July 2017 by Southern Oregon Business Journal

July 2017

Inside This Issue: 

Jeld-Wen goes Public

Page 14



FCC Commercial Furniture

Page 19



Willowood USA

Page 24

A Few Words from Greg: The reality of things is hard to fathom when the inundation of news, almost news, “fake news”, and garbage is coming at us by the hundreds of pages and gigabytes, every hour of the day. By default, or mere survival necessity, we are being educated in the ways of discernment of just what we should believe and what is nonsense. Now that we sometimes find workplaces where employees come from as many as five generations it is incumbent on us to be more flexible in our day-to-day acceptance of things other people believe and share. Sometimes it’s just entertainment, other times it’s education, while further still it may be our chance to help a cohort have a better understanding of a subject. The noise of constant news and bickering wears us down eventually. We’d like it to just go away. Dream on, my friends. This has been going on since Plato was a child. There is a kind of health in it.

As painful as it may be the challenge of an adversary is teaching us to think, to research, to communicate. Call it Free Speech if you like. Make it a constitutional amendment while you’re at it. In our life-times it may be the best education we will receive. There was a time when things printed in the daily newspaper were seldom challenged. If it came to us over the air waves of radio during the news hour it might as well have been coming from God. Those were the days before we knew the definition of naïve or felt any reason to doubt an elder. But, someone did. Maybe in the sixties, or in a political contest someone began to challenge the things heard and said. With that all of us were enrolled in a new kind of education. And we didn’t even know we were applying. Starting today I’m going to have a different view of those crazy people who insist on getting my goat by telling me I’m wrong in everything I’ve ever believed or learned. From now on they are my teachers who are in the process of learning from their own mistakes. Maybe I will help them a bit by suggesting they have been misinformed, or, perhaps I’ll let them find out for themselves. Some of the most lasting lessons I have learned came from times when I discovered that I was wrong in a rant I refused to leave. I think I take more time to think before speaking than I once did. It is a proven tool of learning. Let the nut jobs rant and rave. Someday they will figure it out and become a little smarter as a result.

Greg Greg Henderson, Publisher greg@southernoregonbusiness.com

Southern Oregon Business Journal

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

Table of Contents PUBLISHERS NOTE 2 Life Lessons

Feature Articles 14 Jeld-Wen Goes Public 19 FCC Commercial Furniture

ECONOMICS 4 Regional Economic Indexes 5 Housing Crisis 6 Oregon GDP Growth

26 Strong Towns— Growing Incrementally 30 Educating Our Inmates 32 Business Journal Mission

AROUND THE REGION 8 Serious Crush on Wine 10 Rent Inflation

12 KCEDA Board Supports LNG 18 Lifetime Value of a Customer 22 Out & About in S Oregon 24 Willowood USA—Lighthouse Award Winner 25 SOREDI Prosper Awards

Cover

Happy Independence Day America! 703 Divot Loop Sutherlin, Oregon 97479 www.southernoregonbusiness.com 541-315-6127

Southern Oregon Business Journal

Southwestern Oregon and the Housing Crisis by Annette Shelton-Tiderman Prospective homebuyers in Portland, Bend, rural Oregon, and the communities in between report finding limited inventory, especially within the buyer’s budget range. National news reports also tell of limited inventory as well as bidding wars. What is behind the headlines and conversations when it comes to housing availability? Pivotal to the matter is the shrinkage in number of new residential building permits in recent years and the associated decline in construction jobs. The U.S. Census Bureau’s Residential Construction Branch studies new, privately owned residential construction by tracking the number and type of building permits issued.

development. Although statewide, some arenas of the economy showed signs of turning around by 2009, rural Coos, Curry, and Douglas counties’ economies lagged. Construction employment continued to decline and finally bottomed in 2013 (46 percent below 2006 peak). Since then, the industry has experienced a modest recovery of 12 percent. Still, overall, this industry is down 39 percent from its peak employment levels.

Total Building Permits Issued Reflects the Underlying Economy When examining permits for the construction of new, privately owned residences in Coos, Curry, and Douglas counties, the ebb and flow of the overall economy is evident. With the exception of Coos County, there was a slight drop in permits in 2002, corresponding with a short-lived economic slowdown. By mid-decade, plans for building, as evidenced by the issuance of permits, had increased and peaked in 2005 at 841. Overall, building permits increased 47 percent between 2001 and 2005. The Great Recession, however, took its toll. The number of permits issued bottomed out in 2011 with only 137 permits issued across all three counties – an 84 percent drop from 2005 levels. Although permit issuance has increased by 76 percent since 2011, the 2015 level is still 71 percent below the 2005 peak.

Construction Employment Lags Changes in Building Permits Issued Getting a building permit for new construction is only the beginning of a time-intensive process. It is not surprising that although the number of residential permits peaked in 2005, those employed in the construction industry peaked a year later in 2006. Southwestern Oregon saw a 60 percent increase in construction employment from 2001 to 2006, corresponding with the overall increase in housing Southern Oregon Business Journal

Conclusion Declines in building permits issued since 2005, coupled with the decline in construction employment, has resulted in fewer residential structures built. Additionally, the majority of the region’s houses are at least 30 years old; 61 percent were built prior to 1980. Aging inventory, especially in coastal and mountain climates, often present added maintenance issues and increased costs. These inventory and structural issues and modest population increases (especially in Curry and Douglas counties, 17 percent, each), significantly contribute to the housing shortages experienced in rural southwestern Oregon. Annette Shelton-Tiderman Regional Economist Coos, Curry, and Douglas counties annette.i.shelton-tiderman@oregon.gov

Quality Information, Informed Choices

Oregon GDP Growth Ranks Second Fastest Among All States by Amy Vander Vliet

Oregon’s Gross Domestic Product (GDP) grew by 3.3 percent in 2016 according to the Bureau of Economic Analysis. This was more than double the pace of national growth (1.5%) and the secondfastest among all states. A year earlier, in 2015, Oregon’s growth tied with Texas for the fastest in the nation at 4.5 percent. GDP measures the total market value of final goods and services produced in a given region over a specified period of time. It’s a comprehensive and widely used measure of economic activity.

