journal

Males maturing precociously in a hatchery look a lot like other fish, and so as they grow through the winter months and are released in the spring it’s not evident to the eye which fish will grow and go to the ocean normally and which will mature too quickly. “It’s extremely accurate,” Schroder said. “If a fish has a high level of this androgen (11ketotestosterone), it’s going to mature as a two-year -old fish,” he said. “So far we’ve only looked at 10 hatcheries, and we need to survey the additional hatcheries in the basin that produce yearling Chinook and find out how prevalent this problem is, and we need to start evaluating procedures to try to reduce it.” He said the research work, “in many cases is the best in the world, and it acts as a guide for many projects and additional research around the world.” “I’ve often asked project sponsors to tell us what has been discovered and why it is important to the region,” Karier said. He said the Council should consider establishing criteria for what constitutes a successful project. “I think what’s most important for us to know are two things. First, are these projects effective – are they producing fish that are healthy, whether it’s through hatchery work or in improved habitats? We’re spending three hundred million dollars a year, and we want to know whether those things are effective and working. And the second thing is, are there other things that we are not doing that we should be doing? Every [project] should go through the screen of what did we learn about the effectiveness of what we do, or what else can we do?” John is the Council's information officer. He helps edit and write Council publications, speeches, and news releases. He came to the Council in 1990 from the Columbian, Vancouver, Washington's daily newspaper, where he was a reporter for six years writing about Northwest energy issues and an editor for four years. He has a bachelor's degree in communications from Washington State University and a master's degree in journalism from the University of Oregon. jharrison@nwcouncil.org

John Harrison

Information Officer

Images accompanying this article provided by the Northwest Power and Conservation Council

Oregon’s Child Care Industry by Jessica Nelson Social and economic trends over the past 60 years have made child care a workforce issue and turned child care into an industry. The share of women participating in the labor force nearly doubled between 1950 and 2000, before reaching a plateau in recent years. Labor force participation rates are higher among parents than among those without children under the age of 18. Among parents of young children under the age of six, nine out of 10 fathers and six out of 10 mothers are working. Today, most parents are in the labor force and employed, translating into a lot of children needing child care.

services of child care providers because these services help their workforce continue to be stable, reliable, and productive.

Parents make up a sizeable share of Oregon’s labor force. Parents of children under six years of age make up 14 percent of Oregon’s workforce, and those with children ages six to 17 make up another 18 percent. Oregon employers benefit from the

In 2016, Oregon’s private-sector child care businesses numbered 1,187 and employed 11,421 workers. Half of the businesses had four or fewer employees. Fifteen percent of child care businesses employ 20 or more workers.

Southern Oregon Business Journal

Parents of children under six years of age make up 14

percent of Oregon’s workforce So, how big is the child care industry in Oregon, and has it kept pace with the demand for paid care?

The Industry

Wages are low in the industry, an issue that is often linked with quality of care. Total payroll of child care businesses with employees in 2016 was about $262 million – this averages out to an annual industry wage of $23,000, less than half the allindustry average of $47,700 (as shown in the Census Bureau’s County Business Patterns data set). One reason for a low average wage could be the low wages of the occupations that dominate the industry. For example, the median wage of a preschool teacher in Oregon in 2018 is $13.91 per hour, and the median wage for childcare workers is $11.98. These two occupations account for more than two-thirds of the employment in the day care industry.

Employment in child day care businesses with employees grew 33 percent from 2007 to 2017 – a bit faster than the 30 percent growth rate in the larger industry sector of health care and social assistance. All-industry employment grew just 9 percent from 2007 to 2017.

