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					  THE OFFICIAL PUBLICATION OF ASSOCIATED OREGON INDUSTRIES


                                                                              January - February 2005
                                                                              volume 45, number 1




                                                                                                        TM




                                                                                          Tom Giacomini,
                                                                                           COO




                 Jon Kreitz,
                     CEO




     Warn Industries
                   Up to Challenges
     8             on the Road
                   to Growth
                                                        Special Feature
                                                        2005 Oregon Legislative
                                                        Assembly                    18

Associated Oregon Industries
1149 Court Street NE
                                         PRSRT STD
                                        US POSTAGE      Top 50 AOI
Salem, Oregon 97301-4030                   PAID
                                      FOREST GROVE OR   Manufacturing
                                       PERMIT NO. 36
                                                        Companies
                                                                                    20

                                                        Myths and
                                                        The Older Worker
                                                        Myth vs. Fact               31
02   JANUARY/FEBRUARY 2005   AOI BUSINESS VIEWPOINT
                                                C           O            N            T           E          N            T     S

          The official publication of
          Associated Oregon Industries


25,187 — Qualified Circulation




Chairman
Steve Pratt
President
Richard M. Butrick
Publisher
Jennifer O’Brien
Editor
John Ledger
Editorial Assistant
Kathy Hall
                                                                18                                    20                             31
Copy Editor
Amy Moskal
Copy Editor                              Special Feature                     Top 50 AOI                           Myths and
Maggie DeLancey
                                         2005 Oregon                         Manufacturing                        The Older Worker
Design
designpointinc.com
                                         Legislative Assembly                Companies                            Myth vs. Fact
AOI member
Printer
Times Litho
AOI member
Paper
West Linn Paper Company                        4       Editor’s Note
AOI member
Publisher & Editor                             6       Chairman’s Message
Donna C. Lewis
1992–2003
                                                       Another Season—Another Opportunity
Send address changes to:                       7       President’s Message
AOI Business Viewpoint                                 Oscar Got it Wrong, Optimistically Speaking
1149 Court Street NE
Salem, Oregon 97301-4030
tel: 503.588.0050 Salem
                                               8       Warn Industries
tel: 503.227.5636 Portland                             Up to Challenges on the Road to Growth
email: aoi@aoi.org
web: www.aoi.org                             12        The Oregon Business Point of View
Paying Attention to Business
AOI Business Viewpoint is read
                                             14        Oregon may love dreamers,
by the most influential, involved                      but we don’t send a message that we want them to set up business here.
and concerned business
decision makers in Oregon, from              20        Top 50 AOI Manufacturing Companies
presidents and CEOs of Oregon’s
largest companies to the owners
and operators of every business
                                             22        Reverse the Decline in Support for Higher Education
type throughout the State.                             Credibility and Accountability in Public Higher Education
  They include retail,
manufacturing, real estate,                  24        Chalkboard Project Erasing School Reform Riddle
banking, marketing, finance,
timber and forest products, food
                                                       Statewide effort to define action plan for our schools
service, electronics, health,
transportation and more.                     25        Employing Some Ingenuity
  The AOI Business Viewpoint is                        Innovation at the Employment Department Avoids Higher Taxes
published every other month
with a subscription price of $25
per year by Associated Oregon
                                             26        Your Best Employees Could Be High
Industries, Inc., 1149 Court                           Spotting “Performance Enhancing” Drug Users in Your Workplace.
Street NE, Salem, Oregon 97301
                                             27        Agricultural safety workshops scheduled
ADVERTISING INFORMATION
Publisher                                    28        Just Another Close Call?
Jennifer O’Brien
503-222-2851
                                             30        Keeping it in the Family—Q&A about your family business
Production Manager
Kathy Hinton
                                                       Incorporation in Nevada—A Good Idea? Structure Your Business So You Can Find Out
503-632-5041
                                             31        Myths and the Older Worker
MEMBERSHIP INFORMATION                                 For the smart employer, their time is on your side
Sr. Business
Development Manager                          32        View to the Past
Corry Hollingsworth
541-312-2588                                           The Wandering Capitol
Business
Development Manager                          32        AOI Welcomes New Members and Thanks Our Long-time Supporters
Jim Siddons
503-588-0050                                 34        Oregon by the Numbers
U Cover Photo:
                                                       Going Down the Road
Kevin Haislip, Haislip Photography
                                                                                               LETTERS TO THE EDITOR
                                                 We’ve featured CEOs, welders,

      Editor’s Note
      By John Ledger
                                                 Republicans and Democrats,
                                                 and just last issue we featured
                                                 the Governor and his economic
                                                                                               Dear Editor:

                                                                                                  Your President’s message in the
                                                 development efforts.                          November/December 2004 Business
                                                   Response to these changes has               Viewpoint (Two Suggestions to Create an
                                                 been gratifying. Readers seem                 Oregon Economic Recovery) is right on.

  I  t’s been a year since I became
     editor of the BV. During that
  time we’ve made numerous
                                                 to like the more open format,
                                                 the wider range of opinion and
                                                 even some lighter content. Still,
                                                                                               I can name you five auto dealers who
                                                                                               moved to Washington a year or two before
                                                                                               they sold their operations, saving a
  format changes such as                         some comments are not so                      significant amount on their capital gains
  enlarging the type, using an                   positive. For instance, a                     – $3-$10 million dollar transactions.
  easier to read font and re-                    Statesman Journal (Salem)                        One caveat on your proposal for tuition
  designing for a cleaner look. But              reporter describes this                       (dedicate entire amount of reduced capital
  we’ve also modified the content.               publication as a “political                   gains tax to need-based scholarships): I
  Articles are more focused and                  organ,” a dark term. But that                 would agree wholeheartedly; however, I
  we have attempted to make the                  sort of thing goes with the turf.             would include the private colleges, too.
  publication more enjoyable –                     I’m looking forward to the                  The state institutions cannot handle all
  something you’d want to pick                   coming year. But even more,                   of the prospective students in Oregon,
  up and thumb through.                          I’m looking forward to hearing                and the Linfields and Willamettes of this
    We’ve also greatly expanded                  from you – your comments and                  state have made significant contributions
  the range of viewpoints                        suggestions, criticisms and                   to Oregon as a whole.
  presented. We’ve had opinion                   corrections, what you like and
  pieces from government agency                  what you don’t. My mailbox is                 Richard E. Withnell
  heads, “public interest”                       always open: ledger@aoi.org.                  Owner
  advocates and academics.                       Drop me a note.                               Withnell Motor Company
                                                                                               Salem


Letters to the Editor are welcome. Submittals should be under 150 words, are published at the discretion of the Editor, may be edited for clarity
and brevity, become property of AOI, will not be returned, and may be otherwise used by AOI in anyway in any medium, Send them to bveditor@aoi.org
or fax (503-588-0052) or regular mail (AOI, 1149 Court St, Salem OR 97301). Include your daytime phone number.




        2005 AOI Mission Members
        We are pleased to welcome                                    By becoming a Mission Member, they are
                                                                     going the extra mile to make Oregon a
        AOI’s first Mission Members.                                 place your business can grow and flourish.

        These AOI Mission Members are demonstrating their commitment to the free enterprise system, support of
        Oregon’s business community and dedication to AOI’s mission of prosperity and livability. If you would like more
        information about becoming an AOI Mission Member, please contact Erica Dunsmore at erica@aoi.org or go to www.aoi.org.

        FIRM                                              CEO/PRESIDENT               WEBSITE
        A-dec                                             Ken Austin                  a-dec.com
        Good Shepherd HealthCare System                   Dennis E. Burke             gshealth.org
        Gunderson, Inc.                                   William A. Furman           gundersoninc.com
        High Desert Beverage Distributors, LLC            David J. Kremers            abwholesaler.com/highdesertbeverage
        JAE Oregon, Inc.                                  Katsumi Watanabe            jaeoregon.com
        Lane Powell Spears Lubersky LLP                   Mark Rossi                  lanepowell.com
        Lochmead Dairy, Inc.                              Jock Gibson                 lochmead.com
        PacifiCare of Oregon                              Howard G. Phanstiel         pacificare.com
        ServiceMaster of Swan Island/Oregon City          Barbara Neyland
        Snyder Roofing of Oregon LLC                      James F. King               snyderroofing.com



 04     JANUARY/FEBRUARY 2005         AOI BUSINESS VIEWPOINT
VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005   05
                                              By Steve Pratt   Chairman of the Board




                                              Another Season –
                                              Another Opportunity


             y first Chairman’s message focused on                   Another AOI initiative would establish a rainy day

 M           One Oregon and the search for common
             ground amongst the diversity of viewpoints
 in our state. The 2005 Legislative Session provides
                                                                  fund for the state. Any prudent manager—of a
                                                                  company, of a government or of a family—knows
                                                                  that it’s foolish not to prepare for the unexpected.
 ample opportunity to work toward One Oregon as                   Oregon’s lack of a rainy day fund has hurt
 we pursue AOI’s goals in education, jobs, the economy            communities, schools, those in need, businesses, and
 and the environment.                                             literally every segment in our state. This problem
    As the state legislative session begins, AOI takes            needs to be fixed now.
 an active role to ensure that we reach across divides               In regards to the environment, AOI will join
 and promote an agenda that will help us achieve                  environmental groups to push for adequate funding
 the goal of being One Oregon. One area where it                  to continue the Willamette River cleanup and support
 seems possible to reach broad agreement is in the                the Oregon Department of Environmental Quality
 arena of quality education. Research has proven                  (DEQ). We recognize that Oregon’s environment is
 that focusing on our youngest students delivers an               a huge draw for companies attracting highly
 excellent return on investment. That’s why AOI is                specialized talent as well as something Oregonians
 pushing hard for 100% funding of Head Start,                     hold dear.
 recognizing that a great start for all children is a                I urge you to keep current on AOI’s legislative
 cornerstone of Oregon’s future.                                  activities through AOI’s electronic newsletter Leading
    AOI’s top legislative goal is to gain a gradual               Issues, and through the AOI website. AOI lobbyists
 reduction of the state’s capital gains tax from 9% to            are working for you in Salem, but there are times
 5%. Our capital gains tax is the highest in the country          when direct contact from constituents makes all the
 and it’s pushing away people and companies. But                  difference. If you are asked to make these contacts,
 AOI isn’t simply asking for a reduction in taxes.                please make them a priority. Staying aware, invested
 Recognizing the importance of higher education,                  and visible is in everyone’s best interest. We rise or
 we’re asking that the remaining 5% be dedicated to               fall together because we are all part of One Oregon.
 a trust fund to underwrite tuition for students, based
 on need. This will help ease the crushing burden of
 student loans and make it possible for students to
 attend college who otherwise could not.
    Capital gains revenues are currently low because
 of the state’s lackluster economy. Dedicating those
 revenues to higher education now will have little
 immediate economic impact. But as the economy
 grows and revenues increase, Oregon will have a
 mighty tool for helping its own achieve their highest
 potential.




