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FOIA Number: 2012-0769-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council on Environmental Quality
Series/Staff Member:
Kathleen (Katie) McGinty
Subseries:
OA/ID Number:
17806
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Folder Title:
[Oregon Wood Products Competitiveness Corporation] [Loose]
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61
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2
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Desclutes business Center
20354 Empire Avenue, Suite DS
Bend. OR 97701
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
May 19, 1993
The Honorable William Jefferson Clinton
President of the United States
1600 Pennsylvania Ave., NW
Washington, DC 20500
Dear President Clinton:
We wish to thank you for holding the Forest Conference in April and, in particular, for
including secondary wood products manufacturers in this very important dialogue.
Your commitment to break the gridlock is essential both to strengthen the economy of
the rural Northwest and protect the environment.
For years, interested parties have polarized discussions about the Pacific Northwest
forests, waging a debate based on a false choice: protect the forests or provide for the
economic well being of the Pacific Northwest and the people who live there. As you
have indicated many times, it is possible and necessary to do both. We can protect our
environment while we help expand the region's economy and provide high-skilled,
high-wage jobs.
One way to accomplish both goals simultaneously is to help strengthen the secondary
wood products industry in the economic plan you will present as part of your
comprehensive forest proposal. The state of Oregon established the Wood Products
Competitiveness Corporation as a state agency just for this purpose in 1991. In Oregon
alone there are now 800 firms that employ 20,000 persons each year in the manufacture
of millwork, cabinetry, furniture, and specialty products. These businesses often are
called value-added manufacturers precisely because they are able to do more with less.
By helping to make this segment of the industry more competitive, your Administration
can create more family-wage jobs, stimulate economic growth, improve America's
trade balance and reduce the impact on the nation's natural resources.
The Northwest's secondary products industry brings unique benefits and offers unique
promise to the region:
Job growth. Over the last four years, virtually every sector of the Northwest
forest products industry experienced job losses, but the secondary manufacturing
industry showed absolute job growth in millwork and other sectors.
WPCC is Funded by the Oregon Lottery
President William Jefferson Clinton
Page 2
May 19, 1993
More jobs per unit of fiber. The industry employs significantly more people
per board foot of raw material than the primary industry. Primary fiber
processing operations (sawmills) employ roughly 3 people per million board feet
of lumber processed each year. Secondary wood products manufacturers employ
12-18 people (for moulding and millwork products) and up to 80 people
(furniture manufacturing) annually to process the same quantity of raw material.
Jobs throughout the region. Secondary manufacturing jobs are spread across
every region in the state of Oregon, including many in eastern, southern, and
other rural areas where workers in the primary industry have been dislocated.
Easily transferable jobs. Many jobs are transferable because the stages of the
secondary manufacturing process require skills similar to those used in primary
sawmills.
Investments in-and added strength for-the region's economy. When firms
manufacture value-added products, they often move up-market to high-margin
niche products that generate greater profits. These more profitable companies
are then able to reinvest their profits in plant improvements and sophisticated
equipment to retain their edge in international markets.
Increasingly higher-skill, higher-wage jobs. As firms invest in more
sophisticated equipment, they will require additional higher-skill, higher-wage
employees.
The Wood Products Competitiveness Corporation (WPCC) has identified a series of
federal initiatives that would improve the competitiveness of this critical industry by
addressing its four major problems: the supply of raw material, access to capital,
improving the competitiveness and market development for the industry. Our
recommendations are outlined in the enclosed document, "Recommended Program
Responses." It is important to note that these programs do not involve any direct
grants. Instead, they rely on a series of activities to improve market opportunities,
enhance access to capital, improve training programs, and promote collaboration
among Northwest secondary manufacturers.
The secondary wood products industry is working to bring value-and additional
employment-to the Pacific Northwest, but we need your help to maximize our
effectiveness in the region and continue our growth. We hope you will consider our
President William Jefferson Clinton
Page 3
May 19, 1993
program ideas to invest in the secondary industry as you move forward in crafting a
solution to the current crisis in the Pacific Northwest.
