July 1, 2016 by Southern Oregon Business Journal

July 1, 2016

Dutch Bros. Coffee Taking the west by steam

A few words from Greg: Life doesnâ&#x20AC;&#x2122;t come at us all at once. It comes at us in fits and spurts with a few times of peace and calm, where we catch our breath or reflect on where we are and where we want to be . Business has its own life not dissimilar to our own.

The research and interviews that go into compiling the articles that are printed in our monthly issue of the Southern Oregon Business Journal give us the opportunity to discover the challenges business entrepreneurs have overcome to be successful. Energy and determination go head-to-head with bumps that inevitably appear along the way in building a business, including those times when a business takes a different path and becomes more than it might have been. The similarities of many aspects of business allow article choices to be somewhat varied in their industry but quite the same in operational or organizational function. The crossing of industries in a single business publication is intended to provide useful information to all industries. Many comments about previous issue compilations tell us that is so.

Our determination to make the readability of articles better with each issue is coupled with a step-by-step process of creating systems that are faster and more efficient with every passing month. I wish you every success.

Greg Henderson Greg Henderson, Publisher greg@southernoregonbusiness.com

2 ASSISTING THE ECONOMIES OF THE SIX COUNTIES OF SOUTHWEST OREGON

Publishers Comments Business journal growth and improvements

Oregon Econ Indicators Tim Duy

Reclassifying Employees Elizabeth Semler

Oregon Preferred Worker Arlene Soto

Skills Gap James C. Price

California Influence

Coffee Drinkers

Somethings Brewing Dutch Bros

Publisher

Energy

703 Divot Loop Sutherlin, Oregon 97479

OSHA Changes

Manufacturing

www.oregon.gov/DAS/OEA

talkaboutcoffee.com/

Greg Henderson energy.gov/ - world-nuclear.org

www.orosha.org

www.southernoregonbusiness.com 541-315-6127 A JOURNAL FOR THE ECONOMICALLY CURIOUS, PROFESSIONALLY INSPIRED AND ACUTELY MOTIVATED

Top 20 Facts

24 Oregon Manufacturing 3

Barry Robinson General Manager ••••• barry@ameri-title.com (541) 672-6651 Fax: (541) 672-5793

AmeriTitle is proud to announce the availability of ACH capabilities for both our Borrowers and Lenders. ACH payment handling will eliminate delays in mail and lost checks allowing us to provide a more efficient service to you.

1495 NW Garden Valley Blvd Roseburg, OR 97471

APRIL 2016 STATE OF OREGON ECONOMIC INDICATORS The April 2016 State of Oregon Economic Indexes was released today. We thank KeyBank for their generous support of this project.

The Oregon economy sustained its momentum in April despite a drag from manufacturing indicators. Highlights of the report include:  The Oregon measure of economic activity edged down from an upwardly revised March figure, while the three-month moving average, which smooths month- to-month volatility in the measure was effectively unchanged at 1.04, where “zero” indicates average growth over the 1990present period.  The manufacturing sector again contributed negatively, held back in part by weaker employment numbers. Soft manufacturing activity currently affects firms nationwide and is more significant in sectors exposed to a stronger dollar or the low energy prices. Note that both factors have been reversing themselves in recent months, suggesting that the drag from manufacturing will lessen in the second half of the year.  The UO measure of economic activity suggests a pace of growth similar to that experienced in other post-1990 expansions.  The University of Oregon Index of Economic Indicators was up 0.2% in April. The UO Index incorporates revisions to capital goods orders data this month; the Index remained qualitatively unchanged by the revisions. Initial unemployment claims fell while employment services payrolls (largely temporary help workers) rose; both indicators suggest overall job growth is set



to continue. Residential building permits and consumer sentiment both edged back while hours worked in manufacturing and the weight distance tax, a measure of trucking activity gained. Core manufacturing orders continued to trend down; as noted earlier, the sector is under pressure from a strong dollar and weak energy prices.

Together, these indicators suggest ongoing growth in Oregon at an above average pace of activity. The ongoing US economic expansion provides sufficient support to sustain Oregon’s economy for the foreseeable future.

Tim Duy Senior Director, Oregon Economic Forum Professor of Practice Department of Economics University of Oregon Eugene, Oregon DUY@UOREGON.EDU

Reclassifying Exempt Employees for 2016 By Elizabeth A. Semler

Most employers have both hourly and salaried employees. The salaried employees are either exempt from overtime because of the duties they perform, or nonexempt and entitled to overtime if they work more than 40 hours per week. On May 23, 2016, the Department of Labor issued new regulations that substantially increase the salary threshold for employees who are classified as exempt from overtime because they are executive, administrative, or professional employees.

Under federal law, the duties that an employee must perform to qualify as an administrative employee include:  The performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers (i.e., the employee must perform work directly related to assisting with the running or servicing of the business); and

The proposed increase will raise the minimum salary from $455.00 per week to $913.00 per week. This means that once the new regulations are introduced, an employee who performs the duties of an executive, administrative, or professional employee must earn at least $47,476.00 annually to be exempt from overtime. The DOL rule also provides for annual increases to the salary minimum and permits employers to satisfy up to ten (10%) percent of the annual salary requirement with nondiscretionary bonuses, incentive payments, and commissions, provided these forms of compensation are paid at least quarterly. The new rule goes into effect on December 1, 2016.



The exercise of discretion and independent judgment with respect to matters of significance.

To qualify as an exempt executive employee: 

An employee’s primary duty must be managing a business, or a department or subdivision of the business;



The employee must customarily and regularly direct the work of at least two or more employees; and



The employee must have the authority to hire or fire other employees, or the employee’s recommendations with respect to hiring, firing, advancement, or promotion of other employees must be given particular weight.

