Southern Oregon Business Journal January 2020 Edition

Proudly Serving Benton, Coos, Curry, Deschutes, Douglas, Jackson, Josephine, Klamath, Lane, Lincoln & Linn Counties Since 2015

January

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Efficiency!

Energy’s Multiplier

Energy Saving Solutions + Energy and Production Efficiency = Better Product Quality & Lower Prices. Page 6 The Journal for Business in Southern Oregon

SouthernOregonBusiness.com

A Few Words from Greg Reflecting on 2019 leaves too much unsaid. It was a full year for most and frustrating for many in innumerable ways. Politics stole the show largely because media couldn’t leave it alone.

At every turn it seemed too much time and money were being wasted on unsolvable differences of opinion, priorities at personal, national and global levels broadened the divides that make the peacemaker’s tasks impossible.

2020 is a timely metaphor for clarity of thought, process and achievement. Let’s call a truce long enough to set common-sense goals we can all agree on, those - sometimes difficult - stretch goals that are not impossible.

It is a time of generational shifting with Baby Boomers retiring at record numbers and the Millennials now 24-39 years old creating a new dynamic for everything from politics to families to education and international economics. Generation X with the bookends of Boomers and Millennials on either side are assuming leadership roles left behind by the aging retirees. This generation has quietly grown during the age of technology with their heads down considering possibilities for their future while the aging and the young around them contemplated disruptions of cultural norms and long-held beliefs.

Look for 2020 to be a time when the door opens widely for Generation X to make sense of chaos and implement solutions for repairing mistakes, quieting the young and old, and setting a logical path into the future.

It will be difficult, but they have the tools to accomplish amazing things.

Greg Greg@SouthernOregonBusiness.com 2 | Southern Oregon Business Journal January 2020

The Southern Oregon Business Journal extends sincere thanks to the following companies for their continued presence as important cogs in the wheels of industry in southern Oregon.

A Few Words from Jim

Welcome to 2020 and the first issue of the Southern Oregon Business Journal of the year and of the decade.

I want to thank this months issue sponsor, Energy Trust of Oregon. The feature on page 6, “Efficiency! Energy’s Multiplier”, is an insightful article about how we can combine Energy Saving Solutions + Energy and Production Efficiency to achieve Better Product Quality & Lower Prices.

They share the story about Cook Woods, a Klamath Falls-based, family-owned company mills exotic and domestic woods, and rare hardwoods, into specialty products for use by hobbyists, wood artists and instrument makers and show how Cook’s commitment to investing in energy-saving solutions is a great way to impact the bottom line.

I love it when we are able to feature southern Oregon businesses in the journal.

If you would like to sponsor a month of the journal and/or get a Southern Oregon business story featured, please reach out to Greg. We would love to talk to you and see what we can work out.

May your year be prosperous and your decade be epic!

Happy New Year!

Jim Jim@SouthernOregonBusiness.com

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

5350 HWY 66, Ashland, Oregon 97520

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January 2020 - Table of Contents Inside This Issue

Arrggghhh! The stores in my town close too early!

Page 4

Five Tech Startup Founders Weigh-in on Eugene’s Entrepreneurial Ecosystem Page 12

How Amazon is disrupting Telephone Poles Page 16

Budget-Friendly Inventory Management Tools for Small Business Page 18

Employment in Linn County (Albany MSA): November 2019 Linn County’s Unemployment Rate at 4.5 Percent Page 20

Oregon Regional Economic Indexes Page 22

Opinion : Transportation planners flunk Econ 101: Price elasticity of demand

Efficiency!

Energy’s Multiplier

Cook Woods, a Klamath Fallsbased, family-owned company is featured inside this issue, on Energy Saving Solutions + Energy and Production Efficiency = Better Product Quality & Lower Prices.

Page 6

Page 24

50 Reasons Why Some Businesses Fail While Others Succeed - Three Part Series: Part Three Page 32

Does Your Business Need an Enterprise Systems Strategy?

Page 36

History has to begin somewhere. And so do businesses.

Cover Photo by Energy Trust of Oregon

Page 40

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SAVEYOUR.TOWN

Arrggghhh!

The stores in my town close too early!

BY BECKY MCCRAY AND DEB BROWN

I got a great email from Dane in response to my last newsletter.

He said:

Thanks for suggesting that businesses stay open an extra hour. You might also tell them to not be closed two or even three days a week. A lot of businesses in my town are closed all day Saturday and Sunday, while almost all the restaurants except Chinese and fast food are closed all day Sunday and all day Monday.

The nonprofit coffee house is open only Wednesday to Saturday!

Then they all moan about not having enough business. Maybe if they thought about being 4 | Southern Oregon Business Journal January 2020

Photo by Guille Álvarez on Unsplash

open when it's convenient for customers and not just when it's convenient for them. Even some dentists and doctors are now open in the evenings!

them why?

My response ended up being long and I want to share it with you!

The closed Saturday for the whole day? That does suck.

Sunday is a hold over from the days when people didn't shop on Sunday, the Lord's Day. But as you know, times have changed! Have you asked them why?

Hi Dane, I hear you! No evening hours is the first complaint I hear a lot. I have seen stores holding hours Friday, Saturday and Sunday which works for them because they have other jobs and works for the community too. I'm sad for you the coffee shop is only two days week. Have you asked

The best way to start talking to people and sharing your frustration is to ask them why they do what they do! Nothing better than a face to face conversation. I know you'll hear: but we want to be with our families I don't have enough staff

no one wants to work at night

We tried that before, it didn't work

we tried that before, it didn't work

Of course you tried that before.

For a week, or even a month.

That's not long enough! Right now your previous customers are used to you being closed and they are shopping elsewhere. Now you've got to earn them back. That takes time, and marketing.

Here's a few ways to handle those objections:

No one wants to work at night and I don't have enough staff

For you, asking them why they do what they do face to face is what I encourage. Be kind, be genuine and start to really get to know your store owners.

You'd be amazed at the number of people that might be interested in working at night. Women who are home during the day with the kids, high school and college students, people who just want to work a couple of hours a day. So extending hours for just a couple of hours is not a big deal. Worried about theft? You can get a bond for $50 that covers that. And there's cameras.

For the businesses, looking hard at why they do what they do is vital.

Lost customers take a lot of work to earn back. If you keep losing them, you'll lose your business.

BRAVO to the doctors and dentists! Spread that kind of good news all over the social media platforms, and around town.

But we want to be with our families!

We all want to be with our families, don't we? Having a business that is open when your customers can shop allows you to save money and keep your family fed. It's the nature of business. You make a commitment to yourself and your community when you open a business to serve them the best you can. Otherwise, you're just a hobby business. They don't last long.

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

Send your ad copy to: Greg@SouthernOregonBusiness.com Greg Henderson, Co-Publisher

Hi, I’m Becky McCray. And I’m Deb Brown.

We believe small towns can be saved — including yours.

Small towns can best be saved by their own people using their own resources.

https://saveyour.town/

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Southern Oregon Business Journal January 2020 | 5

FEATURE

BY SUSAN JOWAISZAS ENERGY TRUST OF OREGON

Cook Woods, a Klamath Fallsbased, family-owned company mills exotic and domestic woods, and rare hardwoods, into specialty products for use by hobbyists, wood artists and instrument makers.

Sustainability drives every part of the business. Having grown up in national parks as the son of a park ranger, founder Christopher Cook seeks to 6 | Southern Oregon Business Journal January 2020

Energy Saving Solutions + Energy and Production Efficiency = Better Product Quality

“have a light foot on the land.”

He carries more than 270 species of wood in the showroom, the majority of which are salvaged from logging operations or sourced from around the world. He sees potential in material that otherwise may be discarded, burned, or sold as firewood.

Managing how his business consumes energy is another guiding factor. “I watch the

bottom-line closely, so I look for ways to reduce energy use,” explained Cook. “When we lower our operating costs, we can offer our product to customers at a lower price, which makes them happy and increases demand.”

Cook’s commitment to investing in energy-saving solutions is shared by other Oregon manufacturers.

Umpqua Dairy, Roseburg, and J.H. Baxter & Co., Eugene, also see a direct link between

NW Natural, Cascade Natural Gas, and Avista.

system ran motors at one speed all the time and required employees to manually open

energy efficiency and production efficiency. All three companies work closely with Energy Trust of Oregon to help their facilities reduce energy costs related to lighting, heating, refrigeration, pumps, air compressors and more.

Energy Trust services and cash incentives are available for customers served by Portland General Electric, Pacific Power,

EďŹƒciency streamlines operations

and close vents. Automation has improved dust management and made the process simpler for employees.

Efficient equipment often leads to operational efficiency. Cook Woods installed a new dust collection system that saves energy by automatically adjusting motor speed based on the number of dust collectors in use. An older

The mill’s most recent energysaving investment is a new vacuum kiln, dramatically increasing their ability to dry wood quickly. Cook has to kilndry all the wood that comes into the yard to remove insects and reduce moisture content.