Southern Oregon Business Journal

National GDP growth was fueled by the information sector, as was also the case in Washington and Utah; the states with the fastest and third-fastest growth. This wasn’t the situation in Oregon. Instead, economic growth was driven by durable goods manufacturing, which accounted for nearly one-third of net gains. Oregon derives a disproportionate share of its GDP from this sector relative to the nation due to high tech (semiconductors); 19.1 percent or three times the national share. These manufacturers provide an unusually large amount of added value to their products, and invest heavily in research and development.

Oregon GDP Growth Ranks Second Fastest Among All States (Cont.)

Despite being a powerhouse of Oregon’s economy, our growth advantage relative to other states does not hinge on durable goods. Removing it from the equation across all states, Oregon’s GDP comes in at 2.9 percent; more than 1 percentage point faster than the nation and seventh fastest among all states. Oregon’s GDP growth ranking has been all over the map in recent years. The state went from recording the slowest to the fastest growth in just three years – 2012 to 2015. Similarly, during the dot.com bust, it dropped from second fastest to sixth slowest in just one year. Such volatility tends to be the case when a region is more concentrated in one or two cyclical industries. We’re not alone. Wyoming and North Dakota, highly dependent on the even more volatile oil and gas industry, are far more extreme. Together, they’ve recorded the fastest growth in eight of the last 16 years and the slowest growth in five. Despite Oregon’s relative volatility, long term trends are strong. Annual growth over the past two decades averaged 3.3 percent; second only to North Dakota at 4.7 percent. For more information on GDP, visit the Bureau of Economic Analysis website at www.bea.gov.

Southern Oregon Business Journal

Rent inflation is abating

Over the past year, rent inflation has declined in 48 of the top 50 markets

By: Joe Cortright

For the past several years, rising rents have been at the center of the nation’s housing affordability debate. A combination of former homeowners dispossessed by the collapse of the housing bubble, weak incomes and job prospects for younger workers and a growing demand for urban living have increased the demand for rental housing in the face of a relatively slowly changing supply of apartments and rental houses. Particularly in hot coastal markets, like San Francisco, Seattle, New York and Washington, rents have been rising much faster than inflation. Spiking rents have produced a predictable demand for policy solutions, ranging from inclusionary housing mandates to rent control. Economists–ourselves included–have long counseled that the most important ingredient to achieving a reduction in rental inflation was an increase in housing supply. A critical challenge is the temporal mismatch between supply and demand. The demand for housing can change relatively rapidly, with changes in employment, migration and tastes. Building new housing takes time: prospective developers have to recognize a need, arrange financing, secure planning permission, and then actually construct new units. Its common for demand to outstrip supply in the short term.

demand, and that rent hikes are moderating everywhere. Rents are actually falling in some cities. The latest data from Zillow tracks changes an multifamily rents on a monthly basis for the nation’s metropolitan areas. We look at the 12 month change in prices between April 2016 and April 2017 (the last twelvemonth period for which data are available) and compare it to the change in rents in the preceding 12 months (April 2015 to April 2016). In the following chart, red dots indicate the rate of rental inflation in the past 12 months (April 2016- April 2017), and blue dots indicate the rental inflation in the preceding 12 months (April 2015-April 2016). Metro areas are ranked in order of their rate of rental inflation in the earlier time period.

Not surprisingly, those confronted with the burden of paying ever higher rents have little comforted by economists lecturing them about the long run benefits of increased supply. And some have even counseled economists to keep their mouth’s shut and not talk about housing markets in terms of supply and demand. At City Observatory, we’ve been looking for teachable moments to make the case for basic economic principles. In the past few months, we’ve pointed out some examples of markets where rental rates have been moderating. But its worth taking a look across the nation to judge the trends. Today there’s growing evidence that in rental markets across the nation that supply is catching up with

Southern Oregon Business Journal

First, the most striking finding: Rental inflation was lower in the past 12 months in 48 of the 50 largest metro

Rent inflation is abating (Cont.)

markets. Only in Hartford and Cincinnati did rents increase more in the past 12 months than in the period between April 2015 and April 2016. The deceleration was particularly sharp in most of the markets with the highest rates of rental inflation in 2015. San Francisco’s rent inflation dropped from 12 percent to -0.7 percent. Portland’s dropped from 11 percent to 0.5 percent.

Second, in 20 of the top 50 markets, rents actually declined in the past 12 months. Year-over-year, rents dropped in San Francisco, New York, Austin and Miami. There’s a certain asymmetry to reporting on rent data: Rent increases merit headlines; rent decreases generally don’t.

Third, looking forward, its possible, if not actually likely that rental inflation could soften further. Even more housing units are coming on line in the next year or two. More of this will help alleviate rental inflation. The combination of more supply and continuing (if slow) improvements in income are likely to lessen the nation’s housing affordability problems. Already, according to the Joint Center for Housing Studies, the share of rental households who were cost-burdened (i.e. spent more than 30 percent of their income on housing) declined from 49 percent in 2014 to 48 percent in 2015. We’ll keep following the data on rental price trends in the months ahead. The good news for the moment is that the economist’s prediction appears to be right: As more supply comes on the market, we should expect rental inflation to subside. Stay tuned.