Yours truly,
Members of the WPCC Board of Directors:
And P. Ander
Sen x Ban
Rod D. Andrews
Gevin D. Brown
Rainier Wood Products
American Moulding and Millwork Co.
Sweet Home
Prineville
Style THank
Bill R. Keen
Stephen F. Haberle
Bill R. Keen
Orchard Wood Products
Modoc Lumber Company
Baker City
Klamath Falls
Janus James W.Korth W. Korth
Ronald Loe
North Douglas Wood Products
Wood Castle Ltd.
Drain
Corvallis
Jerrie Jerrie F. Mouhsh Morelock
Morelock Wood Products
Bend
enclosure: Recommended Program Responses
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
THE WOOD PRODUCTS COMPETITIVENESS CORPORATION
The Wood Products Competitiveness Corporation (WPCC) was created in 1991 as a state agency on the
recommendation of the Oregon legislature's Interim Forest Products Policy Committee. The WPCC was
established to devise and coordinate strategies to improve and promote the competitiveness of Oregon's
secondary wood products industry -- the 800 firms that employ 20,000 persons in the manufacture of
millwork, cabinetry, furniture, and specialty products. Seven industry representatives make up its Board of
Directors. While the WPCC received a start-up budget of $2.25 million in lottery funds from the State of
Oregon, it anticipates transition to a private industry association by June 1993.
WPCC's mission is to assist Oregon's secondary wood products industry to become the finest, most
competitive value-added producer in the world. To achieve this mission, the WPCC is utilizing a multi-
faceted approach focusing on market development, access to capital programs, supply stabilization, and
training and service provision. However, WPCC believes its most important function is to promote
collaboration within the industry. Only by cooperating to solve common problems can secondary
manufacturers effectively meet the challenges facing them and become competitive on an international level.
WPCC promotes industry collaboration in a variety of ways: through the development of industry
champions; through the formation of regional chapters to share information and build trust among
manufacturers; and through specific program activities that present collaborative opportunities having solid,
bottom-line results. It is the specific program opportunities that open doors for further collaboration or the
development of manufacturing networks. Some current WPCC projects include:
Access to Capital Programs: The WPCC is working closely with leading banks, the Oregon Bankers
Association and the Oregon Economic Development Department (OEDD) to generate access-to-capital
programs. In February 1993, the WPCC conducted a study of capital needs for the industry and then
hosted a banking conference for wood products manufacturers and bankers which resulted in the
identification of several priority program areas. WPCC is now working to develop specialized industry
information to assist banks in reviewing loan applications, and is hosting a series of local meetings and
plant tours between bankers and manufacturers to improve communication between these two industries. In
conjunction with OEDD, WPCC is also developing a program to provide $50M in guarantees for privately
placed working capital loans, and is planning on developing targeted investment funds to provide needed
equity to the industry.
Market Development Activities: In February 1993, over 160 Oregon manufacturers attended the first
Buyers/Sellers Conference. Senior buyers from over a dozen major U.S. retailers and distributors
discussed existing and emerging opportunities. At the conference, the WPCC released a Buyers/Sellers
Database containing the detailed manufacturing capabilities of over 400 Oregon secondary wood products
firms. This on-line database will serve as both a marketing tool to attract potential customers and an
information resource to improve subcontracting opportunities within the industry. Creating new market
opportunities will continue to be addressed in WPCC programs on marketing consortia, product
development assistance, and market information/data collection.
WPCC is Funded by the Oregon Lottery
Workforce Preparedness and Support Services: The WPCC has initiated a series of educational seminars
designed to enhance existing workforce skills. The WPCC is presently collaborating with community
colleges, the Department of Education, and the state university system to design specialized education
programs that respond directly to industry's needs and concerns. The Cutting Edge, WPCC's bimonthly
newsletter, reports WPCC progress and information relevant to the vitality and growth of the industry.
