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August 2017

ENERGY GEO THERMAL

SOLAR

OCEAN

FOSSIL FUEL

EMPLOYMENT KCC TRAINING

SMART EXIT

HIRING FOR HIGH RISK BUSINESS

WEIRD JOBS


A Few Words from Greg Someone once disputed the acceptance of average in determining how a decision should be made by saying that placing one hand in ice water and the other on the hot stove is, on average, comfortable. However, both hands would disagree with the assessment. That is the place we’re in most of the time when reaching a fair decision for large numbers of people or organizations. Using the bell curve analogy, the “Greater Good” determination lends heavy weight to the large percentage of data falling in the center, sometimes eighty percent or more. But, an empathetic observer would say the numbers at each end of the curve, the “tails” if you like, are not being treated fairly. On one end they may be receiving much less benefit from the decision than the remainder of the population; on the other, far more than a fair share. Saying ‘always’ or ‘never’ in either case is probably wrong. Someone with firm beliefs that all business is greedy and bad hasn’t met the owner of a business in Southern Oregon like I did. He, at 75 years old, told me he can’t retire or close the business because he has nearly 30 employees, some who have worked for him for over 15 years, who depend on their jobs with him to raise and feed their families. With nowhere else to go for a similar job they depend on him to keep the doors open, like when the economy was pretty bad and he kept his people working for six months even though his losses would have been avoided by simply shutting down for those months. We need the stories of individuals, business owners as well as employees, if we’re going to avoid the disasters of ignoring statistics on either end of the bell curve. Data analytics, statistical modeling and polling have their place in business leadership and government, but great care must be taken in reaching conclusions based on nothing more than those scientific details. Sometimes real people are affected who depend on us to remember them.

Greg Greg Henderson, Publisher greg@southernoregonbusiness.com

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

Table of Contents PUBLISHERS NOTE 2 The Bell Curve

19 Jordan Cove “open season” 20 Fossil Fuels Dominate

ECONOMICS 4 Economic Indicators 5 Hiring—Recruiting

MISC. BUSINESS 21 Cooling Tips

7 Owning a Business

23 How Green is My Parking Structure

8 Weird Jobs

27 Last Mile Home

9 Multiple Jobholders

29 KCC Employment Training

10 Algorithms Developed Your Coffee

30 Smart Exit 33 Major Manufacturing

Partnership ENERGY

34 Hiring for High Risk Business

13 Geo Heat Center 15 Geo Thermal Brewing 16 Ocean Power 18 Solar Energy 19 Deepening Newberry Well

Cover:

Geo Thermal Power Plant at Oregon Tech 703 Divot Loop Sutherlin, Oregon 97479 www.southernoregonbusiness.com 541-315-6127

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Southern Oregon Business Journal

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New Survey: Businesses Report It’s Getting Harder to Fill Jobs 70% Say Recruiting and Hiring is Very or Somewhat Difficult Nearly 1/3 Blame Lack of Applicants By: Robert A. Funk

Express Employment Professionals released new survey results revealing the difficult time businesses are having filling jobs—and the reasons for that difficulty. In a survey of 533 businesses, respondents were asked, “How easy is it for you to recruit and fill positions?” Almost one quarter, 24 percent, said “very difficult,” and another 46 percent said “somewhat difficult.” In total, 70 percent reported some level of difficulty, the highest percentage since the last quarter of 2016. In contrast, 25 percent said “somewhat easy,” while just 4 percent said, “very easy.” Respondents were also asked for the “primary reason that your open jobs are not filled.” Almost one third, 32 percent, blamed the “lack of available applicants,” while 30 percent said the “lack of applicants with experience.” This is a slight shift from the previous three quarters of the survey when “experience”

Currently, how easy is it for you to recruit and fill positions?

ranked higher than “available applicants.” Other top responses included “I have all my positions filled” (20 percent); “lack of applicants with hard skills” (18 percent); “lack of applicants with soft skills” (13 percent); and “company’s geographic location” (13 percent). Full results are below. “There should be little doubt at this point that we have a tight labor market and are approaching full employment, at least by conventional measures,” said Bob Funk, CEO of Express, and a former chairman of the Federal Reserve Bank of Kansas City. “As a result, it’s not surprising to see companies lamenting the difficulty of finding talent. Employers would be well-advised to consider new recruitment and retention strategies. If the economy continues to grow, these challenges will not subside, and it will be up to business leaders and elected officials alike to find ways to bring more people into the American workforce.”

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Very easy

4%

5%

5%

4%

6%

Somewhat easy

25%

27%

26%

23%

29%

Somewhat difficult

46%

46%

45%

41%

41%

Very difficult

24%

19%

20%

30%

21%

I don't know

2%

3%

4%

1%

3%

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What is the primary reason that your open jobs are not filled?

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Lack of available applicants

32%

30%

29%

30%

31%

Lack of experience

30%

32%

33%

33%

24%

I have all my positions filled

20%

24%

26%

23%

30%

Lack of hard skills

18%

18%

17%

21%

18%

Lack of soft skills

13%

14%

13%

11%

10%

Client location

13%

11%

10%

9%

9%

Other (please specify)

11%

12%

11%

7%

7%

Not enough pay offered

11%

11%

10%

10%

6%

Unwilling to work part-time or temporary roles

6%

6%

6%

5%

3%

Undesirable client image or reputation

1%

1%

1%

3%

0%

The survey of 533 businesses, which are current and former clients of Express Employment Professionals, was conducted in June 2017 as part of the America Employed campaign to gauge respondents’ expectations for the third quarter of 2017. Previous surveys were conducted to cover hiring trends of the quarters indicated.

About Robert A. Funk: Robert A. “Bob” Funk is chairman and chief executive officer of Express Employment Professionals. Headquartered in Oklahoma City, the international staffing company has more than 770 franchises in the U.S., Canada and South Africa. Under his leadership, Express has put more than 6 million people to work worldwide. Funk served as Chairman of the Conference of Chairmen of the Federal Reserve and was also the Chairman of the Federal Reserve Bank of Kansas City. For more information, visit ExpressPros.com.

“One of the challenges of a strong economy and continued job growth is that companies have to compete harder for the available workforce. It is exhilarating that we have reached the point where the jobs are back and our local businesses are doing well. This is what we have been working towards. I have found that companies which have strong onboarding programs including training, a career path, and step increases for performance are succeeding in the tight employee market.”

Willis Cook, PHR, SHRM-CP Franchise Owner—Douglas County P. (541)673-3332 f. (541)673-5358 c. (541)680-7258 309 NW Stewart Parkway, Suite 305 Roseburg, OR 97471 www.expressroseburg.com

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

I have always dreamed of owning a business. How do I get started? Preparation, research and planning are keys to owning a successful business. Do you want to start a business, buy an existing business or invest in a franchise? Do you have the knowledge, skills, financial security and family support to realize your dream? The Small Business Development Center (SBDC) in your area is a good place to get started learning about business ownership options. SBDC counselors have tools and information to help you make the right business decisions. Many years ago I found the following help wanted ad in a book by Randy Baca-Smith that sums up the potential down-side of being a business owner, “HELP WANTED: Combination manager-stock clerk to take full charge of new firm. Must like people and hard work. Duties include management, purchasing, production, books, payroll, marketing, personnel, shipping and receiving, customer complaints, government and public relations, janitorial and sales. Must be available 24 hours daily, 7 days a week. Furnish own transportation. Salary and benefits depend on profits. Failure to meet goals may result in forfeiture of personal residence, repossession of car and furniture, destruction of credit rating, loss of health. No vacation likely for a minimum of 2 years. Good opportunity for nervous breakdown and marital breakup. No previous experience necessary but all experience might be helpful. Apply in person. An equal opportunity employer.� The good news is, the potential up-side of being a business owner is you have the opportunity to create personal wealth, be an important contributor to the local economy and be a respected leader in your community. Owning a business does not require a college education, although, it might be helpful to learn some of the skills needed to be successful. Many community colleges offer two year associates degrees in Entrepreneurship. What is required to be truly successful in business is finding a product or service you have the capacity to offer, where enough customers have the ability to purchase at a price that is profitable and are willing to buy from you. Finding the right business opportunity will take research and planning. An excellent resource to get started creating your dream is the booklet How to Start a Business In Oregon available free online at http://sos.oregon.gov/ business/Documents/business-guides/start-business-guide.pdf. The SBDC is a partnership of the U.S. Small Business Administration, the Oregon Small Business Development Center Network and the Oregon Business Development Department. By: Arlene M. Soto CMA, Southwestern SBDC Director

