Goodbye smokestacks, hello silicon.
Intel and Matsushita haven’t even broken ground on their new high-tech facilities in Pierce County, and already, business and civic leaders are proclaiming the birth of a new “Silicon Forest” — an era in which the South Sound region will be known throughout the world as a center of computer-related manufacturing and services.
The arrival of Intel and the expansion of Matsushita should put Pierce County on the “silicon map,” said Bruce Mann, an economics professor at University of Puget Sound.
“People who ask where this stuff is made will answer Silicon Valley, Austin, Texas, and Tacoma, Wash. For years, our manufacturing sector was composed of aerospace, copper smelters, aluminum plants and pulp and paper plants.
“Now, it’s fundamentally different. It’s a large change from aerospace and metals to ‘thought’ products.”
It may sound like unbridled optimism to base such far-reaching predictions on announcements from two companies. But industry observers say Mann is probably right.
When one high-tech plant comes to town, others often follow–particularly if the initial facility is one of the giant plants of the sort built by Intel.
Dennis Matson, director of the Thurston County Economic Development Council, said one need only look to Hillsboro, Ore. Intel now employs 8,000 in the Portland-Hillsboro area, and high tech has become one of the state’s top employers.
“Intel will spin off additional facilities if its growth pattern (in Washington) mirrors Oregon,” he said. “It’s a trend the industry calls conglomeration, where like industries tend to locate close to each other because of workforce issues.”
The big new DuPont facility, which Intel says could employ up to 7,900 workers by 2003, surely will attract support services, and the presence of those services may well act as a magnet to other high-techs, too.
The presence of Intel and an expanded Matsushita is expected to attract a highly skilled workforce, and that’s a major benefit to any high-tech employer.
“It makes a critical difference,” said Frank Williams, president of Arnav, a Pierce County company that manufactures location devices using the Global Positioning Satellite system. “When skilled people come to the area looking for employment, we can choose from a wider array of people, both on the engineering, technician and assembly level.” And in an area where high-tech plants are being built, “a lot of the local schools will be producing people to satisfy the job requirements.”
Arnav can use the help. Though it hasn’t made the headlines of an Intel or a Matsushita, the company is undergoing a major expansion and expects to have about 300 employees within three years.
“We’re already talking to the county” about building a second, 38,000-square-foot manufacturing facility at Pierce County Airport, Williams said.
“We’re just about out of space now. We’re going into two shifts of manufacturing. That’ll keep us going ’til about next year (but) we’re going to have to farm out some of the manufacturing off site.”
Since Intel announced in September that it would build a manufacturing and research complex in DuPont, Matson said he’s already heard from more high-tech firms interested in the area.
“Additional companies have contacted us, saying they’re aware of Intel’s decision and they wish to take a look at this area.” He wouldn’t name companies, but classified them as “micro-electronic” companies.
“I think we’ll see additional companies locate in the area,” he said.
The key, said Matson, is the health of the computer industry.
“Intel has chosen DuPont for its sixth domestic site for light manufacturing and R&D. They’ll grow in this area until they think they’ve grown to what’s appropriate. It’s going to get back to Intel’s ability to stay competitive in a world market.”
For a glimpse of its future, Pierce County also can look 130 miles down Interstate 5 to Clark County, which in recent years has successfully weaned its economy away from natural resources by developing a nucleus of high-tech firms.
Bob Levin, president of the Columbia River Economic Development Council, said that since the late 1970s, Clark County has gone from 12 high-tech employees to about 7,000. He says Pierce County could be even more successful in transforming its economy.
Intel, Levin said, is the “gold standard” of the computer hardware industry, just as Microsoft is the gold standard in software.
“You will see clustering occur and vendor-supplier relationships develop around the gold standards. I’ll guarantee you that. . .not only should you be prepared for additional companies coming, you should be identifying which of those would bring the most economic prosperity for your community and achieve your benchmarks.”
Thurston County should “capture somebody as well.” With the industry’s gold standard company already coming to the South Sound, “it’s very possible to attract” one of the “silver standard” companies, too. DuPont, after all, is only six miles from the Thurston County border.
“I bet there’s probably three or four companies looking at (locations in) Washington state right now,” Levin said. “I think the state of Washington is in for a lot more investment, and R&D.”
Jordan Dey, spokesman for Gov. Mike Lowry, said that’s in large part because of a tax break proposed by the governor and passed by the Legislature earlier this year.
The new law exempts from state sales tax any purchases of new or replacement equipment or machinery related to operating a manufacturing plant.
Dey noted Matsushita is the fourth major company to take advantage of the tax change since it was signed into law in April.
Others are SEH America, a microchip manufacturing plant that announced a $61 million expansion near Camas the day after the law was signed; BHP Steel, which is building a $220 million plant near Kalama; and Intel, the computer company that is building a $250 million facility at DuPont.
“Really, right now, we feel like we’re on a roll,” Dey said.