SECONDARY WOOD PRODUCTS INDUSTRY
FACTS AND FIGURES
The Secondary Wood Products Industry in Oregon:
Number of Firms
Percent
Description of Sector
141
17%
millwork plants
125
15%
kitchen cabinet manufacturers
106
12%
box and other wood container
manufacturers
198
23%
furniture manufacturers
157
18%
non-classified
122
14%
mobile home and prefabricated
wood building manufacturers,
wood preservers. pallet
manufacturers. hardwood
dimension producers. and
structural wood member
manufacturers.
849
100%
TOTAL
Source: Oregon Economic Development Department, Directory of Oregon Wood Products Manufacturers, 1991
1990 Employment in Oregon in the Secondary Wood Products Industry:
Number of Employees
Percent
Description of Sector
7,421
37%
millwork plants
1,491
7%
kitchen cabinet manufacturers
170
1%
box and other wood container
manufacturers
2,237
11%
furniture manufacturers
1,724
9%
structural wood member
manufacturers
1,199
6%
non-classified
2,179
11%
mobile home and prefabricated
wood building manufacturers
1,948
10%
reconstituted wood products
1,392
7%
wood preservers, pallet
manufacturers, and hardwood
dimension producers
19,761
100%
total employment in the
secondary wood products
industry
Source: Oregon Employment Division, 1990
*
Secondary wood products: sector 24 (Lumber and Wood Products), 2426, 2431, 2434. 2439, 2441.
2448, 2449, 2451, 2452, 2491, 2493, 2499; sector 25 (Furniture and Fixtures), 2511, 2512, 2517, 2521,
2541.
Secondary Wood Products Industry Facts & Figures (cont'd)
Definition/categorization of the industry:
Size/Category
Number of Employees
Annual Sales
Small
3 to 10
less than $1 million
Medium
11 to 50
> $1 and < $5 million
Large
> 51
over $5 million
Source: Wood Products Competiveness Corporation, 1992
Secondary Wood Products Employment comparisons:
Description of Sectors
Employment
Secondary Wood
Products Employment
as Percent of Totals
employment in the secondary
19,761
100%
wood products industry
total employment in sectors 24
67,498
29%
and 25
total employment in
220,208
9%
Manufacturing
total employment in Oregon
1,236,243
2%
Source: Oregon Employment Division, 1990
*
Secondary wood products: sector 24 (Lumber and Wood Products), 2426, 2431, 2434. 2439. 2441,
2448, 2449, 2451, 2452, 2491. 2493, 2499; sector 25 (Furniture and Fixtures), 2511. 2512. 2517, 2521,
2541.
Business activity by region within Oregon:
Total = 389
Portland
Valley
Southern
Central
Eastern
Area
Oregon
Oregon
Oregon
Finished
241
94
90
31
16
10
Products
Components
149
58
55
18
13
4
Value
97
37
37
14
6
3
Added
Services
DailyJournal
Council OKs Hayden
Island fire station. Page 4.
FINANCE:
Mutual fund ads won't tell
you everything. Page 4.
ommerce
TO employer
REAL ESTATE:
about consult-
ing imbitions.
Local retail, office markets
gain attention. Page 5.
Page 2
©Dally Journal of Commerce All Rights Reserved
No. 60
Portland, Oregon
Thursday, March 25, 1993
The corporation was designed
The corporation was one of
State wood
Ron Lot, chairman Ji the
to build business opportunities
the state's more unique agencies
board and president of Wood
for the 1,200 firms and more
in that it has been under the
Castle Manufacturing in Corval-
products agency
lis, attended the signing and said
than 20,000 people that comprise
direction of 3 seven-member, pri-
the wood products corporation is
Oregon's secondary wood prod-
vale-sector board of directors
goes private
ucts industry.
appointed by the governor.
an example of a successful part-
WPCC's objectives have been
The senate bill privatizing the
nership between the state and the
10 identify markets, establish
corporation was introduced at
By MELODY RULLS
private sector.
