Southern Oregon Business Journal - March 2021 Issue

Proudly Serving Benton, Coos, Curry, Deschutes, Douglas, Jackson, Josephine, Klamath, Lane, Lincoln & Linn Counties and Crook, Lake, Harney and Malheur Counties as well. Since 2015

March 2021 PEOPLE’S BANK COMPLETES MERGER WITH WILLAMETTE COMMUNITY BANK - PAGE 28

COVID-19 VACCINATION TRENDS - PAGE 26

INTERVIEW WITH WHITMAN PARKER, PUBLISHER OF SOUTHERN OREGON WINE SCENE AND JACKSONVILLE REVIEW - PAGE 8

The Oregon Economic and Revenue Forecast PAGE 12

Sponsored by

Fiber Optic Internet: A Conduit for Economic Transformation PAGE 34

The Journal for Business in Southern Oregon

SouthernOregonBusiness.com

The Southern Oregon Business Journal extends sincere thanks to the following companies for sponsoring the journal. Without their support we could not produce a FREE resource for Southern Oregon businesses.

A Few Words from Jim March already!? This month marks the 1 year anniversary of working from home via zoom for millions of workers.

Vaccinations are rolling out at a brisk pace now and with spring flowers blooming, our desire to be outside and away from the computer 24x7 is stronger than the typical spring fever. I look forward to the days of long hikes, staring at the ocean and not having any zoom meetings or Netflix bingeing.

The world changed in this last year. It will be fascinating to see how we go back “to normal” once we can. What do you think will be the new normal? Drop me a note and let me know. I’ll be doing a story on it soon.

The journal has a new sponsor.

UNIVERSITY OF OREGON CENTRAL OREGON BUSINESS INDEX® - PAGE 4

We couldn’t produce this journal without the support of companies that believe in it and its mission and want to be aligned with it. This month we are proud to announce that LS Networks is an official sponsor. They are an Oregon based Fiber backhaul provider to communities in Oregon and Washington and have been partnering with ISPs and Communities for over 15 years. Check them out at https://www.lsnetworks.net/. Their article “Fiber Optic Internet: A Conduit for Economic Transformation” starts on Page 34.

One of the primary reasons for the journal is to keep you informed and abreast of what is going on in the state and how it may impact the business climate here in Southern Oregon. Another reason is to showcase certain economic reports published by different departments in the state. This month we feature a 14 page executive summary of Oregon’s Economy and Revenue Forecast by Mark McMullen and Josh Lehner of the Oregon Office of Economic Analysis. It’s a great read that recaps the state of the state, employment and economics. Oregon Economic and Revenue Forecast - Starts on page 12.

Founder Greg Henderson ghenderson703@gmail.com Greg started the Southern Oregon Business Journal in 2015 and retired in 2020.

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Greg is back. He quietly came back last month with an article and does so again this month. Hopefully we will hear from him every month. When he retired, I told him that I would always save a page for him if he wanted to come back and write for us. I’m glad to see him back. Go, Set, Ready - Page 30

Jim Jim@SouthernOregonBusiness.com

COVID-19 VACCINATION TRENDS - PAGE 26

Cover Photo : Ahturner / Shutterstock.com- See Page 34

5350 HWY 66, Ashland, Oregon 97520

www.SouthernOregonBusiness.com A JOURNAL FOR THE ECONOMICALLY CURIOUS, PROFESSIONALLY INSPIRED AND ACUTELY MOTIVATED

March 2021 - Table of Contents SPECIAL INSERT

INTERVIEW WITH WHITMAN PARKER, PUBLISHER OF SOUTHERN OREGON WINE SCENE AND JACKSONVILLE REVIEW - PAGE 8

PEOPLE’S BANK ANNOUNCES COMPLETION OF MERGER WITH WILLAMETTE COMMUNITY BANK- PAGE 28

OREGON ECONOMIC AND REVENUE FORECAST - PAGES 12 TO 25

FIBER OPTIC INTERNET: A CONDUIT FOR ECONOMIC TRANSFORMATION - PAGE 34

GO, SET, READY - PAGE 30

LOCAL INNOVATION LAB PREPARES SOU INTERNS TO ADDRESS DISASTER ISSUES - PAGE 38

HUNTER COMMUNICATIONS AWARDED $19.2 MILLION IN FCC RURAL DIGITAL OPPORTUNITY FUNDING TO BOOST BROADBAND SERVICES IN OREGON AND CALIFORNIA - PAGE 31

CENTRAL OREGON

By Timothy A. Duy Director, Oregon Economic Forum Department of Economics, University of Oregon 541-346-4660 · duy@uoregon.edu

Fourth Quarter 2020 Analysis The Central Oregon Business Index continued to rise in the fourth quarter despite the winter wave of the Covid-19 pandemic and the associated restrictions on business activities. While a broad array of indicators have improved, the labor market remains depressed. Assuming the pandemic ebbs as vaccines 4 | Southern Oregon Business Journal March 2021

University of Oregon Central Oregon Business Index®

become more widely available, activity should accelerate in 2021. Labor market improvements stalled out in the fourth quarter as the pandemic forced new restrictions on business activity. Initial unemployment claims rose and employment rose only slightly; employment is roughly 7,000 jobs lower than prior to the pandemic. A full recovery in the labor market requires that the pandemic be brought under

control such that sectors most impacted, such as leisure and hospitality, can rebound. Like much of the state and nation, housing is a bright spot in the economy. Although the number of sales slid from the breakneck pace of the third quarter, homes are selling more quickly as buyers leap at any inventory that becomes available. Construction activity accelerated to an average monthly pace of 243 units permitted compared to 166 the

Deschutes County Personal Income Southern Oregon Business Journal March 2021 | 5

prior quarter. The persistent strong demand for housing should help keep upward pressure on home prices. Tourism and travel indicators are mixed.

Air passenger traffic rose but remains well below pre-pandemic levels. Lodging revenues, in contrast, have staged a strong recovery. The availability of outdoor recreation options is likely attractive to travelers looking to escape the pandemic.

Separately, waste flows continue to rise as they typically do during an expansion and are also driven by solid construction activity and a consumer shift from services to goods purchases. The relative resilience of the regional economy during the winter wave of the pandemic reveals underlying strength that will serve as a strong base for more complete recovery when the pandemic comes under better control. If vaccine distribution allows that to occur by the middle of the year, the economy could quickly normalize in the second half of 2021.

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Methodology and Notes The methodology used to construct the Central Oregon Business Index is identical to that used by the University of Oregon Index of Economic Indicators. Both follow the approach developed by the Conference Board, an independent, not-for-profit research organization, to construct a U.S. Leading Index.

Individual components are transformed into symmetric percentage changes, and the resultant series are adjusted to equalize the volatility of the components. This process ensures that a change in a high volatility component is weighted equally to a change in a low volatility component. The adjusted series are summed to create the index, which is rebased to set 1998=100.

Full details can be found at www.globalindicators.com. The Central Oregon Business Index (COBI) provides a snapshot of business activity by aggregating nine often contradictory economic statistics into a single variable. The variables are chosen on the basis of economic

relevance, timely availability, and sufficiently long history. The selected variables, measures of the labor market, tourism, housing markets, waste generation and the state economy, cover a wide swath of local economic activity.

The COBI as constructed mirrors other indicators of economic activity that are reported on a less timely basis. For instance, on a year-over-year basis, the COBI fell ahead of both the 2001 and 2008 recessions. The COBI is also a leading indicator of personal income growth – data released only annually and with a substantial lag. Still, the available data encompasses only two national recessions, a very small sample from which to draw generalities. Also note that no single variable is capable of decisively determining the state of the business cycle.

Sources: Bend Bulletin, Bureau of Labor Statistics, Oregon Employment Department, Oregon Department of State, Redmond Municipal Airport, Census Bureau, City of Bend, City of Redmond, Deschutes County Department of Solid Waste, Central Oregon Realtors Association, and the author’s calculation. Initial research for this project was supported by a grant from the UO Williams Council.

CAPICHE CONVERSATIONS:

By Chris Cook, Capiche, capiche.us President and CEO of Capiche & Capiche Wine, Chris Cook is a leadership coach focused on happiness, culture, living your brand, and winery marketing & PR. She brings decades of experience in marketing and a love of entrepreneurship.