Is the Supply of Quality Child Care Adequate? Child care and early education is important to today’s workforce – in that it allows parents to be present at work. It is important to tomorrow’s workforce as quality child care gives the next

Southern Oregon Business Journal

generation a solid start in their education. There is some evidence that points to a shortage of available day care services. According to the most recent report from the Oregon Child Care Research Partnership (Child Care and Education in Oregon and Its Counties: 2014), the supply of child care spots was 17 per 100 children under 13 years old. In order to meet demand, 25 spots per hundred children were needed. This shortage was particularly acute for children with special needs, infants and toddlers, and evening care for children of parents who work late shifts. Additional research from the Oregon Child Care Research Partnership (Oregon Early Learning Workforce), shows that turnover among regulated child care facilities far exceeds turnover at K-12 schools. In fact, between 2012 and 2016, the annual turnover rates in child care facilities ranged from 16 to 29 percent per year. In all, just 36 percent of the 2012 child care workforce were still working in child care in 2016. Programs paying lower wages tended to have lower levels of teacher retention than the industry norm.

The child care industry has grown in response to the increasing numbers of families in which both parents work, and to the increasing number of households headed by women. Supply of day care currently is not meeting potential demand.

As the importance of early childhood education is embraced and more fully supported, efforts are underway to better measure and support the professional development of child care workers and preschool teachers and more fully align their training and compensation with the broader array of educators. The study concluded, â&#x20AC;&#x153;Low wages are associated with high turnover rates in both early learning and K-12. High turnover rates harm children and challenge professional development investments; although in Oregonâ&#x20AC;&#x2122;s early learning workforce we find that those in whom we made professional development investments were mainly in the group who remained in the workforce.â&#x20AC;? The child care industry has grown in response to the increasing numbers of families in which both parents work, and to the increasing number of households headed by women. Supply of day care currently is not meeting potential demand. Improved support of child care workers through professional development and retention strategies can improve both the availability and the quality of child care.

Jessica Nelson

Employment Economist jessica.r.nelson@oregon.gov 875 Union St NE Salem, OR 97311

Southern Oregon Business Journal

When all the planning and researching is done a decision is made to take action. The restaurant business is known as one of the most difficult businesses to go from start up to success of any business in America. When that dream becomes a feasible reality there is an overwhelming feeling that what some people warned was impossible becomes possible has made you as proud as a new parent. There are no words to define the joy of such an accomplishment, especially when that dream began with a nearly impossible task of resurrecting an iconic home left to rack and ruin. Thatâ&#x20AC;&#x2122;s what Heidi Lael has done. There have been hurdles and tears that she has faced with courage, determination, a strong and dependable support group, and prayers whispered as she ran from one demanding task to another. The Parrott House is amazing! If youâ&#x20AC;&#x2122;re looking for tenacity, Heidi Lael, Owner of The Parrott House has got it!

Southern Oregon Business Journal

Kim Daniels has accepted the Executive Director position at the Prineville Chamber of Commerce after serving in an interim role since June of 2018. Kim follows Casey Kaiser in the executive position who served in that capacity from 2014 – 2018 before accepting a position in the Planning Department of the city of Prineville.

Kim Daniels moved to Prineville in 2002 when she became part of the Les Schwab marketing team. She was with Les Schwab for 14 years until the move of the HQ to Bend became too far to commute. A native Oregonian, Kim was born in Eugene and graduated from the University of Oregon in 1998 with degrees in Journalism and Communication. She is the mother of two daughters. Kim describes Prineville as a great community that ”takes care of its own”. She supports the Shop Local attitude of local residents and is active in the business community. The position at the chamber comes with the additional responsibility of directing the office of the Prineville Visitor Center. 30,000 people passed through Prineville to view the eclipse in 2017, and Kim says that many of them are returning. A strong economy, construction and employment growth press the education of a future workforce into a key component of Kim’s local activities.