I Jeurnal of Commerca
Several of the wood products
contact between Oregon sec-
Robert's request as part of her
ondary manufacturers and
efforts to streamline and reorga-
corporation's board members,
he Oregon Wood Products
past and present, and secondary
regional and national purchasing
nize state government, officials
Competitiveness Corp.,
wood products manufacturers
agents and merchandising man-
said.
from across the state witnessed
agers, initiate consortiums,
The bill provides that WPCC
created by the 1991 Leg-
the signing along with key leg-
improve access to capital financ-
will dissolve June 30 with all
islature as a public agency to
boost Oregon's secondary wood
islators.
ing, assist in technology upgrad-
remaining funds and obligations
products industry, became a pri-
ing and employee education, and
to be transferred to the new,
"Tbe Wood Products Com-
vate company Wednesday.
petitiveness Corporation has been
develop strategic alliances with-
independent organization, along
Gov. Barbara Roberts signed
an important element in Ore-
in the industry and government.
with the responsibility to carry
Senate Bill 169 authorizing the
Recent WPCC activities
out the strategic plan mandated
agency to operate as 2 private,
gon's commitment to a strong,
include a Buyers/Sellers Confer-
by the Legislature.
non-profit trade organization.
diverse secondary wood products
ence in February chat introduced
The Oregon Economic Devel-
Ray Daffner, WPOC executive
industry," Roberts said during
secondary wood producers to
opment Department will be
director, said the privatization
the signing ceremony.
regional and national buyers with
responsible for oversight of
will allow the corporation more
"With this legislation we set
corporations such as Fred Meyer,
WPCC programs, and WPCC will
freedom in achieving its goals.
the stage for the corporation to
Wal-Mart and Lumbermen's
be required to report to the Joint
"We'll be able to pursue our
continue that commitment in the
Building Centers.
Legislative Committee on Trade
activities a little more afgres-
future to make the most of our
The organization earlier this
and Economic Development on
sively as & private organization,"
timber resources and maintain
month created an innovative
its programs, officials said.
Daffner said. "As a state agency
good, stable, family-wage jobs for
computerized database which
SB 169 allows existing mem-
we bad some limits."
Oregonians," she added.
enables manufacturers and buy-
bers of WPCC's board of direc-
"We've been working toward
WPCC was funded by a $2.25
CIS to obtain information about
tors and employees to continue
this for quite 2 while We feel
million dollar grant from the
product specifications and pro-
working with the new organiza-
that for this organization to get
Oregon Lottery. The original leg.
duction and service capabilities
tion. The bill provides no addi-
things done it has to be in the
islation specified the organiza-
of Oregon secondary wood prod-
tional funding.
industry's hands," be added.
tion would become privatized
ucts companies.
this year.
Eugene, OR
(Lane Co.)
Register-Guard
(Cir. D. 72,608)
(Cir. S. 74,983)
FEB 2 3 1993
l
Wood product firms
meet 864 with bankers
By LANCE ROBERTSON
A recent legislative study found
The Register-Guard
that the top problem faced by second-
ary wood products manufacturers was
One of Oregon's fastest-growing
financing. Second on the list was gain-
manufacturing sectors is so-called sec-
ing access to markets.
ondary wood products - high-value
goods such as furniture, toys, moldings
Donaldson said WPCC is trying to
and window sashes.
set up a bond fund or a revolving loan
fund to help small value-added manu-
But because many of these compa-
facturers get loans. The WPCC also
nies are small and have few assets,
plans to work with local banks to hook
they often find it difficult to get loans
them up with manufacturers in the
needed to market their products and
same area.
expand production.
Oregon is home to about 900 "sec-
Monday, a new state non-profit cor-
ondary" wood products manufactur-
poration introduced the people who
ers, with an annual payroll of about
make the goods to the people with the
$500 million, Donaldson said.
money.
Secondary manufacturers often use
About 75 Oregon bankers and sec-
much less wood than primary lumber
ondary wood products manufacturers
and plywood mills. Secondary manu-
gathered at the Eugene Hilton for a
facturers also often employ far more
daylong conference sponsored by the
people for each 1,000 board feet of
Oregon Wood Products Competitive-
wood used, and the value of the wood
ness Council.
product they make sells for many
"Frankly, many of these compa-
times the equivalent volume of typical
nies have been in the shadow of the
framing lumber and plywood.
big primary lumber and plywood man-
Value-added manufacturers range
ufacturers," said Sam Donaldson,
from large companies that make doors
spokesman for the Wood Products
and window parts to small firms mak-
Competitiveness Council, based in
ing specialty items such as cedar shav-
Bend. "If the state wants to expand
ings for dog beds, cedar coat hangers,
jobs, we have to find a way to open up
wooden toys, picture frame parts, wine
more access to capital for these com-
racks and novelty items.
panies."