Joe Cortright is President and principal economist of Impresa, a consulting firm specializing in regional economic analysis, innovation and industry clusters. Joe’s work casts a light on the role of knowledge-based industries in shaping regional economies, Joe served for 12 years as the Executive Officer of the Oregon Legislature’s Trade and Economic Development Committee.

Southern Oregon Business Journal

KCEDA Board of Directors supports Jordan Cove LNG Project will create more than 2,000 jobs Submitted By: Nicole Desmond Desmond & Louis Public Relations

Klamath Falls, Oregon (June 26, 2017) – KCEDA is proud to support the Jordan Cove LNG. The Port of Coos Bay is a potential economic driver for the region that has been not used to its full potential for many years. The economic success of Coos Bay will be of great benefit to the people in the areas but will also provide direct benefit to the people of Klamath County in terms of spillover jobs, economic activity and tax revenue. A partial list of the benefits includes: •

Jordan Cove’s approximate $10 billion capital investment in Oregon, its approximately $48 million in annual corporate taxes, $62 million in annual local taxes and payments in lieu of taxes will benefit the state and Southern Oregon’s economy and local governments. Klamath County will receive approximately $5 million of this tax revenue every year the facility is in operation providing a much-needed boost to county tax revenues.

•

The economic ripple benefits of construction workers’ income will contribute directly or indirectly to state and local payroll taxes, increased spending at local businesses, construction vendors, job training, increased local charitable contributions, tourism and more. This project will create 3,500 new construction jobs for 2-4 years and those workers will be earning an average of $80,000 a year plus benefits, more than double the average wage of Southern Oregon counties.

•

Increased natural gas supply to Southern Oregon. The Pacific Connector Gas Pipeline will allow for increased supply of natural gas to Douglas, Jackson and Klamath counties and will provide opportunities for local distribution companies to provide gas service to communities that currently do not have it. This will lead to even more business investment in Southern Oregon and even more good-paying jobs. For example, Jordan Cove has already signed an agreement with the Klamath County Chamber of Commerce to provide a tap near Merrill so that the local distribution company can provide natural gas service to Merrill.

Environmentally, there will be limited impact to streams and rivers, as more than half the bodies of water that will be crossed are intermittent and dry. This in addition to the modern construction methods, such as the horizontal directional drilling, which goes well below the riverbed, serve to be very helpful in avoiding impacts. As the region’s economic development agency, we reiterate support for this project, and encourage those who would like to provide testimony at the Federal Energy Regulatory Commission (FERC) hearing to please do so.

The FERC scoping meeting was held: Thursday, June 29, 2017 at the Oregon Institute of Technology College Union Building Mt. Bailey and Mt. Theilsen Rooms 3201 Campus Drive Klamath Falls, OR 97601

Members of the public who were unable attend can submit written comments to FERC before July 10, 2017 at https:// ferconline.ferc.gov/QuickComment.aspx.

About the Klamath County Economic Development Association (KCEDA) Since 1975, KCEDA has reflected the best of private enterprise, responsibility and dedication. Its mission is to provide tailored recruitment and retention/expansion programs, new opportunities for jobs, and a diversified, value-added industrial base/ expanded economic development climate in southern Oregon. Learn more at www.ChooseKlamath.com. Southern Oregon Business Journal

For more information visit the FERC Website at: https://www.ferc.gov/industries/gas/indus-act/lng/LNGapproved.pdf

Southern Oregon Business Journal

Jeld-Wen Goes Public By Greg Henderson, Southern Oregon Business Journal

The window and door manufacturer from Klamath Falls, a sixty year old Oregon company, described as Oregon’s largest privately held company, is no longer private. On Friday, January 27, 2017 Jeld-Wen went public through its IPO on the New York Stock Exchange. History JELD-WEN was founded by Richard ”Dick” Wendt, an entrepreneur at heart, who learned the art of managing a manufacturing company under the tutelage of his father. In 1957, Iowa-based Caradco sent Dick to Oregon to help run the company’s millwork plant in Klamath Falls. A few years later Caradco decided to sell the plant at auction. Dick and four business partners, Larry Wetter, John Biehn, Gerry Wickersham, and Bill Taylor bought many of the assets on October 25, 1960 and named the company JELD-WEN. With just 15 employees, JELD-WEN quickly gained the reputation of producing a reliable product. After just two years, JELD-WEN became successful enough to begin acquiring new manufacturing facilities and expand its product offering. One secret of the initial success of JELD-WEN was the company’s resourcefulness and deliberate decision to use for a high-value purpose every last bit of raw resource that entered its doors, a philosophy that still stands true today. In 1969, the JELD-WEN Foundation was established. The JELD-WEN Foundation was and continues to be dedicated to providing financial assistance through grants, scholarships, and matching JELD-WEN employees’ voluntary United Way donations. Today JELD-WEN employs approximately 21,000 people worldwide and has manufacturing, distribution and showroom locations across the United States and in 24 countries, located primarily in North America, Europe and Australia.

Going Public After a competitive negotiation process from other large manufacturers in the New York state region, Mark Beck was hired in November 30, 2015 to be the CEO/President of Jeld-Wen and to navigate the process of becoming a public company. Corporate Headquarters were moved from Klamath Falls, Oregon to Charlotte, North Carolina in 2015. The process to go public began in June, 2016. Top 10 Canadian Private Equity Firm, ONEX Corp. of Toronto Canada purchased nearly 60% of Jeld-Wen in 2011 for roughly $864 million. In 2015 Jeld-Wen posted revenues of $3.4 billion and profit of $91 million, showing excellent recovery from a nearbankruptcy state during the Great Recession in 2011, due to the housing crisis.

