Governor, Can You Spell Jobs?


I’ll say it again. Gov. Ted Kulongoski is the least “economically literate” governor that Oregon has had in modern times. He appears to have virtually no understanding of the micro or macro economic effect of government policy. Oregon’s major businesses continue to contract and leave while Kulongoski touts the manufacture of unproven “green technologies” as appropriate replacements.

The latest case in point is the closure of the Daimler/Freightliner plant in Portland with the resulting loss of approximately 900 well paying manufacturing jobs, an additional 600 administrative jobs in the Portland headquarters office and the resulting losses in the multitude of manufacturers and suppliers of parts. Nick Beleiciks, a senior analyst for the state economist’s office in a recent interview in the Portland Tribune noted, “For every job lost in heavy-duty truck manufacturing, three more jobs disappear elsewhere.”

Not that the governor ever pays any attention to his economic advisors, but just so that he understands the math, that means that there are 1,500 direct jobs lost from Daimler/Freightliner and another 2,700 jobs from suppliers. (There is also a ripple effect from the 600 administrative jobs but I don’t have a reference to that multiplier.) Not minimum wage jobs but well paying manufacturing jobs, complete with benefits,

And the sad truth of the matter is that one phone call from the governor could have prevented all of it. One call from the governor to the attorney general could have prevented the loss of all of these jobs. One call that should have been made if the governor or his principal advisors knew even basic high school economics.

Here is the scenario. Several years ago a German truck manufacturer, Man AG sued Freightliner’s parent, Daimler Trucks seeking $500 million in economic damages and $350 million in punitive damages. Because of a quirk in the law, the State of Oregon is entitled sixty percent of any punitive damages collected – $210 million dollars to the state’s coffers for no efforts on the part of the state and no demonstrable damages to the state. It was a windfall of $210 million.

That windfall caught the eye of Attorney General Hardy Myers and the chase was on. But the big catch was that Daimler and Man settled the lawsuit without punitive damages — that means the State of Oregon was entitled to nothing. But that didn’t deter the Myers. With the scent of free money he promptly sued Daimler Trucks demanding the $210 million anyway.

Freightliner General Counsel and Secretary Paul Hurd was quoted in the Portland Tribune as saying that the state’s lawsuit was very much on the minds of company executives when they decided to pull the plug on their Portland operations:
“They are deeply disappointed that Oregon would sue us while other states are courting us. Oregon poisoned the well with the suit. They poured iodine in the water.”
Even Portland’s notoriously liberal city commission got it. The Portland Tribune noted that

“During the past two years, Portland Mayor Tom Potter and Multnomah County Commission Chairman Ted Wheeler have urged Oregon Attorney General Hardy Myers to drop the suit, however. Just last month, Portland’s City Council authorized the city attorney’s office to file a friend of the court brief on behalf of Freightliner.”

These officials noted publicly that they were concerned that this lawsuit would force Daimler/Freightliner out of town, particularly in a time of manufacturing contraction. The Portland Tribune went on to quote from the brief filed by the city and county,

“‘The city puts significant time, effort and money into encouraging employers to locate in Portland and in retaining those employers already located here,’ according to the city’s brief. “˜Especially in uncertain economic times, retaining important corporate headquarters and manufacturing operations are crucial for the health of the city. Any action that threatens a substantial employer within its boundaries also concerns the city. If Freightliner is required to pay an excessive punitive damage award that is not part of the settlement agreement reached with the parties to the litigation, its continued viability in Portland could be threatened.'”

At least Mayor Potter and Commission Chairman Ted Wheeler understood that in a global market businesses have choices and one of those choices is to relocate rather than continue to deal with the anti-business sentiment in a state already notorious for it high taxes.

But it is obvious that neither Kulongoski nor Myers got it. It’s not like it was a secret. It’s not like Daimler/Freightliner hadn’t been talking about this for a considerable time. The Portland Tribune noted “During a February press conference, Freightliner Chief Executive Officer Chris Patterson said the state lawsuit could play in role in the company’s decision about the future of its Swan Island manufacturing plant.”