06   JANUARY/FEBRUARY 2005     AOI BUSINESS VIEWPOINT
                                              By Richard M. Butrick      President    richard@aoi.org




                                               Oscar Got it Wrong,
                                               Optimistically Speaking
U Photo: Lynn Howlett Photography




I
      have always believed that it is better to be                       We are vying with Alaska for the dismal distinction
     optimistic than pessimistic, even if it is for no                of having the highest unemployment in the nation.
     other reason than it makes me feel better. Not                   But I suppose we could conclude that we could not
everyone sees it this way. Oscar Wilde once said that                 get any worse and we have a great shot at getting
“The basis for optimism is sheer terror.” Catchy, but                 better. Plus, a recent Oregonian article pointed out
I expect that it is more the product of literary                      that Oregon’s industrial sector is beginning to make
cleverness than fact. So, despite the engaging epigram,               a little money. This may result in people being hired
I am optimistic anyway.                                               in high-paying, high-benefits jobs. So I am optimistic
   Not that there aren’t reasons enough to foster the                 anyway.
worst kind of pessimism – there are more than enough                     Oregon’s voters spoke clearly last November. They
– and you don’t have to look far to find them.                        said that destroying SAIF Corporation, which keeps
   I just read that the “Brand Oregon” campaign ran                   workers’ compensation rates low, was a bad idea.
out of money and is not slated for new funding. Yet                   They said that government changing the rules and
I believe the program will continue, maybe by moving                  depressing an elderly lady’s property values was a
funds from other budgets like Economic Development                    bad idea. And they said that losing thousands of jobs
or Agriculture, because it is a good idea. So, despite                that depend on the Tillamook Forest was a bad idea.
its precarious status, I am optimistic anyway.                        So I am really optimistic about the citizens of Oregon
   The Legislature is politically split, likely resulting             having good sense.
in a stalemate. But it could also mean thoughtful                        We have just experienced a natural disaster that
cooperation. There is even serious discussion about                   killed at least 150,000 people. There is nothing we
saving money for a so-called rainy day fund. Imagine                  could have done to stop the shearing of 1,200 miles
the government doing exactly what every citizen                       of faultline over 8,000 miles away deep under the
does — saving some money for a rainy day. So I am                     Indian Ocean. Yet the entire world unified to provide
optimistic anyway.                                                    record levels of aid to these millions of stricken
   Some school districts are giving their administrators              people. Perhaps we may be more unified in spite of
10% increases while offering their teachers 0%-2%                     the pain. So, I am optimistic anyway.
increases. And so-called Education Service Districts                     There are countless other examples. Some are
in urban areas are primarily just another layer of                    global, some involve a single person. We endured a
bureaucracy draining off money that should go into                    half-century of a vicious cold war, yet we prevailed
classrooms. But the Legislature has the power to                      and no longer face a conflagration in Europe. We
address these problems and give our kids a full year                  see a homeless person in our city, but we also see the
of school. So I am optimistic anyway.                                 Rescue Mission take him in and feed him. You can
   Governor Kulongoski has produced a budget based                    think of many more.
on the actual money available - a unique concept                         So I am optimistic…and so it goes.
displeasing many. He points out that the money
simply isn’t there to spend, so maybe we will see a
new emphasis on growing Oregon’s economy. And
so I am optimistic.




                                                                         VISIT US: WWW.AOI.ORG     JANUARY/FEBRUARY 2005       07
                                                                        CEO Jon Kreitz [L] and COO (and AOI Board
                                                                       member) Tom Giacomini [R] in front of the
                                                                       Warn Industries headquarters.




           Warn Industries
           Up to Challenges on the Road to Growth

            08     JANUARY/FEBRUARY 2005      AOI BUSINESS VIEWPOINT
U Photo: Kevin Haislip, Haislip Photography
  By Kirk Richardson         kirk@meetingpointforums.com




T     here are few places in the world where people embrace “the rugged” as much
      as those in the Pacific Northwest. It’s no wonder then that three years after
World War II, a Northwesterner named Arthur Warn launched a company in Seattle
that invented a revolutionary hub for off-road vehicles. The unique “locking” hub
converted thousands of WWII surplus jeeps into vehicles suitable for city streets,
highways... and windy mountain roads.

   Six decades later, the Warn family is out of the        navigate to achieve success. He says that Warn
business, but the brand lives on. Warn Industries,         Industries faces a number of challenges in the next
now a subsidiary of Dover Corporation, manufactures        few years, including significant increases in raw material
more than 600 products that are sold in 65 countries.      costs and capacity issues at its two Oregon
Today WARN products, which include everything              manufacturing operations as well as increased energy
from winches to clothing, are still used on Jeeps and      costs. “Certain types of steel we use increased by more
other Big 3 automaker trucks and SUVs, but can also        than 100% in 2004, and we make a number of products
be found on vehicles ranging from Land Rovers to           that are very steel intensive,” says Kreitz. “The
ATVs. To supply its ever-growing list of customers,        automotive accessory market can only absorb a portion
the company now employs approximately 650 people           of that price increase; the rest is pushed back on us.”
in two Oregon-based plants and a technical facility           Approximately one third of Warn Industries’ sales
in Livonia, Michigan.                                      revenue is international. “We anticipate this number
   As he steers Warn Industries into the uncharted         to increase dramatically in the next few years,” predicts
territory of 2005, Chief Executive Officer Jon Kreitz      the CEO. “At the close of 2004, we set up our
is guardedly optimistic. “2004 was a record sales year     European operations in Amsterdam to support this
for Warn Industries, and 2005 looks to be even             important market.”
stronger,” he says. “During the economic slowdown             Yet globalization is a two-edged sword for the
of 2001-2002, we invested more than $47 million in         Clackamas-based manufacturer. “Competition from
research and development and marketing for new             the Chinese will continue to be a challenge,” states
products. That development is now penetrating the          Kreitz. “A number of the winches made in Asia are
market, and our sales growth is due to that investment,    direct knock-offs of US-patented or trademarked
along with a stronger global economy.” For 2005            Warn Industries products, and we are embroiled in
and beyond, the CEO plans to continue                      intellectual property litigation as well as defending
“globalization” of the company “ through our selling,      our number one global market position.” The company
sourcing and manufacturing.”                               is also fighting back in other ways, introducing a value
   Kreitz believes parent company Dover will help          winch line, the Tabor , to position itself in the entry-
                                                                                  ™


drive that growth. “Dover strives to be a leader in        level level market and compete with the Asian winches.
every market it serves, and it is willing to invest for       Many US-based exporters are capitalizing on the
the long-term success of its divisions,” he says. “Dover   weak dollar. Not so Warn Industries. “Overall, the
has a decentralized management style that gives its        weak dollar has not benefited us,” says Kreitz. In fact,
division Presidents the maximum possible autonomy          as an importer of raw materials, the company has paid
to run their companies and be successful. It               a heavy price. “We have had to pay more for those
understands manufacturing, and we’ve been able to          items, increasing our cost of goods,” he says, adding,
leverage the knowledge and assistance from other           “The weak dollar has made our products cheaper for
Dover companies for our foreign and domestic               our international customers, but that invites gray market
operations and implement our best practices.”              activity that harms a global distribution channel.”
   While optimistic about the company’s near-term             Warn Industries also faces challenges on the home
prospects, Kreitz is also a realist, fully aware of the    front. “Unfortunately, here in Oregon, we tend to rely
significant obstacles that the company needs to            on this beautiful geography to be the attraction,” says

                                                                                           continued on next page…

                                                               VISIT US: WWW.AOI.ORG     JANUARY/FEBRUARY 2005          09
                                                                   strong customer relationships and a steady stream
     …continued from previous page                                 of new products, our Powersports business will
                                                                   continue to be very successful,” he predicts.
                                                                      Warn Industries’ orientation toward innovation is
     Kreitz, who is considering expanding operations in            a competitive advantage. The company’s IP portfolio
     Mexico. “It is becoming increasingly difficult to build       includes 110 patents issued or pending and more are
     a solid business case for us to add to our Oregon             on the way. Several products are either in
     facilities. Costs, availability of a skilled workforce, and   development or almost ready to introduce to the
     the fact we are so far away from our major customers          marketplace. “A winch developed for the new
     is working against increasing our regional presence.”         powerful, heavier snowmobiles will be launched at
        While it may seem a good problem to have, strong           the February, 2005 International Powersports
     demand for the company’s winches and wide array of            Industry show,” Kreitz says. “We are also working
     other products is pushing the limits. “Our employees          closely with the OEMs to develop accessories and
     have worked a large amount of overtime this year to           work tools for the Utility Vehicle market.”
     meet customer demand,” he explains. “We are working              Recent innovations include a new Integrated Wheel
     three shifts, six days a week, and have had up to a 20%       End System, which comes installed on every new
     temporary production work force. These issues will            four-wheel-drive Ford F150, Expedition and
     continue for the next few years, and Warn Industries          Navigator, and an off-road package option for the
     is looking at additional manufacturing sites outside          2005 Dodge Power Wagon that includes a 12,000-
     Oregon and strategically located distribution facilities      pound WARN winch.
     to position us for future growth.”                               Though Kreitz doesn’t see everything through
        Kreitz also red flags energy as an area of concern.        rose-colored glasses, he can’t be characterized as
     “Energy costs and reliable service are an issue for           pessimistic. He simply wants the best for his company,
     us,” he says. “We work closely with PGE to                    its shareholders and employees. “I strive to create
     understand our options, and PGE supports us in                the company where I want to work,” he says. “That
     emergency conservation activities. We use software            is a company with leadership that is decisive and
     to monitor our electric use and understand where              accountable for achieving business results through
     improvements can be made.”                                    collaboration, turning vision and strategies into
        Occasionally, availability is an issue... a big issue.     action. It is a company of uncompromising ethical
     “During a two week span this fall, we lost power              business practices and values to support our
     three times,” Kreitz notes. “This is a significant cost       commitment to our customers, employees,
     to Warn Industries, as some of our equipment is               shareholders and community; a company with a
     damaged by any power outage, and we have to scrap             strong brand name, where employees are proud to
     production materials that are in process during the                                           create market-leading
     outage. When both facilities are affected by the                                              products that provide
     outage, our production comes to a complete                                                    the highest level of
     standstill.” Kreitz laments the energy-related                                                customer satisfaction.
     problems that Oregon industry has faced over the                                              It is a nimble company
     years, opining that “businesses in Oregon have long                                           with constancy of
     since lost a competitive advantage with inexpensive                                           purpose that is not
     electric power.”                                                                              encumbered by
        Issues of steel, labor and electricity aside, Kreitz                                       bureaucracy. It is a
     is positively charged about Warn Industries’ future                                           company that is open,
     and for good reason. He calls the company a category                                          honest and where
     creator. “In early 2003, we launched the WARN                 employees and leaders have mutual trust and respect.”
     Works® line of tools for professionals, such as                  A former Air Force Officer, Kreitz knows a little
     contractors, landscapers, and farmers,” he says. “These       about the discipline that it takes to earn such levels
     products allowed us to enter new markets, including           of trust, respect and ultimately, success. “I was very
     Lowe’s home improvement stores, and we are                    fortunate to have parents who provided me with a
     currently preparing shipments to Home Depot. The              very solid foundation of principals and a strong work
     industrial and commercial markets had record sales            ethic,” he adds. “What drives me? I always want to
     in 2004, and we anticipate significant growth in this         make sure I am delivering my best for those who
     area. Warn Industries is a leader in the Powersports          have put their trust in me.” From all indications, it
     Accessory Industry with our complete line of winches          appears Warn Industries has the right guy behind
     and accessories for All Terrain Vehicles. With our            the wheel for the rugged road ahead.




10     JANUARY/FEBRUARY 2005        AOI BUSINESS VIEWPOINT
VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005   11
                                                                                     3     Do your employees need the                   Yes
                                                                                           following technical skills?                  No
                                                                                                                                        Not sure/Refused


      An AOI membership survey sponsored by Miller Nash LLP
      and Regence BlueCross BlueShield of Oregon.*




                                                                                             Lean                 Engineering           Geometric
                                                                                         Manufacturing                            Dimensions/Tolerancing




                                                                                           CAD/CAM            Computer IT               Equipment
                                                                                                                 Skills                 Operation



     O    n December 14, 2004, The Nelson Report
          completed a membership survey for AOI. The
     survey involved telephone interviews with randomly
     selected AOI members and was designed to elicit
     respondents’ point of view concerning manufacturing                                 Sales/Customer       General Math             English as a
     and workforce in Oregon.                                                                Service                                 Second Language
       Below, The Nelson Report has highlighted the key
     results of the survey research report.
       A total of 303 respondents were interviewed between
     December 10 and December 14, 2004. The margin of
                                                                                     4     Do you provide assistance to employees
                                                                                           to help them transition to more senior
     error for this survey is +/-5.17 at the 95% level of confidence.
                                                                                           positions in your company?

                                                                                                       Yes                                     73%
 1         Over the next five years, what percentage of                                                 No               25%
           your workforce do you believe will need to be                                  Not sure/Refused   2%
           replaced due to attrition or retirement?