Operating in more than 20 countries, half of Jeld-Wen’s

Southern Oregon Business Journal

“A private equity firm is an investment firm that invests in private equity, although private equity investors are not limited to such firms. Private equity investments often involve investing in an ailing company by offering an influx of funds as leverage. The investor will also often make operational changes or take other actions to make the company more profitable.”

AS ONE GLOBAL TEAM, WE â&#x20AC;Ś

Mark Beck, CEO/President

Build Businesses Ethically and Safely Invest in People Inspire Customers Through Innovation Deliver on Our Promises Improve Every Day

Jeld-Wen Admin, Klamath Falls

revenue is generated outside the United States. The products developed and manufactured by Jeld-Wen have won numerous awards and endorsements for dependability, innovation and excellence. These have added exceptional value for builders, architects and home owners around the world.

Building the New Leadership Team With every company restructuring comes the necessity to place individuals in significant leadership roles who have proven histories and credentials that assure the new organization the transition from private to public will be done smoothly. The new Jeld-Wen has done that through the private equity firm ONEX.

the new public company. (NYSE: JELD) This represents ownership in JELD-Wen of 60%.

The leadership of a private equity firm is properly matched to company and industries with which the board is familiar.

The inclusion of Onex Corporation of Toronto, Canada in the restructuring and ownership of Jeld-Wen is strategic. Onex Corporation and Onex Group (affiliates of Onex) owns approximately 61 million shares of stock in

Southern Oregon Business Journal

Onex has offices in Toronto, New York, New Jersey and London. It is considered one of Canada’s oldest and most successful private equity firms. Onex’ businesses have assets of $46 billion, employ approximately 166,000 people around the world and trades on the Toronto Stock Exchange under the stock symbol ONEX. Its website is at www.onex.com and www.sedar.com.

January 2014 and a director since June 1985. He joined the Company in 1980, working in various legal, marketing, window manufacturing, and sales positions of increasing authority culminating in his service as President and Chief Executive Officer from 1992 to August 2011. Mr. Wendt served as Executive Chairman and Chief Executive Officer from 2011 to March 2013.

At the head of ONEX is Gary Schwartz the 1984 Founder and CEO of Onex. He holds a Bachelor of Commerce degree and a Bachelor of Laws degree from the University of Manitoba, a Master of Business Administration degree from the Harvard University Graduate School of Business Administration and a Doctor of Laws (Hon.) from St. Francis Xavier University and Doctor of Philosophy (Hon.) from Tel Aviv University. Mr. Schwartz was inducted into the Canadian Business Hall of Fame in 2004 and was appointed as an Officer of the Order of Canada in 2006.

He earned a B.A. from Stanford University in 1976, and a J.D. from Willamette University College of Law in 1980, and is a member of the Oregon State Bar. Mr. Wendt is the son of late founder, Richard L. Wendt.

Anthony Munk is a Senior Managing Director at Onex and has been a member of the Jeld-Wen board of directors since October 2011. Since joining Onex in 1988, Mr. Munk has worked on numerous private equity transactions. His service on other boards of directors over the years allows him to provide the board of directors with a valuable perspective on corporate governance issues.

The combined Boards of Directors of ONEX and Jeld-Wen total twenty individuals with extensive backgrounds in a diverse list of industries with world-wide influence. Their credentials and education is exemplary. Mark Beck joined the Company as President and Chief Executive Officer in November 2015 and joined the board of directors in May 2016. He came from Danaher Corporation, where he served as Executive Vice President overseeing Danaher’s Water Quality and Dental Platforms. Previously, Mr. Beck spent 18 years with Corning Incorporated in a series of management positions culminating in his appointment as Executive Vice President overseeing Corning’s Environmental Technologies and Life Science units in July 2012.

Roderick Wendt has served as Vice Chairman since

Southern Oregon Business Journal

Mr. Beck served on the board of directors of Dow Corning Corporation, a private manufacturing company, from October 2011 to April 2014. Mr. Beck holds a B.A. in Business Management from Pacific University and an M.B.A. from Harvard Business School. Mr. Beck was selected to serve on the board of directors due to his business experience and current service as Chief Executive Officer. He is originally from Sandy, Oregon. Mark Beck is a part of the Harvard Business School’s “Joint Center for Housing Studies” and with that is able to keep his finger on the pulse of the industry most important to Jeld-Wen. In combining the production of doors and windows the company is classified as the world’s leader. Kirk Hachigian, the immediate past President and CEO, has spent a year in the transition of leadership. Mr. Hachigian said, “I am extremely pleased that Mark is joining the JELD-WEN leadership team. His extensive experience leading global organizations and achieving strategic growth is a perfect fit for JELD-WEN. Mark has demonstrated the ability to develop innovative products by applying advanced technological solutions. He is a natural leader who will establish effective relationships both inside the organization and across the building products industry.” In management style and through the institution of modern production methods well known today in manufacturing circles, Mark Beck is well versed in the practices found in “Lean Manufacturing”, Toyota’s “Continuous Improvement”, Six Sigma and the tree metaphor “From Roots to Fruits” that Toyota uses.

In his pocket he carries a card with the Purpose, Vision, and Values of JELD-WEN printed on it. Though he has the entire card memorized, Mark is happy to share them; the Vision: “To lead the global building products industry with great people creating superior products and delivering in all that we do.” In determining his decision to accept the leadership position at Jeld-Wen, Mark Beck compared the vision, purpose and values of the newly structured Jeld-Wen and the leaders of ONEX Corporation. The favorable findings that were present at his previous positions at Corning and Danaher Corporation matched Mark’s discovery with leadership conversations with both Jeld-Wen and ONEX. By combining proven leadership models the new Jeld-Wen team has created the Jeld-Wen Excellence Model, or JEM.

