Oregon should put chips in more than one basket
The battle to land new semiconductor manufacturing facilities may be lost but there are other job-rich investment targets that Oregon can win
The energetic, bipartisan effort to land more semiconductor facilities and jobs in Oregon may increase its odds of success with a more inclusive quest for opportunities in a wider range of technologies where Oregon has an advantage.
The battle to land major new fab labs may already be lost. But there are other battles for federal funding that Oregon could win with a concerted effort.
Oregon is already a computer chip hub. Two major semiconductor producers here decided to invest in their current facilities rather than expand in new sites – a potential clue to a winning strategy. Investments could be aimed at helping expansion of manufacturers, toolmakers and suppliers. Chips for America has $11 billion to invest in advanced semiconductor research in fields such as artificial intelligence (AI), telemedicine and virtual reality (VR).
Portland’s keep-it-weird reputation may give it a leg up to attract talented people in VR, AI and telehealth for gaming, marketing, e-commerce, healthcare and educational applications. Oregon has three research universities and an academic health center to support this work. These investments may only require facilities on available or underdeveloped land or in vacant office space, not expensive greenfield development that encroaches on farmland.
Establishing a state tax credit for research and development (Oregon is one of 12 states without one) could be a useful recruitment tool to attract semiconductor as well as other industrial investment.
While computer and electronic component manufacturing is the largest industrial sector in Oregon, the state has other significant manufacturing sectors in food production, wood products, fabricated metal and machinery. Oregon also is a center for innovative shoe design and has a reputation for green environmental policies. We have options and should use this moment to pursue the most promising ones that benefit all parts of Oregon.
Mass Timber
An obvious target to promote is mass timber, a state-of-the-art technology that produces strong, versatile and esthetically pleasing wood products and creates jobs in rural and urban areas. Mass timber has the same or better strength than steel and the advantage of pre-assembly to speed construction of multi-unit housing and multi-story commercial buildings.
Canada is leading the effort to popularize mass timber, but Oregon has two manufacturing facilities, as well as a massive showcase of its utility and beauty in the redesigned Portland International Airport lobby under construction. The U.S. Economic Development Administration has awarded the Oregon Mass Timber Coalition a $41 million Build Back Better grant to advance this technology.
State lawmakers have committed $5 million to support the Building Innovation Hub at the Port of Portland’s Terminal 2 to produce mass timber panels for modular homes that can be trucked or barged to communities around the state to address Oregon’s housing shortage. The Hub also will serve as a training site for manufacturing and construction workers. Further investment opportunities include expanded manufacturing facilities, creating reliable timber supply chains and sponsoring a mass timber architectural design center.
Green Energy
Expanded use of mass timber will spur more demand for timber resources. That will create more biomass in forests which, if left in place, can become fuel for wildfires. Biomass could be used as raw material to produce renewable diesel, a low-carbon diesel fuel that is gaining popularity as a drop-in substitute for petroleum diesel.
Transit providers and public agencies like the Port of Portland have made the switch. Legislation to mandate the switch has been hung up on concerns of a potential shortage of renewable diesel, which suggests an opportunity exists to invest and promote in-state production of the fuel. The feedstocks for renewable diesel range from woody biomass to vegetable oils and animal fats, which could involve producers from all over the state.
Also on the green energy front, investment could be made to accelerate research and development of battery technology to support wind and solar power. The first combined wind/solar/battery power generation facility in America is located in Morrow County and operated by NextEra Energy Resources. PGE uses the output as part of its renewable energy portfolio. David Lawlor with NextEra says there is high interest in similar projects. Another investment target is research underway for battery technology that doesn’t rely on lithium.
We shouldn’t forget that Daimler Truck is designing a new generation of electric trucks and school buses in North Portland. We also shouldn’t forget the Inflation Reduction Act included federal funding for green energy projects.
Food Products
Oregon makes food products such as Tillamook Cheese, Dave’s Killer Bread, Bob’s Red Mill Grains, Resers prepared food, Lamb Weston French fries and fine wines from multiple wine-growing regions. Oregon also exports wheat, berries, pears, hops and Christmas trees to the tune of more than $2.5 billion per year.
More than 95 percent of Oregon farms and ranches are family-owned. Almost 45 percent are owned by women. Oregon has one of the highest percentages in the nation of direct-to-consumer sales. The state boasts nearly 200,000 acres devoted to organic farming.
This is a natural place for state investment to support already successful Oregon enterprise, whether it’s in production, marketing, logistics, worker acquisition or applied research.
Telehealth
Oregon has been a leader in telehealth for three decades with its efforts to allow rural Oregonians to receive quality primary care and access to specialists close to home and complex care at community hospitals. Telehealth incorporates AI technology to queue patients for check-ups or arrange a virtual visits with an urgent care provider.
Investment could be made to create, expand or improve telehealth options for behavioral health, in-school counseling and Medicare and Medicaid services. These services could be combined with new generations of medical test equipment that can aid in managing chronic health conditions and diagnosing acute illnesses.
It’s Not Either/Or
Actively pursuing semiconductor manufacturing investment doesn’t have to trump other investment in forward-looking industries, especially ones in which Oregon already has a stake or a leadership position.
The advantage of a breadbasket approach is that it includes the rest of the state in opportunity-shopping and potential job creation. At a time when 11 counties want to belong somewhere else, a more inclusive, build-on-what-you-got strategy seems timely, appropriate and smart.
Gary Conkling has been a newsman, congressional aide and public affairs professional for more than 50 years.
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You make excellent points that are getting lost in the business lobby panic to find ways to throw money at the effort to "be competitive". However, you have also fallen into the trickle down approach that an R&D tax credit encourages R&D. There is no data that supports this myth and plenty that says there is no link between a state's R&D and a tax credit or that a bigger tax credit leads to more R&D. In fact after Oregon got rid of a small R&D tax credit, research expenditures in Oregon grew and after Arizona increased their tax credit to the most generous in the country they fell behind other states in their ranking for R&D per GDP. Oregon came in 4th in the country, Arizona 21st. The reality is that research centers are much more dependent upon historical business decisions than tax credits.