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When the Jobs Get Weird, Oregonians Get the Jobs by Christian Kaylor , Workforce Analyst, State of Oregon

Few states offer what Oregon does. America. The center is dedicated to How many places in America have providing a safe habitat for sloths. both mountains and ocean beaches, rivers and deserts, a major city, and more than 50 ghost towns? In a state as geographically diverse as Oregon, it’s no surprise that we boast workers in almost every category – and some workers that defy any known category. The Oregon Employment Department categorizes over 800 specific occupations. However, for really unusual jobs there is no defined category or available statistics. It's worthwhile to study the jobs that fall outside of what we consider normal. After all, everyone is different and for some folks that perfect job may mean looking outside the jobs that exist today – and creating something truly original. At the No Regrets Farm in Corvallis, Lainey Morse organizes yoga classes with her friend and yoga instructor, Heather Davis. Yoga is well known for helping people feel better both physically and mentally. Less well known, studies show that owning a pet lowers blood pressure and improves the mood of their owners. Combining the therapeutic value of yoga with the medical benefits of petting goats has been a big success. The goat yoga class at No Regrets Farm has thousands of people on the waiting list. The sloth is a small, slow moving, tree dwelling mammal native to the rainforests of Central and South America. These adorable creatures are well known for their calm demeanor and soft fur. In the Oregon town of Rainier, the Sloth Center sustains the largest population of long-term, actively reproducing captive adult sloths in North Southern Oregon Business Journal

The staff at the Sloth Center don’t just care for these rare and unusual creatures. They also provide opportunities for people to interact with the sloths. At the Sloth Center, the staff will teach you about sloths while letting you pet and feed the animals. Sloths sleep during the day. If you want to really spend some quality time with the sloths, the staff at the center will let you sleep in the sanctuary with the sloths. While it’s not a hotel, you’ll certainly never find another place to sleep where the employees instruct you about how to properly behave as sloths hang from artificial branches over your head. Oregonians Work Different Oregon has a national reputation for putting a unique twist on lots of different things. That’s also true for some of the jobs we do. Not every Oregonian has a unique job, and certainly not every Oregonian who tries a different way of doing a job will be successful. But maybe in Oregon we create a safe place for people to risk experimenting with the unusual. So the next time you're working at your job, and it begins to feel a little routine, feel free to shake it up a little. Just make sure you get permission before bringing any goats into the office. 8


Quality Information, Informed Choices

It Takes Two (or More): Oregon’s Multiple Jobholders in 2016 by Nick Beleiciks

In 2016, 106,000 Oregonians held more than one job in addition to their primary job and were considered to be multiple jobholders. The multiple jobholding rate – the proportion of multiple jobholders among all employed workers – was 5.4 percent, which was slightly above the U.S. rate of 5.0 percent. Oregon’s multiple jobholding rate reached a recent high of 6.7 percent in 2012, and was as low as 5.2 percent in 2004. Multiple jobholding has generally become rarer in Oregon and the U.S. since 1995. Research shows that people are less likely to take on a second job than they were in the past.

Oregonians More Likely to Work Multiple Jobs Oregon workers were more likely to hold more than one job at a time than our national counterparts, a trend

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dating back at least two decades. Oregon’s multiple jobholding rate has been higher than the U.S. every year since 1994, with the brief exception of 2004. The U.S. multiple jobholding rate stabilized at 4.9 percent from 2010 to 2015, before increasing slightly to 5.0 percent in 2016. Oregon’s rate climbed from 2009 through 2012 before falling to 5.4 percent in 2016. Economic conditions certainly affect whether or not an individual works more than one job, but there is no clear association between the multiple jobholding rate and the business cycle. That is because fewer jobs are available during recessions, right when more people need a

second job to help meet their expenses. During expansions, increased income and looser credit constraints mean fewer people need a second job to meet expenses. These factors seem to cancel each other out on the whole, which is why multiple

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jobholding rates don’t rise or fall significantly with the business cycle.

Reasons for Working More than One Job Most people working more than one job say they are doing so in order to earn extra money (38.1%), or to meet expenses or pay off debt (25.6%). Another 17.6 percent of multiple jobholders report that their main reason for working a second job is because they enjoy it, as reported by the U.S. Bureau of Labor Statistics (BLS) in an article about Multiple Jobholding Over the Past Two Decades. So working more than one job is thought to serve both economic and noneconomic purposes. Working two or more jobs tends to be a temporary situation for most workers. Every month, more than 30 percent of multiple job holders return to working just one job at a time.

Changes in Latitudes, Changes in MultipleJobholding Rates Northern states generally have higher rates than southern states, as shown in the map. Wisconsin had

Southern Oregon Business Journal

the highest multiple jobholding rate at 8.3 percent in 2016, followed by Nebraska and South Dakota at 8.2 percent. New Mexico had the lowest multiple jobholding rate at 3.6 percent. Multiple jobholding among Oregon’s neighboring states ranged from a high of 6.2 percent in Idaho, to 5.7 percent in Washington, to just 4.2 percent in California and 4.0 percent in Nevada.

Fewer People Choosing to Work Two Jobs The BLS study of multiple jobholding over time found that taking a new second job has become less common, which is why multiple jobholding rates have fallen over time. People who hold multiple jobs are just as likely to continue working two jobs as they always were. One explanation is that workers may have become more reliant on alternative sources of income instead of a second job. Another explanation is that fewer people are looking for enjoyment through a second job. Whatever the reason, the downward trend does not seem to be related to working-age population shifts, or to occupation or industry structure shifts in the economy.

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INSIGHTS

PERSPECTIVES: ALGORITHMS MAY HAVE DEVELOPED YOUR FAVORITE COFFEE DRINK By Ben Schubert, SVP, Nielsen Innovation Practice

Most individuals likely don't spend much time wondering how the products they use every day are developed. Generally speaking, they identify the products that appeal to them and then bring them into their lives without thinking too much about how they came to be—their drinkable yogurt, their antioxidant beverages and their rippled toilet paper. So unbeknownst to most consumers, tremendous thought goes into developing even the most commonplace products. As a result, product development in the fast-moving consumer goods (FMCG) industry is anything but fast-moving, especially when compared with the technology sector. In reality, it may take an established company two years or more to launch a single product. But before any actual product development takes place, companies spend the first several months asking consumers about ideal features and positioning for possible new products. This might seem preposterous. After all, how complicated could it be to launch an ordinary product? The answer is: quite complicated. Take, for example, ready-to-drink coffee, a relatively simple concept. But before you start the production line, here are just a few considerations to think about: Should it include milk or flavor additives? Should it be sweetened? If so, with sugar or zero-calorie sweeteners? Should it be allnatural? How many calories should it have? How much caffeine should it have? Should it be positioned as a "craft" or mainstream coffee? The list goes on. These probably don’t seem like make-or-break decisions but, for established companies, they are all carefully considered—and for good reason. Given that successful FMCG products can earn tens of millions of dollars in sales during their first year in market, an overlooked detail or a positioning bungle can mean millions in lost revenue. New-to-market products rely on strong value propositions that grab consumers’ attention and inspire them to give them a try. And unlike new launches in the technology space, FMCG manufacturers can't correct serious issues after launch by updating code or pushing a new app version to users. Needless to say, there’s

Southern Oregon Business Journal

significant pressure to get things right from the very beginning.