When Whitman Parker and his wife, Jo, moved from Denver to Jacksonville, Oregon, they harnessed their backgrounds in real estate to embark on new career trajectories. Whit purchased the Jacksonville Review, and Jo set up WillowCreek Gifts in downtown historic Jacksonville. It wasn’t long before Whit realized he’d better seize the opportunity to launch a magazine celebrating the budding Southern Oregon wine industry, and thus Southern Oregon Wine Scene was born. Fourteen years later, and the region is now a major industry player racking up international acclaim and attracting worldclass winemakers.

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Interview with Whitman Parker, Publisher of Southern Oregon Wine Scene and Jacksonville Review

Q: If you were to chart your life’s story in wines, what would it look like? In other words, which wines would you associate with key periods of your life and why?

Q: How did your background in real estate prepare you for your present career as a publisher?

A: Really intriguing question! Truthfully, I’ve had a very happy, productive, and contented life, and wine became a part of it with the discovery of Pinot noir in my early 30s. I was an occasional beer drinker until that discovery of really good wine. I consider myself a moderate person, and I associate Pinot with moderation—it’s not too heavy, not too light, it’s moderate, right down the middle.

A: Without my nearly 30-year real estate career, I couldn’t have become a publisher. A day doesn’t pass without someone asking me if my college degree was in journalism, to which I answer, “Nope!” To be able to publish successfully, you need marketing skills … period. Without marketing and advertising sales, you have nothing but a concept, an idea, a dream. It’s the ability to pick up the phone, knock on a door, and

idea or plan might not be the best and go with another option offered up by someone else—in other words, ditch the ego. As far as advancements go, if I had a dollar for every new widget and software program and upgrade we’ve adopted, I’d be retired. The technology has enabled two people (Andrea and me) to publish two outstanding magazines, with no other staff. This would not have been possible years ago.

Q: What inspired you to start Southern Oregon Wine Scene?

ask the tough question, “Would you like to advertise in my publication?” I was so lucky to have worked for the BEST real estate companies in the nation and had amazing mentors who guided me and allowed me to use my natural skills and succeed. When it came time to buy the Jacksonville Review 14 years ago, I drew upon my real estate marketing background and essentially used the Review as if it was a multimillion-dollar real estate listing.

Fortunately, my wife, Jo, was gifted with Adobe skills and was able to take my vision for reimagining the publication and gave it new life. The first thing we did was to take the news off the front cover—headlines such as “Mayor and Council at Odds” did nothing to promote the town as a place to visit and live and were relegated to the back pages—all intentionally.

Q: How has the Jacksonville Review evolved as technology has transformed the publishing landscape?

A: Jo and I bought the Review in 2009. Since then, technology has made our work lives much easier … but there’s a catch in that you need PEOPLE, and I am very fortunate that Andrea Yancey, who’s my right hand and left hand, is so very gifted with the technology. My role is to know what the technology can do—how it can help market a winery or event—not to know what buttons on the Mac to hit. To succeed in business, you must be able to delegate and then trust your partners to do their part … and you must be flexible and acknowledge that your

A: Frankly, one factor was the fear of missing out and that someone else would start a wine-only magazine before I did! The decision to move ahead was made very fast but very strategically with the assistance of my Jacksonville Review graphics editor, Andrea Yancey. Andrea replaced my wife as my graphics person years before Wine Scene was started, and the two of us just rolled the dice and figured we’d give it a go. I already knew a lot about the printing business, having attended hundreds of press runs at Valley Web Printing, and the owner, Todd Reichenbach, and their team were instrumental in helping launch Wine Scene.

And, luckily for me, I knew a ton of winery owners since one main function I have with the Review is “paperboy.” I had literally delivered copies of the Review to dozens of local wineries for years and already had a relationship with many winery owners. When I approached them about Wine Scene, there was pre-

established trust and confidence, and they eagerly jumped at the chance to be a part of the wine-only publication.

Q: In what ways does SOWS serve both the wine consumer and the Southern Oregon wine industry?

A: The two are totally connected, a symbiotic relationship where one cannot exist without the other. The mission of Wine Scene is simple: provide a print/online vehicle that gets people interested in visiting wineries … period.

Without visitors to tasting rooms, there’s no wine industry. Fortunately, we have a unique product here in Southern Oregon in that the winery fan can actually interact with those making the wines—from winemakers to winery owners, it’s a very up-close and personal experience you don’t find everywhere. Because the wineries are always crafting new vintages, it gives Wine Scene a chance to tell their story in print/online, and there’s always something new to talk about and promote.

Q: How has the branding research Capiche conducted on the Southern Oregon wine region for the Southern Oregon Winery Association (SOWA) informed your decisions related to SOWS? A: We follow Capiche very closely and consider Chris Cook and her team a part of our team.

Because our focus is really on getting people from tasting room to tasting room, Capiche can concentrate on other aspects of the industry we need to know about. When it comes to branding, there’s probably not another more important topic to address—branding brings life to concepts, and Chris has been able to distill what the industry needs to do in terms of marketing itself to the outside world very effectively.

Q: Chris has been writing articles for Southern Oregon Wine Scene since you launched it in 2017. What unique strengths does Chris bring to her role as contributor?

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Interview with Whitman Parker, Continued from page 9 deeply about the industry, partly because the industry here comprises owners and staff whom we know personally—it’s different than a corporate model wherein there’s a disconnect.

Our tourism economy needs the wineries, and the wineries need the lodging, retail, and culinary sectors to all succeed. Chris’s connections are just as deep in other industry segments, and that is meaningful.

Q: Capiche has sponsored crosspollination events such as the Wine Marketing Roundtables and SOWINS. Can you talk about how these events benefited you and fellow participants?

Q: Raising the profile of Southern Oregon wineries benefits the entire region, particularly when it comes to the economy and tourism. How do you and Chris collaborate on your shared goal to promote the Southern Oregon wine industry?

A: The bottom line to a great story is making a connection with a reader from a freelance writer who is personally connected to the subject in the story. Chris knows the players and knows all aspects of the wine business and is able to convey a variety of subjects easily. Good writers have “conversations,” and that is only doable when the author is connected.

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A: I am really happy that I can pick up the phone anytime and speak with Chris and collaborate on a variety of issues and topics … sometimes it’s as simple as finding out about what’s happening at certain wineries, shifts in demographics, economic trends, and changes happening in the industry and with our tourism partners such as is happening with the COVID crisis. Chris is a great sounding board when it comes to vetting ideas for stories and finding out what the readers of Wine Scene will be interested in learning about. The more we can shed a positive light on what’s happening here, the better. Both Wine Scene and Capiche care

A: I have to tell a funny story here … it’s relevant. Years ago, before Chris took over the Wine Marketing Roundtables (WMR) from Marylin Hawkins, I sat with Chris at one of the events. I was a familiar face in the crowd, having been publishing Wine Scene for a bit of time. It was one of Chris’s first meetings, and she didn’t know that many people in the room. She looked over at me and asked, “Do you know EVERYONE in this room?” I said, “Yes,” and added, “you will, too, someday.” Fast-forward a year or so to the same event renamed SOWINS. I reminded her of that encounter and added that I then believed she knew more people than me at that moment —it’s a great testament to how hard she’s worked to get to know everyone in the industry. More importantly, she’s a giver, one who shares her

passion with others with no guarantee of getting anything in exchange. This was the basis of the

WMR—to gather, share, learn, and help lift up everyone attending.

opportunities due to COVID regulations, or are those conversations continuing in remote/digital forms?

A: C19 has severely impacted one-on-one interaction, and nothing can take the place of that. Zoom is a great fill-in, but it doesn’t replace being able to be there, engaged, together. All I can say is that I am hopeful we are nearing the end of this lonely era!

A: The variety of wines is just outstanding due to the climate and ability to grow so many varietals here. But the number-one thing that sets the region apart is the accessibility of the vineyards and tasting rooms, with owners and staff willing to allow guests to get a real glimpse of winery life.

Q: Your wife, Jo, owns WillowCreek Gifts in the historic Jacksonville, and you are highly engaged in the local community, including having served on several boards and committees. What makes Jacksonville such a special place— for residents, business owners, and tourists?

Vicki Purslow and Chris Cook at Cork & Barrel (Anne Fischer Photography) Q: Capiche also spearheaded the first wine marketing workshop in the region, and Southern Oregon Wine Scene was the primary sponsor. Why did you feel it was important to support this event, and what were some of the takeaways?

A: Like Capiche, a core principle of my company is to give back and help others who are helping others—I know it sounds quaint, but it’s true.

