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Economic diversification is key for Oregon, say investors

Just as timber toppled, technology fell under the weight of some of its own market expectations

The technology industry that sprang up to replace Oregon's dependence on wood products has proven that it, too, has limits.

So even as the public sector is mired in a fiscal malaise, the state's businesses and industries need to find additional pillars on which to build the state's economy.

As much as possible we need to look at further diversifying the economy in Oregon, said Dale Annis, regional investment manager in Portland for Wells Fargo's Private Client Services.

Remember when timber was everything and high tech got going in the Silicon Forest outside of Portland and in the metropolitan area? That was a positive and really helped. But I think we forgot too much about concentration. It was kind of like we moved from one industry to another, yet we really didn't improve our situation in terms of being vulnerable.

So just as timber was toppled by offshore competition, regulation and the environmental movement, technology fell under the weight of market expectations that the industry itself helped overheat.

There was too much reliance on technology, said Annis, after speaking to a gathering of investors and bankers at Rogue Valley Country Club. We need to try get some other things in this state as well.

In Southern Oregon, he sees continuing growth in the medical and health-care sector.

This has become a retirement destination and part of what has made it attractive is the availability of good medical services, said Annis, whose parents retired to the Rogue Valley in the 1960s before moving to Arizona.

Globalization continually has an impact on rural life east of the Cascades.

Many of the agriculture products grown in Eastern Oregon are exported, and the declining dollar gives farmers a competitive edge against Japanese, Indonesian or South American rivals.

Eastern Oregon has done a lot in agriculture that you don't hear a lot about, Annis said. A positive trade policy ' something to get the value of the dollar down ' can really impact that area.

Our concern is that the administration wants a strong dollar and there is a precedent for a strong currency and an economy doing well. Japan had an extremely strong yen against the dollar and pound and yet its economy was booming for 12 years. But, it didn't last forever.

The bank vice president, said that although he's frequently asked how proposed spending bills and tax cuts are going to impact client portfolios, the Iraq question is looming larger.

They want to know what it's going to do to the economy, he says.

Good or bad, it probably won't have the same result that stimulated boom times after Operation Desert Storm.

Even resolution of Iraq is not going to lead to a robust economy simply because the economy is not in a recession at this point, Annis said. So there is not a lot of pent-up demand to suddenly throw us into a high gear should it all be resolved.

In 1990-91, you had negative economic growth for a little bit and saw the consumer pull in their horns a little bit more than they have this time around. When you had the pent-up demand unleashed, that's what started the ball rolling in the first five years of the '90s. ... It just snowballed into the excesses we saw in the latter half of the '90s.

Reach reporter Greg Stiles at 776-4463 or e-mail