THE WAY THINGS USED TO BE—AND MOSTLY STILL ARE While necessary, the extensive pre-work to develop the ideal product idea is still a time-consuming and often inefficient process. Consider a typical innovation scenario: A beverage manufacturer develops a few “product concepts” that describe the attributes and messaging for a handful of ready-to-drink coffee products. Next, the company uses focus groups or online surveys to see what consumers think about the ideas. Based on the feedback, the company tweaks its product concepts, then test the next round with more consumers. This cycle goes on for quite some time, but in the

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end, only a relatively small number of ideas will have been tested with relatively small groups of consumers. That means that if the manufacturer’s “starting point” idea was lacking, there’s no guarantee that additional refinements will make it a truly good idea.

THE FUTURE: ITERATION AT SCALE No longer satisfied with living in the status quo, some tech-savvy manufacturers have started to leverage evolutionary algorithms to optimize their product ideas. This allows them to explore thousands—or millions—of product ideas with a large consumer base over a drastically reduced time period.

analysis, the quality of the outputs relies heavily on the quality of the inputs—and innovation demands creative inputs. In the context of evolutionary optimization, technology simply removes the barriers to creativity; it allows marketers to explore many more ideas without added risk, cost or time, rather than being forced to whittle their options down to a few safe bets. Baconflavored coffee or beer ice cream may sound crazy but, with a million chances to get it right, why not shoot for the moon?

Rather than enter tedious test-refine-retest cycles, algorithm-using marketers identify all of the possible attributes they’d like to explore at the outset, including different product names, claims, benefits, ingredients, flavors and more. They then use an online application that dynamically generates a large number of product concept alternatives by combining the elements in the defined “attribute pool” in different ways. For example, 138,600 unique product concepts can be created using the variant options below. The application serves up these concepts two-at-a-time to consumers, then prompts them to choose which one they prefer. Evolutionary algorithms learn from consumers’ responses, which means they progressively “get smarter” and eliminate the least attractive options until the most broadly appealing concepts are identified. This technology works similarly to popular music streaming applications. Though most users are unaware, each song in a given music database is composed of a distinct combination of variants, such as the gender of the lead vocalist, the degree of melodicism, the presence of a certain instrument, and so on. As a user likes or dislikes individual songs, the algorithm learns which elements (and combinations of elements) the user prefers so that it can recommend increasingly appealing options. However, unlike these applications, concept optimization registers feedback from hundreds or thousands of consumers at once; its goal is to find the most broadly appealing options rather than the most personally appealing ones.

"This article originally appeared on Nielsen.com"

http://www.nielsen.com/us/en/insights/news/2017/ perspectives-algorithms-may-have-developed-yourfavorite-coffee-drink.html Nielsen 85 Broad St New York, NY 10004

Perhaps not surprisingly, concept optimization works. In fact, Nielsen research has found that concepts identified using evolutionary algorithms generate an average 38% increase in forecasted revenue relative to a brand’s “best guess” concept. Does this mean that marketers are no longer necessary? Or should they relinquish the task of innovation to their robot overlords? Not at all. As is often the case with data Southern Oregon Business Journal

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Geothermal Information and Technology Transfer The transfer of technological information to consultants, developers, potential users, and the general public is an important element in the development of direct heat utilization of geothermal energy. The Geo-Heat Center's resources are available to the public, through United States Department of Energy (USDOE) grants. Information developed through firsthand experience with hundreds of projects and through extensive research is provided to individuals, organizations or companies involved in geothermal development.

What is Geothermal? Geothermal Energy is heat (thermal) derived from the earth (geo). It is the thermal energy contained in the rock and fluid (that fills the fractures and pores within the rock) in the earth's crust.

Calculations show that the earth, originating from a completely molten state, would have cooled and become completely solid many thousands of years ago without an energy input in addition to that of the sun. It is believed that the ultimate source of geothermal energy is radioactive decay occurring deep within the earth (Burkland, 1973).

280 kW binary geothermal power plant at Oregon Tech

In most areas, this heat reaches the surface in a very diffuse state. However, due to a variety of geological processes, some areas, including substantial portions of many western states, are underlain by relatively shallow geothermal resources.

These resources can be classified as low temperature (less than 90°C or 194°F), moderate temperature (90°C - 150°C or 194 - 302°F), and high temperature (greater than 150°C or 302°F). The uses to which these resources are applied are also influenced by temperature. The highest temperature resources are generally used only for electric power generation. Current U.S. geothermal electric power generation totals approximately 2200 MW or about the same as four large nuclear power plants. Uses for low and moderate temperature resources can be divided into two categories: direct use and ground-source heat pumps. Direct use, as the name implies, involves using the heat in the water directly (without a heat pump or power plant) for such things as heating of buildings, industrial processes, greenhouses, aquaculture (growing of fish) and resorts. Direct Southern Oregon Business Journal

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use projects generally use resource temperatures between 38°C (100°F) to 149°C (300°F). Current U.S. installed capacity of direct use systems totals 470 MW or enough to heat 40,000 average-sized houses.

1750 kW binary geothermal power plant (two units @ 1,000 kW and 750 kW) at Oregon Tech

Ground-source heat pumps use the earth or groundwater as a heat source in winter and a heat sink in summer. Using resource temperatures of 4°C (40°F) to 38°C (100°F), the heat pump, a device which moves heat from one place to another, transfers heat from the soil to the house in winter and from the house to the soil in summer. Accurate data is not available on the current number of these systems; however, the rate of installation is thought to be between 10,000 and 40,000 per year. The current production of geothermal energy from all uses places third among renewables, following hydroelectricity and biomass, and ahead of solar and wind. Despite these impressive statistics, the current level of geothermal use pales in comparison to its potential. The key to wider geothermal use is greater public awareness and technical support—two areas in which the Geo-Heat Center is very active.

Geo-Heat Center 3201 Campus Drive Klamath Falls, OR 97601 geoheat@oit.edu

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Geothermal Brewing Klamath Basin Brewing Company was founded in 2001 by two friends who shared a desire to brew and sell great beer. In four years, the founders had moved from operating out of a garage to opening the Brewpub in the historic Crater Lake Creamery building in downtown Klamath Falls. The iconic Blue Cow sign still marks the building. With our freshly prepared food, beers, live music, and outdoor dining, we strive to add quality to our community. We're open seven days a week, so stop by and have a pint! The Klamath Basin provides many resources for those who live and work here. Along with its remarkable scenery, we enjoy a unique mixture of benefits from its fresh water springs and geothermal resources. Klamath Basin Brewing Company and The Creamery Brewpub and Grill together enjoy both these benefits. Geothermal resources provide heat to our buildings and sidewalks (even when the snow falls,) and aides us in the brewing process itself. A combination of hot rocks and water like those that created Yellowstone's geysers have been tapped by the City of Klamath Falls to keep the sidewalks toasty since the early 1980s. They heat downtown buildings, like the Brewpub, as well as numerous other facilities, schools, greenhouses and the OIT college campus. It has been pointed out that “Geothermal wells in Klamath Falls mark one of the nation's most ambitious uses of a green energy resource with a tiny carbon footprint, and could serve as a model for a still-fledgling industry that is gaining steam with $338 million in stimulus funds and more than 100 projects nationwide." One of the many other things that make Klamath Basin Brewing Company unique is our water. It comes from naturally fed underground rivers that flow from the Cascade Mountains and Crater Lake area and provide our city wells with exceptionally pure water. In the brewing process, this crystal-clear mountain water is heated by heat exchange units, powered by our geothermal district heating system. We are the only known brewing operation that uses geothermally heated water for beer production. All this helps to make our brews exceptional, pure in taste and “green” in production. We welcome you to stop by, enjoy the atmosphere and brews, and raise a toast to Mother Nature.