When I was approached to support the kick-off event, I jumped at the chance. There’s a saying I use all the time, “Give it out in slices, and it comes back in loaves,” and this was truly the case. Wine Scene needed exposure at the time, and it needed to show it was a legitimate player in the region. When you attend marketing events here in the region and then take a moment to look around the room, you always notice you are surrounded by the key players, the doers, the ones making it happen … in most cases, you’ll be humbled to be in their presence.

If you’re not humbled, you may not understand how hard everyone in this region is working and how challenging it can be to succeed here—you might want to check your ego at the door and pay attention.

Q: Do you feel the wine industry is suffering from diminished networking

Q: In 2019, Capiche played an instrumental role in getting Cork & Barrel to spotlight Southern Oregon wineries. Milestones like this show how far the region has come in gaining recognition as a premier wine-producing region over the years. How has the perception of Southern Oregon wines changed since you arrived in Oregon?

A: Over my 14-year publishing career here in Southern Oregon, I have seen massive changes, much of which are due to better wines being produced by uber-talented winemakers. Truth be told, a decade ago, there were wines being produced that were not that drinkable—that has all changed, partly due to competition raising the bar and forcing mediocrity to take a hike.

Just look at the number of highly skilled winemakers from around the nation coming here—here to Southern Oregon—where they compete for jobs because they love crafting great wines. That shift has trickled down to the “shelf” level, where the local wine-drinker now chooses local wine first and proudly serves local wines to their guests at home.

Q: What do you love most about Southern Oregon wines, and what sets this region apart as a top wine-lovers’ destination?

A: Jo has owned WillowCreek Gifts for 10+ years. Jacksonville is like living in Mayberry … some days, you just have to pinch yourself and make sure it’s real. The one thing making it such a great place to live/work is the committed and involved volunteers—they run the town and deserve the credit.

Q: What do you envision for the future of the Southern Oregon wine industry?

I think it’s going to take another year at least to recover from the economic impacts from the pandemic … but the future is bright. With so many event venues dark, the wineries are one of the only places to go, and wine tasting is the only thing to do! Prior to March 2020, we were on course to finally put Southern Oregon on the map, but that has taken a back seat to just surviving. I know “this too shall pass,” and that a year from now, we will be talking about big marketing initiatives to draw visitors to the region once again. The industry in going to survive and thrive, no doubt, but it’s just going to be a bit longer road to get there. When we get there, there are many to thank … and that surely includes Chris Cook and her Capiche team.

Continues on page 27

Southern Oregon Business Journal March 2021 | 11

FEATURE

By Mark McMullen and Josh Lehner Oregon Office of Economic Analysis

ECONOMIC OUTLOOK The cycle is different. The nature of the pandemic induced recession lead the economy into a severe shutdown essentially overnight last spring. Since then nearly every economic indicator has looked better than first feared. While the broad contours of the economic outlook remain the same since the start of the pandemic, the timing and strength of the recovery continue to come in above expectations.

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March 2021 Oregon Economic and Revenue Forecast

The stage is set for a strong recovery this year and next as the pandemic wanes. This is largely due to the improvements seen in public health, the large federal fiscal policy response, and underlying resiliency in the economy. Most encouraging is that there has been surprisingly little economic scarring in the form of business closures and permanent layoffs to date.

Federal aid has kept most firms and households afloat over the past year.

Despite being down 160,000 jobs (9%), total personal income in

Oregon today is higher than it was prior to the onset of the pandemic.

Personal savings have built up among middle- and upper-income households. Pent-up demand will drive stronger growth in the months ahead.

The shift in consumer spending out of physical goods and back into labor-intensive, in-person services will result in large employment gains this year and next. The full return to in-person schooling this fall will provide a double boost to the economy as well. There is the direct

jobs increase of hiring more teachers and staff, in addition to the indirect boost from freeing parents to rejoin the labor force or increase their hours worked in greater numbers. Overall, Oregon’s economy will return to health by early-2023. This is 6-9 months sooner than expected in recent forecasts and more than a full year earlier than expected in the first post-COVID forecast released last May. Pandemic Progress The economy is emerging from a dark winter. The virus’ resurgence last fall lead to more restrictive public health measures and consumers pulled back out of fear.

While economically painful, this was expected.

Both Oregon and the U.S. lost jobs in December. In January the U.S. eked out a small gain – Oregon data is not yet available. Early indications1 are that March does not look to be any better on the jobs front, even as consumer spending is picking up. Our office has built in job losses for the first quarter due to the dark winter.

That said, as the snow and ice melt and the calendar turns to spring, economic growth will accelerate noticeably. The number of vaccines in Oregon has increased considerably. Currently more than 548,000 Oregonians have received at least one dose of the vaccine, approximately equal to 16% of the state’s adult population. As consumers feel more confident in their ability to safely resume previously limited activities, the economic recovery will accelerate in the months ahead. The outlook brightens with every inoculation.

While the pandemic progress is highly encouraging, there do remain public health risks. While not part of the baseline outlook, a resurgent virus due to new variants, vaccine distribution issues, or a seasonal component next fall, would slow the pace of recovery. Similarly, should the vaccines continue to prove effective against the new variants and a large enough share of the population chooses to receive the vaccine to truly reach herd immunity, the recovery could be even faster and stronger than currently expected.

Federal Fiscal Policy Economic growth in 2021 is shaping up to be one of the strongest years in decades, possibly generations.

The primary reason for this is pentup demand that will lead to very strong consumer spending in the quarters ahead. Incomes are up due federal fiscal policy and spending is suppressed by the pandemic.

The combination of recovery rebates and expanded unemployment insurance benefits means total personal income today is higher than it was prior to the start of the

Southern Oregon Business Journal March 2021 | 13

pandemic, despite the significant job losses. Such support is unprecedented when comparing to recent recessions. Even more encouraging is that underlying personal income excluding the direct federal aid is now back to prepandemic levels. The economy has proved much more resilient than feared a year ago.

This forecast also assumes another major federal relief package, similar to what is being currently debated in Washington D.C. All told this new package will deliver aid of approximately the same size to Oregonians as the CARES Act did a year ago. The composition of the aid will be somewhat different, however.

First the upcoming recovery rebates will be larger at $1,400 per person – thus bringing the total to $2,000 when combined with the $600 passed in late December – compared to the $1,200 per adult and $500 per child in the CARES Act. Second, the amount of expanded unemployment insurance benefits will be lower due to both an improving labor market, and a reduced level of benefits at an additional $300 or $400 per week instead of the previous $600 per week.

Pent-Up Demand Many forms of consumer spending have been restricted by the pandemic, from indoor dining and nightlife to air travel and routine dentist appointments. However, with incomes up, consumers have continued to spend where and how they are able to. The overall patterns in consumer spending have shifted strongly into physical goods, ecommerce, and home entertainment including streaming services.

Furthermore, car sales and home

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sales have rebounded strongly since last spring.

That said, even with the strong spending on goods, households have accumulated sizable savings in the past year. Despite consumers’ best effort, they are unable to spend as much ordering online as they typically do going out to eat, on vacations, and getting their hair cut.

Nationally, households have built up nearly $2 trillion in excess savings.

Here in Oregon financial institutions have seen substantial increases in deposits. Much of this savings is

currently sitting in bank accounts, ready to be spent when the time comes or invested long-term.

Looking forward, as the economy continues to reopen and households become more confident in their ability to venture out safely, consumer spending will accelerate. Patterns of spending will also start to move back toward old habits. This shift out of physical goods and back into labor- intensive, in-person services will create strong employment growth later this year.

Specifically, large serviceproviding industries like health care, leisure and hospitality, and other services – namely barbershops and nail salons – will need to staff back up quickly as consumer spending rises.

These sectors account for more than half of the current jobs hole today. Some subsectors like health care, social assistance, and food services have reduced their employment proportionately to the drop in consumer spending during the pandemic. Effectively that means for every increase in spending in the months ahead, these firms will need to hire more workers to meet consumer demand.

Other subsectors like art, entertainment, recreation, and accommodations have experienced much larger revenue losses and undertaken comparatively smaller levels of layoffs. This likely means two things. First, these firms may not need to staff up as quickly as they can absorb a sizable increase in demand before needing to bring on additional labor. Second, these firms are very likely operating at losses in the past year. They may be unable to lower labor costs to match revenue declines and rely on retained earnings, raised additional capital, or issued debt to remain in business.