                         None                                      20%
                      1% - 10%                                                 31%   5     Do you provide tuition reimbursement
                     11% - 25%                                           26%
                     26% - 50%                            14%
                                                                                           for off-site employee training or job-
                     Over 50%                  6%                                          related education?
              Not sure/refused            3%
                                                                                                       Yes                                     69%
                                                                                                        No                  30%
                                                                                          Not sure/Refused   1%
 2         What are two or three of the most important
           technical skills employees in your business
           need today?
                                                                                     6     Jobs Plus is a program that diverts a portion
           In Order            1 Professionalism/Work Ethic                                of unemployment insurance to assist with
           of Rank             2 Communication                                             the hiring of new employees that would
                                3    Knowledge of Industry/Product                         otherwise have difficulty getting hired. Has
                                4    Writing                                               your company utilized Jobs Plus during the
                                5    Computer                                              last 18 months?
                                6    People/Customer Service
                                7    Common Sense/Intelligence
                                8    Math                                                              Yes    7%
                                                                                                        No                                     90%
                               9     Problem Solving/Resolution
                                                                                          Not sure/Refused   3%
                              10     Organization/Time Management


The survey results are not necessarily the opinions of the sponsors.



        12      JANUARY/FEBRUARY 2005                 AOI BUSINESS VIEWPOINT
VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005   13
                                                                     Oregon may love dreamers,
                                                                     but we don’t send a message that we
                                                                     want them to set up business here.

                                                                     Targeted Tax Incentives Needed to Create Jobs


                                                                                          By Dale S. MacHaffie
                                                                                  Tax Manager, ESCO Corporation




     O
               regon needs a comprehensive, balanced tax
               strategy to attract and keep manufacturing
               jobs. Presently, our employment situation is                majority of small businesses who cannot qualify due to
     embarrassing, second worst in the nation. Every year                  the number of investments required. New, revised
     Oregon faces a budget deficit, and major manufacturers                legislation that is friendly to smaller business would be
     are skipping over or leaving our state due to lack of                 a better fit for Oregon.
     incentives to stay.                                                      Yet another major consideration for Oregon
        As members of AOI, what can we do? We can get                      lawmakers would be to create business tax credits for
     on the Legislature’s radar screen for the upcoming                    increased employment. As of July 2004, 25 states had
     session. There are several major incentives that can                  various types of jobs-based income tax credit programs.
     revitalize business and bring new jobs to our state,                  Oregon, unfortunately, did not. The purpose of this
     which sits brimming with capable new hires. Oregon                    tax incentive, simply put, is to give businesses an income
     has certain tax benefits that can be negotiated with local            tax credit for new jobs created. The programs that
     tax jurisdictions by large industrial taxpayers, like many            currently exist in other states are measured by wages
     AOI members. However, any new incentives may be                       of new employees and could be customized for Oregon.
     in jeopardy unless the tax incentives are carefully crafted           With half of the states already on board with this
     and designed to benefit all Oregon businesses. Let me                 concept, it would be smart for Oregon to follow suit.
     offer some suggestions.                                                  Next, let’s discuss the “throwback rule” for state income
        First, Oregon needs an investment tax credit that                  tax apportionment. First, not all states require businesses
     applies to manufacturing machinery and equipment.                     to file income tax returns. That being said, the Oregon
     To be effective, this tax credit needs to cover at least              “throwback rule” mandates that a business manufacturing
     50% of the cost of the machinery, including installation              or warehousing in Oregon who also has sales across the
     expenses. It should also be for a fixed period of time,               nation, must file state income tax returns reflecting all
     such as five years. The enactment of an investment tax                of its U.S. income. This means that Oregon companies
     credit will advance new construction, helping to create               who sell into states without income taxes or where the
     a burst of new economic activity and jump start our                   taxpayers do not have a taxable connection to the state,
     state out of economic lethargy. Once the investment                   must “throw back” the income to Oregon and file an
     tax credit program has expired, the jobs created by the               Oregon income tax return showing a much larger income
     new and improved manufacturing base will remain.                      tax due. The impact of this formula is only adverse to
        A second idea is legislation providing property tax                businesses that manufacture in Oregon or warehouse
     abatements for new or expanding businesses. Many                      their products in the state. The Legislature must eliminate
     states have programs granting ten year property tax                   this archaic and punitive rule and encourage business to
     moratoriums on manufacturing facilities that are built                not only stay, but expand in Oregon.
     new or substantially reengineered. We have a similar                     Finally, Oregon needs a moratorium on increasing
     type of program called the Strategic Initiative Program               business taxes. The state should also enhance its pollution
     (SIP) but it is not as effective due to its exclusive nature,         credit program which sunsets this year, its research and
     being available only for the largest plants. The SIP                  development credits and maintain its single sales factor.
     requires the property taxing jurisdictions to negotiate                  Oregon vies for jobs in an extremely competitive
     with the prospective business to arrive at the terms and              global marketplace. Tax incentives can make or break
     conditions associated with the property tax abatement.                a company’s decision to locate here. We need a cohesive
     While this program works well for large business                      and sound business tax strategy to ensure that our state
     (Daimler Chrysler Inc. in a recent court case out of                  attracts that most valued prize: family wage jobs. It is
     Ohio had a similar 10 year property tax free period                   up to us to make sure the voice of Oregon business is
     affirmed as constitutionally sound), it is unfair to the              heard during the 2005 Legislative Session.


14    JANUARY/FEBRUARY 2005         AOI BUSINESS VIEWPOINT
                                                                 Bruce Warner
                                                                 Director ODOT, Salem

                                                                 Mr. Warner: Oregon’s             By Adrienne Pauly
                                                                 transportation system is
                                                                 aging. It’s not expanding to
                                                                                                  What’s the biggest
                                                                 keep pace with growth, and
                                                                 it’s underfunded. We really
                                                                                                  problem with Oregon's
                                                                 built a system for the 1960s,    transportation system?
                                                                 not for Oregon’s place in the    And what do we need
                                                                 global economy today.            to do to fix it?
                                                                    We need stable funding
                                                                 for the system as a whole—
                                                                 highways, county roads, city
                                                                 streets, bridges, ports and         Finally, we need to fund
                                                                 airports, and rail transit—      the system. Traditional
                                                                 but it is not available.         funding systems like gas
                                                                 Highway funds that come          taxes and vehicle
                                                                 from taxes and fees on           registration will not take us
                                                                 motor vehicles in Oregon         far into the future. We need
                                                                 are constitutionally             to look at alternatives. I look
                                                                 dedicated to highways and        at our efforts to encourage
AOI LegalPLUS™ is         AOI members who choose to utilize
                                                                 bridges and cannot be used       public-private partnerships
offered exclusively to    AOI LegalPLUS™ are entitled to 15
                                                                 for any other purpose.           like the airport-MAX
AOI members by AOI        minutes of free legal consultation
                                                                    We should start with a        expansion that extended
and Jordan Schrader PC.   per month.
                                                                 vision of what kind of an        light rail service to the
                                                                 economically healthy and         airport. The private sector
To access AOI             If you have questions regarding the    livable state we want, and       was involved, and in this
LegalPLUS™ simply call    program, please contact Associated     then plan and design a           case it funded, designed,
888-598-7070‚ and ask     Oregon Industries at:                  transportation system that       and built this project in
for Bob Blackmore.                                               supports that vision. That       return for real estate
                          503-588-0050 (Salem)
Identify yourself as a                                           vision means a system that       revenues from land owned
                          503-227-5636 (Portland)
member of Associated                                             anticipates the future, not      by the Port of Portland. I
                          800-452-7862 (Statewide)
Oregon Industries.                                               just what we need today.         think we have to look at that
                          Or you can                             And integration of the           model and use it for other
                          email mina@aoi.org                     modes of transportation is       types of transportation
                                                                 really important, they need      projects—rail, maritime,
                                                                 to work together.                highways.




                                                                VISIT US: WWW.AOI.ORG      JANUARY/FEBRUARY 2005       15
16   JANUARY/FEBRUARY 2005   AOI BUSINESS VIEWPOINT
VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005   17
STATE SENATE                       12 REPUBLICANS — 18 DEMOCRATS


    Courtney, Peter                        Brown, Kate                             Ferrioli, Ted
             Senate President                      Majority Leader                         Minority Leader
             900 Court Street NE                   PO Box 5271                             750 W Main
             Salem, OR 97301                       Portland, OR 97208                      John Day, OR 97845
             SD 11                                 SD 21                                   SD 30
             Portion of Marion                     Portions of Clackamas &                 Baker, Gilliam, Grant,
                                                   Multnomah                               Harney, Jefferson,
                                                                                           Malheur, Sherman,
                                                                                           Wasco, Wheeler &
                                                                                           portions of Clackamas,
D                                      D                                       R           Deschutes & Marion



    Atkinson, Jason                        Bates, Alan                             Beyer, Roger
             PO Box 1704                           PO Box 912                              39486 S Cooper Road
             Grants Pass, OR 97528                 Jacksonville, OR 97530                  Molalla, OR 97038
             SD 2                                  SD 3                                    SD 9
             Portions of Jackson &                 Portion of Jackson                      Portions of Clackamas,
             Josephine                                                                     Linn & Marion




R                                      D                                       R

    Burdick, Ginny                         Carter, Margaret                        Deckert, Ryan
             4641 SW Dosch Road                    PO Box 3722                             PO Box 2247
             Portland, OR 97239                    Portland, OR 97208                      Beaverton, OR 97075
             SD 18                                 SD 22                                   SD 14
             Portions of Multnomah &               Portion of Multnomah                    Portions of Multnomah &
             Washington                                                                    Washington




D                                      D                                       D

    Devlin, Richard                        Dukes, Joan                             George, Gary
             10290 SW Anderson                     900 Court Street NE                     15195 NE Ribbon Ridge
             Court                                 Salem, OR 97301                         Road
             Tualatin, OR 97062                    SD 16                                   Newberg, OR 97132
             SD 19                                 Clatsop, Columbia &                     SD 12
             Portions of Clackamas,                portions of Multnomah,                  Portions of Benton, Linn,
             Multnomah &                           Tillamook & Washington                  Marion, Polk & Yamhill
             Washington


D                                      D                                       R

    Gordly, Avel                           Kruse, Jeff                             Metsger, Rick
             6805 NE Broadway                      PO Box 3082                             PO Box 287
             Portland, OR 97213                    Salem, OR 97302                         Welches, OR 97067
             SD 23                                 SD 1                                    SD 26
             Portion of Multnomah                  Curry & portions of Coos,               Hood River & portions of
                                                   Douglas, Jackson &                      Clackamas & Multnomah
                                                   Josephine




D                                      R                                       D

    Monnes Anderson, Laurie                Morrisette, Bill                        Morse, Frank
             PO Box 1531                           348 G Street                            221 NW 2nd Street
             Gresham, OR 97030                     Springfield, OR 97477                   Corvallis, OR 97330
             SD 25                                 SD 6                                    SD 8
             Portion of Multnomah                  Portions of Lane & Linn                 Portions of Benton & Linn




D                                      D                                       R

    Nelson, David                          Prozanski, Floyd                        Ringo, Charlie
             1407 NW Horn Avenue                   PO Box 11511                            4085 SW 109th Avenue
             Pendleton, OR 97801                   Eugene, OR 97440                        Beaverton, OR 97005
             SD 29                                 SD 4                                    SD 17
             Morrow, Umatilla, Union               Portions of Douglas &                   Portions of Multnomah &
             & Wallowa                             Lane                                    Washington




R                                      D                                       D

    Schrader, Kurt                         Shields, Frank                          Starr, Bruce
             2525 N Baker Drive                    PO Box 20356                            22115 NW Imbrie Drive
             Canby, OR 97013                       Portland, OR 97294                      #290
             SD 20                                 SD 24                                   Hillsboro, OR 97124
             Portion of Clackamas                  Portions of Clackamas &                 SD 15
                                                   Multnomah                               Portion of Washington