Klamath Basin Brewing 1320 Main Street, Klamath Falls, Oregon http://kbbrewing.com Southern Oregon Business Journal

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Northwest Power and Conservation Council

OCEAN POWER The waves and wind of the world's oceans could generate a nearly inexhaustible supply of electricity once current technology issues are resolved. Research in the Northwest aims to

By: John Harrison The constant motion of the world’s oceans and the winds above them constitute an energy resource of immense potential. Capturing that energy to make electricity is the focus of intense research in the United States, Europe, and Japan, experts told the Council at a meeting this month in Corvallis, Oregon, home of one of the premier ocean wave energy research facilities in the world. “The Pacific Northwest is the epicenter of marine energy development,” Jason Busch of the Pacific Ocean Energy Trust said. “There has been significant progress toward commercialization of the technology; in about five years you will see the first commercial-scale generator in the water.” Many generator designs are being tested, he said. All make power as waves rise and fall, but the mechanisms differ. Meanwhile, ocean wind turbines look like those on land, but some are anchored to the ocean floor and others float in areas where the floor is too deep. Wind turbines located off the Northwest coast would have to float, he said, as the near-shore floor is deep.

Floating wind turbine off the coast of northern Portugal. Photo: Principle Power

Research and design support for Pacific coast ocean power plants takes place at the Northwest National Marine Renewable Energy Center at Oregon State University in Corvallis. The Center operates test sites off the coast of Newport, Oregon, and in Alaska, Puget Sound, and Lake Washington. In 2016 the Center received a grant of up to $40 million from the federal Department of Energy to build the second of its two test faoff Newport, which should be operational by 2020. Congress appropriated $30 million of the total. Southern Oregon Business Journal

“This will be an asset that will attract companies to this area to build and test their designs that will make the first commercial-scale technologies viable,” Busch said. Ted Brekken, an associate professor of electrical and computer engineering at OSU, said two important questions for research are how to lay out an array of floating generators that takes maximum advantage of ocean waves, and how best to account for “output pulses” – making power when a wave passes but not when the wave has passed. Another research issue is 16


In this design, a wave enters an open chamber under the structure, forcing air upward. The force of the air turns a turbine, generating electricity. The retreating wave creates a vacuum, which keeps the turbine spinning in the same direction, generating power continuously. Photo: Ocean Energy USA. how to reliably connect ocean wave and wind generators to the power grid on land. On the West Coast, Brekken said, ocean wave energy systems could improve the capacity of the regional power grid, provide carbon-free power when solar power and terrestrial wind plants power down, and improve the resilience of the power supply in the event of an emergency. “If there is an earthquake, these systems are pretty much impervious to damage,” he said. Meanwhile, wind energy companies increasingly are deploying offshore generators as they learn to deal with the dynamic interactions of wind and waves – in short, keeping floating windmills upright. Kevin Bannister of Principle Power, a California-based company developing ocean wind generators off the coasts of Portugal and

JOHN HARRISON Information Officer

France, said ocean wind already is spinning turbines closer to home. Ocean wind energy plants are planned or are under construction off Maine, California, and Hawaii. Others are being built off Taiwan, Japan, and northwestern Africa. Some issues regarding floating power generators have yet to be resolved, and they loom large – for example, the potential impacts to marine mammals such as whales and to pelagic birds such as several species of Albatross, which are protected by international agreements. There also could be conflicts with ocean fishing fleets. Nonetheless, power from the ocean may be the next big thing in the energy world. “This is an industry that has arrived,” Bannister said. “There is a lot of optimism in the industry today.”

John Harrison is the Council's information officer. He helps edit and write Council publications, writes speeches, news releases and Council Quarterly stories and answers background questions from the media and tracks media coverage of the Council. He also works with the rest of the public affairs staff to devise and implement public involvement strategies. He came to the Council in 1990 from the Columbian-Vancouver, Washington's daily newspaper-where he was a reporter for six years writing about Northwest energy issues, and an editor for four years. Before that, John was a reporter at the Spokane Chronicle. He has a bachelor's degree from Washington State University and a master's degree in journalism from the University of Oregon. jharrison@nwcouncil.org

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Department of Energy

Top 6 Things You Didn't Know About Solar Energy

Installing a concentrating solar power system in Gila Bend, Arizona. The curved mirrors are tilted toward the sun, focusing sunlight on tubes that run the length of the mirrors. The reflected sunlight heats a fluid flowing through the tubes. The hot fluid then is used to boil water in a conventional steam-turbine generator to produce electricity. | Photo by Dennis Schroeder

The solar industry is changing rapidly as it experiences unprecedented growth. Here are 6 facts that may surprise you about this increasingly popular source of power. 6. Solar energy is the most abundant energy resource on earth -- 173,000 terawatts of solar energy strikes the Earth continuously. That's more than 10,000 times the world's total energy use. 5. The first silicon solar cell, the precursor of all solar-powered devices, was built by Bell Laboratories in 1954. On the first page of its April 26, 1954 issue, The New York Times proclaimed the milestone, “the beginning of a new era, leading eventually to the realization of one of mankind’s most cherished dreams -- the harnessing of the almost limitless energy of the sun for the uses of civilization.” 4. The space industry was an early adopter of solar technology. In the 1950s, the space industry began to use solar technology to provide power aboard spacecraft. The Vanguard 1 -- the first artificial earth satellite powered by solar cells -- remains the oldest manmade satellite in orbit -- logging more than 6 billion miles. Southern Oregon Business Journal

3. Today, demand for solar in the United States is at an all-time high. The amount of solar power installed in the U.S. has increased more than 23 times over the past eight years -- from 1.2 gigawatts (GW) in 2008 to an estimated 27.4 GW at the end of 2015. That’s enough energy to power the equivalent of 5.4 million average American homes, according to the Solar Energy Industries Association. The U.S. is currently the third-largest solar market in the world and is positioned to become the second. 2. As prices continue to fall, solar energy is increasingly becoming an economical energy choice for American homeowners and businesses. Still, the biggest hurdle to affordable solar energy remains the soft costs -- like permitting, zoning and hooking a solar system up to the power gird. On average, local permitting and inspection processes add more than $2,500 to the total cost of a solar energy system and can take up to six months to complete. The SunShot Initiative’s soft costs program works to make it faster and cheaper for families and businesses to go solar. 1. California’s Mojave Desert is home to Ivanpah Solar Power Facility, the world’s largest operating solar thermal energy plant. It uses concentrating solar power (CSP) technology to focus 173,500 heliostats, each containing two mirrors, onto boilers located in three power towers. The plant, which came online in 2014, has a gross capacity of 392 megawatts (MW). CSP technology is unique in that it allows for solar energy to be stored for use after the sun sets -- a key focus for our recent research and development efforts -- which addresses some of the concerns over delivering solar power when and where it is needed most. Want more on Solar? Visit the NREL, EIA, and Solar Technologies Program websites for more solar energy resources.

Erin Pierce is a former Digital Communications Specialist in the Office of Public Affairs at the Department of Energy.

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Announcing Workshop to Plan for Deepening Newberry Well and reach over 450 °C

NEWS ALERT:

by newberrygeothermal

Jordan Cove achieved a milestone of an “open season” for the Pacific Connector pipeline. The announcement actually comes in the form of advertisements (per FERC’s requirements), but this is newsworthy locally because the lack of an open season during the last permitting process is something FERC referred to in the previous 2016 denial. Jordan Cove advocates are excited to meet this requirement so early into this permitting process and feel confident this will meet FERC’s expectation.