Southern Oregon Business Journal January 2020 | 7

Energy Saving Solutions (Continued)

His old kiln needed 120 days to dry wood properly, causing an inventory bottleneck. To speed up production, he had to choose between purchasing a second dehumidification kiln or a newer, more costly technology.

“The vacuum kiln is so advanced it requires less energy to dry wood compared to the normal dehumidification kiln,” said Cook. “Plus, we doubleinsulated the kiln, which increased our energy savings even more than estimated by the manufacturer. In the end, with cash incentives and energy savings, the newer kiln produced very little extra cost for us. We’ve been able to cut drying time from about four months to 14 days, decreasing the load on our electrical system and improving product availability.”

Lighting is often one of the first energy-efficiency upgrades at a manufacturing plant. Newer, energy-efficient technologies save money on energy costs, improve safety and productivity, and result in better product quality.

Cook’s sawmills have upgraded to LED lighting, which makes the work environment bright and cheery, and amplifies the safety factor for employees.

“Many of our processes are still 8 | Southern Oregon Business Journal January 2020

done by hand,” said Cook. “We trim small pieces of wood with sharp blades and need good lighting to avoid mistakes and accidents.”

To date, Cook has invested in four energy-efficiency projects that have saved the mill more than 114,500 kilowatt hours of energy annually and earned $19,669 in cash incentives from Energy Trust.

Strategic energy management cuts waste Serving the forest products industry for four generations, Eugene’s J.H. Baxter & Co., is one of the nation’s oldest wood preserving companies.

Customers use their treated wood products for a range of outdoor installations including utility poles, railroad ties, and bridge timbers.

Right now, J.H. Baxter is near completion of a year-long Strategic Energy Management (SEM) project to identify, implement and sustain low and no-cost energy-saving opportunities. Energy Trust provides resources and SEM coaching services to help the company engage employees in changing behaviors and processes and embed those

changes in the daily decisionmaking process.

SEM has been a huge success at J.H. Baxter, exceeding the company’s goal of saving 3% of its total annual natural gas usage.

“Once our folks saw how making simple changes can deliver a big impact on monthly results, they understood the power of behavior change,” explained Jace Jones, treating manager, J.H. Baxter.

“Everyone bought in to the new way of thinking and it took off from there.”

Roseburg’s Umpqua Dairy is wrapping up its own SEM initiative. “We started by getting people from across departments to go on a treasure hunt for overlooked energy-saving opportunities,” said John Harvey, director of plant operations, Umpqua.

“Because they were assigned to areas different from their usual department, they could see the process—and solutions— through fresh eyes.”

Umpqua’s team looked for equipment running unnecessarily, and other behavior-related actions. They found big savings by adjusting motors to slower speeds when production is lighter, rather than running them at full speed all

day. Staff has become diligent at monitoring and fixing air leaks and shutting equipment off when not in use.

Employees discovered that by implementing longer ice cream runs they can produce more product more efficiently. They save time with fewer changeovers from one product to another and save energy by keeping equipment running longer, rather than turning it off and on. To date, the SEM improvements have saved more than 324,000 kilowatt hours of electricity.

“We want to keep the momentum going,” continued Harvey. “Employees understand that the more we save, the more we can produce, which translates into a stronger, healthier company.”

Using efficiency to save more, do more At J.H. Baxter, natural gasfueled steam is a key component of the wood treatment process. The

company uses live steam deployed inside large pressure cylinders to clean the surface of the wood product and eliminate standing water.

Natural gas also fires three dry kilns on-site to treat products to customer specifications.

The company has completed 15 energy-efficiency projects since 2012, including the insulation of tanks and piping, replacement of steam traps, and repair of steam and steam condensate leaks. Another project reduced sooting in the boilers to make them function Southern Oregon Business Journal January 2020 | 9

Energy Saving Solutions (Continued)

more efficiently. Their efforts have paid off, saving the company more than 331,000 therms of natural gas annually and an estimated $269,800 in yearly energy costs.

“Incentives are a critical piece of our decision-making process,” observed Jones. “We couldn’t make these

investments without Energy Trust’s help.”

To further reduce natural gas consumption, Jones looks for ways to decrease the company’s reliance on steam. The company holds a zero liquid discharge permit, which requires water generated through the treating process to be evaporated on-site, not discharged off-site or to the city sewer. A recent capital investment project replaced the 10 | Southern Oregon Business Journal January 2020

steam-fired evaporator with an evaporative cooling tower, using heat from the treating process to evaporate water without using any steam.

“Not only do we evaporate the same volume of water, we’re doing so more efficiently and at a significant savings,” explained Jones.

Energy savings commitment reflects company culture A third-generation family business, Umpqua Dairy has been producing and distributing premium dairy products since 1931. Using milk from family farms in Southern Oregon, Umpqua takes pride in setting high product standards

and staying ahead of industry changes. The manufacturer of milk, ice cream, butter and other products has embraced that same approach to improving energy efficiency in its operations—working with Energy Trust of Oregon on projects since 2003.

“Finding ways to be efficient

and streamline costs has been part of our company culture since its early days,” said Umpqua’s Harvey. The company’s sustainability policy underscores that commitment by pledging to reduce its consumption of natural resources and use technology to conserve energy.

The company’s long list of energy-saving projects has earned more than $223,500 in Energy Trust cash incentives

and achieved annual energy cost savings of more than $133,270.

“Refrigeration is responsible for most of our energy consumption, from storing products to freezing ice cream.

We invest in these projects because that’s where we get the greatest savings.” Harvey continued.

One of Umpqua’s first energy upgrades involved overhauling its ammonia refrigeration system, which could not keep up with expanding demand.

Energy Trust helped replace two small compressors with a large energy-efficient model and install a new control system to ensure optimal production temperatures.

When it was time to replace production ice cream freezers, Umpqua turned to Energy Trust for help installing three new high-efficiency freezers that scooped 350,000 kilowatt hours from its annual energy use.

Later, a new ice cream mixing room tripled capacity using the latest in energy-efficient equipment and LED lighting.

Lighting has also made an outsized impact on energy use and staff productivity at Umpqua Dairy. Occupancy sensors and new LED technology have been installed in offices and production areas.

“When you have good lighting in a manufacturing facility, it’s more inviting, easier to clean, and helps people see better, which makes their job easier,” said Harvey.

Recently, the company earned first place for its Butter Toffee Crunch ice cream at the World Dairy Expo. Umpqua earned its “best of the best” in the nation award from among more than 1,500 entries submitted throughout North America.

“Our people love to be competitive,” said Harvey. “If we enter our products in dairy contests, we want to win, and when it comes to energy efficiency, we want to win there too.”

“Every business needs to trim the amount of energy they consume,” Chris Cook observed. “Environmentally, it is a good thing to do, and financially, you lower your operating costs. With these energy-saving investments, our productivity is higher, and we deliver faster turnaround on the product. That’s a win for environment, a win for the company, and a win for the profit margin.”

Learn how energy efficiency can improve your business. Changes in equipment, operation, and maintenance practices can optimize plant system operations and deliver significant energy savings.

To get started, visit www.energytrust.org/ industry or call 503.202.0576.

Energy Trust of Oregon is an independent nonprofit organization dedicated to help utility customers benefit from saving energy and generating renewable energy. Our services, cash incentives and solutions have helped participating customers of Portland General Electric, Pacific Power, NW Natural, Cascade Natural Gas, and Avista save nearly $3.4 billion on their energy bills.

Our work helps keep energy costs as low as possible and builds a sustainable energy future.

Southern Oregon Business Journal January 2020 | 11

ENTREPRENEURIAL ECOSYSTEM

BY MATT SAYRE ECONOMIC DEVELOPMENT | COMMUNITY BUILDER | TECHNOLOGIST | RAIN MAKER

Five Tech Startup Founders Weigh-in on Eugene’s Entrepreneurial Ecosystem

An entrepreneurial ecosystem is the social and economic ingredient of a region that affect the probability of success for newly forming companies. The ecosystem is all the inputs to economic growth taken together including: capital, talent, partnership, and mentorship. I caught up with five founders during Eugene’s recent Tech Tour to get an update on how things are going.

WHY EUGENE: ETHAN RALSTON, PRESIDENT OF UBCO US Ethan Ralston , US President/ CEO Converting owners of gaspowered vehicles to electric with a twist of technology The concept behind UBCO was germinated in early 2014 in New Zealand. Daryl Neal and Anthony Clyde saw a gap in the market for a new category of product after spending 10 years in the electric bike industry. The concept was a 2 wheel drive electric, lightweight, utility vehicle.

UBCO had been actively visiting and investigating the US market when it was contacted by Technology Entrepreneur Bob Ralston. Bob had successfully built Feeney

12 | Southern Oregon Business Journal January 2020

Wireless, an IoT company, with his son Ethan Ralston and sold it to Novotel Wireless in 2015.