D                                      D                                       R
                                                                                                                       Provided by the more than 22,000 business members of…
    Starr, Charles                         Verger, Joanne                          Walker, Vicki
             8330 SW River Road                    1400 Ocean Boulevard                    PO Box 10314
             Hillsboro, OR 97123                   Coos Bay, OR 97420                      Eugene, OR 97440
             SD 13                                 SD 5                                    SD 7
             Portions of Clackamas,                Lincoln & portions of                   Portion of Lane
             Marion, Washington &                  Coos, Douglas, Lane,
             Yamhill                               Polk, Tillamook & Yamhill




R                                      D                                       D

    Westlund, Ben                          Whitsett, Doug                          Winters, Jackie
                                                                                                                                    The Voice of Oregon Business
             20590 Arrowhead Drive                 23131 N Poe Valley Road                 PO Box 126
             Bend, OR 97701                        Klamath Falls, OR 97603                 Salem, OR 97308                                  Associated Oregon Industries
             SD 27                                 SD 28                                   SD 10
             Portion of Deschutes                  Crook, Klamath, Lake &                  Portions of Marion & Polk                 1149 Court Street NE • Salem, Oregon 97301
                                                   portions of Deschutes &
                                                   Jackson                                                             Salem: 503-588-0050 • Portland: 503-227-5636 • Statewide: 800-452-7862
                                                                                                                                                     www.aoi.org

18
R      JANUARY/FEBRUARYR2005                      AOI BUSINESS VIEWPOINT
                                                                 R

"Corps of Discovery" Designer and Sculptor: Eugene Daub, San Pedro, Ca. • architect; Theis Doolittle Associates, Kansas, Mo. • architect for base: Halstead Wells, NYC • art consultant: Donald Reynold
  HOUSE OF REPRESENTATIVES                                     33 REPUBLICANS — 27 DEMOCRATS


      Minnis, Karen                           Scott, Wayne                            Merkley, Jeff                            Ackerman, Robert                     Anderson, Gordon                       Avakian, Brad
               Speaker of the House                   Majority Leader                         Minority Leader                         PO Box 41749                         PO Box 1389                             17915 NW Lonerock
                                                                                                                                      Eugene, OR 97404                     Grants Pass, OR 97528                   Drive
               PO Box 790                             1988 NE 19th Avenue                     PO Box 33192                            HD 13                                HD 3                                    Portland, OR 97229
               Fairview, OR 97024                     Canby, OR 97013                         Portland, OR 97292                      Portion of Lane                      Portion of Josephine                    HD 34
               HD 49                                  HD 39                                   HD 47                                                                                                                Portion of Washington
               Portion of Multnomah                   Portion of Clackamas                    Portion of Multnomah




  R                                       R                                       D                                        D                                    R                                      D

      Barker, Jeff                            Barnhart, Phil                          Berger, Vicki                            Beyer, Terry                         Boone, Deborah                         Boquist, Brian
               PO Box 6751                            2790 Echo Lane                          805 Kingwood Drive NW                   1439 Lawnridge Avenue                37564 Hwy 26                            17080 Butler Hill Road
               Aloha, OR 97007                        Eugene, OR 97404                        Salem, OR 97304                         Springfield, OR 97477                Seaside, OR 97138                       Dallas, OR 97338
               HD 28                                  HD 11                                   HD 20                                   HD 12                                HD 32                                   HD 23
               Portion of Washington                  Portions of Lane & Linn                 Portions of Marion & Polk               Portion of Lane                      Portions of Clatsop,                    Portions of Benton, Linn,
                                                                                                                                                                           Columbia, Tillamook &                   Marion, Polk & Yamhill
                                                                                                                                                                           Washington




  D                                       D                                       R                                        D                                    D                                      R

      Brown, Alan                             Bruun, Scott                            Buckley, Peter                           Burley, Chuck                        Butler, Tom                            Dallum, John
               1155 SW Coast Hwy                      23069 Bland Circle                      840 Roca Street                         PO Box 9424                          PO Box E                                3012 W 10th Street
               Newport, OR 97365                      West Linn, OR 97068                     Ashland, OR 97520                       Bend, OR 97708                       Ontario, OR 97914                       The Dalles, OR 97058
               HD 10                                  HD 37                                   HD 5                                    HD 54                                HD 60                                   HD 59
               Lincoln & portions of                  Portions of Clackamas &                 Portion of Jackson                      Portion of Deschutes                 Baker, Harney, Malheur,                 Gilliam, Jefferson,
               Lane, Polk, Tillamook &                Washington                                                                                                           & portion of Grant                      Sherman, Wasco, Wheeler
               Yamhill                                                                                                                                                                                             & portions of Clackamas,
                                                                                                                                                                                                                   Deschutes, Grant &
                                                                                                                                                                                                                   Marion

  R                                       R                                       D                                        R                                    R                                      R

      Dalto, Billy                            Dingfelder, Jackie                      Doyle, Dan                               Esquivel, Sal                        Farr, Debi                             Flores, Linda
               PO Box 943                             PO Box 13432                            3995 Hagers Grove                       711 Medford Center #178              4257 Barger Drive #272                  PO Box 55
               Salem, OR 97308                        Portland, OR 97213                      Road SE                                 Medford, OR 97504                    Eugene, OR 97402                        Clackamas, OR 97015
               HD 21                                  HD 45                                   Salem, OR 97301                         HD 6                                 HD 14                                   HD 51
               Portion of Marion                      Portion of Multnomah                    HD 19                                   Portion of Jackson                   Portion of Lane                         Portions of Clackamas &
                                                                                              Portion of Marion                                                                                                    Multnomah




  R                                       D                                       R                                        R                                    R                                      R

      Galizio, Larry                          Garrard, Bill                           Gilman, George                           Greenlick, Mitch                     Hanna, Bruce                           Hansen, Gary
               PO Box 231161                          906 N 8th Street                        3695 Dodson Drive                       712 NW Spring Avenue                 612 NW Cecil Avenue                     628 N Tomahawk Island
               Tigard, OR 97281                       Klamath Falls, OR 97601                 Medford, OR 97504                       Portland, OR 97229                   Roseburg, OR 97470                      Drive
               HD 35                                  HD 56                                   HD 55                                   HD 33                                HD 7                                    Portland, OR 97217
               Portions of Multnomah &                Portion of Klamath                      Crook, Lake & portions of               Portions of Multnomah &              Portions of Douglas &                   HD 44
               Washington                                                                     Deschutes, Jackson &                    Washington                           Lane                                    Portion of Multnomah
                                                                                              Klamath




  D                                       R                                       R                                        D                                    R                                      D

      Hass, Mark                              Holvey, Paul                            Hunt, Dave                               Jenson, Bob                          Johnson, Betsy                         Kitts, Derrick
               6505 SW 90th Avenue                    PO Box 51416                            PO Box 68445                            2126 NW Despain                      PO Box R                                PO Box 1946
               Portland, OR 97223                     Eugene, OR 97405                        Oak Grove, OR 97268                     Pendleton, OR 97801                  Scappoose, OR 97056                     Hillsboro, OR 97123
               HD 27                                  HD 8                                    HD 40                                   HD 58                                HD 31                                   HD 30
               Portions of Multnomah &                Portion of Lane                         Portion of Clackamas                    Portions of Umatilla &               Portions of Clatsop,                    Portion of Washington
               Washington                                                                                                             Union                                Columbia & Multnomah




  D                                       D                                       D                                        R                                    D                                      R

      Komp, Betty                             Krieger, Wayne                          Kropf, Jeff                              Krummel, Jerry                       Lim, John                              Macpherson, Greg
               885 Garfield Street                    95702 Skyview Ranch                     PO Box 130                              7544 SW Roanoke Drive                PO Box 1616                             322 SW 2nd Street
               Woodburn, OR 97071                     Road                                    Sublimity, OR 97385                     Wilsonville, OR 97070                Gresham, OR 97030                       Lake Oswego, OR 97034
               HD 22                                  Gold Beach, OR 97444                    HD 17                                   HD 26                                HD 50                                   HD 38
               Portion of Marion                      HD 1                                    Portions of Linn & Marion               Portions of Clackamas &              Portion of Multnomah                    Portions of Clackamas,
                                                      Curry & portions of Coos                                                        Washington                                                                   Multnomah & Washington
                                                      & Douglas




  D                                       R                                       R                                        R                                    R                                      D

      March, Steve                            Morgan, Susan                           Nelson, Donna                            Nolan, Mary                          Olson, Andy                            Richardson, Dennis
               842 NE 44th Avenue                     PO Box 2223                             2150 NW St Andrews                      PO Box 1686                          34499 Mountain View                     55 South 5th Street
               Portland, OR 97213                     Myrtle Creek, OR 97457                  Drive                                   Portland, OR 97207                   Place NE                                Central Point, OR 97502
               HD 46                                  HD 2                                    McMinnville, OR 97128                   HD 36                                Albany, OR 97322                        HD 4
               Portion of Multnomah                   Portions of Douglas,                    HD 24                                   Portion of Multnomah                 HD 15                                   Portions of Jackson &
                                                      Jackson & Josephine                     Portions of Polk & Yamhill                                                   Portions of Benton & Linn               Josephine




  D                                       R                                       R                                        D                                    R                                      R

      Riley, Chuck                            Roblan, Arnie                           Rosenbaum, Diane                         Schaufler, Mike                      Shields, Chip                          Smith, Greg
               250 NE Hillwood Drive                  PO Box 1410                             2327 SE 41st Avenue                     12910 SE Ridgecrest                  6606 NE Mallory Avenue                  PO Box 219
               Hillsboro, OR 97124                    Coos Bay, OR 97420                      Portland, OR 97214                      Road                                 Portland, OR 97212                      Heppner, OR 97836
               HD 29                                  HD 9                                    HD 42                                   Happy Valley, OR 97236               HD 43                                   HD 57
               Portion of Washington                  Portions of Coos, Douglas               Portion of Multnomah                    HD 48                                Portion of Multnomah                    Morrow, Wallowa &
                                                      & Lane                                                                          Portions of Clackamas &                                                      portions of Umatilla &
                                                                                                                                      Multnomah                                                                    Union




  D                                       D                                       D                                        D                                    D                                      R

      Smith, Patti                            Sumner, Mac                             Thatcher, Kim                            Tomei, Carolyn                       Whisnant, Gene                         Wirth, Kelley
               PO Box 209                             1442 Meadowlawn Place                   PO Box 9111                             11907 SE 19th Avenue                 PO Box 3565                             PO Box 607
               Corbett, OR 97019                      Molalla, OR 97038                       Salem, OR 97305                         Milwaukie, OR 97222                  Sunriver, OR 97707                      Corvallis, OR 97339
               HD 52                                  HD 18                                   HD 25                                   HD 41                                HD 53                                   HD 16
               Hood River & portions of               Portions of Clackamas &                 Portions of Marion &                    Portions of Clackamas &              Portion of Deschutes                    Portion of Benton
               Clackamas & Multnomah                  Marion                                  Yamhill                                 Multnomah




  R                                       R                                       R                                        D                   VISIT US: WWW.AOI.ORG
                                                                                                                                                         R                               JANUARY/FEBRUARY 2005
                                                                                                                                                                                               D                                         19
ds, NYC • concept: Jonathon Kemper, Kansas City, Mo. • research: Dr. Jo Allen Archambault, Smithsonian Institute, Dr. William Swaggarty, University of Idaho, Dr. Randy Skelton, University of Montana
                          Top 50 AOI Manufacturing Companies
RANK     AOI MEMBER                                   OREGON LOCATION                   EMPLOYEES       CEO/PRESIDENT          WEBSITE
         PRODUCT

         Intel Corporation                       Hillsboro                              15,000          Craig R. Barrett       www.intel.com
1        Computer, networking and communications products

         Weyerhaeuser Company                        Locations throughout Oregon        4600            Steven R. Rogel        www.weyerhaeuser.com
2        Forest products for shelter, communications and commerce

         Freightliner LLC                             Portland                          3500            Rainer E. Schmueckle   www.freightliner.com
3        Commercial vehicles