Bend, Oregon, July 10, 2017: The NEWGEN consortium is pleased to announce that an international workshop of geoscience experts will be held this fall to develop a full proposal for drilling one of the hottest wells in the world at Newberry Volcano, central Oregon. The workshop will be held at the Oregon State University – Cascades campus in Bend, Oregon from September 10-14, 2017. Important scientific questions related to volcanic hazards and geothermal energy will be discussed by more than 40 engineers and scientists during this workshop sponsored by the International Continental Drilling Program (ICDP). ICDP is a non-profit organization that supports international science teams with a proven need for land-based drilling. While ICDP may partly fund future drilling, an important goal of the workshop is to identify other funding sources interested in contributing to potential economic breakthroughs in geothermal energy production and scientific breakthroughs in earthquake and volcano studies. The Newberry Geothermal Test Facility is located on the western flank of the caldera rim of Newberry Volcano, one of the largest geothermal heat reservoirs in the western United States, extensively studied for the last 40 years. Here, hot rock is relatively close to the surface, making it easier to drill super-hot wells and carry out enhanced geothermal system (EGS) research. Millions of dollars have already been invested in the site by private geothermal developers and the US Department of Energy, resulting in a ready-to-use facility with the necessary infrastructure, environmental permits, land commitments, and monitoring plans. An idle geothermal exploration well drilled in 2008, already 3500 m deep and 320° C at bottom, will be evaluated for deepening another 1500 m to reach temperatures above 450°C. The NEWGEN consortium was formed in 2015 by Pacific Northwest National Laboratory, AltaRock Energy, Oregon State University and Statoil to develop a research observatory on geothermal energy on Newberry Volcano. The ICDP workshop was proposed by the NEWGEN team, and other worldrenowned scientists and engineers from the United States, Canada, Japan, Norway, Iceland, France, and Italy. Invited participants will have world-class expertise in geothermal energy, drilling at extreme temperatures, earthquake science, and volcanic hazards.

Jordon Cove— “open season” for pipeline capacity” Greg Henderson, Southern Oregon Business Journal

An open season is an opportunity for potential pipeline customers to express interest in, and potentially contract for, natural gas supply (the industry refers to this as “transportation service”) on the Pacific Connector pipeline. FERC is requiring Jordan Cove to hold an open season to ensure that all potential customers have a fair chance to obtain transportation capacity service. Jordan Cove’s open season will last for 30 days, beginning with the FERC-required advertisements in two major industry publications (in this case, advertising with Platts and Natural Gas Intelligence). During the 30 days, parties can express interest and inquire about the binding contract details. TEXT OF THE ANNOUNCEMENT ADVERTISEMENT:

“Pacific Connector Gas Pipeline, LP (“PCGP”) hereby announces that it is conducting a binding open season on new pipeline facilities that it proposes to construct in the state of Oregon (the "Pacific Connector Gas Pipeline”). PCGP is soliciting commitments for firm natural gas pipeline transportation on the Pacific Connector Gas Pipeline. As proposed, the Pacific Connector Gas Pipeline will extend from interconnections with multiple interstate pipelines located in the vicinity of the Malin, Oregon market area to a delivery point adjacent to the proposed Jordan Cove LNG natural gas liquefaction facilities and export terminal to be located in Coos County, Oregon. Additional information on PCGP and the Pacific Connector Gas Pipeline is available through the Federal Energy Regulatory Commission’s e-library system under Docket No. PF17-4 (www.FERC.gov). Further details regarding the open season can be found on PCGP’s website: (pacificconnectorgp.com).”

https://blog.newberrygeothermal.com

Southern Oregon Business Journal

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Even as renewables increase, fossil fuels continue to dominate U.S. energy mix

Source: U.S. Energy Information Administration, Monthly Energy Review

Fossil fuels have provided more than 80% of total U.S. energy consumption for more than 100 years. Since 1928, when consumption of natural gas surpassed that of biomass, the three fossil fuels—petroleum, natural gas, and coal—have been the most consumed fuels in the United States. In 2016, fossil fuels accounted for 81% of total U.S. energy consumption, the lowest fossil fuel share in the past century. In 2016, the renewable share of energy consumption in the United States was 10.5%. This was the largest renewable share since the 1930s, when overall energy consumption was lower and the amount of biomass consumption (mainly wood) was relatively high. The greatest growth in renewables over the past decade has been in solar and wind electricity generation. Liquid biofuel consumption—more than half of which is ethanol blended into motor gasoline—has also increased in recent years, contributing to the growing renewable share of total energy consumption.

coal consumption fell nearly 9% in 2016, following a 14% drop in 2015. Overall, U.S. coal consumption has declined almost 38% since 2005. In each of the past 20 years, the power sector has accounted for more than 90% of total U.S. coal consumption. Petroleum, which encompasses nearly all transportation fuels and several petroleum-based fuels used in homes, businesses, and industries, continues to be the largest source of energy consumption in the United States. Petroleum consumption has increased in each of the past four years. Consumption of natural gas has risen in 9 of the past 10 years. As recently as 2006, the United States consumed more coal than natural gas (in energy-equivalent terms), but as natural gas consumption has increased— particularly in the electric power sector—natural gas use in 2016 was about twice that of coal. Principal contributor: Michael Mobilia

In addition to the increasing share of renewables, the decline in the fossil fuel share of consumption is attributable mainly to declines in coal consumption. U.S.

Southern Oregon Business Journal

https://www.eia.gov

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How green is my free parking structure? Not very. By: Joe Cortright Why does the National Renewable Energy Lab give its employees free parking? The researchers at the National Renewable Energy Lab are hard at work on a lot of cool ideas for reducing pollution and promoting greater energy efficiency. They’re figuring out ways to improve photovoltaics and increase the efficiency of wind energy generation, and are a research leader in integrating these renewable energy sources into utility scale energy systems. The staff are also developing biofuels that could one day replace fossil fuels in transportation and other uses. They have an entire program dedicated to transportation: NREL research, development, and deployment (RD&D) accelerates widespread adoption of high-performance, low-emission, energy-saving strategies for passenger and freight transportation. Dedicated to renewable energy and energy efficiency, NREL and its industry, government,

and academic partners use a whole-systems approach to create innovative components, fuels, and infrastructure for electric, hybrid, fuel cell, and conventional vehicles. When the scientists working on tough problems of how to maximize the use of renewables and minimize energy use and pollution are charged with building the place they work, you can bet they’ll put a lot of thought into how to make things as smart and efficient as possible. It’s festooned with arrays of photovoltaic cells to generate electricity on site. Because it’s one of the lab’s newest structures, they’ve extensively modeled the daylighting of the building to minimize lighting requirements, and made extensive use of recycled (and re-cyclable aluminum). The building’s lights are mostly on only at night, and only when motion detectors recognize occupants. This new $31.5 million building is shooting to be LEED Platinum and even be a “net zero” energy structure.

Net zero, provided you ignore what its used for. (Haselden Construction).

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But there’s one big environmental (and energy) problem with this shiny new structure: It’s an 1,800 space parking garage. Not only that, but (if you’re Don Shoup, please don’t read this) they don’t charge employees anything to use the garage. The whole thing strikes us as utterly tone deaf and a flat contradiction to the organization’s mission statement. So, in addition to the lab being located in a suburban office park on the fringe of the Denver metro area, its employees are strongly incentivized–nay, subsidized–to drive their private cars to work. And that’s exactly what an overwhelming majority of them do.