But Myers office doesn’t believe that the lawsuit had anything to do with Daimler/Freightliner’s decision to leave. That brings to two (Myers and Kulongoski) the number of people in Oregon that believe that nonsense.

Let’s be clear. Daimler/Freightliner didn’t simply close the plant due to a slow down in heavy truck sales. It closed a different line of trucks being manufactured elsewhere but MOVED the manufacture of Freightliner trucks to the Carolinas. The jobs lost in Oregon were recreated in the Carolinas.

But this is not an isolated incident. Gov. Kulongoski and his party tend to measure the well being of Oregon on the amount of money available to state government rather than on the quantity and quality of jobs available to Oregon citizens. As long as the money keeps rolling in to the state coffers, they are oblivious to the long and short-term effects of their decisions. In this instance that chance to enhance the state coffers by $210 million was all that was in the focus of the governor and the attorney general. The cost of pursuing money, to which the state was not entitled, in terms of loss of business and the attendant jobs, was simply off of their radar. They are unable to connect the dots between their policies and the resulting impact on the business community and the jobs that it creates.

Even when their fellow liberals spell it out, Kulongoski and Myers simply can’t understand the message. There is a great ad on television in which a man is pouring out his heart to his psychiatrist — he comes to the pause looks at the psychiatrist for comment and the psychiatrist begins speaking French. Similarly, discussing the economic impact of government decisions with Kulongoski just as well be conducted in Swahili because he is incapable of understanding it in any language.

This is a “Joe the Plumber” moment in which it should become crystal clear as to the real thoughts and priorities of our politicians. And in this instance it simply affirms what you have always suspected — you are here to feed the government, first, last and always.

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  • Steve Plunk

    The Dems in Oregon continue to destroy traditional jobs while dreaming and hoping for the high tech, green, micro brew, or whatever else jobs to take their place. The problem is those jobs have never lived up to the hype and have failed to employ enough people at decent wages.

    After building this state the wood products industry was stabbed in the back and treated as a pariah. Loggers were demeaned while hopes of tourist dollars lulled local officials into a false sense of security. Though not in Oregon the California town of Orick is a good example of what happens when you hope for tourism to float your economy instead of timber.

    Now a large manufacturer is being treated as a criminal when in fact it’s the state acting criminal in it’s lust for money. The price for such behavior will be felt in Portland for years to come. There’s not enough jobs in micro brewing fine Belgian Ales to replace those lost payroll dollars.

    The backbone of Oregon business is not the Alliance or even local Chambers of Commerce. The backbone is small businesses with no time for lunch speeches and glad handing. It’s business looking to make an honest dollar over slick government contracting and public works jobs. The backbone of Oregon business is looked down upon by Salem enough so it feels unwelcome. That’s a far cry from the way it used to be.

    The little guy is getting much worse than Freightliner got it. The little guy just gets it in smaller doses spread around the state. When one guy goes out of business it doesn’t make the news. The problem is there are hundreds of these one guys across the state.

    So thanks Ted, thanks Hardy, and thanks to the mindless bureaucrats in Salem doing everything they can to make it hard for us to give a job, feed our families, and make Oregon a better place.

  • Dave A.

    I agree with Steve Plunk’s assessment of Oregon government. As a small businesws owner here in Portland for 20 years, I’ve watched a long line of large employers leave this state for good. I’ve seen the weak and/or non-existant efforts by local and state politicians to do anything to keep these employers here.
    Worst of all, these idiots are spending millions of taxpayer dollars to entice “green” companies here that pay much less than the employers that are leaving. Talk about clueless!

  • Slick Willhe

    Here is another juan for you. How about lil teds going against the gas plant at the coast. Energy, jobs, etc. but oh no they can’t get a piece of the action so they are trying to kill it.