Southern Oregon Business Journal

DOWN TO BUSINESS A look at small business questions from the Southwestern Oregon Community College Small Business Development Center (SBDC).

What is the lifetime value of a customer? Simply put, the lifetime value of a customer is a calculation of how much your customers will spend, how often they will buy and over what period of time they will be shopping at your business. The formula to calculate the average value of a customer is (average sale amount) X (the number of purchases per month or year) X (the number of months or years the typical customer visits your business). For example, if you have a restaurant and the average ticket price for a meal is $12 and the average customer eats there twice a month for five years the value of that customer would be $12 x 2 x 60 for a total of $1,440. But why is this important? The main reasons lifetime value of a customer are important-- creating a budget and determining overall level of service. Knowing how much an average customer spends and how often they shop helps determine the revenue that the business can reasonably generate. It also helps determine an advertising expense budget including discounts and promotional items. No business can afford to spend more on attracting and keeping a customer than that customer spends buying from the business. To determine a reasonable amount to spend attracting and retaining customers look at the overall profitability of the business and determine a reasonable percent to spend on marketing. Not all customers are average customers though. Some are excellent (high value) customers and

Southern Oregon Business Journal

others create more problems than the revenue they generate for the business. In the book Bust a Myth: Delivering Customer Service in a Self -Service World, Barry Moltz and Mary Jane Grinstead suggest a more complex formula for determining the value of a customer that includes qualitative as well as quantitative factors. They add factors such as how quickly the customer pays accounts receivables, how often they refer your business, the feedback they give you, what they say about your business to others and how many additional products or services they buy from you. They suggest those customers that rate higher on a point scale should receive more attention than the average clientele. The lifetime value of a customer is an important metric for business owners to be aware of and use to create higher profits in their business. The Oregon Small Business Development Center Network has many tools to help your business calculate and use customer value and other metrics to strengthen your business. To find an advisor near you go to www.BizCenter.org.

By: Arlene M. Soto CMA, Southwestern SBDC Director

50 Years and Growing By Greg Henderson

FCC Commercial Furniture, Inc.

Three brothers, Mick, Scott, and Gary Crowe decided to look outside the chaos of Los Angeles for a better place to create their special brand of commercial furniture that is found in malls, fast food restaurants, businesses and places like the Boys and Girls Clubs around the world. They never would have guessed the landing place would be along the I-5 freeway in the little berg of Wilbur, Oregon halfway between Roseburg and Sutherlin, two small towns south and north of Wilbur. But that is what happened.

Pacific Tasty Freeze started the march in 1967 in the town of Temple City, California. When the family realized they found a promising business the effort to grow resulted in an expansion that made the future move likely. So, on July 5, 1993 FCC Commercial Furniture opened its facility near Roseburg, Oregon. Today the claim can be made that â&#x20AC;&#x153;FCC IS A TRUSTED DESIGN HOUSE AND USA MANUFACTURER SPECIALIZING IN FIXTURES, FURNITURE, MILLWORK, DECOR AND GRAPHICS.â&#x20AC;? The claim will stick because of excellent management and leadership with a purpose. It is probable you have eaten at an establishment furnished with FCC Commercial Furniture products. The furniture is delivered to popular fast food restaurants around the world. From the plant that has grown to 160,000 square feet 5,237 projects have been shipped. As new clients come on

Southern Oregon Business Journal

board the quality reputation assures them that a positive relationship will result. Earlier this year the list of clients served stood at 3,079. The business grows steadily and looks to continue well into the future. The FCC website states the obvious to those who are familiar with the values and standards of this amazing family owned company.

“WE BRING IDEAS TO LIFE AND ALONG THE WAY, DEVELOP LASTING EXPERIENCES.”

“WE EMBRACE BRAND RELATIONSHIPS AND DEVELOP LASTING STORIES BY BRINGING IMAGINATION TO LIFE. OUR TEAM OF DESIGNERS WORK IN TANDEM WITH CLIENTS TO TRANSLATE BRAND STRATEGY GOALS INTO LASTING AND MEMORABLE EXPERIENCES. FROM RESTAURANT SEATING, TO GRAPHICS AND RETAIL SOLUTIONS, WE STRIVE TO BE YOUR VALUED PARTNER, ENSURING YOUR EXPECTATIONS ARE MET.”

Southern Oregon Business Journal

“WE ARE AN EXTENSION OF YOUR BRAND, DEVELOPING IDEAS, PRODUCTS AND EXPERIENCES THAT THRIVE. OUR TEAM IS DEEPLY CREATIVE AND COMMITTED TO HELPING SHAPE YOUR BRAND EXPERIENCE”

“WE ARE AN AMERICAN BASED, ONE-STOP MANUFACTURER OF CUSTOM PRODUCTS WITH THE LATEST TECHNOLOGIES, COMPETITIVE PRICING AND SCALABLE CAPACITY. “

“OUR DRIVING GOAL IS TO BRING TO LIFE EXCEPTIONAL PRODUCTS IN A TIMELY AND COST-EFFECTIVE MANNER. FROM DESIGN CONCEPTION AND PROTOTYPING TO FULL PROGRAM ROLL OUT AND INSTALLATION, WE ARE YOUR STRATEGIC PARTNER.” FCC Commercial Furniture, Inc. 8452 Old Highway 99 North, Roseburg OR 97470 https://fcc-create.com/ Southern Oregon Business Journal