Generally, non-exempt employees (or hourly employees) are entitled to be paid overtime if they work more than 40 hours per week. Employees who are employed in “a bona fide executive, administrative, or professional To qualify as an exempt learned professional: capacity” are exempt from overtime, provided they are paid on a salary basis. To be exempt from overtime, the  An employee’s primary duty must be the performance of work requiring advanced knowledge in employees must perform certain duties to qualify as the field of science or learning acquired by a executive, administrative, or professional employees prolonged course of specialized intellectual and be paid the same salary every week regardless instruction. of how many hours they work (with a few exceptions).

If your company has employees who are currently classified as exempt because the duties they perform meet the criteria for administrative or executive employees, you need to make certain that their salaries meet the $913.00 weekly threshold, or reclassify the employees as non-exempt and pay overtime (if earned). Among the factors to consider when making this decision is how many hours per week you think your exempt employees are working. If your exempt employees rarely work more than 40 hours per week, then reclassifying these employees as non-exempt should not have a significant economic impact on your business. However, if your current exempt employees typically work more than 40 hours per week, you will have to do some math to calculate your potential exposure for overtime and compare that exposure to the increased salary you will have to pay to keep the employees exempt. The comparison might result in a decision to reclassify some or all of your exempt employees, or to hire additional hourly employees and schedule shifts to avoid paying overtime. For positions that you decide to reclassify as nonexempt, you should also consider: 

Whether to switch the employees to an hourly wage as opposed to paying the non-exempt employees a salary;



How non-exempt employees who continue to be paid a salary are going to keep track of the hours they work so you can make sure they are paid properly;



Whether your payroll system is set up so you can calculate a regular rate of pay based on the nonexempt employees’ salaries and pay overtime based on that regular rate of pay;



What kind of incentives or programs, if any, you want to introduce to retain management employees who become non-exempt; and



Adopting a policy that prohibits non-exempt employees from working overtime without advance permission and imposes discipline for employees who work unauthorized overtime.

There is no “right” answer for whether a particular employee should be reclassified. The decision should be based on the economics of your business and whether, based on the duties the employee actually performs, the employee should have been classified as exempt at the outset. Elizabeth Semler is a Partner at Sussman Shank LLP. She is Chair of the firm’s Employment Law Group and assists clients with a broad range of business and employment matters and business disputes. She is counsel to employers on a wide range of employment related topics and frequently writes and speaks on issues relating to employment law. www.sussmanshank.com

Non-Profit Response: “Re Exempt Ruling and its effects on non profits Non profits do a lot with a little to help people and communities. CASA’s donors, foundations, and government funders expect that we keep our expenses low while also doing more each year. In fact, they require that we keep our expenses low in order to receive needed funding. Yet lawmakers increased the minimum salary for exempt employees by 50%. Therefore, less will now be done with less. Which will greatly impact, in our case, the number of abused children who will receive an advocate.” Jennifer Mylenek Executive Director CASA of Jackson and Josephine Counties

Next Steps The proposed revisions to the FLSA’s white collar exemptions are designed to extend overtime protections to millions of employees and may, in particular, have a significant effect on retailers. Employers should consider the following actions:



Submitting comments to ensure that the regulatory record reflects the true effect of any proposed changes and to shape the final rule. Retail employers may do so individually or participate in association or coalition comments.



Consider changes to compensation and staffing models in light of the proposal. Indeed, the significant increase in the compensation required to meet the proposed salary-level test will likely affect long-standing staffing and compensation models within the retail industry. http://www.natlawreview.com/

the Preferred Worker doesn’t need the equipment. Other benefits an employer might receive include:

Southwestern Oregon Community College

Oregon preferred worker program A look at small business questions from the Southwestern Oregon Community College Small Business Development Center (SBDC). What is the Oregon preferred worker program and how can it benefit my business? The Preferred Worker Program (PWP), is designed to get employees back to work who were previously injured on the job. The program is offered through the Workers’ Compensation Division of the Oregon Department of Consumer and Business Services. The program is funded by worker and employer contributions to the Workers Benefit Fund. The program offers incentives to businesses to hire previously injured workers who have work experience, skills and a desire to return to work after an injury that limits their ability to do the same work they did before. Utilizing the PWP is a win, win scenario. Workers go back to being employed, and businesses save money while potentially increasing efficiency in the process. The program offers benefits that reduce the cost of doing business and make the worker more appealing at the same time. Benefits include wage subsidies that pay half of the employee’s wages for six months. Worksite modification benefits provide as much as $25,000 to modify a workplace to accommodate an employee’s restrictions. PWP employees are also exempt from workers compensation premiums for three years…even if there is a new injury during that time period. Imagine hiring an employee who has a 20-pound weight lifting limitation. With the worksite modification money, you could potentially get a forklift to enable the employee to be able to lift the things needed. Now imagine how much more productive and efficient that employee could be with the help of the forklift. Other staff could use the same forklift on shifts when

Claim cost reimbursement: This protects the employer from the costs of a new workers’ compensation claim if the preferred worker has a new injury during the three year premium exemption period. Employment purchases: This is help needed for a worker to find, accept, or keep employment. Purchases may include: Tuition, books, and fees for instruction to update existing skills or build new skills ($1,000, maximum benefit). Temporary lodging, meals, and mileage to attend instruction when overnight travel is required ($500 maximum benefit). Tools and equipment mandatory for the job, such as tool starter sets ($2,500, maximum benefit). Clothing required for the job ($400 maximum benefit). Moving expenses for a job within Oregon and more than 50 miles from the preferred worker’s primary residence. Initiation fees or back dues and one month’s current dues required by a labor union. Occupational certification, licenses, and related testing costs, drug screening, physical examinations, or membership fees required for the job ($500 maximum benefit). Placement assistance allows the preferred worker to hire a vocational counselor to help find a job ($2,000, maximum benefit). Miscellaneous purchases that do not fit into any other category, excluding a vehicle purchase ($2,500, maximum benefit). The PWP is a way small employers can save on employee costs and hire seasoned employees to help build their business. For more information go to the website www.oregonpwp.com. Additional help is also available at the OSBDCN Web page www.bizcenter.org.