All told, the shifting from current above-trend sales in physical goods back into services would increase national employment by a couple million jobs, and Oregon employment by around 20-25,000 jobs. This shift in patterns of spending combined with pent-up demand that is unleashed will drive strong overall employment growth this year and next.

Of course the accumulation of excess savings is almost entirely

concentrated among middle- and high-income households. Lowerincome households have continued to struggle as many workers in the low-wage service industries face dim job prospects until the pandemic is over. They have also had to overcome lapses in federal aid multiple times in the past year. For this reason, ongoing federal assistance in the form of expanded unemployment insurance and recovery rebates that reach those who do not qualify for UI is needed to ensure more of our neighbors, family, and friends do not fall behind on bills or rent.

Recent survey data indicate that after the passage of the COVID relief bill in December, the number of Oregon renters behind on rent or worried about eviction began to decline after rising in recent months. The passage of another major federal relief package, as assumed in this forecast, will go even further to ensuring more Oregonians and Americans do not fall further behind.

Potential GDP and Risk of Overheating Strong consumer spending and additional federal aid this year will provide a nice tailwind for the overall economy. However, given these underlying fundamentals combined with rising asset values and a Federal Reserve that continues to signal it is not even beginning to think about raising interest rates, don’t these conditions lead to rising inflation and an overheated economy?

The classic answer would be yes.

The combination of the CARES Act, December’s COVID relief bill, and the expected federal package in the weeks ahead total more than 20% of GDP. The pandemic induced a drop in GDP more like 11%. As such the potential for an overheating economy is there. The ultimate risk lies in that should inflation accelerate permanently, the Federal Reserve will have to raise interest rates, probably substantially, likely leading to an ensuing recession.

Southern Oregon Business Journal March 2021 | 15

current downgraded estimates of potential GDP is not concerning when viewed in a broader context.

However, there are at least four reasons why this is not as large of a concern today, even as it remains a risk.

First, inflation expectations remain well anchored. There are no signs yet that households or firms are expecting accelerating inflation in the years ahead. The Federal Reserve monitors changes in these measures closely.

Second, the economy has experienced disinflationary pressures for decades. Actual inflation was noticeably below the Federal Reserve’s 2 percent target for nearly the entire economic expansion that ended a year ago. A modest uptick in inflation is more than welcomed from a policy perspective.

Third, to the extent any unleashing of pent-up demand drives the prices of consumer services higher – airline tickets, hotel prices, amusement park admissions, etc – these pressures are likely to be transitory.

Prices would rise this year due to surging demand, but are unlikely to continue to increase at such fast rates every year into the future.

Absent broad-based wage push 16 | Southern Oregon Business Journal March 2021

inflation, any pickup in inflation in the near future is not expected to be persistent.

Fourth, many of the concerns over an overheating economy rest on the concept of potential GDP. Essentially, if all of the available resources were put to use effectively, how large would the economy be?

The concept has clear theoretical implications, yet proves difficult to measure in reality. Even so, current estimates of the so-called output gap – the difference between the actual level of GDP today and the potential GDP – peg it around 4% in the U.S. An additional federal aid package of around 10% of GDP would clearly push the economy above potential and could lead to overheating.

However, estimates of potential GDP have continued to be revised down in recent decades.

Since the Great Recession ended, the Congressional Budget Office (CBO) has lowered their estimates of potential GDP by 10 percentage points or so. Relative to pre-Great Recession expectations, potential GDP estimates have been revised down more like 15 percentage points. Breaching the

Furthermore, past cycles show that a strong, even a hot economy are necessary conditions to see changes in the underlying drivers of long-run growth like productivity and labor force participation rates. In particular, businesses invest in and adapt new technologies to a greater degree, which boosts productivity years into the future. Today, business investment in software, computers, and cloud computing have all accelerated during the pandemic, in part due to the rise of remote work.

Furthermore, when jobs are moreplentiful and higher-paying, like they are in a strong economy, more individuals enter into the labor market in order to find work. Any boosts to productivity or the number of workers should raise the longterm potential growth path of the economy. To the extent this occurs today, then worries over the current estimates of the output gap are misguided at best.

On a related note, concerns over economic disparities, be they racial or ethnic, geographic, or income in nature, are also likely to lessen in a stronger economy. In recent years, Oregon finally began to see the racial poverty gap begin to close, in large part due to the strong labor market by the end of last decade.

Similarly, income inequality was falling some as wage and income gains among lower- and middleincome households outpaced those at the top. In a tighter labor market firms have to dig deeper into their resume stacks to hire workers they may have previously passed over.

Additionally, companies had to compete more on price (wages) to attract and retain workers. A strong

economy can work wonders, even if it does not cure all ills.

Economic Scarring The solid economic foundation prior to the pandemic should aid in recovery, or at least not hinder it.

Unlike past recessions, there are few structural macroeconomic imbalances to overcome or work through. In past severe recessions the restructuring of the timber industry in the 1980s and the household debt overhang from the housing bubble slowed the pace of recovery. Something similar does not appear to be an issue today, leading to a quicker recovery in the years ahead.

Of course, the cycle is not over yet.

Economists remain very concerned about business closures and permanent layoffs. The more of this economic scaring that accumulates, and there will be more, before the recovery can truly get underway will weigh on the strength of that recovery. Even under the best of circumstances it takes time for new firms to replace the lost ones and for laid off workers to find new jobs.

Clearly 2020 and the start of the 2021 are not the best of times.

using a particular software or the like, indicate that an apocalyptic 30% of businesses in Oregon have closed. Those same sources indicate an unfathomable 50% of leisure and hospitality firms have closed.

While solid data on firm closures takes time, let’s run through the actual hard data that is currently available.

First, the total number of active business licenses as reported by the Oregon Secretary of State have increased 1.7% from January 2020 to January 2021. Similarly the number of private sector “business units” as reported by the Oregon Employment Department has increased 2.9% from 2019q4 to 2020q3.

Business Closures The pandemic has impacted all aspects of the economy to varying degrees. Small business in particular appear the most vulnerable as they generally lack sizable reserves, access to capital markets like large businesses, and at times even traditional banking relationships.

Unfortunately, we know not all small businesses have or will survive the cycle. The question is just how much damage is done and what does it mean for the overall outlook?

Estimates here vary. Some third party data sources that track firms Southern Oregon Business Journal March 2021 | 17

Second, businesses close every year, even in good economic times.

During the 1990s economic expansion around 8% of Oregon firms closed each year. Last expansion that improved to around 7% of firms closing each year. These figures rose to 10-12% of businesses closing during each of the past severe recessions in the state including the early 1980s and in the aftermath of the Great Recession.

While sizable increases in the number of firms shutting their doors, this is nowhere near some of the estimates cited in the past year.

Either the pandemic generated three times the number of closures as these past severe cycles or these third party data estimates are not truly representative of the overall economy.

Third, small business income is largely flat over the past year thanks to the Paycheck Protection Program.

While the PPP is flawed and insufficient at saving some of the most vulnerable firms, including those who lacked existing banking relationships, the level of support for Oregon firms totaled just over $7 billion last year. Absent the PPP, proprietors’ income fell nearly 20%.

That is an apocalyptic drop that few businesses could survive on their own. Thankfully some firms were able to access the PPP last year and this year to help support their operations.

Fourth, what timely data we do have for bars and restaurants – the most impacted sector in terms of the pandemic – show that firm closures are up in the past year, but not nearly as much as the conventional wisdom or miscellaneous third party data source indicate. Specifically, OLCC liquor license renewals continue to hover around 92%. This is down from the 97-98% renewal 18 | Southern Oregon Business Journal March 2021

rates prior to the pandemic. Total active liquor licenses for on-premise sales over the past year are down around 5%. Similarly, the number of video lottery retailers who were open and reporting sales was down 7% last fall, prior to the more restrictive public health measures going into effect. Further research by the Oregon Lottery found that a couple percent of retailers continued to keep their doors closed due to the pandemic and uncertain economic outlook and had not permanently shuttered, or at least not yet. Overall there is a clear increase in closures among bars and restaurants in Oregon, however that increase thankfully appears to be around 5% not 50%.

Fifth and finally, the most encouraging data point in terms of business dynamics relates to the ongoing strength in new business formation. Start-up activity has surged since the shelter in place

phase of the pandemic ended. This is seen in the business application data as reported by both the Census Bureau and the Oregon Secretary of State.

Best case scenario here is that the rising number of start-ups means innovation and productivity will increase in the years ahead, boosting long-term growth prospects. At a minimum the higher number of start-ups means the economy will not suffer the double blow of more closures and fewer start-ups as has been the case in past severe recessions and which would slow the overall recovery.