The Oregon Legislature created the
New federal banking laws have
WPCC in 1991 with $2.25 million in lot-
tightened up credit restrictions, mak-
tery proceeds. The WPCC will be dis-
ing it harder for lenders to extend
solved in June of this year and re-
long-term financing to small value-
placed by an industry-directed non-
is
added manufacturers, Donaldson said.
profit organization.
Mail Tribune
(Cir. D. 29,310)
(Cir. S. 33,500)
4
1993
FEB
'Reverse' 864 show brings buyers to makers
By PAUL MACOMBER
Malnight, marketing director
Mail Tribune Business Editor
"We want to go out there and
generate sales."
ome of America's major
S
wood products buyers will
The reverse trade show - The
meet with Oregon
Oregon Wood Products Buyers/
manufacturers next week in a
Sellers Conference - is
"reverse trade show."
expected to attract 200 Oregon
The event brings in buyers
manufacturers, including about
from Wal-Mart, Costco, Fred
40 from
Meyer, Lowe's, Klingman
southern
Furniture, IKEA and others.
Oregon.
They will tell manufacturers
"This end
about their markets, quality
of the state
standards, product
has perhaps
specifications and purchasing
been our
procedures.
strongest
The product range includes
group of
moulding and millwork, cabinets
manufac-
and furniture.
turers,"
The event, Feb. 11-12 in
Daffner said.
Portland, was set up by the
"They've
Oregon Wood Products
been
Competitiveness Corp., which
Daffer
intimately
was created by the 1991
involved with
Legislature to develop the
this from the
state's value-added wood
start."
products industry.
A subgroup
It's a means to squeeze more
of regional
jobs out of each tree processed in
manufac-
the state, says Ray Daffner,
turers,
executive director of the agency.
headed by
"A primary mill - lumber or
Terry
Kerwood of
MT file photo
plywood - will employ two or
three people to process a million
Woodline
Workers make mousetraps at Parson's Pine in Ashland, which could benefit from a trade show
board feet of timber," he said. "A
Products, has
furniture company will employ
been formed
60 to 80 people to process the
here. Daffner
In addition to the trade show,
do." Daffner said. "When one
manufacturing." he said.
same volume."
Malnight
said.
a database has been gathered to
manufacturer calls Wal-Mart,
"Buyers are going to see a state
More than 800 companies,
The
help steer buyers to
they are not going to get a
at every level committed to help
many of them small, are
statewide agency, financed by a
manufacturers and to assist in
response. When the industry
manufacturers in value added
operating in Oregon and the
$2.25 million allocation from the
collaborative manufacturing.
calls, they come out to Portland
products
agency is working to help them
state lottery, is overseen by a
The agency is also working
and talk to us."
develop new products and
with the Oregon Bankers
Malnight says the agency has
The growing searcity of timber
markets.
board of directors from the
Association to ease the access to
gained creditability as a
is giving manufacturers
"A lot of organizations try to
industry and is destined to be
capital for wood products
representative of
incentives to cooperate to meet
go in and train and teach
spun off into a private industry
manufacturers.
manufacturers.
market opportunities, Daffner
manufacturers," said Jim
association in 1993.
"Here's what we're trying to
"Oregon is a leader in primary
said.
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Ray Daffner
WPCC Executive Director
Ray Daffner is the executive director of the Oregon
Wood Products Competitiveness Corporation. He has
eight years of experience in the private sector in both
manufacturing and retail environments. He also has
experience in the nonprofit and public sectors, assisting
the governors of the southeastern states to initiate and
implement industry-focused economic development
initiatives. Mr. Daffner received a bachelor's degree in
Chemistry from Duke University and a graduate degree
in business from Yale University.