Arlene M. Soto, Director Southwestern SBDC

5 Important Facts About the Skills Gap

By James C. Price in Workplace In today’s workforce, there is a growing disconnect between the skills, training, and experience workers have and the job requirements employers need. From a lack of skilled laborers to being unable to fill job positions, the skills gap is one of the toughest challenges businesses face. Here are five important facts you should know about the widening skills gap. The Skills Gap Costs Companies A Harris Poll study conducted on behalf of Career Builder found that 60% of companies worry about the cost of having jobs go unfilled due to lack of skilled workers, and 25% cited revenue losses associated with the skills gap. On top of fiduciary constraints, the lack of qualified workers costs companies in other ways—41% experienced low morale due to uneven work responsibilities, 40% said work doesn’t get accomplished, 30% have had a decline in customer service, and 25% have more employee mistakes, resulting in poor quality of work. Mismatch: Skills People Have vs Skills Employers Need According to a May 2016 Bureau of Labor Statistics report, there were 5.8 million job openings in the U.S. in March 2016. A recent survey of businesses by Express Employment Professionals answered why these jobs are going unfilled. Lack of available applicants, lack of experience, and lack of hard skills were the top three reasons job postings remain open. According to Express CEO Bob Funk, the findings show that there is a “mismatch between the skills people have and the skills employers need.”

Younger Generations More Educated, Less Skilled According to the U.S. Census Bureau, 29% of Baby Boomers have attained at least a bachelor’s degree by age 42 and 35% of Gen Xers have a degree. Though younger generations haven’t finished their college education, 66% of high school graduates enrolled in college in 2013. Millennials are on track to become the largest college-educated group of any generation. The problem is well-educated people sometimes lack basic workplace skills. According to researchers at Princeton-based Educational Testing Services, American Millennials ranked among the lowest in the world when it came to skills employers need, including literacy, practical math, and problemsolving. Canada is experiencing a similar skills gap as a study by Canada West Foundation found 40% of workers lack the skills to perform their jobs. 10,000 Baby Boomers Reach Retirement Age Every Year The generational shift in the workforce is causing a schism in the workplace. Baby Boomers are reaching retirement age at the alarming rate of 10,000 per day. And, as Baby Boomers near retirement and Millennials step into leadership roles, the two largest generations in the labor force are switching places. Companies Combat the Gap with Training CareerBuilder’s study on the skills gap also unveiled what companies are doing to bridge the gap within their workforce. Instead of allowing positions to go unfilled, 61% of companies hire individuals who don’t meet job requirements and plan to help them grow into their positions. Additionally, 49% of businesses plan to train employees who don’t have experience in their respective industries or fields.

The Importance of California to Oregon’s Economy California's population in 2014 was 38,802,500, according to the United States Census Bureau. This estimate represented a 4.2 percent increase from the bureau's 2010 estimate. The state's population per square mile was 239.1 in 2010, exceeding the national average of 87.4.

The median household income in California was $61,094 between 2009 and 2013, compared to a $53,046 national median income. Census information showed a 16.8 percent poverty rate in California during the study period, compared to a 14.5 percent national poverty rate.

California experienced a 2 percent increase in total employment from 2011 to 2012, falling below the 2.2 percent increase at the national level during the same period.

Oregon’s Trade Ranks High Among U.S. States

Demographics California exceeded the national average for residents who attained at least bachelor's degrees, according to data from 2009 to 2013. The United States Census Bureau found that 30.7 percent of California residents aged 25 years and older attained bachelor's degrees, compared to 28.8 percent at the national level.

“A trade study released in 2010 by the Portland Business Alliance ranked Oregon seventh nationally in the share exports hold -- 12 percent -- of the state’s economy. A more recent study prepared for the same group indicates that nearly 80,000 jobs in Oregon are directly tied to exporting goods and services, with one in four manufacturing jobs in the state being export-related.”

Office of Economic Analysis http://www.orgon.gov/DAS/OEA 

The Oregon population is 4,028,977 people according to the US Census Bureau's 2015 Population Estimates Program.



The Oregon median household income in the past 12 months is $50,521 in 2014 inflation-adjusted dollars according to the US Census Bureau's 2014 American Community Survey.

mold into a desired asset that becomes a highly marketable feature. Oregon certainly has those assets in spades. Realizing when and how to take advantage of them is an art form in economics that can prove beneficial to an entire state. Geographically Oregon ranks #9 in size with just over 98,000 square miles of land area. California is #3 with over 168,000 square miles. In population Oregon’s numbers place it at #27 of the 50 U.S. states; California is #1. That means, on a comparative basis, there is a lot of room for growth in Oregon. Every community and county in Oregon is working to improve the opportunities for its citizens by seeking employers that will add to the job opportunities while taking part in the culture of the region. By recognizing the opportunities across our southern state line in California and using that ready-made resource the future of Oregon can be bright. While the state of California is not Oregon’s only resource for the future, it is certainly within walking distance and an easy way to take steps to benefit future citizens of the state.

With a population of about 10% of that in California, Oregon must rely on that state as a primary partner in nearly everything we do. From a source of trained and ready employees to financial resources of business and individual real estate seekers, the state of California and its next-door-neighbor closeness to Oregon offers an extensive opportunity for growth in Oregon’s economy.

Greg Henderson, Publisher Southern Oregon Business Journal www.southernoregonbusiness.com

There is a parochial tendency for communities, states and countries to desire their independent cultures including standards of living. There is nothing wrong with remaining autonomous and securing a brand to 11

• 1720 Cafe Florian opens in Venice, Italy in Piazza San Marco. It's still open to this day. When in Venice do as the Venetians do... Stop by for an espresso.