“Central Oregon’s oldest community also happens to have its pulse on the high tech needs of the future. Prineville, while maintaining its small-town cowboy charm, is quickly becoming a hot spot, so to speak, for some of the tech industry’s biggest names like Facebook and Apple which have recently set up shop there. The town is experiencing a renaissance with more places to dine, a new brewpub and choice lodging.” From: https://visitcentraloregon.com/ chambers-tourism-partners/ For these reasons and many more Kim is pleased to be the new Chamber and Visitor Center Director.http://www.prinevillechamber.com

Southern Oregon Business Journal

Oregon’s Per Capita Personal Income 2017

by Christopher Rich

Oregon’s

total personal income ranked 26th in the nation in 2017, one spot below the 2016 rank. Data on personal income comes from the Bureau of Economic Analysis, a division of the U.S. Department of Commerce. State personal income captures total income within a state and is the sum of three main components: net earnings (wages, salaries, employer contributions); personal current transfer receipts (retirement, Medicare, unemployment insurance); and dividends, interest, and rent. Growth in personal income for the U.S. overall averaged 4.4 percent in 2017, an increase of 1.8 percentage points from the previous year’s rate of Southern Oregon Business Journal

growth (2.6%). For individual states in 2017, growth ranged from a 0.7 percent decrease in North Dakota to a 6.1 percent increase in Washington. Personal income grew by 5.2 percent in Oregon in 2017, which was the eighth fastest in the nation. The previous year, Oregon’s rate of growth was 4.8 percent, which was third in the nation. Growth in the three components of personal income changed at varying levels over the past year. Growth in net earnings increased from a 5.4 percent increase in 2016 to a 6.2 percent increase in 2017. Growth in dividends, interest, and rent slowed just slightly from 4.7 percent in 2016 to 4.6 percent in 2017. Growth in personal current 29

transfer receipts slowed from 3.0 percent in 2016 to 2.6 percent in 2017. Per Capita Personal Income The size of a state’s population plays a predominant role in the size of its total personal income. California, Texas, Florida, New York, Pennsylvania, and Illinois – six of the most populous states in the nation – are also the top six states in terms of total personal income. South Dakota, North Dakota, Alaska, Vermont, and Wyoming – five of the least populous states in the nation – are also the bottom five states in terms of total personal income. By dividing a state’s total personal income by its total population, we obtain per capita personal income (PCPI). This gives us a number that is more easily compared with other states. For instance, Oregon’s total personal income was just over $199 billion in 2017, while Texas’ was more than $1.3 trillion. Per capita personal income, however, was $48,137 for Oregon and $47,362 for Texas. Adjusting to PCPI adjusts the income rankings of states as well. Connecticut ranked 23rd in total personal income and 29th in population but ranked first in the nation in PCPI. Mississippi ranked 34th in population and 35th in total personal income, but Mississippi ranked last of the states in PCPI. Oregon ranked 27th in population, 26th in total personal income, and ranked 25th in per capita personal income. Comparison of PCPI Components

For the United States as a whole, 63 percent of PCPI came from net earnings in 2017. Connecticut took the top slot and Mississippi took the bottom in dollar value of per capita net earnings. For Connecticut, 64.8 percent of PCPI came from net earnings and for Mississippi, it was 57.3 percent. Oregon ranked 30th among the states in per capita net earnings ($29,245), which accounted for 60.8 percent of the state’s PCPI in 2017. Many states ranked similarly in dividends, interest,

Southern Oregon Business Journal

and rent per capita as they did in net earnings per capita. Oregon ranked 24th in dividends, interest, and rent per capita. Connecticut ranked second and Mississippi 49th in per capita dividends, interest, and rent. States that ranked high in per capita net earnings receipts and states that ranked low in per capita earnings generally ranked higher in per capita transfer receipts. This makes sense. If you are earning income, either through wages or dividends

and interest, then you are less likely to need transfer receipts to cover basic living expenses. Oregon, which ranked near the middle in both per capita net earnings and per capita dividends, interest, and rent, moved to 20th highest in per capita transfer receipts. Connecticut ranked 18th and Mississippi ranked 12th in per capita transfer receipts. Oregon’s Population-Driven Relative Trend Oregon’s PCPI has remained close to the U.S. level since estimates began in 1929. The largest difference between the Beaver State and the U.S. came in 1943 when Oregon climbed to its peak of 123.8 percent of the national level. Oregon’s PCPI was consistently above the U.S. from 1938 to 1956 when incomes were bolstered by defense manufacturing for World War II and the post-war economic boom. In 1943, war-related manufacturing propelled Oregon’s PCPI to its highest level relative to the nation. In 2009, Oregon’s PCPI dropped below 90.0 percent of the national level for the first time. And the state’s PCPI reached its lowest relative point (88.1%) in 2011. This was largely influenced by two main factors: the Great Recession of 2007 to 2009; and Oregon’s fast population growth. The Great Recession brought job loss and lower earnings, while at the same time Oregon’s population increased as well. Many states with high annual growth in population are also states with low

annual growth in PCPI. This relationship can greatly impact a state’s per capita income relative to the national level.