A giant, free garage encourages energy consumption and pollution We contacted the Lab to learn more about commute patterns and parking policies. They shared with use the mode split from their latest (2014) commuting survey. Not surprisingly, about two-thirds of all workers drive alone to work daily, almost ten times the share that either carpool or vanpool. These figures represent typical commute patterns. As many as a quarter of lab employees telework at least some days, and the lab estimates that telework offsets about 9 percent of commute trips. We asked about parking prices for commuters. Lissa Myers, who is the Lab’s Sustainable Transportation & Climate Change Resiliency Practice Leader told us: Drive alone – 65% Walk – 0% Bicycle – 4% Carpool – 5%

Vanpool – 2% Transit – 14% Motorcycle/Scooter – 1% Telework – 9%*

Parking is free on our campus and we have an abundance of it. That’s the problem, really. We have an abundance of proven technologies that are “high-performance, lowemission, energy-saving strategies”–they include dense cities, cycling, transit, walking and car pooling. But technologies don’t work, or don’t work well if we subsidize people to use energy-wasting alternatives and locate large concentrations of workers in places where they have few alternatives but to drive single-occupancy vehicles.

Location, location, location And because the lab is located on the urban fringe, rather than in a central, transit served location (like say, downtown Denver) its employees have few nearby housing options that would let them bike, walk or take transit to work. The lab has a Walk Score of 30 (out of a possible 100) making it “car dependent”–the nearest coffee shops, restaurants and grocery stores are more than a half mile away, and generally on the other side of the I-70 freeway, meaning that if they leave the lab for errands or a meal, its most likely they’ll drive.

Southern Oregon Business Journal

Promoting renewable energy is (and energy conservation and greenhouse gas reductions) a matter of both technology and incentives. An agency that’s supposedly dedicated to these tasks ought to do a better job of aligning its policies with its mission. There’s little hope that people will use a non-polluting bicycle or take transit to work, for example, if they have free use of parking.

Excess capacity We also have to note the capacity of the NREL garage, relative to the size of the institution is enormous. The garage, completed in 2012, contains 1,800 spaces, while the lab has just 1,500 employees. So that’s about 300 spaces more than are needed to provide one space per employee. Based on the lab’s mode split, only slight more than 1,000 spaces are occupied per day (about 975 by single occupancy commuters, about 30 more by carpools (if we assume 2.5 workers per carpool), and about 6 spaces for van pools (assuming six workers per van pool) and the equivalent of 8 spaces by motorcycles and scooters (assuming 2 two-wheelers per parking space). That means the garage has almost 75 percent more capacity (1,800 spaces supplied for about 1,025 vehicles) than is needed to house NREL’s worker’s vehicles–and that a price of zero to the users. (To be sure, the garage also accommodates visitors, but that 24


doesn’t materially affect our analysis. According to the NREL’s economic impact statement, the lab gets about 25,000 visitors per year, which works out to about 100 visitors per day; if they each needed a parking space for an entire day, that would work out to about 100 parking spaces. In reality, typical demand would be less because most visitors stay less than an entire day and many arrive in multi-occupancy vehicles or via transit or hired vehicles). Having built the garage, there are powerful bureaucratic incentives to see it as full as possible; that, and employee resistance to having to pay for something that they’ve been given for free, means this problem is likely to persist. It’s hard to say what’s worse: an over-sized garage that’s mostly empty (representing a waste of resources that could be better used for other things, like say research on clean energy) or a garage that’s nearly full of single-occupancy vehicles (because its free to users). As we’ve suggested, and as our colleague Tony Jordan reminds us, dedicated parking garages are likely to become big stranded assets with the advent of autonomous vehicles. But it looks like that’s not something that’s on NREL’s mind.

Southern Oregon Business Journal

The agency’s construction manager Tony Thornton tells the American Galvanizer’s Association NREL wanted a building that would last for a 100 years. Whatever they’re planning for renewable energy, it doesn’t look like they expect it to influence car ownership or driving patterns, if they expect their parking garage to be around through 2100. The claim that a parking garage can be “zero net energy” requires casting a blind eye to the structure’s central purpose. It’s only zero net energy if you completely ignore the energy used by the cars it’s designed to store, and that you ignore how building garages and subsidizing their use prompts more driving, more energy consumption and more pollution.

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

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Grants Pass, OR

Out & About in Southern Oregon

Graffiti Weekend, Roseburg

CoosWinning Bay, Award Photo by: Bonnie Erickson Melville

Downtown Klamath Falls Roseburg, OR

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LAST MILE HOME by Peter Jones, Vice President of Research

July 14, 2017

WEEKLY MARKET MAKERS

The Fed continues to grapple with conflicting signals in an attempt to balance the dual mandate of maximizing employment and stabilizing prices. On one hand, tight labor markets argue for sustained interest rate hikes whereas stubbornly low inflation suggests a pause in the tightening of financial conditions. Retail sales disappointed this month while investors welcomed strength in U.S. industrial production. This data supports the notion that economic growth has been buoyed by an acceleration in manufacturing activity.

deliveries will fall into this low productivity category. In response to secular changes in shopping behavior, parcel giants UPS & FedEx are investing billions on automated distribution and sorting facilities where they intend for package handling robots and route optimization software to offset the higher costs of last mile delivery. In an increasingly tight labor market, it is hard to fathom that the supply of courier labor can keep up with the growth of e-commerce unless workers are enticed by significantly higher wages. As the chart below illustrates, this has already begun with courier wages growing more than three times the national rate.

Shop ‘Till the Mail Drops It is no secret that shopping preferences have shifted dramatically from traditional brick-and-mortar outlets to online shopping. One of the consequences of this trend is “last mile delivery.” Last mile delivery is the term used to describe package delivery to individual homes. Traditionally, consumer products were delivered in large quantities to a single location such as a mall or department store. On the other hand, last mile delivery often involves one small package per location. From a shipper or parcel company’s perspective, last mile residential delivery is less efficient than traditional business-to-business delivery. As e-commerce continues to increase as a percentage of overall retail sales, more and more package

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In recent years, e-commerce giant Amazon has conditioned shoppers to expect minimal shipping costs. To protect their profits, e-tailers demand low shipping prices from delivery companies. The combination of inefficient last mile delivery and price sensitive customers would appear to spell trouble for parcel companies and this bearish backdrop is reflected in price-to-earnings multiples for both FedEx and UPS. On the contrary, senior management at FedEx argues that rapid e-commerce growth, a shortage of labor and underinvestment in additional capacity from the United States Postal Service will ultimately lead to robust pricing power for package delivery services. Economic theory contends that it is unrealistic to expect the cost of labor to increase at the same time the price of delivery decreases. As such, the pessimistic scenario reflected in the current market values of parcel companies underestimates future price increases as the balance of power shifts from e-tailers and consumers, to delivery service companies. Takeaways from the Week: • • •

Emerging markets continue to lead global equities Conflicting economic signals weigh on the Fed as it considers additional rate hikes As labor markets continue to tighten, shipping costs may be subject to price increases

Disclosures Tagged: Weekly Market Makers, Peter Jones, Ferguson Wellman and West Bearing Investments, Ferguson Wellman Capital Mangement, West Bearing Investments, Fed Tightening, labor market, S&P 500, emerging markets, U.S. Treasury, employment rate, inflation, USPS, FedEx, Amazon, UPS, last mile delivery

Ferguson Wellman 503.226.1444 | 800.327.5765 888 SW Fifth Avenue, Suite 1200 Portland, Oregon 97204 https://www.fergusonwellman.com

WE ARE a PRIVATELY OWNED, INVESTMENT ADVISORY FIRM serving individuals, families and institutions. For more than 40 years, we have designed and managed customized investment portfolios for clients’ IRAs, trusts, foundations, endowments, corporate retirement and pension plans. Ferguson Wellman and its division, West Bearing Investments, manage $4.56 billion for 769 clients. (updated annually, as of January 1, 2017) Southern Oregon Business Journal

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Klamath Community College

KCC Cements Commitment to Provide Community with Employment Training Services

By: Lacey Jarrell Public Information Officer KLAMATH FALLS – A new partnership will put Klamath Community College at the front line of regional workforce development. In June, the KCC Board of Education unanimously voted to enter into a $594,000 contract to provide WIOA Title 1B employment training services to adults and youth in Klamath and Lake counties.