“For more than three decades, coffee has captured my imagination because it is a beverage about individuals as well as community. A Rwandan farmer. Eighty roast masters at six Starbucks plants on two continents. Thousands of baristas in 54 countries. Like a symphony, coffee's power rests in the hands of a few individuals who orchestrate its appeal. So much can go wrong during the journey from soil to cup that when everything goes right, it is nothing short of brilliant! After all, coffee doesn't lie. It can't. Every sip is proof of the artistry -- technical as well as human -- that went into its creation.” ― Howard Schultz, Onward: How Starbucks Fought for Its Life without Losing Its Soul

I’m rarely hungry until about lunchtime. So, other than a morning cup of coffee, I don’t eat much before noon.

10 Things Coffee Drinkers Do Better Okay, I’m a coffee drinker. And if there’s anything that will pique my interest its a headline that claims something I do is better than someone else. Well, I have to read it. The above headline is just such a piece. Apparently some smart people from a big, important institution - the academic kind - have some proof of a few things coffee drinkers do better. They are a little ambivalent about the studies and the people who did them other than to say things like “A number of researchers” and “Research has shown” and “Scientists” (unnamed), but since they say good things about a group with whom I agree, I’ll accept their claims as fact. Here you go: 1. Coffee drinkers are happier than people who don’t drink coffee. (Especially after they’ve had their morning coffee?) 2. People who drink coffee get more out of exercise. (Maybe coffee is an adrenalin replacement?) Did you know that the Olympics committee counts caffeine as a performance enhancing drug? Yeah, really. 3. People who drink coffee live longer. (Maybe its all the exercise they do because of the caffeine boost?) 4. Coffee drinkers have fewer health risks than noncoffee drinkers. Apparently there’s less risk of skin cancer, Alzheimer’s disease and Parkinson’s disease. 5. Coffee drinkers are smarter. Reaction time, attention, logical reasoning and vigilance improve if you drink coffee when you’re in a slump. 6. People who drink coffee play well with others. A coffee company said (uh huh - a coffee company) their customers claimed to be more fun at the office than coworkers. 7. Coffee drinkers make more money. “A study” found that coffee drinkers make about $3,000 more per year than tea drinkers. 8. Coffee drinkers are more generous. (Maybe because they make more money?) ...but, the “study” counted only coffee drinkers who were actually holding a cup of coffee. 9. Coffee is for closers. A coffee company named Nespresso found that 77% of upper management execs prefer coffee to tea. The better the coffee the higher the status symbol. 10. Coffee drinkers stand with giants. History told researchers that people like J.S. Bach, Benjamin Franklin, Voltaire and Teddy Roosevelt were coffee drinkers. There you have it, all the proof you need that coffee drinkers do better. I guess I’d better fill my cup now…

There are many ways to prepare your coffee. The recipe list gets longer every time I visit the local coffee shop. Campfire coffee should always come with a few coffee grounds at the bottom of the cup. Otherwise, you’re not really camping. However, the coffee kiosk and coffee shop offers these and more.: 1. Americano: A single shot of espresso with about 7 ounces of hot water. 2. Black coffee: A drip brew, percolated or French press style. 3. Cafe au Lait: Similar to Caffe Latte, except that an au lait is made with brewed coffee instead of espresso. 4. Cafe Breva: A cappuccino made with half and half milk, instead of whole milk. 5. Caffe Latte: Essentially, a single shot of espresso in steamed (not frothed) milk. 6. Cafe Macchiato: A shot of espresso with steamed milk added. 7. Cappuccino: Usually equal parts espresso, steamed milk, and frothed milk, often with cinnamon or flaked chocolate sprinkled on top. 8. Double, or Double Shot: Just as it sounds, this is two shots of espresso mixed in with the regular amount of additional ingredients. 9. Dry Cappuccino: A regular cappuccino, only with a smaller amount of foam, and no steamed milk at all. 10. Espresso Con Panna: Your basic standard espresso with a shot of whipped cream on top. 11. Hammerhead: A real caffeine fix, this drink consists of a shot of espresso in a regular-sized coffee cup, which is then filled with drip coffee. 12. Irish coffee: A coffee spiked with Irish whiskey, with cream on top. 13. Kopi Tubruk: An Indonesian-style coffee that is very similar to Turkish and Greek in that it’s very thick, but the coarse coffee grounds are actually boiled together with a solid piece of sugar. https://www.talkaboutcoffee.com/ethiopian-coffee-culture.html

Photo by David Gibb | dgibbphoto.com

Dutch Bros Where Something is Always Brewing

GRANTS PASS, OR— From its humble beginnings working out of a small Pushcart in Grants Pass, Dutch Bros has grown into the most popular coffee Kiosks in the Rogue Valley and in over 260 locations in seven states.

Travis Boersma, Co-founder Dutch Bros www.DutchBros.com 300 N Valley Dr. Grants Pass, OR 97526 (541) 955-4700

Ranked by Portland Business Journal as the 74th-fastest-growing private company in Oregon in 2015, Dutch Bros was founded in 1992 by brothers and dairy farmers, Dane and Travis Boersma. Dutch Bros plans to add 20-30 locations in a year, and the company now has an army of 5,000 baristas. Community oriented, each year Dutch Bros has donated more than $2 million to non-profit organizations, including local food banks, the Muscular Dystrophy Association, American Cancer Society and Boys & Girls Clubs of America. Three times a year, the company holds major fundraising events to benefit community food banks, research into ALS and support kids’ organizations.

“Coffee is our avenue to connect with people. A lot of our customers become our friends.” -Kambria Sauer Love Abounds Foundation Specialist Dutch Bros 541) 773-8946 14

Where Something’s Always Brewing.