WPCC is Funded by the Oregon Lottery
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3 Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Chadwick Knowles
Founder, Chairman, Majority Owner
Ranier Wood Products, (Sweet Home, Oregon)
Chadwick "Casey" Knowles is the founder, chairman,
and majority owner of Ranier Wood Products. Mr.
Knowles has spent 25 years in the lumber business, the
first thirteen as a lumber wholesaler and the last twelve
in value-added secondary manufacturing of lumber. He
is a graduate Washington State University. Ranier
Wood Products was originally located in Woodinville,
Washington, and the Sweet Home plant began operation
in 1985. The company consolidated in 1988, moving the
Woodinville manufacturing to Sweet Home, Oregon.
The company, which has expanded to a current
employment level of 128, maintains an administrative
office in Seattle, Washington.
WPCC is Funded by the Oregon Lottery
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
James W. Korth
General Manager/Attorney
North Douglas Wood Products (Drain, Oregon)
WPCC Board Member
James Korth has been a member of the WPCC Board of
Directors since October 1991. He believes that both
environmental awareness and a strong, viable economy
are essential for strengthening the state of Oregon. Mr.
Korth is a member of Trout Unlimited, the Federation
of Fly Fishers, the Forest Products Research Society,
the National Dimension Manufacturers Association, and
Western Hardwoods Association. He received a
bachelors degree in political science from Stanford
University and a J.D. from the Willamette University
College of Law.
WPCC is Funded by the Oregon Lottery
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Jerrie Morelock
Owner/Manager
Morelock Wood Products (Bend, Oregon)
WPCC Board Member
Jerrie Morelock is the owner/manager of a 32-year-old
company that produces specialized wood moldings in
the state of Oregon. She has served on the WPCC
Board of Directors since its inception. Previously, she
served six years on the Small Products Advisory Board
for the State of Oregon, which reviewed legislation and
assessed its potential impact on small businesses. The
Advisory Board reported directly to the Governor of
Oregon.
WPCC is Funded by the Oregon Lottery
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue. Suite D3
Bend. OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Wood Products Competitiveness Corporation
Business Plan
April 1. 1993
Draft
WPCC is Funded hi the Oregon Lettery
Board of Directors 1993
Ronald Loe - Chairman
Castle Manufacturing
Corvallis
Stephen Haberle - Vice Chairman
Orchard Wood Products
Baker City
Rod Andrews
Rainier Wood Products
Sweet Home
Gevin Brown
--
- American Moulding & Millwork
Prineville
Bill Keen
Modoc Lumber
Klamath Falls
James W. Korth
North Douglas Wood Products
Drain
Jerrie F. Morelock
Morelock Wood Products
Bend
Ray Daffner
Executive Director
Overview
The Wood Products Competitiveness Corporation (WPCC) was created in 1991 as a state
agency on the recommendation of the Oregon legislature's Interim Forest Products Policy
Committee. The WPCC was established to devise and coordinate strategies to improve and
promote the competitiveness of Oregon's secondary wood products industry -- the 1,200 firms
that employ over 20,000 persons in the manufacture of moulding/millwork, cabinetry,
furniture, and specialty products. Seven industry representatives make up its Board of
Directors. While WPCC received a start-up budget of $2.25 million in lottery funds from the
State of Oregon, it anticipates transition to a private industry association in June 1993.
Mission
WPCC's mission is to assist Oregon's secondary wood products industry to become the finest,
most competitive value-added producer in the world. To achieve this mission, the WPCC is
utilizing a multi-faceted approach: promoting the industry; seeking to expand the industry's
markets; improving access to capital: strengthening communication within the industry;
assisting industry firms to upgrade technology, design, quality standards, and education; and
developing innovative strategic alliances within the industry and with government.