Bob had been actively researching electric vehicles.

Growing up with the Honda Trail 90, the 2Ă—2 aligned perfectly with where Bob saw the market opportunity.

His passion was clear and a relationship quickly developed with CEO Timothy Allan presenting to a tight group of like-minded investors including Spring Capital in Eugene, Oregon.

The investment opportunity was consolidated over the next 5 months with a dedicated distribution company established in Eugene. Ethan Ralston was appointed as President and CEO and Bob Ralston joined the UBCO Board of Directors. https:// www.ubcobikes.com/us/ourstory/

Eugene is an amazing place to live with access to a variety of outdoor activities, active lifestyle culture, and makes it attractive for starting new companies here. I have lived here my entire life, traveled all over the US for business, but

FINDING CAPITAL: TODD EDMAN CO-FOUNDER OF BITCORK.IO

always prefer to come back home to zero traffic and a comfortable pace of life. There are multiple top notch business groups in town from accounting service, to legal, to marketing, and everything in between that is needed to help start a new company. The tech scene in Eugene has always been growing rapidly since the early 2000’s and seems to be getting better every year.

allowed me to raise money from my own network. Despite that, it has still been a challenge. I've done upwards of 50 pitches and for most here, making a Venture investment for $50K is too risky. There are huge holes in the capital landscape from Angel all the way to VC. I think there are different groups trying to fill those holes but fundamentally that's hard to do with the amount of capital here. Most Funds are predicated on making early

https://www.bitcork.io/ I'm lucky in that I've been in the business community for a while and grew up in Eugene which

Southern Oregon Business Journal January 2020 | 13

stage investments and then following on in their investments in a big enough way to keep their equity stake high "enough." Additionally, if a company is raising funds in Oregon there is no fear of "missing out" on a deal. This keeps valuations low, which then makes it harder for companies to raise their next round outside of the state, and the cycle continues.

14 | Southern Oregon Business Journal January 2020

ACCESS TO TALENT: MICHELE ZIMBA, PRESIDENT OF NULIA Nulia decided to locate our global headquarters in Eugene in large part because of the access it offered to high-quality employees from the passionate students and graduates of the University of Oregon and Lane Community College. We also felt there was a fast-growing technology industry and community in Eugene, which would continue to attract a strong and diverse base of talent for our business well into

the future. We have developed strong partnerships with the Universities and the technology community which have allowed us to grow quickly. We expect to continue adding more jobs and expanding our Eugene workforce in the promising years to come.

LOCAL PARTNERSHIPS: NICHOLAS SKREPETOS, CEO AND FOUNDER OF MYCOFFEEHELPER Local businesses have been eager to offer mobile order

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ADS and pay ahead, and they’ve been both supportive and encouraging of MyCoffeeHelper. They appreciate being able to compete against larger chains while supporting local technology!

PEER MENTORSHIP: CHRIS LEE, CEO OF CONCIERGE365 Peer mentorship has been the foundation of providing me direction in my business endeavors. Every encounter with a fellow entrepreneur is a learning experience for

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

success. What I love about Eugene is the accessibility to other founders. All the founders I know set aside time to help grow and provide a better community through peer mentorship. My top peer mentors have been Justin Bloom, Michael Nail, Lanny Berg, John Friess, Kevin DeWhitt, Richard Geiger, Matt Beaudet, Joe Maruschak & Shane Johnson.

Send your ad copy to: Greg@SouthernOregonBusiness.com Greg Henderson, Co-Publisher

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Matt Sayre VP, TAO / Head of TAO - Southern Willamette Valley Matt is an Oregon native and University of Oregon Alumni, with degrees in Economics, Business, and Geography.

Technology Association of Oregon 123 NE Third Avenue, Suite 210 Portland, Oregon 97232 503-228-5401

Southern Oregon Business Journal January 2020 | 15

UNINTENDED CONSEQUENCES

BY MARK SCHAEFER

How Amazon is disrupting Telephone Poles

Photo by Guille Ă lvarez on Unsplash

16 | Southern Oregon Business Journal January 2020

This week the New York Times did a long, investigative report on how Amazon has weaved its way into nearly every aspect of life in the city of Baltimore — government, education, politics, economics, and employment, to name a few.

The city is mostly positive about its dependence on this gigantic company, but there were also a few unintended consequences!

I experienced this myself. I live far away from Baltimore. In fact, I live in the country but Amazon is disrupting life even here.

They are disrupting our telephone poles!

Big trucks, unintended consequences A few months ago, a big DHL delivery truck dropped off a package at our home, which is situated at the end of a long driveway, at the bottom of a hill.

When the truck was going back up the hill, somehow the top of the vehicle got caught on the electrical wires strung from a telephone pole to our house. It was dark outside but I could tell something was wrong. When I walked to the top of the hill, I saw that a live electrical wire was on the ground.

Even stranger, I turned my flashlight to the top of the truck and saw that the caught wire had peeled back the top of the truck like a can of sardines!

The driver took one look at it and said, “I’m sure glad we have insurance!”

company to replace the traditional pole with one that is 10 feet taller — 40 feet!

The headline of this article promises news about how Amazon is involved in all of this, so let’s get to it.

Unintended consequences

A tall tale Police and emergency vehicles arrived at the driveway scene and eventually, the truck was safely untangled from the wire.

But now, I had to get the wire to my house repaired. The electric company said they would put in a temporary fix but that they would have to come back and put in a whole new, larger telephone pole, which appeared to be fine to me.

They explained: For decades, the electric company has used 30-foot poles. That provided more than enough room for any traditional delivery vehicle — like a mail truck — to navigate a residential neighborhood.

But in the last 10 years, home deliveries from Amazon and other eCommerce sites have increased at such a rapid pace that bigger trucks have been coming into residential neighborhoods to keep up with the delivery volume.

Apparently, my situation was not unusual. These trucks are getting caught by wires with regularity, causing the electric

A new 40-foot pole costs about $500, not including labor. For fun, let’s throw another $500 in there for labor (conservative) to make it an even $1,000 to replace a pole.

Think about how much it’s adding to our utility bills.

Eventually, every telephone pole in a residential neighborhood will have to be replaced with the 40-footers and that cost will have to be recouped somehow.

There are eight poles on my street, serving five houses. That would be an assessment of $1,600 per household in this little thought experiment. Sort of an Amazon tax.

Anyway, I thought it was interesting. Who would have thought the electric bill is going up because we’re buying jeans from Amazon?

Mark Schaefer is the chief blogger for businessesgrow.com, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant. The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon. https://businessesgrow.com/

Southern Oregon Business Journal January 2020 | 17

INVENTORY MANAGEMENT

Budget-Friendly Inventory Management Tools for Small Business

BY MARCUS LANSKY AT ABILITATOR.BIZ

Photo by Guille Álvarez on Unsplash

Whether you’re running a retail store, a manufacturing facility, or a warehouse, inventory management is likely a constant challenge for your business. That’s especially true if you’re a small business in the early stages of growth.

However, even small businesses on tight budgets have options for better inventory management.

4 Common Inventory Management Mistakes How do you know when it’s time to upgrade your

company’s inventory management practices? If you’re regularly encountering these common inventory mistakes, you’re due for a change.

Overstocking Ordering too much inventory throws a wrench in your business’s cash flow. In addition to the upfront costs of purchasing inventory, overstocking leads to higher holding costs as products sit on shelves longer before being sold. If you purchase more than

18 | Southern Oregon Business Journal January 2020

you need before the end of a product’s lifecycle, you’ll have no choice but to markdown items and accept lower margins on superfluous stock.

Stockouts Avoiding overstocks is important for optimizing your company’s inventory management, but being too cautious brings its own set of problems. When a business doesn’t have an item on the shelves, customers won’t wait for a restock. While some customers buy a substitute

from the same retailer, Retail Dive points out 40% of U.S. shoppers opt to buy elsewhere or cancel their purchase.

Misplaced inventory In addition to increasing labor costs as workers search for misplaced items, poor stock management slows order fulfillment. That’s bad news for businesses struggling to compete with the speedy shipping offered by retail giants like Amazon, especially as the delivery experience is consistently cited as one of the most important factors in customer satisfaction.

Only counting inventory once a year It’s easier to avoid inventory mishaps if you know the current state of your stock. However, if you only perform a physical inventory once a year, you won’t discover problems until it’s too late. Infrequent counts also make it harder to identify patterns and pinpoint issues in your inventory management practices.

Affordable Tools for Small Business Inventory Management Avoiding costly mistakes requires infrastructure that improves the accuracy and efficiency of your business’s inventory management practices. While many small businesses still rely on Excel

spreadsheets or pen-and-paper stock books to track inventory, manual inventory is both laborintensive and error-prone. While it might save money in the short-run, relying on manual inventory costs small businesses more in lost sales and labor than it saves.