Even though friends thought brothers Dane and Travis Boersma were crazy at the idea of opening a coffee business, they got busy realizing their dream. They started out with a simple pushcart in Grants Pass, offering high-quality coffee, loud music, lots of smiles and incredible speed at pulling shots for eager customers. Soon, crowds lined up before they opened, and with their business flourishing, they opened a second location. Inspiration struck again. What about a drive-up, they wondered? Over the years, Dane and Travis adjusted their business model to best serve their customers, and they expanded their operation to other communities. But the brothers ultimately faced a new crisis and a new opportunity. In 2004, the warehouse burned down, and the beans, roasters, the office and everything they had built, went up in smoke. Luckily, no one was injured. When the community stepped up to help, Dane and Travis realized the company was more than beans and a facility. It was about the relationships and the goodwill they had built with the community. Just as they sorted themselves out from the fire, tragedy struck again. Dane was diagnosed with Amyotrophic Lateral Sclerosis, ALS, or better known as Lou Gehrig’s Disease. Instead of knocking the brothers down, they started Drink One for Dane to raise funds for ALS. This is one of the biggest events of the year for the company and has provided over $2.53 million to fight the disease.

Photo by David Gibb | dgibbphoto.com

“Espresso! It’s like coffee on steroids,” said Travis Boersma, who first proposed the idea of a coffee stand to his brother. We should sell espresso.” And with those words, Dutch Bros was born and has since grow from a simple pushcart to over 260 locations in Oregon, California, Washington, Idaho, Nevada, Colorado and Arizona.

Connecting people one cup at a time

Unfortunately, Dane, who set audacious goals for the company and inspired everyone including his brother, succumbed to ALS in 2009. Dane’s can-do spirit and passion lives on and has become part of the DNA of Dutch Bros, with head-quarters in Merlin, just north of Grants Pass. Baristas, or “broistas” as they are called, have that same infectious optimism as they greet customers and create a buzz over the company’s coffee. And the spirit of brother helping brother and community members helping community members has grown even stronger. “Coffee is our avenue to connect with people,” says Kambria Sauer, a Love Abounds Foundation Specialist at Dutch Bros. “A lot of our customers become our friends.” The company’s commitment to its employees runs deep and provides one of the strongest bonds in the Dutch Bros culture. Employees of Dutch Bros, who have worked at the company for at least three years and have been a manager for at least one year, have the unique opportunity to operate their own franchise. This is an opportunity that is only extended to Dutch Bros employees and is part of the communityoriented spirit of the company. Sometimes Travis, the co-founder, has been known to trade places with the employees. The company, the largest privately held drive-thru coffee company, was featured on the reality TV show Undercover Boss, where Travis slipped into the role of a rank-and-file employee. Among other things, Travis journeyed to El Salvador to work on a coffee plantation where the company purchases beans. As Dutch Bros became more popular, customers have been excited by the exclusive line of clothing, cups and other accessories, which are sold online at shop.dutchbros.com. The tradition of giving back to the community has continued to grow, and the Dutch Bros’ Love Abounds Foundation vision pursues the goal where all people are smiling, and everyone realizes they have the power to create their own opportunities. The company has three giveback days a year. Dutch Luv raises food for the hungry. Drink One for Dane continues the fight against ALS by supporting families confronted with the disease. Buck for Kids allows franchises and their communities to support a children’s organization. Dutch Bros Coffee was ranked by J.D. Power and Associates as highest in customer satisfaction compared to other coffee companies in it 2012 and 2013 Specialty Coffee Retailer Satisfaction Report (SM). It’s not surprising that Dutch Bros has been on the Portland Business Journal fastest-growing private company’s list in Oregon for the past six years. Dutch Bros continues to make meaningful and successful connections with its customers and its employees one cup at a time. According to Sauer, “if you have happy employees then success will follow.” Dutch Bros | 300 N Valley Dr., Grants Pass, OR 97526 | www.dutchbros.com | (541) 955-4700

541) 773-8946

Energy: Fossil Fuels, LNG and Renewable Energy Since man discovered fire he has been trying to find better ways to capture energy to use it to his advantage. From fire and hydro-energy, wind and solar power, to fossil fuels, nuclear power and storage batteries it seems every option has been tested. Every energy source has its advantages. They also have their shortcomings. The current discussions about an LNG Pipeline through 230 miles of SW Oregon is an important item to the region but a small part of energy conversations around the world. The recession of 2008-2010 weighs heavily in discussions about jobs, local economic impact and the competitive nature of trading in energy among industries and countries. The strength of the U.S. Dollar is a component with weaker currencies allowing the bidding process to favor them. Climate change and global warming fears have launched the political argument into the fray. The attempts to reduce carbon dioxide and other pollutants into the atmosphere through international agreements have placed coal firmly on the chopping block. The first, most efficient means of replacing the energy capacity of coal is to bring in natural gas. With that, new excitement lives on both sides of the discussion. Natural gas headlines are numerous. Natural gas is abundant and much cleaner than coal. But, new technology in drilling, pumping and transportation of the gas causes some to rejoice while the opposition

cringes over current and potential problems. Publisher, GH – Natural Gas History During the 19th century, some types of lamps ran on natural gas, usually along city streets. In 1885 Robert Bunsen invented the Bunsen burner, which mixes gas with air to produce a steady flame for heat or cooking. Widespread household use of natural gas waited until the midtwentieth century, when thousands of miles of natural gas pipelines were built across the country.