Permanent Layoffs and Long-Term Unemployment In addition to firm closures, permanent layoffs are a key economic issue to watch. The data continue to point toward most unemployment being temporary in nature; that is workers expect to return to their jobs when it is safe to do so and customers return in greater numbers.

However, now that the pandemic and its impacts on our daily lives has lasted this long, we are starting to see a rise in long-term unemployment – generally defined as longer than six months. In

December, 60,000 Oregonians had been looking for work for at least the past six months, more than quadruple the 13,000 or so prepandemic. As a full recovery remains a year or two away, the number of long- term unemployed will continue increase in the months ahead.

Long-term unemployment has real economic, human, and social costs. The longer a spell of unemployment lasts, the lower the probability of finding a job and the higher probability of dropping out of the labor force entirely. This reduces the productive capacity of the economy as fewer people are available for work.

unemployed. While this is always generally kind of true, the relationship is even tighter today. To the extent there is a large pool of applicants who have been mired in pandemic-related job losses, firms may not pass over the longer-term unemployed as often as they have in past cycles. The strong rebound in consumer demand for laborintensive, in-person services later this year means firms will need to staff up quickly, hopefully hiring short-term and long- term unemployed workers alike. Even so, the risks for the long-term unemployed are they lose

In terms of the long-run damage from high levels of unemployment there are four reasons for some level of optimism this time around.

First, the expected federal aid package will continue expanded unemployment benefits into the fall of this year providing much needed financial support.

Second, job postings – a measure of labor demand as firms look to hire – are rising again. Online postings at Indeed have recently reached an alltime high, while other measures of job openings indicate growing, but not yet a fully recovered number of postings.

Third, the industrial composition of the long-term unemployed today mirror that of the short-term

connections to their professional networks, or the hiring manager changes, and the like.

Fourth, as discussed previously, workers return to the workforce in great numbers when jobs are moreplentiful, and higher-paying. A fast return to such an economy should minimize some of these long-term concerns. Encouragingly, wage growth continues to be strong for the workers who have not been laid off during the pandemic.

Overall, the average wage in Oregon has risen 10 percent since

the start of the pandemic. Six or seven percentage points of the increase, however, is due to the compositional changes in the labor market. That is, as lower-wage jobs in bars, restaurants, nail salons and the like have disappeared due to the pandemic, that means mathematically the average wage of the jobs that remain has risen.

Even so, the workers who have remained employed since the start of the pandemic are continuing to see solid, underlying wage increases themselves. These gains account for three or four percentage points of the average wage increases. This is surprising and above expectations, at least when compared with recent recessions.

In terms of the outlook, average wages will decline a few percentage points in the year ahead as the economy reopens and many of the lower-wage, service sector jobs return. However, unlike past cycles where there was a period of lackluster wage gains due to economic slack, our office’s forecast calls for ongoing solid wage increases in line with growth seen prior to the pandemic and for those employed throughout the pandemic.

Online Learning and Parents in the Labor Force Women suffered disproportionate layoffs and higher unemployment rates at the start of the pandemic.

However since last spring, much of Southern Oregon Business Journal March 2021 | 19

by the pandemic and hard to find and afford to begin with.

Another 11 percent of Oregon’s workforce has kids, do not have another non-working adult present, but can work from home. Juggling work responsibilities and ensuring their kids attend class and get their homework done is a daily struggle, to say the least.

In America we know taking care of the family and household more broadly disproportionately falls on moms. Nationally moms have seen much larger employment losses than dads have. In fact nearly 1 million moms have left the labor force in the past year, twice that of dads. In Oregon that’s the equivalent of around 12,000 mothers leaving the labor force.

Besides the lack of in-person schooling, another contributing factor to the gender parent gap is likely the gender wage gap. If a household has to choose an adult to stay home, it makes more financial sense for the lower- earning worker to do so, which usually means the mom.

the gender gap in employment has effectively closed. As of January 2021, male employment in the U.S. was down 5 percent, while female employment was down 6 percent.

Here in Oregon the female and male unemployment rates in December 2020 were the same. Noisy monthly data can be challenging and has resulted in some stronger headlines about these gender differences than is probably warranted from the big picture perspective.

That said, while these topline numbers do not show large 20 | Southern Oregon Business Journal March 2021

gender disparities, the same cannot be said if we focus just on parents.

Overall we know that many families are in a bind with online learning.

Nearly 1 in 5 Oregonians in the workforce meet the following definition: they have children, work in a job that cannot be done from home, and do not have another nonworking adult present in the household. These Oregon parents likely face the direct trade off of going to work, or staying home to take care of the kids, or trying to arrange childcare which is restricted

Looking forward our office has built in two impacts in the economic outlook from a return of in-person schooling.

First there are the direct jobs associated with in-person schooling.

Education employment is down considerably since the start of the pandemic. A portion of these losses are office staff, lunch workers and bus drivers, however the vast majority of the losses are teachers themselves. This is primarily due to the lack of substitute teachers being used with online learning, not layoffs to full-time teaching positions. Given around 75 percent of elementary and middle school teachers are

monitor these big changes seen during recessions.

In the years leading up the pandemic, Oregonian moms had begun to return to the labor force in greater numbers due to the strong economy. In fact the share of Oregon moms in the labor force hadn’t been higher in decades. While not the baseline outlook, it is possible the pandemic will undo much of these gains. In the event this does happen, it would likely take years to regain the losses.

Note on Population Growth and Housing Our office’s population and demographic forecast has been updated, see page 25 for a broader discussion and the underlying details. The upshot is births continue to remain low, while deaths are rising due a general aging of the population, increases in the socalled deaths of despair, and COVID. Over the extended forecast horizon deaths are now expected to outnumber births. As such, Oregon’s population growth will rely entirely on net migration.

women, and high school teachers are evenly split between men and women, the direct jobs boost from in-person learning will disproportionately impact women.

Second there is the indirect impact of freeing parents’ ability to work when the kids return to the classroom. Parents – primarily moms – will be able to work again if they want, increase their hours, or at a minimum be more productive as they will no longer be

simultaneously trying to manage online school and do their jobs.

As the pandemic wanes, our office expects a stronger economic recovery than has been experienced in recent cycles. As a result, Oregon parents are likely to return to the workforce in greater numbers this year as the kids return to classrooms and businesses are looking to hire to keep up with demand. That said, it is always important to continue to

A key unknown today is just how strong migration has been during the pandemic. We know in recent years population growth has slowed, including through the latest mid-2020 population estimates published by Portland State’s Population Research Center.

While not the convention wisdom, which seems to be there is a large increase in pandemicrelated migration, this pattern overall does make sense.

Most migrants follow job opportunities. As the business cycle matured in recent years, job growth slowed and so too did migration.

Then the pandemic hit, leading to Southern Oregon Business Journal March 2021 | 21

underlying economy as those households are not bringing their skills, talents, and income with them.

Ultimately what matters for the regional economy is the growth among the working-age population, many of whom move to the area from elsewhere. What matters to the housing industry are rates of household formation among 20- and 30-somethings and the relative demand for different types of housing options. Here, the monthly household survey indicates that household formation continues to hold steady after taking a brief drop during the shelter in place phase of the cycle.

This indicates ongoing demand for housing in Oregon, and the need to ensure adequate levels of new construction.

Our office’s housing starts forecast calls for fairly steady levels of new construction in the years ahead.

There has been a large drop in multifamily activity in Portland proper but ongoing strength in multifamily construction in the suburbs and elsewhere around the state. Single family construction is strong across the state.

Economic Impact of Ice Storms and Grid Resiliency

layoffs and the shelter in place phase of the cycle. Hardly anyone moved last spring or early summer.

Since then, however, indications are migration has firmed. Population growth in the latter half of 2020 will show up in the 2021 population estimates released late this year.

That said, using the strong housing market as a harbinger of migration trends is challenging. Home sales 22 | Southern Oregon Business Journal March 2021

always overstate population growth as the differences between the types of homebuyers matter considerably.

Some local residents sold and moved away. In the big picture, new buyers are simply replacing them.

Similarly, local move-up buyers, or renters shifting into ownership represent home sales but no population growth. Likewise an increase in second homes impacts the housing market but not the

Almost the entire country recently went through some form of a cold snap and disruption to the local economy and our personal lives.