That’s especially true when you consider the affordable inventory management tools available to small businesses today, like these.

Barcode scanners Upgrading from manual tracking to a barcode scanning system is a no-brainer. Barcode scanners turn inventory management into a highlyaccurate paperless process that takes a fraction of the time of manual inventory. With an efficient way to track inventory, performing regular inventory counts becomes feasible, allowing for greater accuracy in reporting and forecasting.

While there are high-end barcode scanners on the market, small businesses can get started with a handheld scanner for under $200. That’s a small price to pay for the benefits this inventory management system delivers.

Inventory management software You’ll get more out of a barcode scanning system when it’s paired with inventory

management software.

Inventory management software lets you dig deeper into product data and sales trends. With it, you can monitor stock levels, expiry dates, and lead times to determine the right time to reorder and analyze sales data to make smarter purchasing decisions in the future.

Full-fledged enterprise resource management software may exceed a small business’s needs — both in features and price — but Ordermentum explains that cloud-based inventory management software like Tradegecko or Zoho Inventory is affordable and scalable for a growing business.

These tools may not eliminate every inventory management frustration in your small business. Even with automation, managing inventory still requires some degree of human touch. However, by improving the accuracy and efficiency of your small business’s inventory management practices, these tools will help you avoid costly errors and scale your business profitably.

About Marcus Landsky: Author of - Be Your Own Boss: The Ultimate Business Ownership Guide for People with Disabilities. n addition to helping me with my physical challenges, the people close to me made me believe in myself and my own abilities. They weren’t just rehabilitators. They were abilitators. I KNOW THE CHALLENGES THAT COME WITH HAVING A DISABILITY…BECAUSE I’VE OVERCOME MANY OF THEM MYSELF. ABILITATOR.BIZ

Southern Oregon Business Journal January 2020 | 19

EMPLOYMENT

BY PATRICK O’CONNOR, REGIONAL ECONOMIST PATRICK.S.OCONNOR@OREGON.GOV

Employment in Linn County (Albany MSA): November 2019 Linn County’s Unemployment Rate at 4.5 Percent

Photo of Brownsville, OR by Jim Teece

Linn County’s unemployment rate declined to 4.5 percent in November, down from its revised October rate of 4.7 percent. Oregon’s statewide rate in November was 3.9 percent, essentially unchanged from its revised rate of 4.0 percent in October. Linn County’s seasonally adjusted unemployment rate is lower than its rate from a year ago of 4.9 percent in November 2018.

Linn County’s employment gains in November were larger than normal; total nonfarm 20 | Southern Oregon Business Journal January 2020

employment increased 150 jobs, when an increase of roughly 50 jobs would be expected. The difference resulted in a 100-job seasonally adjusted increase between October and November. Linn County’s employment is 3,290 jobs or 7.5 percent above its pre-recession employment peak in February 2008.

Linn County’s employment has grown 540 over the past year, a 1.2 percent increase. The growth rate was slightly slower than the nation and the state.

Oregon’s job growth over the past year was 1.6 percent and the U.S. grew 1.5 percent.

Linn County’s private sector added 450 jobs over the past year, growing 1.1 percent. The public sector added 90 jobs, up 1.3 percent.

Fast-growing private-sector industries over the past year included: construction (+180 jobs, or 5.7%); manufacturing (+260 jobs, or 3.1%); and trade, transportation, and utilities (+140 jobs, or 1.3%).

Employment Department News Release

December 24, 2019

Page 2

Workforce & Economic Research Division QualityInfo.org December 24, 2019

Albany MSA (Linn County) Current Labor Force and Industry Employment --Change From-November 2019

October 2019

November 2018

October 2019

November 2018

58,830 2,100 3.6% 4.5% 56,730

59,176 2,391 4.0% 4.7% 56,785

58,968 2,779 4.7% 4.9% 56,189

-346 -291 -0.4 -0.2 -55

-138 -679 -1.1 -0.4 541

47,170 46,880

47,020 46,780

46,630 46,180

150 100

540 700

39,990 3,770 430 3,340 8,710 6,480 2,180 2,450 2,230 10,800 1,760 5,490 3,550 440 1,450 3,010 6,620 6,020 3,660 1,530 7,180 320 620 6,240 4,210 2,030

39,840 3,880 440 3,440 8,800 6,530 2,160 2,450 2,270 10,500 1,760 5,420 3,320 400 1,430 3,020 6,570 5,970 3,690 1,550 7,180 320 630 6,230 4,200 2,030

39,540 3,600 440 3,160 8,450 6,310 2,050 2,320 2,140 10,660 1,680 5,490 3,490 440 1,530 3,020 6,550 5,950 3,770 1,520 7,090 310 590 6,190 4,020 2,170

150 -110 -10 -100 -90 -50 20 0 -40 300 0 70 230 40 20 -10 50 50 -30 -20 0 0 -10 10 10 0

450 170 -10 180 260 170 130 130 90 140 80 0 60 0 -80 -10 70 70 -110 10 90 10 30 50 190 -140

Labor Force Status Civilian labor force Unemployed Unemployment rate Unemployment rate (seasonally adjusted) Employed Nonfarm Payroll Employment Total nonfarm employment Total nonfarm employment (seasonally adjusted) Total private Mining, logging, and construction Mining and logging Construction Manufacturing Durable goods Wood product manufacturing Primary metal manufacturing Nondurable goods Trade, transportation, and utilities Wholesale trade Retail trade Transportation, warehousing, and utilities Information Financial activities Professional and business services Education and health services Health care and social assistance Leisure and hospitality Other services Government Federal government State government Local government Local education Local government excluding educational services

The most recent month is preliminary, the prior month is revised. Prepared in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics.

Civilian labor force includes employed and unemployed individuals 16 years and older by place of residence.

Employed includes payroll employment, self-employed, unpaid family workers, domestics, agriculture, and labor disputants.

Unemployment rate is calculated by dividing unemployed by civilian labor force.

Nonfarm Payroll Employment: Offical Oregon Series. Data are by place of work and cover full- and part-time employees who worked or received pay for the pay period that includes the 12th of the month. The data exclude the self-employed, volunteers, unpaid family workers, and domestics.

Southern Oregon Business Journal January 2020 | 21

Oregon Regional Economic Indexes

The monthly measures can be very volatile, and volatility will increase for smaller regions or those with less data included in the estimation process. To reduce the noise, it is helpful to focus on the average of the most recent data. For the larger areas, Portland, Eugene–Springfield, and Bend, a three-month moving average is sufficient to remove the noise. For Rogue Valley and Salem, a six-month moving average is required.

Is this approach used elsewhere?

Yes, the Chicago Federal Reserve Bank uses the same basic approach to measure both national and regional economic activity.

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

oregon

economic forum

22 | Southern Oregon Business Journal January 2020

Contrib utions to Regional Indexes – Octob er 2019

New Private Housing Units Authorized by Permits Educational and Health Services Employment Financial Activities Employment Government Employment Information Employment Leisure and Hospitality Employment Manufacturing Employment Construction Employment Professional and Business Services Employment Other Services Employment Trade, Transportation, and Utilities Employment Civilian Labor Force Unemployment Rate Lodging Revenue, Inflation Adjusted Airport Passengers Initial Unemployment Claims Residential Units Sold Municipal Waste Home Price Index

0.20 -0.06 0.12 0.00 0.08 -0.07 -0.07 -0.11 -0.01 -0.15 0.10 -0.04 0.17 -0.01 0.00 0.20 0.02 0.08 -0.01

-0.13 0.01 -0.02 0.01 -0.01 -0.04 -0.03 -0.12 0.01 0.00 0.03 -0.04 0.30 0.00 0.03 0.29 0.23 0.34

0.15 -0.02 0.04 0.00 0.01 0.18 0.12 0.03 0.02 -0.01 -0.22 0.00 0.27 0.00 0.00 0.09 0.18 0.27

-0.21 0.08 0.23 0.01 0.00 0.04 -0.05 -0.07 -0.01 -0.01 0.01 -0.19 0.45

Total Moving Average of Recent Observations

0.44 0.73

0.88 1.18

1.33 1.07

1.11 1.10

Salem

What is the significance of the moving-average measures?

Rogue Valley

A reading of “zero” corresponds to the average growth rate for that particular region. In other words, the measures identify periods of fast or slow growth relative to trend.

Central Oregon

How can I interpret the measures?

Oregon’s regional economies began the third quarter on solid footing. For all regions covered by this report, both raw and moving average measures (which smooth monthly volatility) were above zero, indicating an above-trend pace of activity (trend activity differs across regions). Interestingly, labor force growth remains a weak spot across all regions; recent trends suggest that labor markets will remain tight which in turn would be a constraint on hiring and create additional upward pressure on wages. Managing labor costs will still be a challenge for firms while households will benefit from rising incomes.

