Regional Innovation Spotlight: A Broader View of Innovation in Oregon

Amid the current debate in Washington, DC, around U.S. competitiveness issues, BPC has been crossing the nation gathering local perspectives through roundtable discussions with private and public sector leaders. Our most recent stop was Corvallis, OR, where we engaged in a conversation about innovation within the state’s food and beverage industry.

 

“We do a lot of stuff well in Oregon. What we do best is grow things and we need to keep doing that and adding value and shipping around the world.”

—Sen. Ron Wyden (D-OR)

The idea of “innovation” typically invokes notions of software, laboratories, and, especially in today’s federal policy debates, semiconductor manufacturing. Indeed, it can often seem as if policymakers are locked into one idea of what innovation is.

We know, of course, that innovation takes various forms. Within industries, it can occur at every level of the supply chain, from the most basic inputs to the highest value-added outputs. It happens within companies as they adapt their organizational structures to enhance efficiency. And it happens all over the country, even if phenomena such as venture capital investing—closely associated with innovation—are heavily clustered geographically.

When thinking of innovation, the food and beverage industry is possibly one of the least often thought of, even though there’s nothing more fundamental to our lives than food. Go ahead: Make a mental list of what industries you associate with “innovation.” Is food and beverage in the top five? Does it even make your top 10?

Maybe it does, maybe it doesn’t, but a prevailing sentiment during our roundtable discussion in Corvallis, OR, in August was that innovation within the food and beverage industry often goes unnoticed. Hosted by Oregon State University, and led by the Oregon Business Council, the roundtable brought together companies, elected officials, higher education representatives, and others to discuss the state and future of Oregon’s food and beverage economy and innovation’s role in it.

Sen. Wyden, the state’s senior senator and chair of the Senate Finance Committee, joined the discussion. His comment above underscores the significance of discussing innovation within the food and beverage sector. Food and drink fall under tradable goods, which are essential for economic growth and job creation. Which is why innovation in this industry is critical, as one participant mentioned, “At the heart of a great food and beverage system is research and development (R&D).”

From Chips to Grapes (and Cheese and Coffee …)

Oregon turned out to be perhaps the perfect place to have this kind of discussion. The state has a rich history of semiconductor manufacturing: Intel has had a presence in the state for 50 years and employs thousands of residents. The company recently announced plans to expand one of its sites—an effort that will receive support from the state, which set aside $260 million earlier this year to leverage federal CHIPS and Science Act funding for semiconductors. In July, Analog Devices also announced a $1 billion expansion of its Oregon semiconductor facility.

Yet the state also boasts a thriving agricultural industry with a vibrant food and beverage sector, populated by both global companies—Tillamook, Bob’s Red Mill, Dutch Bros, various wineries—and numerous small businesses. Companies, regardless of their size, within this sector are ambitious not only for their own growth, but also for the state: “We need to think world-class,” one participant said. “Not just Oregon, but how we’re the best in the world at what we do. We should hold ourselves accountable to that.”

Agriculture, another person observed, “is the thread that weaves Oregon together and the most important thing in the long-term viability of the state.” No one in the food and beverage industry opposes the state and federal focus on semiconductors—after all, every company in the industries relies on semiconductor technology to some extent. But policymakers’ emphasis on semiconductors doesn’t go unnoticed: “We can put in all the semiconductor manufacturing we want; it won’t change the characteristic that ag is our engine, and we need to accelerate that.”

Participants were quick to note that various branches of the federal government play constructive roles across Oregon’s industries. The U.S. Department of Agriculture (USDA), unsurprisingly, is an essential partner in the state, helping support all types of small manufacturers and food producers. The collaborative model required to benefit from the National Science Foundation’s Regional Innovation Engine initiative has had “an astonishing effect in helping change” how the public and private sectors collaborate. Supplemented by state-level efforts led by the Oregon Business Council, the state received three of the program’s first 44 awards.

Workers, Workforce, Talent, and Labor

A principal topic of discussion revolved around workers—finding them, training them, retaining them, and transitioning them in the face of greater automation. Many observations, especially from employers, echoed those we’ve heard at other roundtables.

Federal workforce initiatives being seen as a “huge impediment” to making progress is not a new idea. Federal grants and the strings attached create “an incredibly bureaucratic system” that doesn’t accomplish much, in some participants’ view, for workers or employers. Participants talked about potential changes to tax credits, or additional tax incentives, that could be more efficient—and effective—in addressing workforce challenges. If public support can assist employers in transitioning workers as automation spreads, it would be even more beneficial.

Two other workforce observations stood out from the Corvallis roundtable.

Economic development policy needs to adapt to a new demographic reality. “We’re looking at flat population growth; immigration reform is a nonstarter.” Yet the entire edifice of economic development policy is built around creating jobs and “fighting unemployment.” The mindset of workforce programs must accordingly shift to “how to fill jobs” and investing in people.

Housing policy is workforce policy and vice versa. Public and private employers are trying to fill jobs with qualified workers but find themselves helping those workers locate adequate housing. According to participants, companies are recruiting individuals to specifically “help workers find housing.” School districts are buying houses to make them available to teachers and staff.

These are nuanced and significant observations about the changing landscape of economic development and workforce policies, highlighting their connection to other issues that may not be immediately apparent.

Notes of Smoke

Discussions surrounding the wildfire smoke damage to vineyards left the most indelible impression on BPC staff. The issue of “smoke-affected grapes… wasn’t even a thought 20 years ago,” Today, it’s an annual challenge. A smoke lab, which may sound unusual but indeed exists (we paid it a visit), at Oregon State University is helping develop treatments for the grapes. This illustrates “the importance of R&D as part of an innovation agenda” and how both public and private organizations are tackling economic challenges while adapting to a changing climate.

Sen. Wyden aptly summed up the discussion about 45 minutes into the roundtable, stating, “This is the longest conversation I’ve been in for the last three weeks when AI wasn’t mentioned first off.” This encapsulated the theme of the day: Innovation is needed in all dimensions of all industries.

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BPC is grateful to the Oregon Business Council, Oregon State University, The Lemelson Foundation, Sen. Wyden’s office, and all participants for their insights.