  • Rupert in Springfield

    >At least Mayor Potter and Commission Chairman Ted Wheeler understood that in a global market businesses have choices and one of those choices is to relocate rather than continue to deal with the anti-business sentiment in a state already notorious for it high taxes.

    Well that’s just it isn’t it?

    Businesses do have choices, and despite the rhetoric, there is no tax credit for shipping jobs overseas. Jobs are shipped overseas, or elsewhere in the country for one simple reason, cost effectiveness.

    But, some just don’t seem to get it. Obviously Hardy Myers didn’t get it.

    They likely winner of the next election clearly doesn’t get it. Obama seems to think there is a line in the tax code that gives a break if you ship jobs overseas. People eat this stuff up. God knows why.

    Politicians seem so foolish, so klutzy when it comes to simple economics don’t they?

    They aren’t you know.

    They know that cutting taxes invariably leads to increased revenue. In a politicians eye its a devils bargain though. Lower taxes might mean more revenue for government, but it also means less control of the populace. Often one loses perspective and thinks government is ever more greedy for money. It is, but only to a point. For a politician money is a means to an end, not an end itself. With money politicians can exercise control. They can start a new program to make a segment of the populace more in thrall to them for example. However one thing is true, politicians have demonstrated, by virtue of their career path, that they care far more for control over the lives of others than for mere money itself. Thus it should not surprise one to see that politicians will readily sacrifice money for power every time. This is why we get increased taxes, and this is why we see such ludicrous anti business attitudes in Oregon. They know these policies are fiscally ludicrous, however they do like the increased control they offer. Governor Ted loves the idea of picking which businesses get to survive in Oregon, and which get to fail. This is why he is fascinated with the idea of green business in Oregon. He loves the idea of establishing it, his name on it, his vision. Its not about jobs, lives or even revenue, its about his imprint. Is he power crazed? No, he is just a politician who has fallen prey to that which many politicians succumb. He thinks he was voted into his position to affect peoples lives rather than to let them live it. Can you blame him for taking advantage of the opportunity? There are legions of dunces who would sacrifice their very dignity for the ease of being slopped three times a day at the government trough rather than face the hard work required to maintain independence and freedom. I can hardly blame Ted for taking advantage, it is after all, the business he is in. And that business, unfortunately, survives.

    • dean

      For Steve up above, who wrote: “Though not in Oregon the California town of Orick is a good example of what happens when you hope for tourism to float your economy instead of timber.”

      I don’t know about Orick, but Bend, Redmond, Hood River, Ashland, Astoria, and Joseph are among Oregon towns that have made pretty successful transitions from primary resource extraction towns to tourist based eonomies. The “old mill” district in Bend is a classic example.

      Thomas Powers, an economist at University of Montana, did a comprehensive study of this and found that throughout the west, towns that embraced conservation and tourism have far out preformed towns that stayed with resource extractive indutries. His book is titled Lost Landscapes and Failed Economics.

      • eagle eye

        Add Sisters to the list of towns that have thrived on tourism.

        I don’t know about the specific case of Daimler — the article could be on the mark for all I know — but on the whole, Oregon has been on an upswing lasting almost 20 years. Per capita income going back toward the national average, with some mild swings from time to time, naturally.

        The places that have looked back nostalgically to the dying timber industry haven’t done so well. Some of them have even tried to keep out new industry. I’m told Oakridge did this for years, thinking the timber industry was going to come back, that somehow Congress or the Courts were going to overthrow the Endangered Species Act.

      • Steve Plunk

        Dean,

        Ashland was never a lumber town. Bend/Redmond took advantage of retirees coming into the state. The other towns I’m not too familiar with.

        The problem with comparing towns embracing tourism versus town trying to hold on to timber jobs is it doesn’t give us a picture of what would have happened if the logging would have continued. Of course they are going to have a tough time if there are no logs and the tourist towns will get a few more jobs but what if the state supported the timber industry? How would those towns have fared then?