Dr. Roberto Gutierrez, KCC President

ECWIB staff will work closely with KCC workforce development ensure a Under the WIOA (Workforce Innovasmooth of transition services and protion and Opportunity Act) contract, KCC gramming, Massie said. will deliver career and training services “We have been working closely with to dislocated workers and adult job the college for the past several months seekers. For out-of-school youth and as they transition into the delivery of young adults age 16 to 24, programs will focus on job training and establish- workforce services to local job seekers and businesses. KCC is able to leverage ing pathways to higher education. their college in support of services that “Providing access to education and job can help lift local residents out of training resources is a top priority for poverty while also helping grow the KCC,” said KCC President Dr. Roberto economy,” said ECWIB Executive Gutierrez. “Entering this contract Director Heather Ficht. furthers KCC’s commitment to the community and ensures more commu- Through the contract, employment counselors will work with participants nity members will have access to to develop an individualized plan that resources for achieving the success guides and supports out-of-work or they envision.” underemployed adults in need of work KCC Workforce Development Director skills, vocational training, or career Charles “Chip” Massie said KCC will pathway education. WIOA training now be a partner to the Klamath Falls activities will also serve dislocated WorkSource Center and will deliver workers and those in need of transicomprehensive year-round adult and tional training or education due to dislocated worker services. Services for business closure or position realignyoung adults will include developing ment. individual career/employment plans The program includes workshops on based on interest assessments, workplace basics, resume developeducational needs, as well as shortment, job search help, and may include and long-term goals. financial assistance for work-related “KCC can now provide more resources items, such as uniforms. to help community members of all For more information, contact KCC ages and backgrounds jump-start new Workforce Development Director Chip careers or seek promotion in current Massie at 541-880-2339. jobs,” Massie said. The East Cascades Workforce Investment Board (ECWIB) manages WIOA employment training services across a 10 county region in Central Oregon.

Southern Oregon Business Journal

Eagle Point Golf Course

Lady Slippers

Klamath Community College is an Affirmative Action/Equal Opportunity/Veteran/ADA institution embracing diversity. We encourage and welcome women, minority, veteran, and disabled candidates.

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By John E. Anderson

Benjamin Franklin once famously pointed out that nothing in life is certain, except death and taxes. But for business owners, there may be another certainty to consider: the day when you decide it’s time to move on… to take the next step in your life. For some, moving on will be an emotional decision: You’ve had enough of this business and need to do something else. Or maybe it’ll be about your health, or the health of someone important to you, such as a family member. Then again, maybe it’s just time: You want to spend your remaining years teaching your grandchildren how to bait a hook, showing them the wonders of Disney World, or simply enjoying your freedom. Whatever your reason, someday you’ll be ready to consider moving on. Which means you’ll probably want to look into selling your business. But selling your business generally depends upon the answers to three very simple, very important questions:

1. Do you have something to sell? 2. Can you prove it’s worth buying? 3. Can you find someone who’s interested? Let’s take a look at these questions and see how they might affect your decision .

Do You Have Something to Sell? This question seems pretty obvious at first. Of course, you have something to sell; you have your business. But is it something that’s saleable? To answer that, you need to consider another question: Can your business operate without you? For too many business owners, the answer to that question is a resounding “no.” Let’s look at a few other questions that will help you determine your answer:

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• • •

Does your sign have a business name on it, or is it your name? When customers call or stop by, do they insist on speaking with you personally? Do you have to put your touch on nearly every client project that comes through the door? When something doesn’t go as planned, do you have to make an “executive decision” to correct it?

If the answer to at least two of those questions is “yes,” your business is probably built around you. It can’t operate without you there. Then what do you have to sell? You can’t sell yourself… well, maybe you can, but that would probably negate the value of selling, since you’d still have to be there. So, if your business is built around you, all you have to sell is some used equipment and old inventory. That isn’t selling your business; that’s a fire sale. And you can be sure that you won’t get anywhere near what you’d like for your business if you don’t really have a business to sell. Of course, if you own the building, you can still sell the real estate, but that probably won’t provide you with the numbers you were hoping for by selling your business.

Can You Prove It’s Worth Buying? For a business to be worth buying, it generally has to be making money. Is yours? And more importantly, can you prove it? Every potential buyer will want to see your business records. They’re looking for a positive financial history, to prove that investing in your business will have the potential to return a profit. They need to know that the money they invest will pay dividends in a reasonable amount of time. If your business records don’t show a reasonable profit, you can’t prove your business is successful to a prospective buyer. Remember, those people — and their bankers — want to see the books before they plunk down big bucks to buy your business. As unfortunate as it may sound, if you want to sell your business for top dollar, you need to prove it’s a cash cow. And that depends on the numbers on your tax returns. If you’ve been altering your bottom line on paper to reduce your tax liability, there’s a good chance you’ll never be able to satisfy your buyer’s due diligence. You may still be able to sell, but not for anything near what you were hoping for.

Can You Find Someone Who’s Interested? Okay, so far, we’ve covered the first two questions. Chances are you’ve discovered you have a lot of problems that you’re going to need to correct if you have any hopes of selling your business. If you were hoping to sell tomorrow, those problems may limit your potential sales. But it doesn’t completely close the door: There still may be a way for you to find a buyer for your business. It just means your potential market will be smaller… a lot smaller. You may have one (or more) current or former employee(s) whom you could work with to improve the business’ value. First, have them become a manager, then a partner and eventually buy you out. In fact, helping someone you know improve the business and buy you out could be an excellent strategy. Or it could be a technician in your field who’s not an employee, but someone looking to open his (or her) own business. And, if your numbers aren’t completely accurate, you’ll have to find one who’s willing to make a judgment based on observation, rather than the existing records.

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If you’re reading this for your future — say five or ten years from now — you still have time to make changes to your business to create a more turnkey situation. When it comes to the numbers, most potential buyers are only going to look back a few years. So, you have time to make the changes necessary, to show you have a saleable business. The object is to create a model that works for anyone who’s interested in owning a business. As long as they can provide the money and are willing to become familiar with the market, your business is a realistic option for them. From there, you need to move on to the final step: finding a potential buyer. Now, you could try to do that yourself, with ads in industry magazines and web-based business resources. But, chances are, you’ll only reach a fraction of the people who might be interested in your business. You could hire a business broker, but a better idea is to hire a consultant with expert knowledge in increasing the business value and getting it ready for sale. Such a consultant can show you all your options while still leaving you in control of your future. The differences between each business and owner’s circumstances are so varied you will need specifics on what would be best for you and your business. General how-to-sell information is good but there is more to the transaction than just the sales price, such as net proceeds after taxes. Even if you aren’t anywhere near ready to consider moving on, this is the time to start building a workable business model that can make an exit possible when the time comes. While old Ben may have been right when he commented on death and taxes, it just makes sense to recognize that, one day, you’ll certainly want to sell your business. The best way to make sure that happens successfully is to start preparing for it now. Read the next article in the series: What’s My Business Worth?

By John E. Anderson, CEO of Be Cause Business Resources and Author of Smart Exit™ Steer Your Business to Success and Companion Workbook

John Anderson discusses key strategies for a successful business exit in this six-part series of articles written especially for small business owners. John has helped clients succeed for over 30-years. He currently serves as chapter president for the International Management Consultant (IMC), Oregon and Washington, and is a mentor for the WSU Carson College of Business.