However in Oregon, hundreds of thousands of our family, friends, and neighbors went without power for multiple days. Most are in the Willamette Valley. Given that the Portland and Salem regions account for 58% of the state’s population, 63% of personal income, and 67% of GDP, anything that happens there

will have a considerable impact on statewide numbers.

In terms of the direct economic impacts of the storms, and natural disasters more generally, it is pretty straightforward. Transportation is heavily disrupted and the storms clearly throw a wrench in logistics.

For example both I-84 in Oregon and SR-14 in Washington were closed for an extended period of time, meaning east-west traffic through the Gorge was delayed or potentially rerouted which added hours to any trip. There is physical property damage in the form of collapsing roofs, icy roads, frozen pipes, and falling trees or debris.

There are repair costs to all of these damages for private firms, the public sector, and utility companies.

Perversely the cleaning up and rebuilding phase is a boost to GDP growth, but not to overall societal welfare. Additionally, outdoor industries like logging, construction, and agriculture — both crops and livestock — are restricted and likely lost product as well. On the other end some industries did see an increase in sales and activity as local residents stocked up on groceries ahead of the storm, and hotels filled up as people needed a warm place to stay.

Overall these disruptions likely caused a short-term drop in economic activity, and wages earned. Hourly workers are the most affected as they miss shift(s) because they cannot get to work due to the weather and/or because businesses close. To some degree, the pandemic and working from home likely muted some of these traditional impacts from natural disasters.

In Oregon there were no major electrical generation (supply) issues like elsewhere in the country. Local

problems were primarily about the transmission and delivery of the electricity due to downed power lines. The personal and economic impacts in recent weeks are more about grid resiliency and being without electricity for days on end.

An Obama era Council of Economic Advisors report on grid resiliency finds that weather-related power outages nationwide have been rising in recent decades; a trend expected to continue due to climate change. Power outage costs include lost output and wages, spoiled inventory for businesses and households, and the inconveniences and cost of restarting industrial operations. Annually, power outages cost between $18 and $33 billion per year. At the time the report was written (2013) that was equal to a tenth or two of a percentage point of GDP. Years with larger events (disasters and storms) had even larger costs.

Such findings are confirmed elsewhere in the research, including Degelia et al (2016) who write that “the effect on power lines tends to be the main and longest lasting impact of ice storms as power supplies often remain off for long periods of time, even after the ice storm has passed.” In addition to the economic costs, Degelia et al discuss some of the societal, human, and environmental impacts as well.

While heatwaves generally cause more deaths than do severe winter storms, there are increases associated with both. Essentially whenever temperatures deviate significantly from normal local conditions, bad health outcomes occur. In cold temperatures there are some deaths attributable to direct exposure in terms of hypothermia, frostbite and the like. More deaths tend to come from complications of

underlying respiratory and heart conditions as cold is a stressor on the body. Furthermore, indirect deaths from falling debris, or improperly ventilated generators as happened in 2012 in the aftermath of Superstorm Sandy on the East Coast, unfortunately occur as well.

Finally, a more modern impact of power outages and need for grid resiliency is the loss of an internet connection. Broadband access is an increasingly important part of society, both economically and culturally. This includes those working from home, in addition to online schooling, and to say nothing about entertainment options to help pass the time, especially when the pandemic already restricts what we can do in the first place.

Regional Comparisons To date the urban-rural divide has shrunk so far this cycle. The severity of the initial recession varied mostly due to the local industrial structure.

Places like the North Coast, Columbia Gorge, and Central Oregon that have an outsized tourism and related sector experienced the largest declines.

However, other areas of the state experienced somewhat smaller losses, including much of rural, eastern Oregon. Transfer payments account for larger portions of total personal income in rural areas as well so increased transfers during the pandemic may disproportionately support these economies.

So far in recovery, the Portland region has seen the slowest growth.

This may be due to the lack of rebound so far in high paying industries which tend to be located predominantly in urban areas.

Additionally major job centers like downtown Portland have seen a Southern Oregon Business Journal March 2021 | 23

REACH

YOUR TARGET

large drop in activity due to hardly any business travel, and an increase in working from home. Additionally, on a smaller scale in terms of impact, the protests and clashes of violence may be in play as well.

previous outlook are available as Table A.2 and A.3 in Appendix A. Additionally see our office’s Alternative Scenarios on page 13 for more on why the baseline outlook may be too optimistic or pessimistic.

While the urban-rural gap is not widening today, over the full cycle it may. Long-run economic growth is primarily about the number of workers and how productive each worker is. Population gains are strongest in urban areas, which should propel these regional economies to faster growth.

Additionally, urban areas, have larger concentrations in the industries expected to grow the fastest in the years ahead than do many rural areas. As always, keep eye on capital (financial, human, natural, physical, and/or social) and investments as those will help drive productivity and overall growth in our regional economies.

Alternative Scenarios

A more complete summary of the Oregon economic outlook and forecast changes relative to the 24 | Southern Oregon Business Journal March 2021

The baseline forecast is our outlook of the most likely path for the Oregon economy. As with any forecast, however, many other scenarios are possible. Given the uncertainty about the path of the virus and public health, in addition to the relative changes in the temporary versus permanent economic damage still to come, the range of potential outcomes is larger than usual. The key points on the path to recovery revolve around the timeline for a widely available medical treatment, the potential for a double-dip recession, and the duration of the entire cycle. The two alternative scenarios below are not the upper and lower bounds of these outcomes. These alternative scenarios are modeled on realistic

ADS 17,000+ Business People get a chance to see your ad in the monthly Business Journal.

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assumptions that are somewhat more optimistic or pessimistic than the baseline. See page 20 for the General Fund revenue implications of these scenarios.

Optimistic Scenario – A Faster Recovery: The dark winter proves less severe than feared. The economy quickly returns to health by early 2022, leading the overall cycle to more closely resemble the traditional recovery from a natural disaster. The likely underpinnings of this outlook include an acceleration in the vaccine supply in the months ahead, combined with a stronger federal policy response to improve the economy. The majority of households have additional financial firepower to spend as a result and the confidence they can do so safely. The number of firm closures and permanent layoffs are kept to a minimum, aiding the pace of recovery.

bungled vaccine distribution system, or new variants of the virus worsening the pandemic. The end result is consumers stay home to a greater degree and businesses once again face dropping revenues.

Complicating matters is a divided federal government that does not pass

additional aid quickly to support laid off workers and struggling households and firms. More permanent damage accumulates, slowing the overall recovery.

Oregon’s economy does not fully return to health until late 2025.

Pessimistic Scenario – A DoubleDip Recession: The decline in new COVID cases proves a false dawn, likely due to a Southern Oregon Business Journal March 2021 | 25

26 | Southern Oregon Business Journal March 2021

Southern Oregon Business Journal March 2021 | 27

COMMUNITY BANKING

By Press Release Ken Trautman, CEO of People’s Bank of Commerce

Medford, Oregon – March 1, 2021 – People’s Bank of Commerce (OTCBB: PBCO), announced that effective March 1, 2021, it completed the merger with Willamette Community Bank.

Ken Trautman, CEO of People’s Bank of Commerce, stated, “We are fortunate to have the opportunity to partner with Willamette Community Bank, which expands our franchise into the Willamette Valley markets.

We are very pleased to welcome Willamette’s customers, shareholders and employees to People’s Bank and look forward to continuing to provide quality services and opportunities to them”.

28 | Southern Oregon Business Journal March 2021

People’s Bank Announces Completion of Merger with Willamette Community Bank

On a combined pro forma basis, People’s Bank of Commerce would have total assets of approximately $742 million as of December 31, 2020 (unaudited and excluding purchase accounting adjustments) with nine branch locations in Southern Oregon and Willamette Valley markets.

About People’s Bank of Commerce Founded in 1998, People’s Bank of Commerce is the only locally owned and managed community bank in Southern Oregon.

People’s Bank of Commerce is a full service bank headquartered in Medford, Oregon with branches in Medford, Ashland,

Central Point, Grants Pass and Klamath Falls. People’s Bank of Commerce’s stock trades on the over-the-counter market under the symbol PBCO. Additional information about the Bank is available in the investor section of the bank’s website at: www.peoplesbank.bank.

About Willamette Community Bank Founded in 2003, Willamette Community Bank is a full service bank headquartered in Albany, Oregon and serves customers from three offices located in Albany, Lebanon, and Salem.