In This Issue - Points under consideration:



“U.S. natural gas prices increase when the U.S. exports LNG. But the global market limits how high U.S. natural gas prices can rise under pressure of LNG exports because importers will not purchase U.S. exports if U.S.

wellhead price rises above the cost of competing supplies. In particular, the U.S. natural gas price does not become linked to oil prices in any of the cases examined.” Federal Register /Vol. 77, No. 238/Tuesday, December 11, 2012 http://energy.gov/sites/prod/files/2013/04/f0/ fr_notice_two_part_study.pdf



The Center for Liquefied Natural Gas (CLNG)

  

LNG An Economic Winner For The Entire U.S. Economy Exports Beneﬁt Consumers DOE Macroeconomic Study on LNG Exports: Key Findings Minimal Price Impacts, No Linkage To Oil



“[F]or every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased. In particular, scenarios with unlimited exports always had higher net economic benefits than corresponding cases with limited exports.” (DOE report, p. 1) “In all of these cases, benefits that come from export expansion more than outweigh the losses…” (DOE report, p. 1) “In all of the scenarios analyzed in this study, NERA found that the U.S. would experience net economic benefits from increased LNG exports.” (DOE report, p. 6) “Even with the highest prices estimated by EIA for these hypothetical cases, NERA found that there would be net economic benefits to the U.S., and the benefits became larger, the higher the level of exports.” (DOE report, p. 12) “In conclusion, the range of aggregate macroeconomic results from this study suggests that LNG export has net benefits to the U.S. economy.” (DOE report, p. 78) “The net result is an increase in U.S. households’ real income and welfare.” (DOE report, p. 6) “All export scenarios are welfare-improving for U.S. consumers…” (DOE report, p. 55) “[The] additional sources of income for U.S. consumers outweigh the loss associated with higher energy prices. Consequently, consumers, in aggregate, are better off as a result of opening up LNG exports.” (DOE report, p. 55) “Natural gas price changes attributable to LNG exports remain in a relatively narrow range across the entire range of scenarios.” (DOE report, p. 2) “In particular, the U.S. natural gas price does not become linked to oil prices in any of the cases examined.” (DOE report, p. 6) “However, the effects of higher price do not offset the positive impacts from wealth transfers and result in higher GDP over the model horizon in all scenarios.” (DOE report, p. 56) http://lnginitiative.org/2013/01/08/doe-macroeconomic-study-on -lng-exports-key-findings/

Gas deposits in shale and hydro-fracking



While burning natural gas is far cleaner than coal or petroleum, drilling for natural gas has raised concerns in recent years as companies have ramped up the use of hydraulic fracturing, or “fracking,” to get at shale gas. It’s too expensive to plumb natural gas deposits that are trapped in shale with conventional methods. Instead, high volumes of a mixture of water, chemicals and sand are pumped into deep wells at high pressure, inducing fissures in the underground rock, through which the trapped gas can be released and collected. Conventional gas drilling requires a company to drill all the way down to where the gas is located, while “fracking” allows companies to access more gas for less cost as the drill doesn’t need to go all the way to all the individual locations of the gas.



Following a major earthquake, a 15-metre tsunami disabled the power supply and cooling of three Fukushima Daiichi reactors, causing a nuclear accident on 11 March 2011. All three cores largely melted in the first three days.



The accident was rated 7 on the INES scale, due to high radioactive releases over days 4 to 6, eventually a total of some 940 PBq (I-131 eq).



Four reactors were written off due to damage in the accident – 2719 MWe net.

www.world-nuclear.org/information-library/safety-and-security/ safety-of-plants/fukushima-accident.aspx

The Truth About Energy Written by Nick Hodge Editor, Energy and Capital Renewable energy has been a terrible stock investment. Wind and solar companies that were once the largest in the world (Vestas, Q-Cells, SolarWorld) and even some smaller ones (like Solyndra) have collapsed… Indeed, shares of those companies — and many others, as evidenced by the fall of solar and wind exchange-traded funds — are sliding hard: Yet counterintuitively, installations of wind and solar are up big. Opposite of related stocks, charts for solar- and windinstalled generation capacity are going almost hyperbolic:



Fukushima Accident

(Updated June 2016)



The Great East Japan Earthquake of magnitude 9.0 at 2.46 pm on Friday 11 March 2011 did considerable damage in the region, and the large tsunami it created caused very much more. The earthquake was centred 130 km offshore the city of Sendai in Miyagi prefecture on the eastern cost of Honshu Island (the main part of Japan), and was a rare and complex double quake giving a severe duration of about 3 minutes. An area of the seafloor extending 650 km north-south moved typically 10-20 metres horizontally. Japan moved a few metres east and the local coastline subsided half a metre. 17

If wind installations have grown 900% in the past decade and solar installations have grown 2,600%... why are the stocks down 50% to 80% — or more? The answer is rapidly falling prices. It's getting drastically cheaper to produce electricity with wind and solar. This is precisely why Solyndra failed. Its fancy, high-tech cadmium indium gallium selenide panels were intended to compete with “high cost” siliconbased panels. But when silicon solar companies started innovating and bringing down the cost of their products, as always happens with economies of scale, Solyndra was no longer competitive. In fact, the price of wind and solar has come down so much that the margins disappeared as they became commoditized. But this is exactly what renewable energy detractors were asking for all along. Now that prices have fallen, they're pointing to the failure of companies as evidence that renewable energy is dead. But what's really happening is it's growing so fast, the weakest ones in the herd are being thinned out. Those citing Solyndra as a symptom of a dying solar industry have it completely backwards… Solyndra went bankrupt because of free market dynamics (of course, the government shouldn't be subsidizing either side with loan guarantees, cheap land, or cleaning up spills).