         JELD-WEN, inc.                               Klamath Falls                     2900            Richard L. Wendt       www.jeld-wen.com
4        Windows and doors

         Georgia-Pacific Corporation                  Locations throughout Oregon       2659            Pete Correll           www.gp.com
5        Tissue, pulp, paper, packaging, building products and related chemicals

         PCC Structurals, Inc.                       Portland                           2200            Mark Donegan           www.pccstructurals.com
6        Complex, high quality structural investment castings

         Country Coach, Inc.                          Junction City                     1650            Jay Howard             www.countrycoach.com
7        Recreational motorcoaches

         Boise Cascade LLC                            Locations throughout Oregon       1600            W. Thomas Stephens     www.boisecascade.com
8        Building and paper products

         Monaco Coach Corporation                     Eugene                            1547            Kay Toolson            www.monaco-online.com
9        Luxury recreational vehicles

         The Boeing Company                         Portland                            1186            Harry C. Stonecipher   www.boeing.com
10       Commercial airplanes, associated products and integrated defense systems

         Gunderson, Inc.                              Portland                          1079            William A. Furman      www.gundersoninc.com
11       Railroad freight cars and marine vessels

         Siltronic Corporation                        Portland                          1010            Neil J. Nelson         www.siltronic.com
12       Hyperpure silicon wafers

         Wah Chang                                   Albany                             954             Lynn D. Davis          www.wahchang.com
13       Reactive and refractory metals and chemicals

         Blount, Inc.                                Portland                      950                  James S. Osterman      www.blount.com
14       Outdoor cutting products, industrial and power equipment, lawnmowers and accessories

         A-dec, Inc.                                  Newberg                           930             Ken Austin             www.a-dec.com
15       Dental Equipment

         NORPAC Foods, Inc.                           Stayton                           917             Erik N. Jacobson       www.norpac.com
16       Food Products

         LSI Logic Corporation                        Gresham                           700             Wilfred J Corrigan     www.lsilogic.com
17       Platform ASICs, standard-cell ASICs, standard products, host bus adapters, RAID controllers & software

         ESCO Corporation                           Portland                            700             Steven D. Pratt        www.escocorp.com
18       Engineered metal parts and components for industrial applications

         Warn Industries, Inc.                        Clackamas                         645             Jon Kreitz             www.warn.com
19       Off-road equipment and products

         Smith Frozen Foods, Inc.                     Weston                            600             Kelly W. Brown         www.smithfrozenfoods.com
20       Frozen Foods

         Stimson Lumber Company                       Portland                          593             Andrew Miller          www.stimsonlumber.com
21       Forest and wood products

         Leupold & Stevens, Inc.                      Beaverton                         550             Tom Fruechtel          www.leupold.com
22       Precision optical products

         Altria Group, Inc.                       Portland                              543             Louis C. Camilleri     www.altria.com
23       Consumer packaged products (tobacco, food & beverage, financial services)

         South Coast Lumber Company                   Brookings                         485             Ronald T. Fallert      www.socomi.com
24       Wood and wood products

    20     JANUARY/FEBRUARY 2005           AOI BUSINESS VIEWPOINT
RANK   AOI MEMBER                                   OREGON LOCATION                   EMPLOYEES    CEO/PRESIDENT             WEBSITE
       PRODUCT

       Electro Scientific Industries             Portland                             479          Nick Konidaris            www.esi.com
25     Semiconductors, passive components and electronic interconnect

       Cascade Steel Rolling Mills, Inc.            McMinnville                       450          Kurt Zetzsche             www.csrm.com
26     Customer-specified steel products

       Consolidated Metco                       Portland                           425             Ed J. Oeltjen             www.conmet.com
27     Permanent mold and die cast aluminum products for the heavy-duty trucking industry

       Oregon Steel Mills, Inc.                     Portland                          400          James E. Declusin         www.oregonsteel.com
28     Specialty and commodity steel products

       Northwood Investments Corp.                 La Grande                          360          Ronald L. Nash            www.nashtraveltrailers.com
29     Travel trailers, truck campers and 5th wheels

       Oregon Cherry Growers, Inc.                 Salem/The Dalles                   350          Ed Johnson                www.orcherry.com
30     Fresh and processed cherry and fruit products

       Leatherman Tool Group, Inc.                  Portland                          342          Timothy Leatherman        www.leatherman.com
31     Compact, multi-purpose tools

       SP Newsprint Co.                             Portland                          333          Joseph R. Gorman          www.spnewsprint.com
32     Recycled newsprint

       Pope & Talbot, Inc.                          Portland/Halsey                   306          Michael Flannery          www.poptal.com
33     Softwood lumber and market pulp

       Epson Portland Inc.                          Hillsboro                         300          David Graham              www.epson.com
34     Cutting-edge imaging solutions

       Pendleton Woolen Mills                      Portland                           297          Mort Bishop III           www.pendleton-usa.com
35     Woolen apparel, upholstery, blankets and fabric

       Gage Industries, Inc.                      Lake Oswego                         297          Jeff Gage                 www.gageindustries.com
36     Custom plastic thermoforming, plastic and extruded plastic sheet

       Amalgamated Sugar Co. LLC                    Nyssa                             295          Ralph C. Burton           www.srcoop.com
37     Sugar and sweeteners

       Cascade Corporation                         Fairview                           275          Robert C. Warren, Jr.     www.cascorp.com
38     Lift truck attachments and related products

       Komfort Corp.                                Clackamas                         275          Manuel Caravia            www.komfort-rv.com
39     Travel trailers

       National Frozen Foods Corporation            Albany                            275          Dick Grader               www.nationalfrozenfood.com
40     Frozen vegetable products

       NACCO Materials Handling Gp, Inc.             Portland                         274          Alfred M. Rankin, Jr.     www.nacco.com
41     Lift trucks, housewares and lignite coal mining

       Coe Manufacturing Company                    Portland                          266          John Kucharik             www.coemfg.com
42     Forest products

       Blue Heron Paper Company                     Oregon City                       256          Michael E. Siebers        www.blueheronpaper.com
43     Newsprint and specialty papers

       JAE Oregon, Inc.                             Tualatin                          250          Katsumi Watanabe          www.jaeoregon.com
44     Technologically advanced, high quality, electrical connectors and personal electronics

       West Linn Paper Company                      West Linn                         250          Ronald M. Stern           www.wlinpco.com
45     Quality paper

       Sulzer Pumps (US) Inc.                       Portland                          247          Cesar Montenegro          www.sulzerpumps.com
46     Pumps and mixers

       Selmet, Inc.                                Albany                             218          Gordon T. Allen           www.selmetinc.com
47     Small to medium sized titanium castings for the aerospace industry

       Farwest Steel Corporation                    Eugene                            212          Jack Clark                www.farweststeel.com
48     Carbon steel products and fabrication of reinforcing steel

       ECS Composites                             Grants Pass                         211          Dennis Becklin            www.ecscase.com
49     Transit, rackmount and transportable cases

       Northwest Pipe Company                       Portland                           206              William Tagmyer          www.nwpipes.com
50     Pipes for water transmission, construction, agriculture and energy; well casings, traffic posts, mechanical tubing and propane tanks

                                                                                         VISIT US: WWW.AOI.ORG        JANUARY/FEBRUARY 2005        21
       Reverse the Decline in Support for Higher Education

       Credibility and Accountability
       in Public Higher Education
       By Edward J. Ray      President, Oregon State University




     I
         n a recent Seattle Times Op-Ed piece I identified
         several steps that academic leaders in public
         higher education can take to help reverse the
     widespread decline in public support for higher
     education, a decline that results in steep tuition
     increases, lower graduation rates and reductions in
     public service.
       This decline in state funding continues despite
     general recognition of the value of public higher
     education. I have never met a legislator or governor
     who did not understand that state support of higher            By grounding the budget process on a well
     education is vital to economic development, yet today        articulated strategic plan and distributing revenues
     our state support is only 69% of what it was in 1990         as earned – and assigning costs as incurred, academic
     per student.                                                 units and support units can be rewarded for their
       Encouragingly, Governor Kulongoski and AOI                 successful efforts to achieve three goals:
     have committed to begin reinvesting in higher
     education. Here’s one way higher education                   1. Providing instruction and support in areas that are
     institutions can help our public. We can show citizens       in demand by students and employers,
     and legislators – and our faculty and students – where
     our revenue comes from and how it’s spent.                   2. Leveraging external funding for cutting edge
     Repeatedly, I’m told voters resist providing additional      research and outreach, and
     revenue to higher education, in part, because they
     can’t “follow the money.”                                    3. Recognizing exceptional and creative activity.
       My advice to leaders in public universities is
     straightforward:                                               Openness and transparency are critical to
     • To understand and support budgets, people need             promoting the rational distributed budget process
       to know where an institution is headed and why it          briefly described here. In turn, this approach creates
       matters. Establish an inclusive strategic planning         new opportunities. At OSU, we just shifted some
       process that realistically describes institutional         scarce institutional resources to our highest strategic
       direction and destination.                                 priorities. It’s hard to take funds from dedicated
     • Make budgeting transparent, so the average citizen         faculty and departments, or to eliminate programs
       can comprehend it. Open the financial books to             outside the new strategic plan. Nevertheless, any
       all interested parties.                                    organization that wants to progress consistently must
     • Eliminate traditional budgeting processes that merely      invest in its future, even in the toughest of times.
       add equal increments (or subtracts equal amounts)          The process proposed here makes these tough
       across all university units. This is not how you focus     decisions more apparent – and promises the day
       an institution on its primary purposes.                    when they won’t need to be so frequent.




22    JANUARY/FEBRUARY 2005      AOI BUSINESS VIEWPOINT
 Laura Etherton
 Field Director, Oregon State
 Public Interest research
 Group (OSPIRG)                   By Adrienne Pauly

 Ms. Etherton: One of the
                                  What’s the biggest
 major problems is that
 Oregon consumers and
                                  problem with Oregon's
 Oregon businesses are            transportation system?
 really forced to use too         And what do we need
 much gas. We’re using too        to do to fix it?
 much gas and there are a
 couple of key reasons for
 that. One is that our cars
 and trucks don’t go very far
 on a gallon of gas. Right        just one weekend. Besides
 now, our miles-per-gallon        being a terrible waste of
 are at an all time low. We’re    money, this contributes to
 getting about 20.8 miles-        global warming.
 per-gallon right now, but           The other piece of this is
 with current technology, we      that too many Oregonians
 could be seeing a statewide      don’t have sufficient
 average of at least 40 miles-    choices. One choice would
 per-gallon.                      be more public
   We did a report in May of      transportation.
 this year, over Memorial         Opportunities for people to
 Day weekend, when gas            walk and to bike safely in
 prices were really beginning     their communities would be
 to go through the roof. We       another option.
 discovered that Oregonians          Also, if U.S. automakers
 would have paid about            would build more efficient
 $977,000 less on gas that        cars, it would produce about
 weekend if their cars had        12,000 jobs. Even if these
 achieved a 40 miles-per-         cars, would cost more, we’d
 gallon standard rather than      quickly make that money
 our current 20.8. That was       back in gas savings.