Out & About in Southern Oregon

Sutherlin, OR Building Art

Eagle Point Golf Course

Lady Slippers

Southern Oregon Business Journal

Grants Pass, OR

Pond at Reustleâ&#x20AC;&#x2122;s Vineyard

Chain Saw Craving Contest Reedsport, OR

Coos Bay, OR

Roseburg, OR

Southern Oregon Business Journal

Willowood receives Lighthouse Award After qualifying for the Fastest Growing Private 100 Companies Award through the Portland Business Journal for the last five years, Willowood USA of Roseburg was awarded the Lighthouse Award by the Portland Business Journal in June at the annual awards meeting. After being in business for two years, a company can qualify for the Fastest Growing Private 100

Companies Award through the Portland Business Journal. Willowood was listed at number 83 in a list of top 100 companies in 2016 for their category. The Lighthouse Award was created to recognize those Oregon companies who have achieved exceptional growth over the previous five years.

“My business has done really well and it just goes to show businesses can grow and flourish in Douglas County,” said Brian Heinze, president and CEO. Heinze was presented with the award at a celebration and reception in Portland. BRIAN HEINZE

A 30 year veteran in agriculture, Mr. Heinze began his career as an agronomist for the J.G. Boswell Company in Central California. A graduate of Chico State, Mr. Heinze went on to further his career with multiple positions at Rhone-Poulenc/ Aventis before forming his own generic crop protection company – AgValue in 2001. After an early buyout in 2004, Mr. Heinze moved to Roseburg, Oregon where he served out his non-compete clause before forming Willowood USA in November of 2009. After being in business for two years, a company can qualify for the Fastest Growing Private 100 Companies Award through the Portland Business Journal. Having won the recognition five years in a row, Willowood received the Lighthouse Award this year.

In 2010, Willowood USA earned $4.5 million in revenue, then grew to $12.8 million in 2011, $22.2 million in 2012, $28 million in 2013 and $37.5 million in 2014. Willowood kept growing to earn $50 million in 2015 and $64 million in 2016. Heinze said the projected number for 2017 is up to $76 million in revenue, and the company is already sitting at $64 million as of June. “A lot of people don’t even know we exist,” Heinze said.

They do now! The information in this article came in part from the June 12, 2017 announcement in the Portland Business Journal.

CORPORATE OFFICE: 1600 NW Garden Valley Blvd #130 • Roseburg, OR 97471 541-679-9963 • 877-679-9963 • Fax: 541-679-4650 www.willowoodUSA.com

Southern Oregon Business Journal

SOREDI Celebrates Prosper Award Recipients at 30th Anniversary Meeting Medford OR— At the 2017 Annual Meeting, held June 21 at the Eagle Point Golf Club in Eagle Point, SOREDI recognized four companies and one individual with awards for their exceptional contributions to the Southern Oregon business community.

and community-driven hub for the downtown area. In 2016 the company’s revenues increased 10%, making it one of many strong candidates who have realized significant market growth over the past 12 months. Since 2010, the company has experienced revenue growth of 400%.

Each year, SOREDI recognizes four companies in our region that exhibit the qualities of Collaboration, Prosperity, Tenacity and Ingenuity. These are the defining characteristics that SOREDI recognizes as vital to successful business growth in our region. This year’s business award recipients also served as guest speakers.

Lithia Motors was founded in nearby Ashland in 1946 and now boasts 1200 local employees. The company contributes its success to the same principles they adopted at their founding – taking care of employees and customers. Sid DeBoer, founder and chairman of the Board was on hand to receive the award.

The 2017 Collaboration Award went to Medford’s Pallet Wine Company in recognition of their excellence in encouraging and embracing others in their industry, who might otherwise be viewed as competitive threats. Linda Donovan, founding partner and wine maker was on hand to share their efforts as a “vincubator” assisting other small wineries with the chemistry, the blending, the barreling and the aging processes according to the client’s unique specifications. This custom-crush process offers small upcoming vintners the infrastructure needed to get started, while saving the expense of equipping a full winery from the ground up.

The 2017 Tenacity Award went to Varney Manufacturing of Medford, a local contract machine shop established in 2003. The company went through its worst year on record a few years ago in 2015, only to follow with its best year on record in 2016. It has remained nimble with market ups and downs, and equipped to meet the need of its ever- changing customer base.

Pallet Wine Company was founded in 2009 and located in a historic 21,000 s/f building on Fir Street in Medford. The company has 25 clients and has produced more than 1,000 wines, covering 35 varietals. More recently in 2016, Pallet Wine Company opened their tasting room, The Urban Cork within walking distance of downtown Medford. The 2017 Ingenuity Award went to MaskIT of Ashland, in recognition of the development of their biodegradable consumer product in the feminine hygiene consumer market, not previously available. After many hours in the kitchen making homemade prototypes, many obstacles, and many nay-sayers, founder Shallan Ramsey heard a resounding “yes” to her innovative new product when the Southern Oregon Angel Network committed to providing close to $600,000 in angel investment support. The company, founded in 2013, has now received national attention including an appearance on the Kathy Ireland show and more recently received a personal visit from Governor Kate Brown, who offered encouragement and resources. MaskIT products are available in numerous local retailers and online at Walgreens.com and Amazon.com. Southern Oregon’s Lithia Motors Inc. received the 2017 Prosperity Award, as one of the fastest growing Fortune 500 companies with 160 locations nationwide, 12,000 employees across 18 states and 30 brands. Medford is home to its corporate office complex and provides an attractive, stylish, Southern Oregon Business Journal