Housing activity is generally robust with home sales making a substantial contribution to most measures. The exception is the Portland area where home sales made a near-neutral contribution; that market has strengthened in recent months but is still a bit softer than late-2017/early-2018. New home construction though made substantial positive contributions in Portland as well as Bend with mixed performance in other areas. All areas received a substantial boost from low unemployment rates, particularly the Rogue Valley and Salem regions.

Eugene-Springfield

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Review

Portland-VancouverBeaverton

October 2019

TM

0.03 0.12 -0.04 -0.02 -0.01 0.07 -0.08 0.03 0.20 0.15 0.22 -0.12 0.45 -0.02

0.01 0.37

1.34 0.87

Oregon Regional Economic Indexes

TM

October 2019 Portland Metro Measure of Economic Activity Three-Month Moving Average in Black, US Recessions in Gray 2

Portland Metro

0 -2 -4 1998

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Central Oregon Measure of Economic Activity Three-Month Moving Average in Black, US Recessions in Gray 2

Central Oregon

0 -2 -4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Rogue Valley Measure of Economic Activity Six-Month Moving Average in Black, US Recessions in Gray 2 0

Rogue Valley

-2 -4 1998

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Salem Measure of Economic Activity Six-Month Moving Average in Black, US Recessions in Gray 2 0

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economic ECON Economics

forum

Š2019 University of Oregon. All rights reserved. Released: December 23, 2019.

Southern Oregon Business Journal January 2020 | 23

OPINION

BY JOE CORTRIGHT

The most basic concept in economics is that higher prices lead to less consumption, yet this fact is routinely ignored in transportation planning and policy.

If we got the prices right, many of our most pressing transportation problems would be much easier to tackle If we have too much of some things, and not enough of others, its a pretty good 24 | Southern Oregon Business Journal January 2020

Transportation planners flunk Econ 101: Price elasticity of demand

indication that the prices are wrong. We have, for example, too much traffic at peak hours in most of the nation’s cities.

That’s because the price of peak hour road space (zero) and the price of parking (below cost and often zero) are too low.

OK, we understand: that undergraduate economics course you took some years back was not your favorite. But if you learned one thing, it was

probably this: we can represent the demand for a product (or service) with a “demand curve” that shows the relationship between the amount that consumers will buy and based on the price of the good in question. The quintessential microeconomics chart is one that shows quantity demanded on the horizontal axis and price on the vertical axis. Demand curves slope down and to the right, meaning that at high

prices consumers buy very small amounts of a given commodity, and at lower prices they buy more. (See the red line on this chart). .

The most basic concept in economics is the idea that when the price of something goes up, people buy less of it.

This relationship turns out to be critically important to understanding things like transportation, energy consumption, and climate change.

For example, when the price of gasoline goes up, people adjust their behavior so that they buy less.

In the short term they may cancel or combine some trips, in the longer term they might buy a more fuel efficient car, or move to a location where its easier to bike, walk, take transit, or drive fewer miles for daily errands.

This basic fact is the intuition behind the carbon tax, as explained by Bill Nye (who for your benefit, doesn’t invoke the demand curve to make this point).

And the reason we’re in such mess in the US when it comes to sprawl, car dependence and carbon emissions, is that driving

is so cheap that we do way, way to much of it. The total social, health and environmental cost of driving–above and beyond what drivers pay is measured in the billions. Trucking alone has

negative social costs of as much as $128 billion per year.

When we get the prices right, or closer to right, people are remarkably capable of adjusting their behavior. We see that in places like Louisville Kentucky, where a $1 a trip toll for using an interstate bridge reduced traffic levels by about 40 percent, and produced nearly empty freeways at rush hour, or more recently in Seattle, where tolling a newly opened downtown tunnel reduced traffic by a third, and also

reduced traffic on nearby city streets.

Higher fuel prices = less driving The clearest example of the price elasticity of demand in transportation is for gasoline prices.

When gas prices go up (in a significant and sustained way) people adjust their behavior, by driving less, riding transit more, buying more fuel efficient vehicles, and moving to more central locations. The simplest way to show this relationship is to look at the average price of gasoline in the US, and compare it to the average number of miles people drive each year. Here are the data from the US DOT (miles traveled, per person per day) and average gas prices (from the US Department of Energy).

Around the turn of the millennium, gasoline was cheap, and had been so for a long time, and Americans reacted predictably, driving more and more each year. But starting in the early 2000’s gas prices started rising, and particularly after 2004, gasoline was noticeably more expensive than it had been in the prior Southern Oregon Business Journal January 2020 | 25

Price elasticity of demand (continued)

decade. At exactly the same time, the number of miles driven by Americans peaked, and then started declining. As the nation experienced $4 a gallon gas for the first time in 2007, driving dropped precipitously. The drop continued through the Great Recession (more about that in a minute) and the decline in driving continued right on through 2014.

In 2014, the global price of oil collapsed, and almost overnight, retail gasoline prices fell by about 40 percent. In June 2014, the average price of gas was $3.69, just seven months later, the price was 2.04, a decline of 44 percent.

Very quickly, consumers reacted to the new lower price of gasoline. Vehicle miles traveled per person shot up, from 25.7 vehicle miles traveled per person in 2014 to 26.9 vehicle miles traveled per person in 2017. And the increase in driving, predictably, led to an increase in traffic deaths.

But the decline in gas prices was more or less a one-off stimulus to increased driving.

Gas prices stopped going down, and trended mostly sideways after early 2017. And not surprisingly (to an economist at least), the rebound in per person driving flattened out. In short, the dollar or so a gallon reduction in gas prices that persisted after 26 | Southern Oregon Business Journal January 2020

2014 added about a mile a day to the average distance traveled by Americans, but didn’t put us back on the growth path of the late 1990s.

Its hard to find a clearer and more easily understandable example of how price elasticity of demand works. If you want people to drive less, raise the price of driving. (Gasoline is the most visible variable price associated with car use; too most drivers, their car payments, maintenance and insurance are relatively fixed costs). Gasoline (and parking) are just about the only things that fluctuate with the number and distance of trips taken.

What the studies say Economists routinely study the price elasticity of demand using gasoline as a classic example.

Studying gasoline markets is a tempting target because its a relatively fungible commodity (a gallon of 87 Octane unleaded gasoline is the same in one city or state as another, and remains comparable over time), there’s a treasure trove of data on prices (the federal government publishes weekly average price data), and its a purchase that consumers make often.

The indispensable Todd Litman has published a summary of the literature on the price elasticity of demand for gasoline. In general the estimates are that the price elasticity is 0.1 in the

short run and 0.3 in the long run. And elasticity of 0.3 means that a 10 percent increase in gas prices is associated with a 3 percent decrease in consumption. Elasticities are almost greater in the long run because over time, consumers have more different possible ways of responding to a change in prices. If the price of gas goes up a $1 a gallon tomorrow, you can instantaneously change your job and commute, your vehicle, your place of residence etc).

But over time, faced with higher prices, consumers do all these things, and others, and can reduce how many gallons they buy and how many miles they drive.

There are good reasons to believe that many of the economic subsidies underestimate the elasticity of demand, especially in the long run. Most studies look at relatively short term responses to price changes, and measure changes in prices that themselves are both small, and frequently varying. There’s a lot of “noise” in gasoline prices, with prices fluctuating by 5 or 10 cents a gallon month to month or seasonally. It’s unlikely that consumers react to these small of temporary fluctuations in price in the same way that they react to a large and permanent change in prices. As Litman notes, people appear to have a stronger

reaction to changes in fuel taxes (which are more nearly permanent) than they do to fluctuations in market prices. In addition, most elasticity estimates are based on timeseries data for US markets. The cross-sectional international data on fuel prices and driving shows that in countries where gasoline is more expensive, people drive many fewer miles.

The strength of this relationship underscores how, in the long run, permanently higher prices for fuel are reflected in changes in the built environment, household location, transit use, and other factors, that aren’t captured by estimates of short term changes.

We can also see the same pattern within and across US cities. Where driving trips are more expensive, chiefly because of the cost of parking, people avoid driving their cars.

Transit trips are disproportionately taken to destinations whee parking is limited and expensive; conversely, few people take transit to places where parking is abundant and free. Charging for parking is a kind of surrogate road pricing that produces discernible changes in behavior.

Transportation planners don’t believe in price elasticity or prices as policy As we’ve pointed out at City Observatory, the higher price of fuel has an important side benefit. By reducing the total amount of travel, higher gas prices turn out to be an extraordinarily effective means of reducing traffic congestion.

Between 2010 and 2012, when fuel prices were high, traffic monitoring firm Inrix reported that traffic congestion went down in every US metropolitan areas but one. One of the key factors at work here is the nonlinear relationship between traffic volumes and traffic congestion. Traffic congestion is a “tipping point” phenomenon–roads function at high capacity right up to the point where they become congested, and after that point is reached, an additional car (or ten) causes the road to slow down and lose capacity. As long as you can keep traffic below the tipping point, roads work well. And, as it turns out, that’s just what high fuel prices do, and the small reduction in traffic volume produces a big decrease in traffic congestion; Inrix data show that an 2-3 percent decrease in traffic volumes between 2010 and 2012 were associated with a 30

percent decline in traffic congestion.