        • dean

          Its a fair question. I have been a peripheral part of the timber industry in my career, so have somewhat of an insider perspective. Federal timber sales were always something of a give away to timber companies, their workers and communities. Most Oregon sales had a net plus on paper, but this was based on very creative accounting, in particular ignoring the cost of maintaining a vast road network needed of access timber. By handing Counties 25-50% of the sale price in lieu of taxes, this was another subsidy. In contrast, our private timber land owners pay near zero in property taxes and hand the Counties nothing when they log.

          If you go up to Alaska you have the real extreme. Timber on the Tongass national forest is sold at a huge loss to the taxpayer to prop up a timber industry that would have no chance to survive but for the subsidies.

          Bottom line is that yes, union mill worker and logger jobs were good paying, and I fully understand why those towns wanted to hang onto those jobs, because alternatives are uncertain at best. But they were provided at great expense, in terms of tax money and the environment. So when you say “if the state supported the timber industry…” my response is that the state and federal governments DID and STILL DO support this industry, though not as much as in the past. But even if they had maintained the cut levels they once had, there would have been a continuing decline in the job numbers because of automation, and there would have been stagnant wages as there are in most industrial occupations. Time does not stand still, and economies and communities have to adapt.

          • eagle eye

            It’s not a matter of whether the state supports the industry or not. The ESA is a federal law and it’s not going away any time soon. (If Bush didn’t kill it, don’t expect Obama to). Like it or not, the federal timber industry is about dead in Oregon. Nothing is going to bring it back to life.

            One of the things that made me disillusioned with the Oregon Republicans and rural Oregon has been the failure to face reality. After 20 years, don’t be a dope, don’t mope forever. Move on and get a life.

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  • Stephan Andrew Brodhead for Congress

    I am the Republican write-in for US congress CD1 aginst david Wu

    Here is my platform page and a few ideas on bringing jobs to Hillsboro

    https://www.iraqeraveterangibill.com/Conservative_Platform.html

  • Jerry

    This Kulongski guy is quite simply the worst governor in the history of the state. Hands down. He is grossly incompetent.

  • Anonymous

    yES, WELL THEN SMILE IF OBAMA GETS THE PRESIDENCY, THEN WE’LL HAVE BUSINESS ILLITERACY ON ALL FRONTS

  • eagle eye

    From all the bitterness toward Kulongoski and the Democrats, one would not know that he had been soundly elected to a second term, that the Democrats are dominant and growing in the legislature and state and national offices. He must be doing something that you guys don’t get. And don’t tell me it’s the unions. Sure, they have them, but that’s not enough to account for what’s happening, especially the growing Democrat dominance.

    • dean

      Eagle…Roseburg and Douglas County in general are also examples of communities that “clung to” the timber industry too hard for their own good, and have suffered economically as a result. Grants Pass was in that category until lately, but now has made the shift.

      What those who denigrate “tourism” as an economic strategy fail to recognize is that the basis for it is conservation and marketing of environmental and community assets. The tourism is often supplemented by retirees moving in with their pension checks, and young people moving in who are the ones who start new businesses and bring in new energy. Its part of a package, and Portland itself is one of the best examples in the nation at attracting young, well educated talent. It was a gritty industrial town when I moved here in the 70s, and could have become another declining rust belt city if not for the conscious shift that city leaders made.

      Kulongowski, in my view as a Democrat, has been a mediocre governor who was elected and re-elected primarily because the Republican party in this state moved too far to the right to back candidates and programs appealing to a working majority. We are not Oklahoma or Alabama (deep red) and never will be.

      We need a pragmatic, non-ideological, fiscally conservative, environmentally responsible, and socially libertarian Republican party to out compete the Democrats here. A Gingrich-Palin type party is never going to win power on the west coast.

      • cc

        “We need a pragmatic, non-ideological, fiscally conservative, environmentally responsible, and socially libertarian Republican party to out compete the Democrats here. A Gingrich-Palin type party is never going to win power on the west coast.”