Southern Oregon Business Journal March 2021 | 29

Go, Set, Ready

L

uck resides at the intersection of preparation and opportunity. You and I have heard it a thousand times, but seldom say no to a bit of luck that may come our way. Too, bad.

Undeserved luck is addictive and unreliable. COVID-19 is blamed for thousands of business failures whose customers suddenly disappeared because of medical or political decisions addressing the urgency of the pandemic.

Studies are also suggesting that many of those business failures were inevitable regardless of restrictions. The risks of starting a business are often magnified by poor preparation in the outset.

That is a hard pill to swallow, bitter but true. Forced shutdowns hurried the ending for many. Just because you like music doesn’t mean you can sing. Just because I like dessert does not mean I can cook. Just because Judd enjoys flying doesn’t mean he should be a commercial pilot. Successful achievement is better served with preparation. Sometime in your life someone has said if you’re going into business that you should do something you enjoy. Sound advice? Perhaps not in the beginning. Check your ego at the door. The preparation phase of going into business is a different animal than the exciting

30 | Southern Oregon Business Journal March 2021

hobby you might have in mind. If your avocation is to become your occupation be sure to do the necessary preparation that could delay your start date by weeks, months, even years. Few things are as painful as failed dreams.

Knowing that dreams have been defined as goals without a deadline should raise a caution flag for us all. Goals have a plan including deadlines. Dreams do not. Most Start-Up businesses fail within the first five years of operation. But they shouldn’t.

Talk to your Chamber of Commerce or Small Business Development Center before declaring your independence in business. It could be the wisest decision you make. “Fifteen percent of small business owners report that they will have to close their doors if current economic conditions do not improve over the next six months, down from 25% two months ago. Another 17% of owners anticipate they will be able to operate no longer than 7-12 months under current economic conditions. Just over two-thirds (68%) are better situated and do not anticipate any near-term problems.” Covid-19 Small Business Survey (15) PPP, ERTC, the Economy, the Vaccine, and Minimum Wage NFIB Research Center January

28-31, 2021 - Covid-19-15Questionnaire_.pdf (nfib.com) To what extent is anything worth the risk? Would you place a $100 bet on a $10 prize? Probably not.

Would you place a $2 bet on a $200 million prize? Quite possibly. Why? Both bets are a bad investment. Some estimates state that as many as 80% of start-up businesses will fail in the first five years of operation.

Those numbers don’t necessarily reflect only business failures, but also the frequency of new business owners having a change of heart who decide business ownership isn’t for them, and just closing the doors.

Nevertheless, the percentage of start-ups that do go broke is a high number. And yet, new businesses are started every day regardless of the odds against them. Risk takers, all. Don’t make the odds against your success greater than they need to be.

Greg Henderson Greg Henderson is the retired founder of the Southern Oregon Business Journal. A University of Oregon graduate and a six year U.S. Air Force veteran, he spent nearly 30 years in banking and finance. His articles have appeared in dozens of publications concentrating on some 20 industry sectors.

Contact him at ghenderson703@gmail.com

BROADBAND

By Press Release

Hunter Communications Awarded $19.2 Million in FCC Rural Digital Opportunity Funding to Boost Broadband Services in Oregon and California

Hunter to provide up to 1 Gbps symmetrical fiber broadband internet Hunter Communications (Hunter), the premier fiber-optic communications services provider in southern Oregon and northern California, has been awarded $19.2 million through the Federal Communication Commission’s Rural Digital Opportunity Fund (RDOF) Phase I auction. Hunter will deploy 100% fiber-optic broadband networks to offer up to 1 gigabit symmetrical internet services to 5,771 underserved homes and businesses in rural Oregon and northern California communities.

Hunter is a portfolio company of the bidding entity, Grain Management, LLC, a leading Washington, D.C.based investment firm focused on the global communications sector.

“One thing the pandemic has reinforced is that it is no longer a privilege for residents in rural areas to have fast, reliable internet — it is an essential requirement,” says Michael Wynschenk, Chief Executive Officer of Hunter Communications.

“Hunter also believes it is not enough to promise stable pricing for internet services — it is an essential requirement.

As Hunter continues to expand our offerings to new communities, we’re committed to deliver the exceptional and reliable service that will help our new communities thrive.”

“Hunter was recently recognized by BroadbandNow, a nationwide broadband rating company, with four 2020 BroadbandNow Service Provider awards in both regional and nationwide mid-size categories,” says Sam Ackley, Chief Operating Officer of Hunter Communications.

“Both Hunter and Grain are extremely excited about these upcoming projects and the opportunities they offer to continue to build out our award-winning fiber network.”

Hunter Communications will use the $19.2 million RDOF funding to bring Fiber to the Home (FTTH) delivered internet to the following areas: Medford, OR Ashland, OR Eugene, OR Jacksonville, OR Shady Cove, OR Klamath County, OR Oakridge, OR Springfield, OR Chiloquin, OR Veneta, OR Gilchrist, OR / Chemult, OR Sprague River OR / Beatty, OR LaPine, OR Eureka, CA Hoopa, CA / Willow Creek, CA The Rural Digital Opportunity Fund Phase I auction is part of a broader effort by the FCC to close the digital divide in rural America and target

areas lacking fixed broadband service that meets the Commission’s minimum standards with download speeds of at least 25 Mbps. More information on the Rural Digital Opportunity Fund Phase I auction is available at https://www.fcc.gov/ auction/904.

About Hunter Hunter Communications provides ultra-high-speed fiber optic broadband internet, data and voice services to business and residential customers in communities throughout southern Oregon and northern California. With Gig speeds, no data caps, and competitive pricing, Hunter’s 2,000+mile fiber network is nationally recognized for performance and reliability.

BroadbandNow recognized Hunter with four 2020 Internet Service Provider Awards, including for fastest business internet speeds in Oregon and among the top 10 nationwide.

Founded in 1992, Hunter is headquartered in Medford, Oregon where the company established a legacy of service excellence and commitment to local communities. Hunter Communicatio ns was acquired in 2020 by Grain Management, LLC. Additional information is available at Hunterfiber.com.

Southern Oregon Business Journal March 2021 | 31

Welcome to Umpqua BroadBand!

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Rural homes, farms, ranches and businesses now have an option. We have towers strategically located all over the Umpqua Valley. We have hundreds of happy customers that have made the switch to Umpqua Broadband™, replacing their slow DSL or Exede wireless service. umpquabroadband.com 845 SE Mosher Ave, Roseburg, OR 97470 (541) 672-3793 customercare@umpquabroadband.com

32 | Southern Oregon Business Journal March 2021

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Southern Oregon Business Journal March 2021 | 33

BROADBAND

BY BRUCE ARNOLD

Fiber Optic Internet: A Conduit for Economic Transformation

A robust, high-capacity fiber optic network already runs throughout Southern Oregon. One company, LS Networks, is poised to “bridge the digital divide” in the region by making their network available to businesses, educational, healthcare and government operations as never before.

Photo : Ahturner / Shutterstock.com

Who Will Stay?

That’s a common refrain when parents, educators, employers and regional officials discuss the future of young people growing up in Southern Oregon.

34 | Southern Oregon Business Journal March 2021

Increasingly, rural areas are losing young, talented people in search of opportunity and better employment prospects. The current reality is that 55 percent of the U.S. population already lives in urban areas, with that figure set to reach 68 percent by 2050. This increasing concentration is often

discussed in relation to urban infrastructure: how will cities cope with this influx of people? The loss of young, vibrant talent in great traditional towns and cities like Grants Pass, Medford and Ashland is an afterthought, if it’s thought about at all.

To let rural communities fade away, however, would be a mistake. The clean air, quality of life and proximity to nature are all things to be treasured; it’s why many of those moving away from rural areas to cities do so with a heavy heart. In the years to come, however, technology may mean they don’t have to. Around the world, governments and private enterprises are looking at ways of preventing the countryside from being hollowed out. Southern Oregon in particular, has a little recognized resource that’s ready

business and residential customers. Major customers include Douglas County Fire District #2, the State of Oregon, Mercy Medical Center, Umpqua Community College, nine city governments, thirteen school districts, and countless medical facilities.

What most people don’t know is that DFN distributes the bandwidth provided by LS Networks, the same company that now serves Grants Pass, Medford

“For years, we paid multiple vendors for enterprise level bandwidth and maintained expensive routing equipment at facilities in Portland and Seattle. By working with LS Networks, we get all of the redundancy, reliability, performance and scalability we need.”

Todd Way, General Manager of DFN.

to deliver on the full potential of the region and it’s hard working people.