VISIT US: WWW.AOI.ORG      JANUARY/FEBRUARY 2005     23
                                                                                        Oregonians are polarized and paralyzed.
                                                                                        So it is clear that a process of gathering

     Chalkboard Project Erasing                                                         accurate information is essential in order
                                                                                        to promote the understanding and
                                                                                        action that will get to what most
     School Reform Riddle Statewide effort
                           to define
                                                                                        Oregonians want – a system that is
                                                                                        “among the best in the nation.”
                                                             action plan                   Enter Chalkboard Project, a
     By Harvey Mathews        Legislative Representative     for our schools            collaborative effort among five
                                                                                        independent Oregon foundations: The
                                                                                        Collins Foundation, The Ford Family
                                                                                        Foundation, JELD-WEN Foundation,
                                                                                        Meyer Memorial Trust and The


     C
              onsider the following:
                                                                                        Oregon Community Foundation.
              80% of Oregonians believe our K-12 education system should be
                                                                                           So what is the task of the Chalkboard
              “among the best in the nation,” but only 45% now rate it as “somewhat”
                                                                                        project? “Our job is to connect
     or “very good.” (Statewide poll of Oregonians conducted by Chalkboard
                                                                                        Oregonians with the best research
     Project, April 2004.)
                                                                                        possible, so that people can decide for
       Oregon’s facilities and instructional material for mathematics and science
                                                                                        themselves what kinds of solutions will
     are lacking compared to other states, yet Oregon 8th graders score among
                                                                                        transform our schools into some of the
     the top ten in the nation in math and science assessments. (The Condition
                                                                                        best in the nation,” said Sue Hildick,
     of K-12 Education in Oregon,” Chalkboard Project, September 2004.)
                                                                                        Chalkboard Project’s president.
       Oregonians believe that local citizens—school boards, principals, teachers
                                                                                           Chalkboard has kicked off 18-months
     and local taxpayers—should have a stronger role in decision-making than
                                                                                        of public opinion polling, focus groups
     state- or federal-level policymakers. Yet Oregon K-12 policymaking has
                                                                                        and public meetings throughout the
     steadily shifted control away from the local level during the past 15 years.
                                                                                        state to identify the best practices in
     (The Condition of K-12 Education in Oregon,” Chalkboard Project,
                                                                                        education. The aim is to create a more
     September 2004.)
                                                                                        informed and engaged public who
       If these facts have you confused about the future of Oregon’s public education
                                                                                        understand what is required to build
     system, you’re not alone. Right now, when it comes to public schools,
                                                                                        strong schools. This also means helping
                                                                                        Oregonians talk through the tough
                                                                                        issues of quality, accountability and
                                                                                        funding. Chalkboard will then present
                                                                                        its findings to policy makers, educators
                                                                                        and community leaders.
                                                                                           Few issues are as vital to the
                                                                                        businesses community as our
                                                                                        educational system and AOI jumped
                                                                                        at the chance to support this effort.
                                                                                        AOI enjoys a productive working
                                                                                        relationship with the project and we
                                                                                        are looking forward to helping turn its
                                                                                        findings into actionable legislation.
                                                                                           “New coalitions are required to
                                                                                        navigate these treacherous waters so
                                                                                        that we can constructively communicate
                                                                                        and move toward a reasonable plan of
                                                                                        action,” said Charlie Walker,
                                                                                        Chalkboard’s chair. “In the end,
                                                                                        Oregonians will know that Chalkboard
                                                                                        exists to inspire every taxpayer, teacher,
                                                                                        parent, grandparent – every citizen –
                                                                                        to do what it takes to make our K-12
                                                                                        public schools among the nation's best,
                                                                                        while living within our means.”
                                                                                           For more information about
                                                                                        Chalkboard or to learn how to get
                                                                                        involved, call (877) YOUR-K12 or visit
                                                                                        www.chalkboardproject.org.

24    JANUARY/FEBRUARY 2005      AOI BUSINESS VIEWPOINT
Employing                                               By Lisa Trussell
                                                        Vice President, Administration




   Some Ingenuity
 Innovation at the Employment Department Avoids Higher Taxes




T
        his may sound amazing, but the Oregon                federal funding to the Employment Department for
        Employment Department (OED) is proposing             Business & Employment Services, the business
        to lower business taxes while stabilizing the        community worked with the Legislature to create
funding of unemployment benefits.                            a $234 million Benefit Reserve Fund (BRF) and
   The OED has been working on this proposal in              dedicated the interest from the BRF to fund certain
conjunction with the Employment Department’s                 Employment Department services. The BRF also
Advisory Council, a group of representatives from            serves as a reserve to pay unemployment insurance
business, labor and the public at large established          benefits if needed. Although this model has worked
to advise the Governor and the Legislature. I have           well, it does have some problems. The interest on
the pleasure of representing you on this group.              this money earns less than SUTA money, and it is
   Unemployment funds come from two taxes. First,            subject to losses if the securities have to be sold
businesses pay 0.8% in federal unemployment tax              quickly. One big problem is that because we had
on the first $7,000 of wages. This money pays                the foresight to create our own “rainy day” account,
administrative costs of the federal unemployment             legislators wanting to finance other important
insurance system as well as extensions, loans and            general fund programs are tempted to tap it.
certain distributions back to the state through a              The OED is proposing to reduce existing and new
program known as the Reed Act. Businesses also               employer taxes while maintaining fund solvency
pay 0.5% - 5.4% in state unemployment tax on the             and maintaining targeted re-employment of
first $27,000 based on a number of things including          claimants. There are four elements to this proposal:
eight tax tables. (The current new business rate is
2.7% - 3.5%.) The state funds are deposited in the              1) adjust the formula for determining fund
State Unemployment Trust Account (SUTA) and                        solvency
invested in the Federal Treasury to earn interest.
Ultimately, SUTA it is used to pay unemployment                 2) round wages to the nearest $100 instead of
benefits to unemployed workers.                                    $1000
   The State Unemployment Trust Account has
stayed solvent mainly because business and labor                3) spend down the current Benefit Reserve Fund
worked together to create funding mechanisms to                    (BRF) for benefits
forward fund the trust account. This means that
we do not have to borrow from the federal                       4) put the funding for employment services
government at a high interest rate and with lots                   into the tax structure
of strings attached. We also index the wage base
to average wages and have several tax brackets                 This is an example of a state agency being
within each tax schedule to allow businesses to              responsive to its constituents and looking for ways
pay according to their experience rating.                    to make Oregon more competitive. We look forward
   In addition, in 1991, as a result of inadequate           to working with the OED on this innovative approach.




                                                                 VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005      25
                                                                   By Kara Blumberg
                                                                   SPHR, Human Resource Consultant
                                                                   AmeriBen/IEC Group Resource Center




                                                                   Your Best
                                                                   Employees
                                                                   Could Be High
     Spotting “Performance Enhancing” Drug Users In Your Workplace


 W
               e live and work in a world where faster is better         likely to be involved in a work related accident and
               and expectations are oftentimes unrealistic.              33 percent less productive than non-users. The U.S.
               To help manage and meet these expectations,               Department of Labor reports that drug use costs
     many U.S. workers have resorted to taking drugs that                employers an estimated $75-$100 billion per year.
     enhance performance. One of the fastest growing                     One study, conducted by the University of Arkansas,
     categories of drugs used in corporate America is                    found that meth use costs employers $42,000 in
     methamphetamines, or “meth.” Meth is a powerful                     higher absenteeism and health care expenses per
     stimulant that makes users feel productive and full of              addicted worker.
     energy. In some countries this drug was historically                   So how can a company detect and discourage use
     provided to military troops to keep them alert and active           of this drug? Pre-employment and regular random
     during long grueling battles. This is quite an analogy              workplace drug testing increases the odds of finding
     for today - employees now use it to remain alert and                casual meth users in your workplace. If an employee
     active during long grueling days at the office.                     begins a more regular regimen of meth, negative
        This drug can be especially difficult to spot because            side effects can become evident. They are likely to
     its effects often make a worker appear to be a star                 call in sick more often and can appear fidgety,
     performer – which is exactly what all employers seek                aggressive and talk very fast. Users may also
     in today’s society. Maintenance users, who moderate                 experience sudden weight loss and show signs of
     their use of the drug, are characterized by having                  sleep loss. These signs may warrant reasonable
     increased concentration and the ability to effectively              suspicion testing based on observable indicators of
     work long hours. A typical high can last up to 14                   drug use. Post-accident drug testing is also effective
     hours! The likelihood that you have a meth user                     in certain environments. Employers electing to
     employed at your company is great - approximately                   conduct drug testing need to have a clear policy in
     73 percent of drug users in America are employed.                   their handbook outlining the terms of drug testing
     According to Quest Diagnostics, a company who                       and the consequences for declining or failing a test.
     processes more than 7 million drug tests each year,                 Companies that conduct pre-employment testing
     the number of workers testing positive for meth                     should place a statement within the application for
     increased 68 percent last year alone. Research                      employment regarding this requirement. Some
     conducted by the World Health Organization                          employers have also found that last-chance
     indicates that meth is more commonly abused than                    agreements for employees who test positive can be
     cocaine and heroine combined. Meth knows no                         successful. These arrangements typically require that
     boundaries – it is equally popular in both blue and                 an employee participate in drug rehabilitation
     white-collar jobs; the California Bar Association                   counseling and subject him or her to regular drug
     reports that one in four attorneys who voluntarily                  testing. However, a meth addiction can be difficult
     enter drug rehab is addicted to meth.                               to break. Research conducted at UCLA reports a
        Meth use can have severe implications in the                     50-60 percent success rate for meth addicts entering
     workplace. According to the American Council for                    treatment programs.
     Drug Education, substance abusers are ten times                        If your company would like more information on
     more likely to miss work, five times more likely to                 implementing a drug testing program, or if you would
     file a workers’ compensation claim, 3.6 times more                  like more information on methamphetamines, please
                                                                         contact the AmeriBen/IEC Group Resource Center.

26    JANUARY/FEBRUARY 2005        AOI BUSINESS VIEWPOINT
                                                                                       John Charles

Agricultural safety                                                                    Environmental Policy
                                                                                       Director and Acting
                                                                                       President                              By Adrienne Pauly

workshops scheduled                                                                    Cascade Policy Institute

                                                                                       Mr. Charles: There is no
                                                                                                                              What’s the biggest
                                                                                       political vision for the next
                                                                                                                              problem with Oregon's
                                                                                                                              transportation system?


S
      AIF Corporation’s 10th annual agricultural safety                                generation of highways in
                                                                                       Oregon. Many political                 And what do we need
      seminar series for Oregon employers is being held
                                                                                       leaders overtly are doing              to do to fix it?
      in locations around the state until March.                                       things to encourage
  The FREE four-hour seminar is designed primarily for                                 congestion. To build the
owners, operators, supervisors and foremen, but anyone                                 Light Rail Line in Portland,           on a per-mile basis, and
working in the agricultural industry is welcome to attend.                             they cannibalized two lanes            prices vary by time-of-day.
Small employers attending the seminar will meet one of                                 of very scarce road capacity,          When time demand is high,
                                                                                       relegating an important four-          charges are high.
the four instructional requirements for House Bill 3019                                lane arterial to two lanes.               For example, in California
that exempts small agricultural establishments from                                    Now, a slow moving train               in 1995 a private company
random OSHA inspections. SAIF has also applied for two                                 carries some passengers                opened a four-lane
hours of pesticide re-certification credits from the Oregon                            whereas the road lanes that            expressway about ten miles
Department of Agriculture for these sessions.                                          were replaced carried                  long in Orange County, built
                                                                                       passengers, freight,                   on the median of an already
  SAIF is pleased to have Kirk Lloyd, president of Risk                                emergency vehicles, buses,             congested highway.
Management Resources, Inc., join SAIF staff once again                                 motorcycles, everything a              Everyone using it has a
this year to talk about safety and compliance for farm                                 road carries. We made                  transponder, and you pay
pesticide storage facilities, as well as how to conduct                                congestion worse!                      through this device. For the
effective safety inspections. As an independent consultant                                The second problem is               last two years the center of
                                                                                       that the highway system is             London has had a crude
with deep experience in agriculture, Lloyd specializes in                              priced incorrectly. We should          form of congestion pricing.
the unique needs and challenges of the agricultural                                    price roads more like we               More than half the highway
business community.                                                                    price telephones and                   tolls in the U.S are collected
  In addition, longtime SAIF agricultural safety seminar                               vacation resorts and movie             electronically now. That is
presenter Linda Meuleveld, RN, COHN-S, CCM, DABF will                                  theaters—have consumers                the future of road pricing.
                                                                                       pay directly and have the                 The Oregon Road User Fee
discuss how employees can protect some of their most                                   prices vary. There is a                Task Force is exploring ways
valuable assets: their backs. As an occupational health                                worldwide move toward                  to replace the gas tax with
trainer with SAIF Corporation, Meuleveld provides expert                               “peak period pricing” or               electronic road pricing. A
instruction on reducing the risks from lifting that are so                             “congestion pricing.” This             pilot project will test the
common in agricultural operations.                                                     system prices road facilities          technology within a year.
TOPICS INCLUDE:
  Injury                  Safety and Compliance in Farm              Safety Inspections. Learn          Back Protection – Defending Your
  Trends and              Pesticide Storage Facilities.              who needs to do safety             Safety Zone. Back injuries continue
  Statistics for          Learn how to stay in compliance            inspections, what to look          to be one of the most common and
  Oregon                  with OSHA farm pesticide storage           for, who should be involved,       costly types of injuries for agricultural
  Agricultural            facility rules, and keep your              and what OSHA expects              operations. Learn how to reduce the
  Workers.                employees safe and injury-free.            from a safety inspections.         risk and protect your back.