Publisher’s Note: The development of energy sources and the utilization of the energy produced from those sources has not been without controversy and concern. Issues are public, private and individual. They are economic on the international front as well as the national, local and individual fronts. Emotions run high whether the discussion is about family wage jobs or preventing harm to the environment. It is unlikely that a final decision on the LNG Pipeline in SW Oregon can be made without someone being disappointed, perhaps to a very large degree. Some of the concerns are: 1. Installation of a pipeline 250 miles long must cross a number of properties owned by private individuals and companies as well as the public. 2. How much damage can be expected to occur in the process of construction? Will damage be temporary or permanent? 3. How many jobs will the construction process create? Will these be local jobs? Are they temporary or permanent? 4. Is it safe? 5. Jordan Cove will be the port for exporting the Liquefied Natural Gas. Who are the customers? Are they guaranteed? 6. Is fracking a real concern in the process of extracting gas from hundreds or thousands of feet below the earth’s surface? 7. Can’t other energy sources be used instead of Natural Gas? 8. Use of natural gas is bad for the environment. How does it improve our need to be more friendly to the earth’s environment? 9. Can’t we use renewable energy sources like wind or solar instead of coal, oil or natural gas for our energy needs? These and many other questions have been common questions during the process of negotiation for approval of the Jordan Cove project. Highlighting these issues has been an ongoing communication effort at local town hall meetings, in local newspapers and on many websites from every side of the discussion.. The Federal Energy Resource Commission (FERC) is responsible for making a determination on whether the project will proceed or not.

Written by Nick Hodge Editor, Energy and Capital

One of the recent requests has been for more assurance that customers are committed to purchasing the LNG that will be carried by the pipeline. Japan is identified as a leading prospect for LNG purchase with Japanese utilities interested in at least 50% of the pipeline’s capacity.

www.energyandcapital.com/nick-hodges-energy-investments/2060

Recent happenings in the United Kingdom (UK) over membership in the European Union (EU) has had a serious impact on the strength of foreign currencies and the potential for serious recessionary consequences. If the U.S. Dollar gains strength while foreign currencies devalue, the price of products like natural gas may rise above a marketable level. Though Japan’s currency may not be impacted the way European currencies have been, these issues are in consideration. Greg Henderson—Publisher, Southern Oregon Business Journal 18

U.S. Natural Gas Pipeline Network, 2009

http://columbiariverkeeper.org/wp-content/uploads/2012/04/pipeline-1024x680.jpg

Pipeline Right Of Way The Pacific Connector Gas Pipeline will need a temporary 95 foot ROW during construction, which gets cleared and then mitigated as the pipeline moves across property. The permanent ROW is 50 feet, but growth can grow back to a certain extent so the true cleared ROW is only 30 ft. There will be a clearing, but itâ&#x20AC;&#x2122;s certainly a skinnier corridor than a utility cleared ROW because they can have more growth on top.

Mark Gregory State Director Oregon SBDC

Arlene Soto SWOCC

Oregon OSHA adopts changes To construction industry fall protection rules Submitted by Oregon OSHA http://www.orosha.org

Oregon OSHA is lowering the construction industry’s current 10-foot general fall protection trigger height to six feet and prohibiting the use of slide guards as a sole or primary fall protection system. The changes, which affect only the requirements in Subdivision 3/M (Fall Protection) and Subdivision 3/E (Personal Protective and Life Saving Equipment), will take effect in 2017.

The six-foot fall protection requirement will become effective Jan. 1, 2017, and slide guards will no longer be allowed as a primary fall-protection system starting Oct. 1, 2017.

(Cranes and Derricks in Construction); Division 2 (General Occupational Safety and Health Rules); Division 4 (Agriculture); and Division 7 (Forest Activities) are unaffected by these rule changes. In October 2015, federal OSHA formally notified Oregon OSHA that the 10-foot fall protection requirement and the option to use slide guards as a primary fall-protection system were not as effective as federal OSHA’s requirements. Oregon OSHA formed an advisory group of stakeholders in commercial and residential construction and asked for input in drafting changes to the existing rules over a series of meetings during the summer of 2015. The advisory group felt that the changes would primarily affect employers who build single-level homes and employers who work on roofs that have potential fall distances less than 10 feet above the ground. But lowering the fall-protection height to six feet would not have a significant fiscal impact on Oregon’s construction industry as a whole. Following those meetings, Oregon OSHA explained the changes to the public at five hearings held throughout the state in January. You will find the text for the proposed changes on Oregon OSHA’s Proposed Rules webpage. For more about the proposed changes go to the website: www.orosha,org

Fall protection trigger height requirements covered under Subdivisions 3/L (Scaffolding), 3/R (Steel Erection), 3/S (Underground Construction), 3/CC 21

Top 20 Facts About Manufacturing



In the most recent data, manufacturers contributed $2.17 trillion to the U.S. economy. This figure has risen since the second quarter of 2009, when manufacturers contributed $1.70 trillion. Over that same time frame, valueadded output from durable goods manufacturing grew from $0.86 trillion to $1.17 trillion, with nondurable goods output up from $0.84 trillion to $0.99 trillion.



Almost two-thirds of manufacturers are organized as pass-through entities. Looking just at manufacturing corporations and partnerships in the most recent data, 65.6 percent are either S-corporations or partnerships. The remainder are C-corporations. Note that this does not include sole proprietorships. If they were included, the percentage of pass-through entities rises to 83.4 percent.



For every $1.00 spent in manufacturing, another $1.40 is added to the economy. That is the highest multiplier effect of any economic sector.



The vast majority of manufacturing firms in

There are 12.33 million manufacturing workers in the United States, accounting for 9 percent of the workforce. In addition, manufacturing supports an estimated 18.5 million jobs in the United States—about one in six privatesector jobs.



In 2014, the average manufacturing worker in the United States earned $79,553 annually, including pay and benefits. The average worker in all industries earned $64,204. Looking

the United States are quite small. In the most recent data, there were 256,363 firms in the manufacturing sector, with all but 3,626 firms considered to be small (e.g., having fewer than 500 employees). In fact, three-quarters of these firms have fewer than 20 employees.

specifically at wages, the average manufacturing worker earned $25.19 per hour, according to the latest figures, not including befits .