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Oregon Manufacturing Innovation Center Secures Industry Commitments to Launch Major Manufacturing Partnership Seven leading manufacturing companies and three Oregon universities are partnering on R&D at new Scappoose facility . Scappoose, Oregon– The Oregon Manufacturing Innovation Center (OMIC) has taken another major step forward with the formal signing of a multi-party collaboration agreement, bringing together manufacturing industry partners with three Oregon public universities in a research and development (R&D) facility being developed in Scappoose, Oregon. This collaboration will launch OMIC’s mission to develop advanced metals manufacturing technologies that are expected to increase commercial productivity and augment state and regional capabilities for industry growth and innovation. Pledging their commitment to the launch of OMIC R&D are companies with headquarters in Oregon, Washington and across the country:    

ATI Blount International The Boeing Company Daimler Trucks North

  

America Hangsterfer’s Laboratories, Inc. Silver Eagle Manufacturing Vigor

OMIC R&D will provide economic, strategic, and technological solutions for its industry partners, bringing together the best talents and capabilities of manufacturing and three universities: Oregon Institute of Technology (Oregon Tech), Oregon State University (OSU), and Portland State University (PSU). The partnership – scheduled to launch its initial projects in 2017 – will provide “outside-in” applied research, technical advice, and support driven by manufacturing enterprises of all sizes to define the R&D focus. The facility will support new supply chain linkages, provide a critical mass of innovation, and promote the region as a major source of engineering and manufacturing expertise. Membership within OMIC R&D is expected to grow with several national and international companies already expressing interest in becoming part of the collaboration. “This project represents an exciting opportunity for Boeing and other industry partners,” said Bill Gerry program manager with Boeing Global Technology. “The partners are pooling resources and experience to problem solve, while also creating opportunity through research and development as well as training. The role of R&D is critical – with industry partnering with Oregon Tech, OSU and PSU – and will be instrumental in bolstering economic growth and deepening relationships with metals-related industry. This provides a glide path for Oregon manufacturers to be more competitive in the global market.” OMIC R&D will be a state-of-the-art facility comprised of talented engineers and technologists as well as university

Southern Oregon Business Journal

faculty, and undergraduate and graduate students. All members of the collaboration have a track record of problemsolving related to industrial manufacturing, and access to a collective of world-class technology and equipment. OMIC has already received commitments from international machine tool and equipment manufacturers for the donation of stateof-the-art manufacturing equipment to be used in execution of the R&D projects. “This industry-driven collaboration is unique, offering significant leverage for industry project dollars. This gain comes from OMIC R&D’s shared equipment, as well as access to the top engineering research faculty in the state,” said Laura McKinney, vice president of Oregon Tech’s PortlandMetro Campus and a lead on OMIC R&D development. “The university research and industry members are in this for the long run, expecting to create economic value for the partners, the state, and further afield. Oregon Tech is honored to be an academic research member in the R&D facility with such top industry partners, and is proud to serve as the host university for this important initiative.” OMIC will coordinate its R&D facility research projects with hands-on “earn and learn” training programs led by Portland Community College, to be located in a nearby facility that PCC is building. The PCC-OMIC Training Center, scheduled to open in fall 2019, will emphasize craftsmanship, professionalism, and placing graduates into high-wage, high-demand jobs. Senator Betsy Johnson, whose district includes Scappoose where OMIC is located said, “OMIC is the most exciting economic development effort that Oregon has seen in a long time. OMIC R&D is an Oregon asset that will have a ripple effect across the state. I anticipate that OMIC will bring jobs and new industries to Oregon as the research results begin to accelerate and grow manufacturing.” OMIC has the strong support of trade unions, including the International Association of Machinists and Aerospace Workers and the Society of Professional Engineering Employees in Aerospace, which recognize the importance of training and apprenticeship programs in growing high-skill, high-wage manufacturing jobs in Oregon via innovation and industry growth. Metals manufacturing is a cornerstone industry for the Greater Portland area, with current employment estimated at nearly 28,000 and approximately 600 small, medium and large metals manufacturing companies. OMIC presents a significant opportunity for the retention and expansion of these firms and the workforce in the region.

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Tip of the Week

Legal and Effective Hiring Practices for High-Risk Business

Clarence Belnavis, Fisher Phillips

Alex Wheatley, Fisher Phillips

Business is booming for marijuana ventures, and onboarding trustworthy and competent employees in the substantially cash-based environment of the marijuana industry, is critical. While the right hire can be an asset to a growing business, the wrong hire could just be a liability. Below are some hiring tips for employers to keep in mind.

Applicants’ Legal Rights Federal law prohibits discrimination in hiring on the basis of race, national origin, gender, pregnancy, age, disability or religion. Many states and localities protect additional characteristics – such as sexual orientation and family status. Therefore, it is important that employers avoid questions that relate to these protected classes. It is also important to develop job descriptions so that there is no question about the position’s essential functions. The goal, both from the legal and the business points of view, should be to determine the applicant’s ability to perform the job. Thus, the focus of interview questions should be on work-life rather than personal-life. Don’t go digging Employers need to be familiar with laws that restrict digging into an applicant’s past. Stick to the requirements of the Fair Credit Reporting Act when obtaining a background check. Many municipalities now restrict employers’ ability to ask about past criminal convictions before a conditional offer of employment is made. These are often called “ban the box” laws. While no law prohibits “Googling” an applicant, doing so can be risky because it may reveal protected information. States may also restrain an employers’ ability to require access to the employee’s social media accounts.

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Employment-related contracts The employment relationship is contractual in nature. Absent an agreement to the contrary, the employment relationship is “at-will,” meaning that both the employer and the employee can terminate the relationship for any or no reason at all. However, this could change if the employer makes any promises or guarantees. Avoid saying things like “as long as you do good work, you will always have a job here,” “we will give you the tools to succeed” or “we are hiring you for a one-year project.” NDA, non-compete or non-solicitation During the hiring process, the employer should also consider whether to enter into a non-competition, nonsolicitation or non-disclosure agreement. Generally, a non -competition agreement is a contract in which the employee agrees not to conduct any business in competition with the employer’s business for a period of time after the employment relationship ends. It is the most restrictive of the three agreements and the most difficult to enforce. Indeed, some states impose severe restrictions on non-competition agreements, making them far less useful than they used to be. In a non-solicitation agreement, an employee promises to not solicit other employees or customers of the business, and a non-disclosure agreement, where the employee agrees to keep any confidential information (e.g., customer or supplier lists) confidential after they leave employment. Employers should consult an employment law expert to make sure any agreements are both useful and legal before using them.

Practical considerations While employers must understand the legal considerations of the hiring process, the goal is to hire the 34


best possible employee, which is more of a personnel issue than a legal problem. Having the right procedures in place, and taking the process seriously, reduces the odds of hiring a problem employee.

Listen Interview the applicant personally and let the applicant do 80 percent of the talking. Be creative, but avoid asking about the prohibited areas listed above. Get to know the applicant and make sure he or she will do the job well and get along with others. Consider taking the applicant on a tour of the workplace to see how he or she interacts with other employees. Make sure the applicant is curious and interested in the business – not just the product! There is always a bit of luck involved in hiring. However, following these procedures, and working with an expert during the sticky situations will minimize the chance of making the wrong choice.

Beware of red flags Employers should require that all applicants submit a written application, and take the time to carefully review it for red flags, such as gaps in employment, lack of information for past employers, sloppiness and history of declining pay, etc. Contact the applicant’s prior employers and other references. They may not share anything, but taking 30 minutes to make those calls may payoff in the long run. This article first appeared in “Marijuana Venture Magazine” 111 SW Fifth Avenue, Suite 4040 Portland, Oregon 97204

This Tip of the Week was written by Clarence Belnavis and Alex Wheatley of the regional law firm Fisher Phillips. Belnavis is a trial attorney with a primary emphasis in employment litigation, including disability, racial and gender discrimination, retaliation, sexual harassment and wrongful discharge. Wheatley is an attorney representing employers of all shapes and sizes. He also advises and provides training on issues relating to workplace discrimination, family leave, wage and hour laws, and non-competition, non-solicitation and non-disclosure agreements.

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August 2017 journal  

Southern Oregon Business Journal

August 2017 journal  

Southern Oregon Business Journal