Given the abundant practical and scientific evidence of the price elasticity of demand, and the dramatic congestionbusting benefits of small reductions in traffic, you’d think that transportation planners would be keen to understand and use prices, especially fuel prices, as a key component of the transportation policies and plans.

But in fact, when it comes to price elasticity, many transportation planners are flatearthers. They either ignore or deny the existence of any price elasticity of demand. Take the transportation modelers working for Portland’s regional government, Metro. When pressed about how their modeling of future transportation demand accounts for possible changes in fuel prices, they essentially argue that fuel prices have no effect whatsoever.

Fuel costs within the Metro travel demand model are considered as part of the auto operating cost, which consists of gasoline and oil, tires, and general vehicle maintenance costs on a per mile basis. This cost is $0.21 per mile (in 2010$ — $0.25 per mile in 2019$), and is derived from Bureau of Transportation Statistics (BTS), Energy Information Administration (EIA) and AAA Southern Oregon Business Journal January 2020 | 27

Price elasticity of demand (continued)

data. Empirical evidence has shown that auto operating costs tend to remain stable or decrease over time, regardless of short term fuel cost fluctuations. VMT per capita has not been shown to be highly correlated to fuel price fluctuations over the medium and long-term which is the scale of time used in our planning analysis. Long-term increases in fuel cost will result in wider adoption of fuel-saving technologies, which offset the increases in cost. Instead fluctuation in VMT per capita tend to be most correlated with economic health (employment) and this accounts for the changes between 2005 and 2015, with the 2008-2012 slump in VMT occurring with the decreased regional employment in our region associated with the Great Recession.

(Source: Email from Metro Staff, dated October 23, 2019).

It’s possible, of course, to have a debate about what the appropriate value is for the price elasticity of demand. We think, especially from a look at the international cross-sectional evidence that it’s probably higher than the 0.1 short term/ 0.3 long term estimates presented by Litman. It might be lower. But there’s no study, anywhere, that supports an estimate of 0.0, which is exactly the figure that the Metro modelers are using. In their 28 | Southern Oregon Business Journal January 2020

view, it doesn’t matter whether gas is 10 cents a gallon or 10 dollars a gallon, they’re predicting exactly the same amount of travel.

When pressed to reconcile their position with the historical data showing the reversal and then decline in driving per capita when gas prices accelerated in the middle of the last decade, transportation planners (like CEOs on a bad-news earnings call) jump to blame the economy: It was the Great Recession that causes the decline in driving, they argue.

There are at least three huge problems with that blamegame. The first is that vehicle miles traveled per person flattened out and started declining well before the Great Recession occurred, so unless you’re arguing consumers were somehow clairvoyant, that’s not an explanation. The second is that vehicle miles traveled per person continued to decline even after the Great Recession ended and the US was growing robustly again. According to the National Bureau of Economic Research, the Great Recession ended in May 2009– the shaded gray bars on the chart above. In fact, US employment grew for five full years through 2014, with continuing declines in VMT/ person. Third, as we’ve noted before, the rebound in VMT per capita was tied directly to the decline in fuel prices, and

petered out almost completely when gas prices stopped declining. If VMT were driven just by job growth as these planners assert, it would still be growing; it isn’t.

Why this matters: Getting the prices right helps achieve all of our goals Because of well-demonstrated responsiveness of consumers to higher prices, pricing can be our most effective strategy for reducing road congestion and decreasing energy consumption and greenhouse gas emissions.

Yet tragically, those who are preparing the technical basis for future transportation plans are in complete denial that price elasticity of demand exists. In fact, they implicitly argue that the demand for driving is perfect inelastic—that no matter what price we charge for fuel, drivers will drive exactly the same number of miles, by the same modes, to the same destinations. That is certainly a simplifying assumption—its harder to model a world with different prices and demand for travel than to build a model where behavior isn’t affected by price changes. But what that means is that the model is unrealistic: its a simplification that does violence to the utility of the model and importantly, uses a deeply buried technical process to preclude any

discussion of one of the most powerful and effective tools available for achieving our stated policy objectives.

What this means is that our plans for the future are systematically ignoring one of the most powerful forces that we can use to reduce traffic congestion (and not incidentally, greenhouse gas emissions). If we have higher prices for gasoline, people will drive less, we’ll have less traffic congestion, we won’t need to build as many roads, and our transit system will work better. In addition, there’s powerful evidence that cheap gasoline has stimulated more driving, which has led to proportionately greater numbers of crashes, injuries and deaths on the nation’s roadways. By denying that prices matter, transportation planners are missing a huge opportunity to harness market forces to achieve all of the policy objectives we’re hoping to further.

Addendum: More understatement of Price Elasticity of Demand A newly released Metro report on possible options for

financing a regional transportation measure also significantly understate the price elasticity of demand for travel. The report, prepared by ECONW, contains references to two articles, which it refers to as “studies.” In fact, neither is a study, and in both cases the data presented don’t support the claims made.

The first is from a 2014 US Energy Department website.

It’s worth noting that this is a web news article (“Today in Energy”) rather than an actual study. The author speculates on the effects of the 2014 decline in retail gasoline prices.

The article doesn’t actually look at data in comparing VMT and gasoline prices from the period after the decline in gas prices; in fact, it only shows data through 2012 (see the chart below). As shown above, the decline in gas prices was followed by a reversal in the decline in VMT–exactly opposite of what this article predicted.

The second item is from a similar US Department of Labor website. This website article’s lead author is described as a “former summer intern.” Just like the Energy Department Southern Oregon Business Journal January 2020 | 29

Price elasticity of demand (continued)

web article, this report isn’t a formal economic study, doesn’t cite any literature, and reports no data post 2014. Also, it focuses only on gasoline consumption, not VMT. The report says that there wasn’t a “dramatic” decrease in gasoline consumption. But the data in the DoL report show that per household gasoline consumption declined by 16 percent between 2005 and 2014 (from 844 to 707 gallons per household), during a period of high and rising gas prices, fully consistent with the idea 30 | Southern Oregon Business Journal January 2020

higher gas prices dampen fuel consumption and driving.

Finally, its worth noting that the term “inelastic” means an elasticity of less than one, i.e. that a 1% increase in the price of good produces less than a 1% decline in its consumption.

“Inelastic” doesn’t mean zero elasticity, i.e. that the price has no effect on the quantity demanded.

Even the Oregon Department of Transportation concedes that gas prices play a key role in shaping vehicle miles traveled.

Their 2018 report on the non-

attainment of state climate goals says, ” . . . lower gas prices coupled with higher incomes and post-recession increases in driving means that vehicle miles traveled (VMT) have increased in Oregon.”

Joe Cortright is President and principal economist of Impresa, a consulting firm specializing in regional economic analysis, innovation and industry clusters. Over the past two decades he has specialized in urban economies developing the City Vitals framework with CEOs for Cities, and developing the city dividends concept. http://cityobservatory.org

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ENTREPRENEURSHIP

BY GEORGE MESZAROS COFOUNDER - SUCCESS HARBOR SUCCESSHARBOR.COM

50 Reasons Why Some Businesses Fail While Others Succeed

Photo by Guille Álvarez on Unsplash

THREE PART SERIES: Part Three Why is it that so many businesses fail while so few succeed?

One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed.

Why some businesses fail while others succeed?

The worst part about a failing business is that the entrepreneur is unaware of it 32 | Southern Oregon Business Journal January 2020

happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.

One thing for sure, a business almost always fails because of the entrepreneur.

“It’s not the plan that is important, it’s the planning.” Dr. Graeme Edwards

There are over 28 million small businesses in the United States, according to the SBA. It’s an impressive number. The sad reality is that only about 50% of them survive. What’s worse is that only about onethird survive 10 years or more.

The life of an entrepreneur is unforgiving. It is a constant challenge. There are many moving parts. Any one of them could put you out of business.

Here are some effective ways to turn your idea into action: 34 – Believe that you can do it. I don’t mean fooling yourself into anything, but the only way can you make it happen if you believe that it will happen.

35 – Reach out to mentors.

There are many successful people within your own existing network, and you can also make new connections. Connecting with mentors helps you hear what it takes to be an entrepreneur.

36 – Minimize risk, but understand that it is unavoidable.

37 – Give it due time. Ideas are fast, but making them happen will take time. Even if all goes well, almost everything you do in business will take longer than expected.

38 – Get others to believe in you. Successful entrepreneurs are great at selling their visions.

You might have to convince vendors, partners, landlords, investors, employees, or a list of more people.