Douglas Fast Net: Powered By LS Networks Many of us who live in Southern Oregon are familiar with the Douglas Fast Net (DFN) success story. Founded in 2001, DFN serves tens of thousands of

and Ashland. According to Todd Way, General Manager of DFN, “By consolidating from a multivendor approach to LS Networks we got more than just performance, we saved money, as well.” By being able to purchase redundancy from a single vendor, DFN doesn’t have to pay a second internet provider for full redundancy.

Particularly in rural areas, true redundancy via multiple providers

is often an illusion. Network providers function in a complex world in which competitors also sell transport to each other. Most service agreements do not allow the end client to know the specifics of a route, so there is no way to verify or guarantee redundancy. As business situations change, those routes can change without notice.

LS Networks is designed differently than large providers, and they do business differently.

LS Networks operates with transparency that competitors often avoid or are simply unable to offer. Unlike the national providers, LS Networks gives their customers detailed documentation of their fiber routes and equipment configurations and topology.

“You can truly verify separate network and equipment connections for redundancy, and then get contractual guarantees for that configuration. That’s something you can’t do with traditional vendor diversity,” said Leif Hansen, VP of Engineering at LS Networks.

LS Networks In Medford & Businesses Like Yours Many residents of Southern Oregon are familiar with Medford Radiology Group, especially if they’ve needed a CT scan. The group’s radiologists oversee Southern Oregon Business Journal March 2021 | 35

transmission needs.”

Not surprisingly, the demand for bandwidth will only grow in medical and business applications. For example, new life-saving technology like Digital Breast Tomosynthesis (DBT) uses anywhere from 250 megabytes to 3 gigabytes per exam, and with 80–90 exams per day, that’s a lot of data. This data transmission can be life saving when radiology reports go to emergency rooms across the state.

“LS Networks allows us to deliver huge amounts of mission-critical data throughout our service area,” Jackson said. “We use roughly 4 gigabytes per day right now, but we can call up LS Networks and say we need an additional 8 or 10 gigabytes if we take on a new client that uses a lot of data. If we have special back-up needs, LS Networks will provide bandwidth on demand to temporarily increase bandwidth for that purpose. We can run huge backups because we have the 50 to 100 gigabytes of data we need just a phone call away.”

“What most people don’t realize,” said Dan Swanson, VP Marketing at LS Networks, “is that a medium sized business in Grants Pass, Medford or Ashland, can get a one gigabyte connection with us, and have all of the power of our network available to them. It’s scalable from one gigabyte to 100 gigabytes, provides VoIP telephone services, Unified Communications and access to virtually limitless, powerful applications in the cloud. All of these capabilities and more are available to all our customers.

They’re just a phone call away.”

“LS Networks allows us to deliver huge amounts of mission-critical data throughout our service area,” Jackson said. “We use roughly 4 gigabytes per day right now, but we can call up LS Networks and say we need an additional 8 or 10 gigabytes if we take on a new client that uses a lot of data. If we have special back-up needs, LS Networks will provide bandwidth on demand to temporarily increase bandwidth for that purpose. We can run huge backups because we have the 50 to 100 gigabytes of data we need just a phone call away.”

about 360,000 procedures per year, offering state-of-the-art radiological diagnostics, reports and consultation to patients and referring physicians in clinics and hospitals across Southern Oregon. Their geographic footprint covers Medford, Ashland, the Rogue Valley, Grants Pass, Bend and the Oregon Coast.

In 2015, LS Networks created a custom-built network, increasing the organization’s network bandwidth, performance and security.

“We had two main concerns,” said Alan Jackson, Director of IT at Medford Radiology Group.

“One was the lack of security. We have HIPAA laws about privacy and security, and our previous network The promise of technology, in general, has always been about didn’t provide the mechanics to ensure our supporting talent, streamlining processes and eliminating barriers data was actually private. to productivity. Measuring the real value of technology is, and The second concern was always will be, a human equation. When it comes to the Internet, we needed more specifically, this has never been more true. bandwidth. Our old network wasn’t capable of meeting our considerable data

36 | Southern Oregon Business Journal March 2021

Southern Oregon Business Journal March 2021 | 37

EDUCATION from SOU News https://news.sou.edu/2021/02/local-innovation-lab-prepares-sou-interns-addressdisaster-issues/

I

f you’re looking for a silver lining somewhere deep within the dual catastrophes of COVID-19 and last fall’s southern Oregon wildfires, look no further than the Local Innovation Lab. The collaborative project of Southern Oregon University and the Humane Leadership Institute is finding student interns and training them as leaders to tackle some of the sticky issues faced by communities and businesses affected by the disasters.

About 30 SOU students from more than 10 separate degree programs are receiving $1,000 stipends to participate as interns in the new program this year, and double that number are expected for the 2021-22 academic year. Four of this year’s fall term participants already have paid jobs as a result of their internships.

“Students are learning that humane leadership applies to how they lead themselves as well as how they lead others, and that it applies equally

38 | Southern Oregon Business Journal March 2021

Local Innovation Lab prepares SOU interns to address disaster issues

to their personal lives and their professional lives,” said Bret Anderson, SOU’s Economics Department chair and the university’s primary link to the Local Innovation Lab project.

“We are meeting students’ innate desire to contribute to their communities, especially in the wake of the Almeda Fire, while inviting them to apply their skills to impactful work,” he said.

The project grew out of a community conversation that was initiated last April, when it was apparent the COVID-19 pandemic would have deep and long-lasting effects on southern Oregon. Stephen Sloan of the Humane Leadership Institute, a local education think tank, convened a small group of people from Ashland and the Rogue Valley to discuss the emerging problems, needs and opportunities.

Those community conversations eventually grew to include more than two dozen participants, and one of the group’s first actions was to create a

501c3 nonprofit organization – Local Innovation Works – to carry out the first project, the Local Innovation Lab. Community leaders in the larger group had discussed the need for interns to help businesses, social service agencies and local governments reboot their operations in ways that could help address pandemic-related issues. But the interns would need to be prepared to lead, rather than be led.

“I have heard over and over again that the effort required to bring a student intern up to speed is not worth the benefit of hiring an intern for many organizations,” Anderson said. “This was a gap that we identified pretty clearly. Universities do a great job of (creating) academic foundations for careers and employers do well with on-the-job training for their long-term employees, but the short-term student intern is left in the void.

Continued on page 41

Southern Oregon Business Journal March 2021 | 39

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Southern Oregon Business Journal 5350 HWY 66, Ashland, OR. 97520 www.southernoregonbusiness.com SOU Innovation lab : Continued from page 38

“Thus, there was a need for a community organization to build a bridge between the academic community and organizations in the community that focused on the students’ own experience of leading themselves and those around them.”

Those who apply to participate in the program as student interns are required to take an SOU course on humane leadership, which emphasizes qualities such as compassion, consideration and encouragement. That course and participation in the internship program satisfy two of the three criteria needed to earn SOU’s digital badge or micro-credential in Values-Based Leadership. The third requirement is completion of any of several elective courses that focus on equity, diversity and inclusion, and the wider social context in which entrepreneurship and civic engagement take place.

The Local Innovation Lab, humane leadership course and Values-Based Leadership badge all

are open to both enrolled SOU students and community members.

The lab was initially intended to launch with a cohort of interns for winter term, but the wildfires of early September “turned the dial up to 11,” Anderson said. It was instead unveiled as a pilot program with interns lined up after fall term had already begun.

Its organizers wove together the abilities of interns, the assets of donors and investors, and the needs of organizations affected by the pandemic or fires.

The project is clearly working.

One intern from SOU’s Financial Mathematics program is helping the city of Phoenix clean up the accounting for its water billings; a Continuing Education student is analyzing data from Medford’s Family Nurturing Center to better map social service outreach efforts to outcomes.

Another student is helping create a community investment fund by looking at gaps between

local banks’ loan terms and the ability of underserved entrepreneurs to get credit. Yet another is working “her dream job” with the Gordon Elwood Foundation, creating a “visually appealing, accessible online database profiling key funders in the Southern Oregon region.”

Two other interns are working with the nonprofit Remake Talent to create an interactive recovery dashboard using ArcGIS and to present the evolving network of fire relief organizations that provide resources to the Rogue Valley.

“Students get a real-world experience of impact, collaboration and reality,” Anderson said. “They get a sense of the practical utility of their education. They get a break from theory and a deep dive into the challenges of trying to get important things done with other people.”

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