Manufacturers have one of the highest percentages of workers who are eligible for health benefits provided by their employer. Indeed, 92 percent of manufacturing employees were eligible for health insurance benefits in 2015, according to the Kaiser Family Foundation. This is significantly higher than the 79 percent average for all firms. Of those who are eligible, 84 percent participate in their employer’s plans (i.e., the take-up rate). There are only two other sectors—government (91 percent) and trade, communications and utilities (85 percent) —that have higher take-up rates. Manufacturers have experienced tremendous growth over the past few decades, making them more “lean” and helping them become more competitive globally. Output per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling their labor productivity over that time frame. To help illustrate the impact to the bottom line of this growth, unit labor costs in the manufacturing sector have fallen 12.3 percent since the end of the Great Recession, with even larger declines for durable goods firms. Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed, and 2 million are expected to go unfilled due to the skills gap. Moreover, according to a recent report, 80 percent of manufacturers report a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions.

average, 18 percent more than other jobs. Employees in the most trade-intensive industries earn an average compensation of nearly $94,000, or more than 56 percent more than those in manufacturing companies that were less engaged in trade.



Over the past 25 years, U.S.-manufactured goods exports more than quadrupled. In 1990, for example, manufacturers in the United States exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2014, it reached an all-time high, for the fifth consecutive year, of $1.403 trillion, However, a number of economic headwinds have dampened export demand so far in 2015, with manufactured goods exports down 4.2 percent year-todate through the first two quarters of the year.



Manufactured goods exports have grown substantially to our largest trading partners since 1990, including to Canada, Mexico and even China. Moreover, free trade agreements (FTAs) are an important tool for opening new markets, with 52 percent of manufactured goods exports flowing to our FTA partners in 2014. The United States enjoys a $55.0 billion manufacturing trade surplus with its trade agreement partners, compared with a $579.2 billion deficit with other countries.



Nearly half of all manufactured goods exports went to nations with which the United States has FTAs. In 2014, manufacturers in the United States exported $674.9 billion in goods to FTA countries, or 48.1 percent of the total.



World trade in manufactured goods has more than doubled between 2000 and 2013—from $4.8 trillion to $12.2 trillion. World trade in manufactured goods greatly exceeds that of the U.S. market for those same goods. U.S. consumption of manufactured goods (domestic shipments and imports) equaled $4.1 trillion in 2014, equaling about 34 percent of global trade in manufactured goods.

Exports support higher-paying jobs for an increasingly educated and diverse workforce. Jobs supported by exports pay, on

 23



Taken alone, manufacturing in the United States would be the ninth-largest economy in the world. With $2.1 trillion in value added from manufacturing in 2014, only eight other nations (including the United States) would rank higher in terms of their GDP. Foreign direct investment in manufacturing exceeded $1 trillion for the first time ever in 2014. Across the past decade, foreign direct investment has more than doubled, up from $499.9 billion in 2005 to $1,045.5 billion in 2014. More over, that figure is likely to continue growing, especially considering the number of announced ventures that have yet to come online. U.S. affiliates of foreign multinational enterprises employ more than 2 million manufacturing workers in the United States, or almost one-sixth of total employment in the sector. In 2012, the most recent year with data, manufacturing sectors with the largest employment from foreign multinationals included motor vehicles and parts (322,600), chemical (319,700), machinery (222,200), food (216,200), primary and fabricated metal products (176,800), computer and electronic products (154,300) and plastics and rubber products (151,200). Given the increases in foreign direct investment since 2012, these figures are likely to be higher now. Manufacturers in the United States perform more than three-quarters of all private-sector research and development (R&D) in the nation, driving more innovation than any other sector. R&D in the manufacturing sector has risen from $126.2 billion in 2000 to $229.9 billion in 2014. In the most recent data, pharmaceuticals accounted for nearly one-third of all manufacturing R&D, spending $74.9 billion in 2014. Aerospace, chemicals, computers, electronics and motor vehicles and parts were also significant contributors to R&D spending in that year.



Manufacturers consume more than 30 percent of the nation’s energy consumption. Industrial users consumed 31.5 quadrillion British thermal units of energy in 2014, or 32 percent of the total. The cost of federal regulations falls disproportionately on manufacturers, particularly those that are smaller. Manufacturers pay $19,564 per employee per year on average to comply with federal regulations, or nearly double the $9,991 per employee per year borne by all firms as a whole. In addition, small manufacturers with fewer than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90 percent of the difference in compliance costs between manufacturers and the average firm.

See more at: http://www.nam.org/Newsroom/FactsAbout-Manufacturing/#sthash.qqkkuvRI.dpuf

Oregon Manufacturing Facts: Manufacturers in Oregon account for 29.77 percent of the total output in the state, employing 10.43 percent of the workforce. Total output from manufacturing was $65.37 billion in 2013. In addition, there were 182,300 manufacturing employees in Oregon in 2014, with an average annual compensation of $71,603 in 2013. Manufacturers help to drive Oregon’s economy, with $17.80 billion in manufactured goods exports in 2014. That same year, $5.46 billion in exports was with our free trade agreement (FTA) partners. This helps create jobs in the state, and 22.00 percent of its employment stemmed from exports in 2011. Small businesses comprised 88.10 percent of all exporters in Oregon.

Southern Oregon Business Journal Greg E. Henderson LLC 703 Divot Loop Sutherlin, Oregon 97479 541-315-6127 greg@southernoregonbusiness.com Please call or e-mail for information about our advertising options. Serving all of Southwest Oregon the business journal reaches all six counties and the 200 communities within its borders. By providing the business journal in a digital format the monthly issue is provided to our readers free of charge. This service to readers enhances the opportunities for advertising clients to reach a larger audience.