Early registration is required, as seating is limited. Participants will receive a registration confirmation letter with
the address and facility location approximately one week prior to the seminar. For more information, contact the
SAIF Groups Division at 1-800-285-8525 or visit SAIF’s Web site at www.saif.com.


Salem                                              The Dalles (SPANISH)                               Aurora (SPANISH)
Tuesday • February 1, 2005 • 9:30 - 2:00           Thursday • February 17, 2005 • 8:00 – noon         Friday • March 11, 2005 • 8:30 – 12:30
Red Lion Hotel                                     Discovery Center, Wasco County Historical Museum   OSU N. Willamette Extension Office
3301 Market St. NE, Salem, OR 97301                5000 Discovery Drive, The Dalles, OR 97058         15210 NE Miley Rd., Aurora, OR
Phone: 503-370-7835                                Phone: 541-296-8600                                503-678-1264

Aurora                                             Hillsboro (SPANISH)                                Medford
Friday • February 4, 2005 • 9:30 – 2:00            Tuesday • February 22, 2005 • 8:00 – noon          Monday • March 14, 2005 • 9:30 – 2:00
OSU N. Willamette Extension Office                 Tuality Health Education Center                    Smullin Health Education Center
15210 NE Miley Rd., Aurora, OR                     334 SE 8th Ave., Hillsboro, OR 97123               2825 Barnett Rd., Medford, OR 97504
503-678-1264                                       503-681-1704                                       541-608-5911

Salem (SPANISH)                                    Albany (SPANISH)                                   Klamath Falls
Tuesday • February 8, 2005 • 8:00 – Noon           Thursday • 8:00 – noon • February 24, 2005         Tuesday • March 15, 2005 • 9:30 – 2:00
Red Lion Hotel                                     Linn County Fair and Expo Center                   Klamath Falls Extension Office
3301 Market St. NE, Salem, OR 97301                3700 Knox Butte Rd., Albany, OR 97321              3328 Vandenberg Road, Klamath Falls, OR 97603
Phone: 503-370-7835                                Phone: 541-926-4314                                541-883-7131

The Dalles                                         Bandon
Wednesday • February 16, 2005 • 9:30 – 2:00        Monday • March 7, 2005 • 8:00 – noon
Discovery Center, Wasco County Historical Museum   Bandon Community Center, “The Barn”
5000 Discovery Drive, The Dalles, OR 97058         P.O. Box 1104, Bandon, OR 97411
Phone: 541-296-8600                                541-347-6303



                                                                                    VISIT US: WWW.AOI.ORG         JANUARY/FEBRUARY 2005           27
                          By Judi Croft         Loss Control Consultant, SAIF Corporation




                             Just Another Close Call?
     “They're funny things, accidents. You never have them till you're having them.”
     — Eeyore, Pooh's Little Instruction Book, inspired by A. A. Milne




     O
                verheard around town, in restaurants, stores,                  and near-misses.
                or anywhere that people gather:                                   However, we have to remember a potential problem
                   “You can’t believe what happened to me                      with trying to eliminate all incidents, near-misses and
     last week. I nearly cut off my finger at work!”                           close calls is called non-reporting. If your employees
        “Bob was nearly killed on his way to work yesterday.                   are worried that they’ll be penalized or punished for
     He was changing lanes to take the exit, and this huge                     reporting close calls, they’ll likely not say anything at
     truck nearly ran him off the road. Bob slammed on                         all. They need to know that working on controlling
     the brake and did a 360!”                                                 hazards doesn’t mean they are failing. It means you
        There’s a bit of attention focused on the term near-                   have an active safety culture that encourages your
     miss and its close relative incident. The media, along                    employees to watch out for each other and themselves.
     with movie producers and videogame makers, love to                        It also means they are empowered to let someone know
     sensationalize trauma and tragedy. There seems to be                      about the hazard and help find a solution. After all, the
     an attraction to misfortune without pain, and society                     goal is to make sure that no one nearly cuts off a finger.
     is accepting of incidents, near-miss experiences and                         Here’s your official call to action for eliminating
     close calls. But our willingness to live with chance, or                  incidents. I’ve listed some implementation steps to
     even embrace it, is a huge detriment to both personal                     get you started:
     and workplace safety.
        As I discussed in my last article, “Getting to Zero,”                  • Talk with managers, employees and your safety
     a true safety culture supports the elimination of incidents                 committee about near-misses, close calls and
     and close calls as well as the accidents and workplace                      incidents.
     injuries. Taking away the allure and fascination of                       • Implement an accident and incident analysis
     danger is the first step in developing a culture that                       process. If you already have a process, review it to
     values safety and that embraces the goal of zero.                           make sure it’s working!
        There’s something alarming about our fascination                       • Make sure your hazard identification program is
     with nearly and almost. As a safety professional, my                        understood and used by all employees. If they can’t
     view of sharing a near-miss has changed. Telling                            recognize the hazards in your workplace, chances
     someone that I nearly cut my finger off or almost fell                      are they won’t recognize a near-miss either.
     off my roof would be embarrassing. I focus on safety                      • Ask employees to bring examples of near-miss and
     in everything I do, not just because of where I work,                       close call incidents to the next safety meeting and
     but because it’s a personal value. Because of my values                     discuss what happened. Ask them for suggestions
     toward safety for my co-workers, family and friends,                        to prevent future incidents.
     I think twice about what I do and how I do it.                            • Listen. Ask for feedback.
        If someone you work with is nearly killed, or almost                   • Be prepared for challenges and ask your employees
     injured, shouldn’t your company find out why and                            to help overcome them.
     make it a priority to eliminate the hazard so it never                    • Be willing to accept and support the ideas of others.
     happens again?                                                            • Encourage collaboration.
        The problem with close calls and near-miss incidents                   • Show sincere appreciation for contributions,
     is that you can’t predict when they’ll turn into                            suggestions and progress.
     something more serious. Statistically speaking, there                     • Value others.
     are probability calculations that may provide comfort,
     but I’d caution against the statistical approach as your                    A close call is just an accident practicing for the future.
     injury prevention program.                                                But with some effort and help from your employees,
        Another problem with almost and nearly is that both                    you can eliminate incidents in the workplace and make
     of these terms still imply a degree of risk. Addressing                   close calls and near-misses a thing of the past.
     risk and, more importantly, hazards or hazardous
     situations should be your first priority. Unless you                      Judi Croft is a loss control consultant with SAIF Corporation.
     can safely eliminate the risk and the risk-taking                         For additional information, please contact her at (503)
     behaviors, you really can’t eliminate the close calls                     373-8826 or at judcro@saif.com.


28    JANUARY/FEBRUARY 2005             AOI BUSINESS VIEWPOINT
VISIT US: WWW.AOI.ORG   JANUARY/FEBRUARY 2005   29
      Keeping it in the Family –                                                                 Sponsored By:



                      Q&A about your family business
                     By Mark Green, PhD
                     A.E. Coleman Chair in Family Business,
                     Director, Austin Family Business Program at Oregon State University




      Incorporation in Nevada – A Good Idea?
                                              Structure Your Business So You Can Find Out


      M       y wife and I started a small business out of our home in Coos Bay. We’ve been approached
              about filing papers of incorporation in Nevada, being told that this provides us with
      some sort of shield and tax savings. When should a fledging family operation consider incorporation
      and who should they go to for some good advice that won’t cost an arm and a leg?
        — A Nervous Stephen and Spouse in Coos Bay

      The best way to calm your nerves is to surround                  aspects of running a successful business is developing
      yourself with a competent team of professional                   a team of advisors with whom you feel comfortable
      advisors. More on this later.                                    and who will help you reach your goals. I cannot
         First, to your question regarding incorporation in            emphasize enough the importance of having
      Nevada — The last time I looked at a map, Coos                   professional advisors and using them properly. This
      Bay was still in Oregon so you should have a really              team should include your attorney, CPA, business
      good reason to even think about incorporation out                banker, financial planner, insurance agent and perhaps
      of state. It would be probably best to set up your               other professionals such as a business consultant or
      business in Oregon if for no other reason than                   a family business consultant. I urge the businesses
      reducing the hassles of complying with Nevada law                that I work with to gather their key advisors in one
      from hundreds of miles away. But to be fair to your              room to discuss the business at least once a year.
      circumstances, this question should be handled by                This is not only cost-effective, but it also improves
      your attorney or accountant who knows your goals                 the dynamics within your team and leads to more
      and objectives.                                                  effective and comprehensive business solutions.
         As for incorporation, once again, rely on your                   You will need to spend some money. However, like
      expert for guidance. However, here are some basic                most things in life, preventative care is much more
      principles to consider. At the very least you should             cost-efficient than crisis management. Business owners
      be operating as a limited liability corporation (L.L.C.),        are often reluctant to work with advisors because of
      a limited liability partnership (L.L.P.), a C corporation        the expense, but that leads to trouble in the long term.
      or an S corporation. It is best not to operate as a sole         It is essential that you seek professional advice since
      proprietorship or a general partnership since these              running a business is extremely complex today. You
      do not provide the kind of liability protection that             can’t master everything, and working with a team of
      you need today.                                                  advisors will help you make the best decisions.
         The other point is taxes. Reducing taxes is certainly            If you don’t know where to start, begin by talking
      a goal; however, tax reduction is only one element               with your business banker. Your banker has
      in running a family business and must be balanced                relationships with other professionals and can give
      with many other factors. Establishing the desired                you references to get you started. And your banker
      control of the business, designing a manageable                  won’t charge you a penny for this service.
      company, succession planning and harmony of the                     The bottom line is that as soon as possible you
      family are some of the many elements that are part               should get advisors and be prepared to spend some
      of optimizing the family business system.                        money now in order to avoid an expensive surprise
         Now about advisors. One of the most important                 in the future.


30   JANUARY/FEBRUARY 2005      AOI BUSINESS VIEWPOINT
  By Mina Hanssen        Director of Risk Management




Myths and the Older Worker
For the smart employer, their time is on your side


P
      eople are living and working longer. While       Myth: Older workers are a poor investment
      there is no agreement on exactly what age        for retraining.
      defines someone as an older worker, all agreed   Fact: Training workers who are loyal and reliable
that 40% of the workforce will be at least 45 years    is always a good investment. Older workers tend
old by 2008. That is a huge increase that will bring   to score better in job skills, loyalty, reliability,
a whole set of workplace issues, especially in the     absenteeism and turnover.
areas of safety and health. But in order to begin
to address these concerns, it is important to            Changes in retirement age, income needs and
examine some of the myths about aging and its          longevity will keep people working into their 60s
implication on worker safety.                          and 70s. This will be more of an opportunity than
                                                       a problem for the smart employer. Today’s older
Myth: Older workers suffer poorer health.              workers are generally healthier, better educated
Fact: A long term study by the National Institute      and wealthier than the elderly population of
on Aging found that disability among older             previous generations. And the facts show they are
Americans is declining. At the same time health        a great investment. Proactively addressing issues
issues such as obesity, lack of exercise and poor      such as ergonomics and employee wellness are
nutrition are affecting the entire workforce           key steps to ensuring that all your workers, and
regardless of age. Promoting employee wellness         particularly your seasonal workers, stay on the job
will keep all your workers on the job.                 as your best employees.

