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Q&A: Consulting economist Joe Cortright

'It will be little things that cumulatively change the economy'Personal File, 48, is a consulting economist in Portland who specializes in regional economic analysis, public finance, work-force and small-business issues. His firm, Impresa, works with state and local governments, private businesses, foundations and advocacy groups in more than a dozen states.He wrote Workforce Myths and Realities, The Economic Importance of Being Different and The Ecology of the Silicon Forest. He is co-author of Understanding your Regional Economy and co-creator of the EconData.Net Web site, a leading Internet resource for economic data. His most recent work, High Tech Specialization, was published by the Brookings Institution in January.For more than 12 years, he was the executive officer of the Joint Legislative Committee on Trade and Economic Development, the Oregon Legislature's policy-making arm on economic issues.

Q: Where did all the timber and wood products workers displaced from their jobs in the past 15 years go? Were they adequately retrained to comparable-paying jobs or did they fall through the cracks.

We tend to stereotype people who work in mills as people who finished high school and don't have any skills beyond that. As it turned out, a lot of people working in mills had other education and found attractive alternatives. Others had clerical, millwright, truck-driving skills applicable to other industries. Younger workers had a tendency to go back to school and move to other industries. Those that were 55 and older were highly likely to retire or had limited opportunities.

Even today, with the decline in the industry, timber and wood products is still the largest employer in the traded industry sector ' businesses that sell services to customers outside the region. One of the things that came out of the focus groups in Southern Oregon was that people are too pessimistic about the forest products industry. All evidence suggests that even though we're not cutting as much timber as 10 years ago, harvests are easily sustainable. And with better forest management there'll be even more opportunities.

There is a perception that this industry is dying. It's gone through major restructuring, but it turns out the current levels are likely to increase. Competitors remaining are the strongest, most robust firms, that have invested a lot in new technologies that make them potentially more competitive.

Q: Twenty years ago, hard economic times left Southern Oregon in dire straits. What changed so that even when Oregon was ranked 50th according to national jobless figures earlier this year, things didn't seem so bad?

The recession of 1979-1982 erased 10 percent of the Oregon economy and was the most severe downturn since the Great Depression. Oregon then had 17 years of continuous growth. This downturn is a lot milder than the last one we went through. Oregon went into it a bit ahead of the rest of the nation. From July 2001 through July 2002, Medford's growth was flat, but the decline is more severe elsewhere in Denver, Seattle and San Francisco Bay area. Portland is doing better than those other areas right now. The thing people tend to forget is that after a long boom, that economies and industries are very cyclical and that sometimes decline is not predictable or recurring.

Southern Oregon is less dependent on high-tech. Portland was harder hit because its growth in high tech was a bigger factor in the development of its economy. But high tech in Portland still outperforms the rest of the nation by a slight margin ' they're just barely negative.

In Southern Oregon, that wasn't as big a factor; there was decline, but it was a smaller fraction of the economy so it hasn't caused as much of a slowdown.

Q: Is it realistic to think agriculture will contribute significantly to the Rogue Valley economy 10 years from now?

It's clear that Southern Oregon over the past four decades has diversified. There will always be agriculture, but its nature is changing, and that's not just in Southern Oregon, but everywhere. Commodity agriculture is facing difficult times. If you're selling to a packer, you're competing in a global marketplace. I heard a lot of testimony about Chinese imports when I was in Southern Oregon. It will be a lot more difficult to be a commodity producer. People who develop the markets ' figure out how to add value to their customers and a way of reaching those people ' are going to succeed. Harry and David were once overwhelmingly dependent on catalog sales, but they've opened stores and figured out new markets. Folks developing new products and developing new market niches, where customers will pay more, will distinguish themselves from competitors. But that's not to say that everybody that tries will succeed. The cast of characters is very different than it was 10 or 15 years ago, and that's very evident from forest products.

Q: What sector do you see providing the most new jobs in Southern Oregon five and 10 years from now?

Everyone is always looking for the silver bullet that totally changes the economy. It will be little things that cumulatively change the economy. There still will be forest products and agriculture, and I suspect much more movement to value-added type stuff. Then we will see other industries ' including high tech ' grow some. But it won't look exactly the same as today. There will be industries growing from indigenous strengths. There's a cluster of aluminum boat builders in the area. Over the next 10 to 15 years, recreation industries are going to be fairly rapidly growing. Who knew about windsurfing in the 1970s? Nobody. Other industries will become popular or emerge.

Q: What danger signals do you see on the horizon for the region's small business entrepreneurs?

Sometimes people get too pessimistic about the economy; it works on both sides of the economy. Two years ago, people thought dot-coms were re-writing the rules of economics, and you didn't need to have profits. A lot of people wasted money on stupid ideas that weren't realistic.

Entrepreneurs are not into it for the next two or three months, but they're into it for the long-term. There's a real opportunity for people to see past the current situation and look at trends they can build on for the long term. Success has a lot more to do with the individual's knowledge. People succeed because they have an idea and understanding of the marketplace. Rather than trusting someone else's general knowledge about whether things are going up, down or sideways, they need to build on their specialized knowledge.

Joe Cortright