From the assembly of precision parts for commercial and aerospace companies to high end ear buds, Varney Manufacturing continues to persevere, become leaner more efficient in the process, while maintaining a strong community presence in the local economy. Founder Gary Varney accepted the award. Bern Case, Director of the Rogue Valley International Medford Airport received the 2017 Inspiration award. Case was honored for his numerous successes at the airport over his 23 year career in Medford thus far and 40 years in the industry, his entrepreneurial spirit, and his partnership in helping SOREDI promote its economic development services. After stints in Salt Lake City, Saginaw Michigan, and Lubbock, Texas, Case arrived in Medford. Since his arrival, the airport has undergone complete renovation, has expanded its direct flight service from 2 cities to 10 cities, and has become a hub for 5 air carriers. He is the entrepreneurial spirit behind the Oval Office, Casper, and Sally Port – all of which are innovations at the airport designed to add amenities inside and efficiencies outside the airport. About SOREDI: SOREDI is a private, membership-based, nonprofit organization, governed by a 28-member board of directors. Its seven-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 www.soredi.org. Submitted By: Codi Spodnik

T H E P OW E R O F G ROW I N G I N C R E M E N TA L LY BY CHARLES MAROHN

I’ve found that the most difficult thing for people to grasp about Strong Towns is our insistence on an incremental approach to development. In the Curbside Chat, I stress how we need to be making small investments over a broad area over a long period of time. I talk about the small bets our ancestors made when building places, how their approach fit with a complex world where we lack the ability to predict, project or even fully understand, after the fact, why one place succeeds and another fails. I show how the incremental approach results in places that are resilient, adaptable and – most incredibly – financially far more successful than our modern approach. I’ve shared all this in person with thousands of people.

Southern Oregon Business Journal

I’ve watched their minds explode with new insight and understanding. I’ve seen their heads nod while their faces smile. And then I’ve watched them leave only to – as we say here at Strong Towns – try and achieve Jane Jacobs ends through Robert Moses means. For modern Americans, incremental is just so hard. Part of this is modernity. Before our Suburban Experiment, people around the world didn’t build incrementally because they were wise. They built that way because, for the most part, they didn’t have another option. They lacked the resources and technology to move mountains, actually or metaphorically. When Daniel Burnham suggested in 1907 that we

should, “make no little plans,” he was at the beginning of a century where that quote would be interpreted to mean, “take no little actions.” “We don’t go to a doctor seeking to be told we must eat healthy, exercise and have good sleeping habits. How uninspiring!” So whether it is Robert Moses then or Elon Musk today, people who would have – in a time past – been called charlatans or hustlers, now become deeply admired for their willingness to take bold action (with public money or supported by tax subsidies). We don’t go to a doctor seeking to be told we must eat healthy, exercise and have good sleeping habits. How uninspiring! Neither do we look to our elected leaders or the cadre of professionals we have turned our cities over to to have them tell us they will generally keep things in working order, establish some reserve funds and make modest improvements, where possible. Yet, incremental investment is how cities have always built wealth. It’s also why places that are the antithesis of the diet and exercise approach – places like Portland and Austin, to name two I’ve discussed at length – are so confusing and disturbing to me. Portland does not make sense to me. Austin does not make sense to me. Wide swaths of the places that are held up as urbanist success stories, places we’re told that Jane Jacobs would be proud of – places like New York City and San Francisco and Boston and Toronto – don’t make sense to me. They feel like illusions—like a beautiful model who looks terrible without her makeup. Like someone driving a convertible that’s about to be repossessed. Like a freshly planted flower bed set in bad soil. My friends and colleagues cheer these places for their vitality and growth, but it feels wrong to me. The financial foundation of it all feels wrong to me. This week I’m going to try and explain why. There are two defining differences between pre-Depression and post-War development patterns. Pre-Depression development was incremental on a continuum of improvement while post-War development is built at a large scale to a finished state. Forget the car, the suburbs and the big box store – the

Southern Oregon Business Journal

symptoms we obsess over today – and just focus on those two aspects. Below is the example from the Curbside Chat of what it means to build incrementally. These are three photos from my hometown. The first is a series of popup shacks from around 1870. As with every pre-Depression city in all human history, this is how things start. That includes not just Brainerd but Manhattan and Dallas and San Francisco and Charleston and Paris and Rome. They all started as little popup shacks. They all began as a small, incremental investment tied to hopes and dreams about the future.

The second photo is the same street in 1904. While many cities never got beyond the popup phase, many grew incrementally like mine and saw those shacks replaced by more substantial structures. Note that out on the edge of town there would have been a collection of popup buildings like the ones in the heart of town in 1870.

The third photo is from around World War II. Those two

and three-story wood structures have been replaced with buildings of brick and granite. Go a few blocks in any direction and the development pattern has the intensity of the 1904 photo and, a few blocks beyond that, there were popup shacks.

to town. And the nature of this development was complimentary; a business owner acting in their own selfish self -interest would line up their building with all the others, place their door on the street and make their building as ornate as possible. All this meant that, the more things developed, the more valuable everything else became. Let’s examine the financial fundamentals that bring about the phase change from popup shack to 3-story wood structure. For simplicity, let’s assume this happened over thirty years. The chart below shows theoretical land values compared to the value of the shack – which I’m going to call the improvement value – for that thirty years between 1870 and 1900.

If we were to do a graph of tax value per acre for each of these time periods, this is what it would look like.

In 1870, the land wasn’t worth much. There was a railroad stop and some platted lots but not much settlement. Nobody really knew for sure how the town would fare so those who started there were early speculators and upstarts. They got cheap land and built a cheap building.

