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Intel’s decision to build a multibillion-dollar manufacturing campus in Ohio set off alarm bells in Oregon earlier this year. Now that decision has become an issue in November’s gubernatorial election.
The state has one of the densest concentrations of semiconductor jobs in the nation, but Oregon is poised to miss out on new computer chip factories planned in states from Arizona to Indiana to New York. Manufacturers are responding to a global chip shortage, which has hampered production in everything from autos to appliances.
Oregon’s three gubernatorial candidates raised the issue in their first debate last month, agreeing that the state’s next governor should be more involved with the chip industry. But they have significant differences in how they perceive Oregon’s business climate.
Democrat Tina Kotek pledged to prioritize workforce development, independent candidate Betty Johnson chastised the state for ignoring Intel, and Republican Christine Drazen complained about the state’s regulatory and tax climate.
“How do we keep the next intel from moving?” asked Draza.
A severe shortage of industrial land in the Portland area is a central issue for the region’s semiconductor industry. Big chip makers need at least 1,000 acres of land for their “megafab” clusters. In Oregon, the largest parcel near Portland is only 200 acres.
A new task force of government and business leaders is examining other potential issues, including the state’s regulatory climate, workforce development, tax structure and incentives.
The task force plans to release its first report later this month, making Oregon a place to pursue a share of $280 billion in new federal funding for scientific research and chip manufacturing.
In their recent debate, neither candidate directly addressed the thorny issue of Oregon’s land use policy. The state zealously protects rural property beyond the limits of urban development, preserving farmland and forests while reserving land for residential and commercial development.
Instead, they focused on other weaknesses or opportunities facing Oregon.
“Oregon makes things. I want to do more things here. Manufacturing is key and high-tech manufacturing is doubly good for us,” Kotek said. Intel chose to see the glass as half-full, saying it has an ongoing commitment to Oregon, the company’s largest workplace and the company’s research center.
While she said she doesn’t know why Intel passed up Oregon for the latest expansion, Kotek — a longtime state representative and most recently speaker of the House — said she maintains a personal relationship with Intel’s CEO as governor.
Johnson, a former state senator, shot back at Kotek: “I know the answer to that question because I’ve talked to Intel executives.” And the answer was to answer the damn phone.
The state ignored its relationship with a large corporate employer, Johnson said, and failed to allocate “a little expansion land” to the company.
“No one in the governor’s office saw the warning signs or got the intel when the tallest tree in our silicon forest came up to Ohio’s door,” Johnson said. “There were a lot of warning signs.”
Oregon-based Intel appeared to miss out on new chip factories being built around the country for months before Ohio announced. Gov. Kate Brown’s office has made Intel’s expansion a top priority, but it’s unclear what steps the administration has taken to pursue the new factories.
No matter how much attention the company receives from state leaders, getting Intel to expand to Oregon may not be easy.
The company secured up to 2,000 acres for Ohio expansion and chose a site near Ohio State University to house a top engineering school. Those are assets that Oregon can’t provide.
What’s more, Ohio has pledged more than $2 billion in incentives to support the project, including a $600 million direct grant to Intel. Intel enjoys more than $170 million a year in Oregon tax breaks, but matching Ohio’s incentives would require a larger allocation from the state’s general fund.
Although thousands of experienced chip industry professionals work in the Portland area and a constellation of industry suppliers is on hand, Oregon may attract smaller manufacturers considering expansion.
Drazen, the Republican leader in the state House, said Intel’s decision to expand in Ohio was a shock, but it shouldn’t have been a surprise.
“We have one of the worst regulatory and tax environments in the nation for businesses in Oregon,” Drazen said.
Oregon’s tax climate is conducive to capital intelligence production. The state has no sales tax on industrial equipment and awards technology companies hundreds of millions of dollars in property tax breaks each year.
The state’s regulatory structure, however, states that state regulations are confusing and difficult, often disconcerting businesses that are hindering large investments. He is chairing a task force subcommittee studying whether regulatory changes could make Oregon more attractive to chip manufacturers.
In a debate last month, Drazan suggested that Oregon’s success in attracting Intel should be a lesson for Oregon leaders in how to meet the needs of businesses and the importance of prioritizing private industry.
“We have to realize that Oregon is stronger when our business sector can really grow here,” Drazan said.
– Mike Rogoway mrogoway@oregonian.com | Twitter: @rogoway |
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