one reason why Oregon’s PCPI was 93.2 percent of the U.S. PCPI in 2017.

The Grass Is Greener in Oregon

Christopher Rich Regional Economist Baker, Grant, Harney, Malheur, Union, and Wallowa counties

Oregon’s PCPI relative to the U.S. showed a slow upward trend from 2013 to 2017. In 2013, Oregon’s PCPI was 89.2 percent and by 2017 it had reached 93.2 percent of the U.S.’s PCPI. Population growth works to drive PCPI downward, while income growth works to drive PCPI upward. Oregon’s 2017 population growth rate was eighth in the nation. The 2017 total personal income growth rate was also eighth in the nation. The PCPI growth rate for Oregon was sixteenth in the nation.

christopher.m.rich@oregon.gov 1901 Adams Avenue La Grande, OR 97850

Continued economic expansion that includes fast job growth, potentially high wages, technology-based industries, and increasing opportunities, along with an attractive Oregon lifestyle, brings new residents to Oregon. We like it here. You might too. And that’s

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Asymmetrical Pricing By: Adam Cuppy

Starting a business is hard enough; setting your price is like calling the shot blindfolded. You might have heard of "asymmetrical risk and reward," but if you haven't, let me bring you up to speedâ&#x20AC;Ś

first year. Think about that, for a minute: Imagine starting a company where your most substantial cost is at almost no risk to you. WTF?

Asymmetrical risk and reward is when you position yourself so that the upside far outweighs the potential downside. The concept is familiar to the financial investing world. So, to put it into those terms, for every $1.00 you invested, you would reasonably assume it would yield $5.00 (5:1). Therefore, by this assessment, you could be wrong four times out of five, but that one time you were right, you would make $5.00 of investment back; it would be a wash.

Do you need to operate on the same scale as Sir Richard? No. But, you can take the same principles and apply them on a smaller size to your business; and, you can start with pricing.

If you were right two out of five times, however, you would see a massive upside and further protect the downside. For many entrepreneurs, we're looking for a marginal return, or, at the very least, a breakeven scenario. We might say "Yes!" to a $1.00 investment that would reasonably assume a $1.50 or $2.00 upside. While doubling your investment is a great success, more is at risk. You would need to see more risky investments succeed, to come out on top, overall. Tony Robbins uncovered that the most successful business people on the planet are often the least risky. Sure, their bets are much larger than the average person, but the return on investment is almost always exponentially higher. In many instances, those same people will work harder to protect the downside altogether. When forming Virgin Atlantic, Richard Branson famously struck a deal with Boeing where he could return the planes, if the business didn't fail in the Southern Oregon Business Journal

I was coaching a client of mine, and we were discussing an event she was considering for this coming year. She had a moderate following and an excellent reputation in her community. The event cost roughly $10,000.00 to put on. Not too much for a person who ran a multi-million dollar business, but still $10,000.00. She had produced the event one year prior, and it was "okay, but lost money." The biggest issue was that there were only a few dozen attendees, and the financial model was based on ticket sales and the prospect of new leads coming from the event a common assumption. This upcoming year she was willing to keep the budget the same and didn't want to invest more money in promoting it. From a break-even point of view, if she sold 100 tickets at $100 for the day, it would be a wash; heck, if she would sell 100 tickets at $200 a piece it would 2x her money; however, that wasn't the biggest concern. Her time and her speakers' time was worth a heck of a lot more than $20,000.00. Let me ask youâ&#x20AC;Ś How often have you committed to something, invested a boatload of your time, made a small amount of money, and still said to yourself "That wasn't worth it?" Your time is precious and investing it into what's valuable is more important; that's 34

where she was.