        Ever the dishonest, two-faced, illiterate clown, In one sentence dean speak “…asa Democrat…” – out of the other side of his mouth, he becomes a Republican – one of US – telling us what WE need. Some people just have no shame, and he’s their poster boy.

        Keep pushing that high-paying, recession-proof tourist crap, dean. It’s your favorite since it breeds more of the “government dependent” class. Using Bend as an example of the success of “new energy” is about as funny as it gets.

        “Timber on the Tongass national forest is sold at a huge loss to the taxpayer to prop up a timber industry that would have no chance to survive but for the subsidies.”

        Wow! If you say so, dean. I wish every issue could be so simple. Of course, when you use the term “timber industry” you avoid talking about the actual *people* who benefit from your alleged subsidies – you just cite the bogey-man of big business as if it existed in a vacuum. You care far more about the environment (or your idealized image of it) than those who live in it. Humans are such troublesome interlopers in your myopic world-view.

        So cute, so convenient, so dishonest, so self-serving, so typical.

        Most of what you wrote in that quote would apply to Tri-Met except that Tri-Met produces nothing of value for 95% of those who subsidize it. I’m sure you, on the other hand, live in a straw house, not made of lumber, a convenient source for all those scarecrows you mass-produce.

        The best part of dean’s comments today is his misspelling of his own union stooge governor’s name.

        Oh, and sharing the information that we “..are not Oklahoma or Alabama…”

        Priceless!

        • eagle eye

          So, cc, you have shown that you can display the graciousness that is getting so many votes for our party these days.

          Now, can you tell us how to help the Oregon economy, especially the rural economy? And if the answer is the timber industry, please tell us how you plan to change the ESA rulings in the executive agencies and the courts?

  • Bad Biy Brown

    By the way Dean, the City of Bend is in a seriusly DEEP RECESSION. Possibly the highest unemployment rate in the state and no end in sight. Lots of unfinished homes dot the area with many builders bankrupt or leaving the area.

    • dean

      BBB…right you are. Bend was hit big by the housing bust. But still, they would have never had a housing boom in the fist place had they not developed a tourism-recreation-retirement community over the ashes of their timber industry. Bend will come back just fine, while Roseburg still sits there waiting for who knows what to come along.

      cc….your usual insults aside….yes the “timber industry” is *people*, as is every industry. I was once a part of that industry in that my job was funded primarly from the sale of federal timber. And I have done consulting work for private timber land owners, and served on a board that managed timber land in southern Oregon, among other things. I am people.

      You seem to think of yourself as anti-socialist, or at least you complain about government waste often. OK….then why aren’t you complaining about the give away of timber, courtesy of indicted Ted Stevens and still roaming free Sarah Palin, to prop up the people of the timber industry in Southeast Alaska? How does selling old growth Sitka spruce for about $5 a tree just to create “jobs” square with your economic and political philosophy? Maybe you are the Marxist here?

      Nope…I’m not pretending to be a Republican, except maybe for Halloween. I just do not want to end up living in a one party state, even if that party is the one I presently belong to. It leads to hubris, overreach and no good. A 2 party system needs 2 functional, competative parties. If one party turns into an uncometative shell representing only extreme views, it opens the door to mediocrity (Kulongowski) or abuse (Ted Stevens).

      Eagle….8 years of Bush and 12 of a Republican Congress and they were unable or unwilling to roll back the ESA or ramp up timber harvest on federal lands. If it did not happen then, it ain’t gonna happen under the next administration, but I know you already know that. The good news, such as it is, is that there are a lot of former clearcuts on federal lands that are just now reaching commercial harvest age, so there will be an uptick in timber harvest as these stands are thinned. Few environmentalists argue against thinning plantations where roads already exist. The bad news is mechanization in the industry (i.e. feller-bunchers) means it takes a lot more logs to make fewer jobs.

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