39 – Prepare to fail – Do not fear failure. There is one thing for sure, you will fail before you succeed. Expect failure but don’t fear it. Think of it as a normal part of your business. It

is necessary. It is good for your business. It teaches you. It helps you make the right decision the next time. It is super important that you don’t associate failure with quitting. Only those that take action fail and only those that take action succeed.

40 – Pivot, rinse and repeat – Successful entrepreneurs are always adjusting. There are many reasons to adjust. Your customers might ask for a new software feature. Or, the recession might have put your best customers out of business.

The price of raw materials might rise one day. Your business and its environment are dynamic. If you are good, you develop a keen eye for changes and make quick adjustments. Most businesses that fail do so because they ignore the world changing around them.

41 – Focus on your customer – You customer keeps you in business and puts you out of business too. If you listen to them, you can improve your products or services. If you ignore they fire you. Customers don’t disappear, they go to your competitors. Reach out to your customers. Ask them questions.

Ask what they like or dislike.

Welcome negative feedback.

Don’t be defensive about it.

Negative feedback gives you a chance to improve.

42 – Stay profitable – Staying profitable will solve many problems. The lack of profit could put you out of business even if you have record sales.

Forget sales. Forget your revenue. Forget the total number of customers. Always be mindful of profitability.

43 – Manage cash – Entrepreneurs that fail often confuse cash flow with profit.

The two are not synonymous. It is possible for you to go bankrupt with record cash flowing into your business. To succeed in business you don’t just need cash flow, you need positive cash flow. With positive cash flow happens when the cash funneling into your business is more than the amount of cash leaving your business. It is simple yet often ignored. The companies that ignore this end up with negative cash flow. This happens when the outflow of cash is more than your incoming cash. You should never allow negative cash flow.

Here are a few ways to improve your cash flow: 44 – Get paid in advance, ask for deposits or full payment in advance.

Southern Oregon Business Journal January 2020 | 33

50 Reasons Why… (Continued)

45 – Be very selective in offering credit to customers, avoid it if possible.

In Conclusion

Here are 10 of the most profitable companies in the world: Apple

46 – Increase your sales.

Exxon Mobil

47 – Offer incentives for early payment.

Wells Fargo Microsoft J.P. Morgan Chase

48 – Secure loans for emergencies.

49 – Disasters do happen – Even though Warren Buffet has a handsoff approach to managing his portfolio of companies. He does require the CEOs of each of his companies to have a one sheet in case of an emergency. The sheet of paper contains information on key aspects of the company.

While the one sheet of paper might be overly simplified the point is that you have to be prepared for the worst.

50 – If you will succeed in business, you must figure out how to deal with the unexpected. It’s not that “what if it happens“, but “when it happens“. What if your best salesperson quits tomorrow?

How long before you will replace her? Do you have a

Few places are less forgiving than the business world.

Eventually, everything adds up.

If your customers prefer your competitors, your employees would rather work for someone else, your partners no longer believe in each other or the business, and the many mistakes you can make along the way. And that is why businesses fail.

Berkshire Hathaway Chevron Walmart Johnson & Johnson General Electric (GE)

system in place, so when you hire a replacement she can sell?

Systems are crucial to recovering from a disaster.

Formal procedures are key.

Identify the key parts of your business and think about what it would take to recover losing any of them. For example, if your company relies on your ecommerce website, develop a system to recover your site even if your current site crashes and your hosting company goes out of business within the same day. You don’t have to be paranoid about it, but create systems of key parts of your company.

34 | Southern Oregon Business Journal December 2019

Yes, it is true that most businesses fail. It is also true that many of them succeed.

Those that succeed are not the result of miracles. Entrepreneurs who lead businesses to success understand that it takes a carefully planned and executed strategy. A little luck also helps.

George Meszaros is the editor and co-founder of Success Harbor where entrepreneurs learn about building successful companies. Success Harbor is dedicated to document the entrepreneurial journey through interviews, original research, and unique content.

George Meszaros george@successharbor.com

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BUSINESS LEADERSHIP

BY JIM MYERS FOUNDER, PRAXIS ANALYTICS, INCORPORATED.

Business leaders live in a world that straddles the known and the unknown, past and future, with today’s demands receiving the most attention. The tactical needs of today crowd out learning from the past and making strategic plans for the future. The adage “Strategy without Tactics is a Daydream, Tactics without Strategy is a Nightmare” rings true, and nowhere more so than when it comes to your business systems. Without rugged, robust systems moving your business forward, the path to success is difficult. Systems provide you with the foundation on which business intelligence activities access past information to leverage knowledge and support good decision-making. Systems also 36 | Southern Oregon Business Journal January 2020

Does Your Business Need an Enterprise Systems Strategy?

serve as the basis for business analysis, looking forward to create models and make informed decisions to support strategic goals and operational objectives. Due to the widespread misunderstanding about their importance, system decisions are often delegated until there is a problem.

Tactical decisions made about systems eventually come back to haunt a business when processes supported by those systems grind to a halt. The daydream becomes a nightmare.

Before system nightmares become all too real, it is a good idea to review your business strategy in light of your systems. This both eliminates risk and ensures team members understand your plans for the

future. Your business has no Systems Strategy? You are not alone. Many business leaders are not unlike the fabled Emperor in Tolstoy’s classic tale, The Three Questions, facing decisions about when, with whom and on what to focus their attention. In this story, Tolstoy’s Emperor sought answers to three questions in an effort to chart his path forward • What is the best time to do each thing?

• Who are the most important people to work with?

• What is the most important thing to do at all times?

Seeking to answer these questions, the Emperor put out a call throughout his empire for

assistance. He offered rewards business? As a business leader, clear System Strategy invites to those who could provide you ought to consider the distraction from your solutions to his three questions.

Emperors three questions in the requirements. System sellers In response, a bevy of experts context of your business often will be more than willing offered responses ranging from systems. In addition, like the to sell you an application that improved time management Emperor, you need to be leery may, or may not, meet your and increased devotion, to of solutions offered by experts needs at a price you may, or analysis, to creating a council of that do not address the intent may not, be willing to pay. the wise, and appealing to the of the questions. In developing Finally, to give up and do supernatural as well as a Systems Strategy for your nothing holds many risks, conceding the task was business, some would suggest including an inevitable need to impossible. Being displeased, courses of action not too far make decisions in the midst of the Emperor rejected the removed from those initially systems failure. We all know expert’s proposals and instead provided to the Emperor. They from experience that decisions sought the advice of an would have you start by made in the midst of crisis have enlightened man who lived a creating an exploratory group the potential to be both short solitary life on a mountain. If to exhaustively evaluate sighted and expensive. you are not familiar with At the strategic level, the this classic tale, I suggest most important act in you read it for it is both developing a business The creation of a group to entertaining and strategy is creating search out options is good, insightful. In the definition. Defining what meantime, we will skip your business is, where it but only when you are sure forward to discover the belongs and how you set that you know what you are answers to the three your business apart in the searching for. questions. In the end the eyes of customers is Emperor, in his quest for crucial. Business guidance discovers that capability definitions • The most important allow you to create and options, others might suggest time is Now. The present prioritize strategic goals and you go directly to the system moment is the only time operational objectives that source for advice, others say over which we have drive business success. Core give up before you start due to dominion.

Capabilities are what define the impossibility of being • The most important person your business as both unique successful.

The creation of a is always the person with and valuable. A key group to search out options is whom you are, who is right component of your business good, but only when you are before you. capabilities are those systems sure that you know what you • The most important pursuit that form the foundation on are searching for, so the is making that person, the which processes, and the detailed evaluation of new one standing at your side, people that use those systems tends to fit best into a happy. processes, are able to project after the development What do these three answers accomplish goals and attain of a System Strategy.

In the have to do with an Enterprise objectives necessary for same vein, approaching a Systems Strategy for your success. Without strategic system seller before you have a Southern Oregon Business Journal January 2020 | 37

Enterprise Systems Strategy (Continued)

clarity and definition, your (effectiveness), and that waste is addressing obstacles that systems are likely to evolve minimized (efficiency). Wasted compromise performance. tactically over time, without a time is perhaps the most First, the team members that plan, often on top of the ruins detrimental of all wastes surround you and work daily of past systems. That is what because time is finite; once with your systems and tactics will get you. The key is time is gone there is no processes are intimately aware to act before systems that recouping its loss or clawing it of the systems issues you face. ought to be assets turn into back. That is why it is As the people most involved liabilities. Let’s follow Tolstoy’s detrimental to wait until with executing those activities lead and see where these three systems fail before acting. linked to your success, your questions lead us in terms of an Systems that no longer support team holds valuable insights Enterprise Systems Strategy. effective resource deployment about current obstacles and Question #1: When should a and efficient processes do not benefits gained in addressing business develop it’s get better by themselves. Like systems problems. Second, if Enterprise Systems your systems do not Strategy? enable clear and Answer: The most precise Wasted time is perhaps the most important time is communication with detrimental of all wastes because now because it is the suppliers, the time is finite; once time is gone only domain over chances of their which we have disappointing you there is no recouping its loss or control increase. Ask your clawing it back.