Her ultimate goal is to develop a coaching program for aspiring female entrepreneurs, in additional to being financially successful. None of these goals were going to be satisfied by the event, and she was considering passing on it all together until we found an asymmetrical pricing model that would make it a solid multi-faceted win. Step 1: What makes it an objective win for you? and, Step 2: for the customer? If she only saw the upside, what would it look like? It was simple: $50,000 (5x the cost) over the first year. Not bad, if you ask me, a 400% profit ($40,000 net profit). How many attendees could you convert to buyers? "What would I offer them?" she asked. "It doesn't matter, yet," I replied. "Let's just work the problem back from the goal." "20%," she thought. Okay, so of 100 attendees, she thought she could entice 20 people to buy something she could offer. Makes sense! For starters, those are not a random 100 people - they're already buyers. She doesn't have to convince them that she can bring them value - they're convinced! Now, it's about aligning a new offering that extends the product they've already bought (attendance to the event.) Step 3: Would you like to supersize your order? Instead of pitching something categorically new and therefore, converting her attendees (existing buyers) back into new customers - it's more useful to upsell/upgrade their current purchase. In her case, it was private 1-on-1 coaching and access to her monthly training program. Again, they've already come to learn and grow. Why not get even more value with those same experts (her and her colleagues) providing specific guidance to you (the attendees) and your business? It's reasonable to assume it would come at a higher cost and it would require more than a single coaching session. Working the numbers backward from $50,000.00 (the goal) she wanted to determine an asymmetrical pricing model for 20 people (of 100 attendees). To reach $50,000 she would need to generate $2,500/ Southern Oregon Business Journal

year from each of those signups. $2,500 over 12 months is $208.33 per month. She's confident she can provide 2 - 3x that much value to those customers through her coaching. That's awesome! And leads me to my next point: asymmetrical value for the customer. How can you bring exponentially more value to the customer? The value they see in a measurable, objective way? There is only one risk at this point: 20 attendees don't sign up. To protect her goal, she needs a one-year commitment of $2,500. The customer can pay monthly, but if they cancel three months in, she's lost control of her achievement. However, $2,500 is a lot. "What if I guarantee?"

offer

one-month

money-back

"Great idea." However, now we're presenting a new mix up in our calculation. If two people of the 20 sign up, then cancel, she's down to 18, and shy of her goal. The asymmetrical fix is to change the calculation and spread the total goal amount out amongst the remaining people. If you assume the unlikely risk that two of 20 will call the guarantee, then base the price on 18 people following through for a year. Instead of $50,000 / 20, change it to $50,000 / 18, which would increase the monthly cost per customer from $208.33 to $231.48, or $23.15 more per month - nothing! That way, even though she's confident not one customer will ask for their money back, she's set up to reach her goal with her worst case scenario. The only way she can do this is to provide exponentially more measurable value than the cost. If she's offering $500, $600, $700 of quantifiable value for $231.48 (rounded to $250/month, of course), then it's still asymmetrical value to the customer. Step 4+: Where can you re-purpose and re-release? Taking it one step furtherâ&#x20AC;Ś She found that the curriculum she is developing for her monthly program can become the outline/

content for her book, which in turn will drive more traffic back to her events, increase attendance and provide even more financial opportunity.

delivers quality features continuously, and with as little friction as possible. A process that your team can maintain and build upon when we're done.

Question to determine asymmetrical pricing

“Not a best-selling author. Not a Fortune 500 CEO. Not a Nobel Prize recipient. Regardless…

•

Does the value to the customer far exceed the cost (asymmetrical value)?

•

Am I measuring and relaying the value to the customer?

•

Have I accounted for the cost of guarantees or rebates that I'm providing?

