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  • SOUTHERN OREGON BUSINESS CONFERENCE

    Economist: 2014 before effects of recession are gone

    Economy's 'generally improving'; however, not at pace most like
  • Attendees at the Southern Oregon Business Conference got a healthy dose of reality Thursday — and it turned out to be not all that bad.
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  • Attendees at the Southern Oregon Business Conference got a healthy dose of reality Thursday — and it turned out to be not all that bad.
    "Smooth out short-term fluctuations and you see things generally improving," said University of Oregon economist Tim Duy, the keynote speaker. "It's just not at the pace we would like to see."
    The 10th edition of the conference, held at the Red Lion Hotel in downtown Medford, was designed to give an overview of Southern Oregon's economy through the eyes of entrepreneurs, executives and economists.
    Duy said the influx of working-age people into the state has been stagnating since the start of the recovery in 2010. "It's worrisome because it speaks to one of the fundamental drivers in Oregon and when are they going to reappear?" Duy said. "The dynamics that typically are sustaining the economy are not coming back, so communities are reinventing themselves to change the local economy to regain growth patterns."
    Just as construction employment didn't plummet immediately after housing sales tapered in 2006, the rebirth of those jobs is slow, Duy said. It will be 2014 before the effects of the fiscal contraction wear off. "Monetary policy (lower Fed discount rates) is not going to change until 2016 or 2017," he said. "It won't change until inflation reaches 2.5 percent or an unemployment rate of 6.5 percent. We're not going to see change in the next two years. We won't see higher inflation until there is improved wage growth."
    John Murphy, president and chief executive officer of Eugene-based Murphy Co., which operates a plywood plant in Rogue River and a plywood plant in White City, warned the threat lies ahead as the housing market recovers.
    Even though his firm, which provides materials for companies such as Louisiana Pacific and Georgia Pacific, has grown to 640 employees from 339 in 2007, he's not confident a full-bore recovery will shower Oregon with jobs.
    Even with low mortgage rates and builders constructing houses for $80 to $90 per square foot house, the timber industry faces a tough road back as timber supply remains scarce. "This section of the country will never deliver when the demand comes back," Murphy said. We've seen a steady movement of our product for the last 12 months. It's been a surprise, but there aren't trees to build. You can see our log decks, that's one thing — you plan for that. If we get any kind of demand at all, will it create more jobs? No chance."
    He said global competition for logs is undercutting domestic supply. China, for example, is scooping up timber in Washington state and shipping it out of Aberdeen. "It just takes it away from our mills," he said. "It's just another dynamic in the equation if we're going to be sustainable long term.
    Craig Johnson, chief executive officer at Harry & David, said the recently concluded Christmas season pointed to future opportunity for his gourmet food and gift company. While overall Christmas holiday sales nationally grew less than 3 percent, online sales saw an 11.1 percent gain, which plays into the Medford-based company's strength. "The second thing was that business was coming in late, whether it was Amazon, Harry & David or whoever," Johnson said.
    Customers have come to expect online orders to arrive quickly. "There was an expected peak at Thanksgiving and then things went dormant," he said. "People procrastinated. Then at the extreme end of the game every retailer got hit hard."
    The lesson learned, he said, was not to discount merchandise too early.
    Mark Rudolph, chief financial officer for Amy's Kitchen, said the Santa Rosa, Calif., company has continued adding jobs at its White City plant as demand for frozen organic entrees, soups and pizza increases.
    Jim Hendershot, president of Radio Design Group in Rogue River, said growth for high-tech companies such as his face a two-front competition — growing Chinese innovation and expertise, along with difficulty finding qualified employees with sufficient math and science skills.
    Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.
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