Act now. The past is suppliers how gone and the future communication has yet to arrive – (quote requests, you are in the specifications, the Emperor, you now know present. Act now before your purchase orders, confirmations, when to act: there is no time systems drag your business etc.) can be improved. like the present to develop your down, becoming a liability.

Suppliers provide important Enterprise Systems Strategy.

Systems are primarily the means ingredients to your success; Question #2: Who are most used to control activities. A they deserve a seat at the table the important people in system in this context is a set of to help you improve your developing an Enterprise related assumptions, rules and systems. Finally, ask customers Systems Strategy? devices that control and focus how you are doing and take Answer: The most important (analyze, measure, monitor, their responses seriously. This people are those around you evaluate, resource, manage, important facet of systems that you rely upon for success support) activities towards planning is often overlooked.

This is a team effort.

A business particular objectives. Within Team member insights, supplier is most reliant upon three your business, most of these communication and customer groups of people: team activities are the processes that feedback about system members, suppliers and people use to accomplish work. improvements directly translate customers.

Developing an Processes and systems work into those requirements that Enterprise Systems Strategy together to ensure that affect systems upgrades and takes into account all three business objectives are met replacement. Like the Emperor, groups and avoids missteps in 38 | Southern Oregon Business Journal January 2020

you now know who those devoted to their success. Not important people are around everyone can be completely you, and who to work with in satisfied all the time; few developing your Enterprise people expect that. What they Systems Strategy. do expect is that the recurring Question #3: What is the most sources of anxiety (in this case important thing about an poorly performing aspects of Enterprise System Strategy? your systems) are Answer: The most important acknowledged. Addressing pursuit is seeking satisfaction systems problems before the for those around you systems become a major Seek satisfaction. Believe it or impediment to everyone’s not, satisfaction has a seat at success, keeps relationships the table of Systems Strategy planning. Why? Satisfied team members Addressing systems do good work and devote themselves to problems before the serving your customers. systems become a major Satisfied suppliers work hard for you, seeking to impediment to everyone’s go beyond the minimum success, keeps to ensure your relationships positive and relationship is solid and business is growing. productive.

Satisfied customers return, again and again, to buy your goods and services and therefore fuel positive and productive. business growth and the Receiving timely input about attainment of your goals and your needs and assessing your objectives. Satisfaction is systems goals, objectives, and directly related to the reduction requirements allows leaders to of anxiety. You pay dearly for be confident in the steps taken anxiety as an unseen cost of to minimize systems risk. That doing business with systems confidence comes from being that do not support your needs. aware of your systems and Taking your Enterprise Systems understanding their current Strategy seriously and devoting state and options for the future. time to identify systems faults From confidence comes the clearly signal to those around satisfaction that you, like the you (team members, suppliers, Emperor, know the most customers) that you have their important thing to do, and can best interests at heart and are make the best decisions in

developing your Enterprise Systems Strategy.

Every business needs an Enterprise Systems Strategy to support their overall plans for value creation in the future. A good first step is clearly defining what your system needs are in the future – as stated above, there is no time like the present to define those needs. The second step is to decide how best to achieve those systems requirements that support business success – that is the result of dedicated and intentional analysis in the context of your strategic goals and objectives. Only after gaining clarity in terms of your requirements should you move to make any decision about the suitability of your systems and the need to update or replace them in the future. Now, like the Emperor, you have discovered the answers to the three important questions and can prepare for the future by developing your own Enterprise Systems Strategy.

Jim Myers is the principal and founder of Praxis Analytics, Incorporated. Jim serves as a trusted advisor to business leaders in their quest to transform intentions into results. For over two decades, Jim worked in manufacturing, supply chain, customer service and maintenance management roles within markets ranging from capital equipment to aerospace and defense. As the Associate Dean of the Atkinson Graduate School of Management (AGSM) at Willamette University Jim led projects that doubled capacity, automated planning/scheduling systems and integrated best practices into school operations. He has taught graduate courses in Operations and Information Management, Strategy Alignment and Project Management. Jim served in the USMC and credits the big green machine with teaching him the value of leadership, quality people, good systems, and how to get the mission accomplished in a resource-constrained environment.

He can be reached at jim@praxisanalyticsinc.com.

Southern Oregon Business Journal January 2020 | 39

LOCAL BUSINESS

BY GREG HENDERSON

Con-Vey, LLC—previously known as Con-Vey Keystone, Inc.—is headquartered in Roseburg at their full-service facility of over 100,000 sq. ft.

Beginning as a fabrication and machine shop in 1946, who could have guessed that customers located only a few miles away in the beginning would one day be the subject of stories told to new customers in 17 countries around the world?

If you’ve seen the advantages of conveyors in materials handling, think assembly lines and loading/unloading of materials in every imaginable business worldwide, then you have some idea of Con-Vey

40 | Southern Oregon Business Journal January 2020

History has to begin somewhere.

And so do businesses.

and one of its root business concepts.

Con-Vey has become a leading manufacturer of material handling equipment with 93 skilled local employees. From steel fabrication to custom robotic automation, Con-Vey is known as a proven, high quality supplier. Con-Vey’s Environmental Division designs and manufactures equipment and components for hydroelectric, debris removal systems, fish handling, water management, and electrical controls.

Jim Kilkenny, Sig Wolf and Bob Herbage were the ones that began Keystone Machine

Works in 1946 in Roseburg.

They had worked at Hyster together in Portland and decided to start their own business.

Inspired in 1946 as a concept, opening of the fabrication shop led to work at the scragg mill. It was three guys that got started when logging was quite robust in Roseburg. The scragg mill was one of the first products Keystone Machine Works did as proprietary. Local jobs were the meat of their business. That was one of the reasons they had picked Roseburg, lots of mills and opportunities for work.

Bob was born in Portland on June 6, 1923, to Frances Lyberg and Arthur Herbage.

He grew up on a local dairy farm surrounded by a loving foster family, the Kilkennys.

Bob attended Oregon State and then enlisted in the Navy during WWII. He had a celebrated early career as a mechanic on navy aircraft carriers and submarines. Then in 1946, Bob, together with Sig Wolf and James Kilkenny, founded a startup machinery company, Keystone Machine Works. Bob continued to work there until his retirement at age 78.

Con-Vey International was a business in Portland that made tube belt conveyors as well as a Spool-O-Vator that could go around corners rather than just a straight line. Con-Vey started about 1965.

They decided they needed to expand their product line and after researching some businesses purchased Keystone Machine Works in 1970, keeping on the owners and Don Goeckner, President of Con-Vey International, at the time learned the business and decided it would be better to keep it here in Roseburg rather than moving it elsewhere.

Under Don’s leadership they

were able to expand the products and obtain patents and really hone in on the wood products industry.

When Don was ready to retire in1995 he hired Dave Larecy, son of his “right hand” Joan Larecy, because he had just the right attitude and quite a knack for the business. Dave has been instrumental in bringing the company up technologically as well as advancing the marketing program. As a result, Con-Vey has been able to keep on expanding all the way.

The 1959 Roseburg blast resulted in the company's

Southern Oregon Business Journal January 2020 | 41

Con-Vey (Continued)

involvement to restore parts of downtown Roseburg. As one of the few steel fabricators in the area Keystone was involved with some of the rebuilding.

They fabricated all the steel for the US National Bank job in 1960 due to the blast. They have also done fabricating for Joseph Lane School, the Green & Tenmile schools, Sutherlin & Roseburg city halls (including the jails).

Con-Vey Wins Supplier of the Year Award at APA Annual Meeting ROSEBURG, OR – Con-Vey is pleased to announce the award for Supplier of the Year from the APA – The Engineered Wood Association, which was presented at the APA Annual Meeting Chairman’s Dinner in Tucson, Arizona on Sunday, November 3rd.

Sales Manager, Jeremy Goebel, accepted the award on behalf of Con-Vey and later shared that he is “so proud of our team at Con-Vey for their effort to receive this award!”

Dave Larecy, President and CEO of Con-Vey, stated, “This is definitely a team win. Our 42 | Southern Oregon Business Journal January 2020

mission at Con-Vey is to provide our customers with innovative solutions. We strive to be the best in terms of quality and customer satisfaction, and know that our products and services represent the end result of our collective efforts.” Larecy continued on to say, “our reputation as a company is a direct reflection of our products and services, so to be recognized by our peers as Supplier of the Year is an honor and means we have achieved our goal of quality and service.”

Con-Vey was selected among a total of 62 nominees in the Equipment/Tooling category.

Supplier of the Year award winners are determined by a vote of APA members. Votes are cast based on quality, service, and delivery. www.engineeredwood.org/ awards.

Greg Henderson

Founder & Co-Publisher

Southern Oregon Business Journal

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