•

Am I giving up control of my achievement by allowing my customer to back out early without accounting for that?

any

I co-founded a culture-focused company that I would want to work for; with core values that I stand behind; where I collaborate with people who care. My mission in life: To amplify the greatness of others, and create a lasting impression in their lives.”

Who am I?

I'm the Chief Operating Officer at ZEAL. We work directly with mid-to-large scale enterprise product owners, software developers and project managers to develop a procedural recipe that’s unique to the business, fosters confidence in the team, manages uncertainty, protects the integrity of the product,

AdamCuppy Chief Operating Officer (COO)

https://www.codingzeal.com/://

Southern Oregon Business Journal

“It was so awesome” “At one time, I had volunteered for hospice care and I remembered how deeply moved I was by a patient’s failure to thrive. I also remembered attending a lighting conference in 2008 where I learned about lighting used in neonatal intensive care that greatly improved the infants’ ability to thrive. Putting these two realizations together was my light-bulb moment. If light can improve the lives of newborns what about everyone else? I became extremely interested in learning how light is not the static thing we often think it is. It has been within only the last hundred years that we have subjected ourselves to live with man-made lighting that is static, meaning that it is the same whatever time of day you turn it on, it doesn't change. Pushing my findings further, I became immersed in research. I believe in the possibilities that we can use light to improve the lives of our elderly, and those who are living with Alzheimer’s and other dementia diseases. With Lumen Element I am able to educate how light can enhance all of our lives. This journey began in February 2008 when my husband and I purchased Century Lighting.” Suzanne Cavanagh, CEO, Owner at Century Lighting OregonFrom her profile on Linked In it is clear that Suzanne Cavanagh is more than a co-owner with her husband, Joe, of a commercial lighting company in Springfield. To hear her speak is to catch her enthusiasm for making a difference with lighting. Are you checking your cell phone as you head to bed at night? And then unable to fall asleep? Maybe its that blue light emanating from your phone. Scientists of lights and lighting will tell you that light can add 90 minutes to the time your body is ready to go to sleep. Have you ever gotten up in the middle of the night and then been unable to fall back to sleep? The reason may be that bright light on your alarm clock, or the night light that keeps you from stubbing a toe on furniture. That blue light is telling your body its time to wake up. Maybe it’s the light.

Southern Oregon Business Journal

From the blog: https://centurylightingoregon.com/blog/ New Paint, Flooring or Furniture? Check your lighting The color of your walls, flooring and furniture can change your lighting. Dark colors on the walls, on the floor or in your furniture actually absorbs light. Light colored walls can reflect and intensify the light. If you have changed any of these things and you feel like your lighting is not the same you are correct, it’s not. In any remodeling of space, lighting needs to be considered. How much lighting do you need? What is the space being used for? Do you want the space to be warm and cozy or bright and crisp? Do you need true color appearance- rendering? As you are planning to make changes in your home or office be sure to consider how this will affect your light! -----------------------------------------------------------------------------------------------------------Through the efforts of Suzanne and her blog postings at suzanne@lumenelement.com information is provided addressing many important and interesting facts regarding something many of us pay little attention to; light, its intensity and its color. A single page flyer containing these items:

HUMAN CENTRIC LIGHTING •

Understanding the biological effects of light on our sleep, health, productivity, learning and so much more.

•

Our Circadian Rhythm is reset each day by the light we surround ourselves with in the morning.

SLEEP •

Now more than at any other time in history we are sleep deprived and this impacts all areas of our lives.

•

We require 8 hours of deep restorative sleep; our pineal gland produces melatonin in direct approximation to the contrast of bright sun exposure we receive during the day and total darkness at night.

•

Once the sun sets “blue light” inhibits our sleep. TV’s and computers are a major source of blue light. To help reduce this enable the “Night Shift” on your phones and www.justgetflux.com on your computers. These adjust the colors of light and greatly reduce the blue light from these devices at night.

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Wear Yellow glasses at night. These block the “blue light’ and will help with melatonin production.

Follow Suzanne’s Lumen Element Facebook page for the latest research on the importance of light.

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