Myth: Older workers are less productive.
Fact: No consistent relationship between aging
and performance at work has been found. While
some studies have suggested that older workers
work slower, they tend to be more accurate in their
work resulting in fewer errors. The most significant
contributors to poor work performance, inadequate
training, poor morale or poor supervision can
happen to a worker at any age.

Myth: Older workers are prone to injury.
Fact: Most studies find that older workers tend to
have fewer accidents but when injured, they tend
to be injured more seriously. The traditional safety
focus on preventing injury frequency will need to
be reexamined and a new model developed that
addresses the aging workforce.

Myth: Older workers lack the strength to
perform physically arduous work.
Fact: The ability and willingness to perform heavy
work is related more closely to factors such as
work ethic and work pace, than to age. Studies
have shown in most cases, older workers
compensate for decreasing physical strength by
working smarter and being more safety conscious.




                                                            VISIT US: WWW.AOI.ORG    JANUARY/FEBRUARY 2005    31
View to thePAST                                                          AOI Welcomes
The Wandering Capitol                                                    New Members
It was intolerable                                                       and Thanks our Long-time Supporters
to the Democrats,
having the
Territorial
Legislature meet                                                         NEW MEMBERS
in Oregon City, a                                                        Advanced Telecom........................................................................Salem
Wig town. By                                                             Electro Scientific Industries........................................................Portland
1852 they had the                                                        Industrial Publishing, Inc.............................................................Eugene
votes and after                                                          Kerr Contractors, Inc. ................................................................Tualatin
holding a session in                                                     Kinetic Enterprises/Mountain Glass........................................Clackamas
Linn City, voted                   Oregon City Capitol                   Langdon Farms Golf Club ............................................................Aurora
to make the move south.            before being torn down
                                                                         M.D. Woodhouse & Assoc. Inc. ......................................................Salem
                                                                         Merry Time Restaurant & Lounge ................................................Astoria
                                          In 1854 the                    North River Jet Boats, Inc. ........................................................Roseburg
                                         Legislature met                 NW Auto Care Inc. ....................................................................Hillsboro
                                         in the Salem                    Oldland Distributing Inc. ....................................................Central Point
                                         capitol, which                  OPENonline ...............................................................................Portland
                                         promptly burned                 Oregon Cherry Growers, Inc..........................................................Salem
                                         to the ground.                  Oregon Trail Electric Cooperative Inc. .....................................Baker City
                                                                         Quixote Investment...................................................................Portland
                                         The first capitol
                                         to burn down                    Radford Trucking Co. .............................................................Baker City
                                                                         Salem Hospital Regional Health Services .......................................Salem
                                                                         The Mortgage Funding Group, Inc. ............................................Portland
The Legislature then met in Corvallis. In the                            United Telephone of the NW/Sprint .......................................Hood River
1850s-1860s, three elections were
                                                                         Valley Solid Waste Management Corp. ...........................................Salem
held to determine the
location of a new capitol.
Salem lost twice to
Eugene. But by throwing                                                  20 YR MEMBERS
out votes and a court                                                    Chemical Distributors, Inc. ............................................Portland
intervention, the elections                                              Clatsop Distributing Company ...................................Warrenton
were voided and a third
                                                                         Columbia Rubber Mills ..............................................Clackamas
settled it in Salem.
   In 1935 this capitol also                                             Cooke Stationery Company...............................................Salem
burned to the ground.                                                    Goodyear Rubber and Supply..........................................Eugene
                                      The second capitol                 Pacific Coast Fruit Company..........................................Portland
                                      to burn down
                                                                         Southtowne Commerce Center ..............................Klamath Falls
                                                                         Terminal Freezers, Inc. .....................................................Salem
                                 The Legislature then
                                 met in the Holman
                                 building, downtown                      25 YR MEMBERS
                                 Salem. It was later
                                 torn down.                              Cash Flow Management, Inc. ...............................Portland
                                                                         Curly's Dairy ...........................................................Salem
                                                                         Deluxe Ice Cream....................................................Salem
The Holman Building before being torn down
                                                                         Rossborough Supply Co..................................Millersburg
The current capitol is made of marble and                                Smith Bates Printing & Design......................Klamath Falls
is fireproof                                                             West Coast Beet Seed Co .........................................Salem
U Photos: Salem OR Public Library Historic Photograph Collection




    32      JANUARY/FEBRUARY 2005               AOI BUSINESS VIEWPOINT
                                                                                              Representative
                                                                                              Mary Nolan
                                                                                              House District #20
                                                                                              Portland                           By Adrienne Pauly

                                                                                              Representative Nolan:
                                                                                                                                 What’s the biggest
                                                                                                 We need to start thinking
                                                                                              in 21st Century terms rather
                                                                                                                                 problem with Oregon's
                                                                                              than 20th Century terms.           transportation system?
                                                                                              We need to decide what             And what do we need
                                                                                              things need to be                  to do to fix it?
                                                                                              transported, and we need
                                                                                              to think about transporting
                                                                                              information so that we don’t       how you connect different
                                                                                              have to transport people or        modes of transportation. If
                                                                                              goods. Teleconferencing is         you have air service from
                                                                                              the most obvious example.          Medford to Portland, you
                                                                                              Without transporting people        also have to plan how a
                                                                                              from several locations, we         person or package gets from
                                                                                              can have the same decision-        Medford airport to its final
   ADVERTISING INDEX
                                                                                              making process by                  destination. With ground
AOI Compwise .......................................................................29        transporting their images          transportation you have to
AOI HRManager......................................................................33         and voices.                        plan how to move packages
AOI Member Services..............................................................17              OHSU is transporting data       or freight from the factory
AOI Membership ....................................................................16         very effectively to its various    to their ultimate market, or
AOI LegalPLUS ........................................................................15      locations and to other             how we get agricultural
Barran Leibman ......................................................................24
                                                                                              hospitals. And OHSU’s              products to the barges that
Bullard Smith..........................................................................31
Energy Trust of Oregon ............................................................5
                                                                                              satellite teaching facilities      will take them down river.
Kaiser Permanente .................................................................11         now enable a surgeon in a          The Connect Oregon
Miller Nash.............................................................................23    smaller community access           Program that the Governor
Oregon GOSH.........................................................................23        to all the best medical brains     is proposing and working
Oregon Head Start..................................................................13         in the state without having        on with all elements—
PacificSource ..........................................................................15    to travel to Portland.             ODOT, county, port, and
Providence Health Plans ...........................................................2
                                                                                                 Certainly the work that         airport—is really farsighted.
Regence BlueCross BlueShield................................................35
SAIF Corporation ....................................................................36
                                                                                              ODOT is doing on                   The Legislature will vote on
                                                                                              multimodal transportation          the program this year, and
                                                                                              is a step in the right             I’m optimistic that it will
                                                                                              direction. Multimodal means        pass.




                                                                                             VISIT US: WWW.AOI.ORG        JANUARY/FEBRUARY 2005     33
                                                                                                      A Crash Course in Oregon Bicycle Safety
                                                                                                      Oregon Bicycle Crashes by Month




                                                                                                      Percent of Crashes
                                                                                                                            15%
                                                                                                                            10%
                                                                                                                             5%
                                                                                                                             0%
                                                                                                                                         jan feb mar apr may jun jul aug sep oct nov dec

                                                                                                      Crashes by Day                                                                 Crashes by Gender




                                                                                                      Percent of Crashes
                                                                                                                            20%
                                                                                                                            15%                                                                   21% female
                                                                                                                            10%                                                                   1% not reported
                                                                                                                             5%
                                                                                                                                                                                                  78% male
                                                                                                                             0%
                                                                                                                                         Su M    T     W    T        F   Sa

                                                                                                      Crashes by Age (1997-2002)

Going Down the Road




                                                                                                      Number of Crashes
                                                                                                                            150
                                                                                                                            100
                                                                                                                             50
                                                                                                                                 0
Daily Travel - How do We Do It?                                                                                                      0     10   20     30       40       50     60     70   80    90 Age of
                                                                                                                                                                                                     Bicyclist
Percent of miles we travel each
day by mode, nationally                                                                               Crashes by Time of Day
                                                                              0.2% Bicycling
99.2% Motor powered of some type                                                                                           14%
                                                                              0.7% Walking
                                                                                                                           12%
                                                                                                      Percent of Crashes
                                                                                                                           10%
                                                                                                                           8%
Trucks                                                                                                                     6%
Exports from Oregon to Canada                                                                                              4%

            Trucks                                                               $394 million                              2%
             Paper                $65 million                                                                              0%




                                                                                                                                     10:00 PM
                                                                                                                                     11:00 PM
                                                                                                                                      2:00 PM
                                                                                                                                      3:00 PM
                                                                                                                                      4:00 PM
                                                                                                                                      5:00 PM
                                                                                                                                      6:00 PM
                                                                                                                                      7:00 PM
                                                                                                                                      8:00 PM
                                                                                                                                      9:00 PM
                                                                                                                                      1:00 PM
                                                                                                                                     12:00 AM
                                                                                                                                      1:00 AM
                                                                                                                                      2:00 AM
                                                                                                                                      3:00 AM
                                                                                                                                      4:00 AM
                                                                                                                                      5:00 AM
                                                                                                                                      6:00 AM
                                                                                                                                      7:00 AM
                                                                                                                                      8:00 AM
                                                                                                                                      9:00 AM
                                                                                                                                     10:00 AM
                                                                                                                                     11:00 AM
                                                                                                                                        NOON
Lube oils & grease              $37 million
Plywood & related              $35 million
           Lumber              $29 million
              Steel           $20 million
        Aluminum              $19 million                                                             The Moral: Don’t be a 12 year old boy riding your bike at 5:00 pm
                                                                                                      on a Wednesday afternoon in August in Oregon. Ever.

27 minutes                                      Down 21%
Average time it takes                           Truck-caused accidents on I-5, I-84,                  312 Tough Rides
ODOT to inspect a truck                         and U.S. 97 from 2002 to 2003.
                                                                                                      The most successful bucking bull, Red Rock, was born in 1976 near
                                     A worker                                                         Sisters, Oregon. He dislodged 312 riders between 1980 and 1988
1947                                 (bottom left) with                                               before being ridden to the eight-second bell. He lived 18 years.
First Tonka                          the largest truck
truck produced.                      in the world, a
                                     Liebherr T 282 B                                                 How Much Do They Make
Each year the Tonka
                                     mining truck.
brand uses more than                 Disk brakes are                                                  Bus drivers in Oregon make                                          So do Parking
119,000 pounds of yellow             standard, cruise                                                 more than the U.S. Average                                          Lot Attendants
paint and 5.1 million                control is
pounds of sheet metal.               optional.                                                        Oregon ..........................$32,320                            Oregon ..........................$19,412
                                                                                                      U.S. Average...................$28,987                              U.S. Average..................$16,383


              2 years, 10 months and 24 days.
                                                                                                      Average wages for                              Statewide                Highest County Lowest County
              The amount of time it would take for a typical Oregon dairy cow
              to fill a milk tanker truck                                                             Bicycle Repair person                          $21,639                  $24,582            $19,302
                                                                                                                                                                              Multnomah          Benton

                                                                                                      Bicycle Messenger                              $22,809                  $24,582            $19,467
Planes                                                                                                                                                                        Benton             Douglas
Hello and Goodbye, It’s About Time
                                                                                                      Heavy Truck Driver                             $34,244                  $36,079            $28,059
Arrivals On Time                                      Departures On Time                                                                                                      Baker              Coos
Nationally .............................79%           Nationally .............................82%
PDX ......................................83%         PDX ......................................86%   Air Traffic Controller                         $73,374                  $85,406            N/A
                                                                                                                                                                              Multnomah
                   Number of left over parking spaces if every person over the
2943               age of 18 in Wallowa, Gilliam, Wheeler, and Sherman counties                       School Bus Driver                              $24,972                  $29,507            $20,897
                   parked his or her car in the PDX parking lot.                                                                                                              Crook              Jackson




   34       JANUARY/FEBRUARY 2005                     AOI BUSINESS VIEWPOINT

				
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