In each of these time periods, the center of town – the heart of the neighborhood that was being developed – had the highest values. The values declined as we go further from the core. In addition, in each subsequent iteration, the value is greater in each location. These fundamental economic relationships are the key driver of incremental development. As a brief aside, it’s important to note that proximity is what creates the growth in value. The reason the popup shacks are positioned next to each other is because, in a time before automobiles, business owners wanted to be right next to other businesses. Home owners (who weren’t farmers) wanted to be near

Southern Oregon Business Journal

As the city grew and more cheap buildings were erected, land values started to climb. This was becoming more of a place and, as such, there was more demand (even if just slightly) to be there. Simultaneous with this, the structure – which was cheap to begin with – was depreciating in value. It probably didn’t have much of a foundation, the roof was starting to go bad and it would have become a maintenance problem. Land was going up in value while the improvement value was going down. At some point, the land value would become substantial enough, and the improvement value cheap enough, to justify tearing down the structure and replacing it with something more substantial. This significantly increases the improvement value while helping propel the general upward trend of land values. It is incrementally rising land values, combined with the ability to redevelop to something more intense, that

naturally prompts the redevelopment of property in decline. Take away one of those two factors and redevelopment breaks down. Without redevelopment, there is a ceiling on success leaving only stagnation or decline as alternatives. Having redevelopment potential puts a floor on decline – each iteration of growth becomes a resilient financial plateau that is hard to fall back from – and prompts continual neighborhood redevelopment to the next level of intensity.

Charles Marohn - known as "Chuck" to friends and colleagues - is a Professional Engineer (PE) licensed in the State of Minnesota and a member of the American Institute of Certified Planners (AICP). He is the Founder and President of Strong Towns. He has a Bachelor's degree in Civil Engineering from the University of Minnesota's Institute of Technology and a Masters in Urban and Regional Planning from the University of Minnesota's Humphrey Institute. Marohn is the author of Thoughts on Building Strong Towns — Volume 1 and Volume 2 — as well as A World Class Transportation System. He hosts the Strong Towns Podcast and is a primary writer for Strong Towns’ web content. He has presented Strong Towns concepts in hundreds of cities and towns across North America.

Southern Oregon Business Journal

Educating Our Inmates Can Save Taxpayers Millions By: Dr. Turner Nashe, Senior Vice President of Education Services at GTL

With an incarcerated population of over 2.1 million inmates (Bureau of Justice Statistics), the United States needs to tackle the issues plaguing our correctional institutions. This is important not only from a financial standpoint—it costs almost $32,000 each year to incarcerate a single inmate—but also from a societal standpoint. The U.S. is doing a poor job of rehabilitating incarcerated individuals—instead they are trapped in a never-ending cycle of release, re-offense, and reincarceration in our nation's jails and prisons. This cycle fails inmates and ultimately burdens the American taxpayer. A National Institute of Justice study found that within three years of release, about two-thirds of released prisoners recidivated, and according to the Bureau of Justice Statistics, total state corrections expenditures have nearly quadrupled over the past two decades, rising from $15 billion in 1982 to $53.5 billion in 2010. Reincarceration means more imprisonment costs. However, an investment in inmate education has the potential to break the reincarceration cycle and prepare the incarcerated for productive and legal employment upon release.

rate drops to approximately 30 percent. With an associate degree, recidivism drops to 13.7 percent, and with a bachelor’s degree, it drops to 5.6 percent. Once an inmate has a master’s degree, the recidivism rate is not even statistically significant enough to count as one percent.

These statistics show that education has a direct impact on reducing recidivism, which could save millions of dollars for taxpayers. The U.S. Department of Justice states that 650,000 inmates are released from prison each year. The National Institute of Justice study states that more than half (56.7%) of those released prisoners—368,550—were rearrested within a year’s time. If we can stop just 5% of those inmates—18,427—from recidivating in the first year and being sent back to correctional facilities, taxpayers would save more than $589 million (18,427 inmates multiplied by an annual incarceration cost of $32,000). It is well documented by the RAND Corporation that educational programs have a positive impact on inmates and recidivism rates. The results included such insights as: 1. Inmates who participate in education programs while incarcerated have a 43 percent lower chance of recidivating than those who did not have access to such programs.

2. Inmates who participate in educational programs have a 13 percent better chance of landing a job after their release.

Education drastically reduces the likelihood that an inmate will reoffend and return to prison. For example, when inmates receive vocational training, the recidivism Southern Oregon Business Journal

3. Every dollar spent on inmate education reduces recidivism costs between four and five dollars down the line.

Educating Our Inmates Can Save Taxpayers Millions (Cont.)

Therefore, we need to make initial investments in educating those who are willing to re-enter society not only to drastically reduce taxpayer costs but also to allow these former inmates a chance at a future that’s mutually beneficial for them and society. In the field of correctional technology, we have spent over 27 years helping departments gain an unprecedented view into virtually every facet of their inmate populations and facilities, driving higher levels of control and safety and enabling them to meet today’s and tomorrow’s operational challenges with confidence. We also provide services that allow inmates to stay connected to their friends and family, which studies have shown is key to reducing recidivism. GTL is the corrections industry’s trusted, one-stop source for integrated technology solutions, delivering an innovative vision for the future while providing exceptional value today. http://www.gtl.net

For every $1.00 spent on education programs $4.00 is saved on reincarceration costs!

Southern Oregon Business Journal

OUR MISSION “To provide a reliable business information tool for the economically curious,

professionally inspired, and acutely motivated.”

PROVIDING IMPORTANT INFORMATION TO BUSINESSES IN THE SIX COUNTIES OF SOUTHWEST OREGON www.southernoregonbusiness.com

Southern Oregon Business Journal