WPCC considers its constituency to be the 1,200 small- and medium-sized secondary wood
products manufacturers in Oregon, those firms ranging from $1M to $25M in annual sales and
having between 5 and 500 employees. These firms are distributed in a roughly equal fashion
between furniture manufacturers, cabinetry firms, molding and millwork plants, and specialty
products producers and are primarily located in rural portions of the state. The secondary
wood products industry accounts for almost 10% of all manufacturing jobs in Oregon, while
the forest products industry accounts for over 30% of all manufacturing jobs in the state. The
industry is undergoing tremendous transition driven by environmental considerations, with a
30% - 50% anticipated reduction in timber harvest in the coming years.
Strategy
WPCC focuses on a four-fold strategic approach to underpin program activities. Driven by
the timber supply crisis facing the Northwest's wood products industry and the need to remain
internationally competitive, WPCC engages in program activities that:
1) Are industry led. Although created by the legislature as a state agency, WPCC has a
seven member private sector Board of Directors and anticipates transition to a
private industry association.
2) Encourage sustainable development practices in the industry. It is only by adding
more value to the natural resource before it is exported from the region that we can
effectively resolve both the environmental and economic challenges facing the
region.
Note: As used in this document, the wood products industry refers only to the secondary wood
products industry.
3) Encourage cooperation within the industry. By cooperating to solve common
problems, manufacturers can effectively meet the challenges facing them and
become competitive on an international level.
4) Utilize the support infrastructure. To become internationally competitive,
manufacturers will need to work closely with the financial community, technology
providers, educational institutions, utilities, service providers and public sector
leadership to ensure that the right ingredients are available to meet the challenges
ahead. It is only through creating these partnerships that Oregon's industry can hope
to remain competitive with the industries of nations that use all the resources at their
disposal to enter and dominate international markets.
Program Introduction
This business plan describes several program areas that will accomplish the mission and goals
outlined in the WPCC Strategic Plan (July 1992) and updated at the Board of Directors retreat
(March 1993). Each of these program areas will have a WPCC staff member identified as
program manager, and it is recommended that an industry advisory committee composed of
both board and non-board members be created to provide input on activities. Each industry
advisory board will need to be educated as to best practice in theses program areas, which will
likely require study tours and background reading materials. The program areas outlined in
this plan are:
Priority Activities:
*
Industry Communication and Cooperation
*
Access to Capital
*
Market Development
*
Activities to ensure a dependable raw material supply
Other Activities:
*
Workforce Preparation
*
Real Services
WPCC intends to maximize program impact by collaborating with existing Oregon entities to
implement these activities. A list of potential program partners is provided on page 14.
Actual budgets may vary from estimates since business plans need to be developed by WPCC
staff and the industry advisory boards for each program area. Actual budgets for these
activities will be influenced by such factors as the ability of WPCC to partner with existing
entities and programs, and leverage additional sources of support. Scheduled program
expenditures of $1.3M are itemized, to be leveraged by $9.0M in support from partners,
foundations, federal and state government. Programs that have received budgetary approval
from the WPCC Board of Directors are itemized with a scheduled project initiation date.
Activities that have no indicated initiation date will be undertaken only if additional resources
2
become available.
WPCC anticipates becoming a self-funded entity, relying on revenues from program activities
to underwrite operational costs. Each program area will develop specific strategies and goais
to generate revenue. WPCC is structuring an employee incentive program linked to revenue
generation to encourage the development of industry supported activities. If WPCC is unable
to develop programs which the industry feels are worth financially supporting, the organization
will have failed in its mission to provide needed services to the industry.
I. Industry Communication and Cooperation
Only by cooperating to solve common problems can secondary manufacturers effectively meet
the challenges facing them and become competitive on an international level. WPCC promotes
industry collaboration in a variety of ways: through the development of industry champions
who encourage strategic partnerships; through the formation of regional chapters to share
information and build trust among manufacturers; and through program activities (such as
market development, capital access, training and service provision) that present collaborative
opportunities having solid, bottom-line results. It is the specific program opportunities that
open doors for further collaboration or the development of manufacturing networks.
WPCC initiated a bi-monthly newsletter in November 1992, funded three demonstration
manufacturing networks in June 1992, and has held a series of regional meeting attracting over
300 manufacturers in five cities across the state. Two educational tours, one to North Carolina
to view the furniture manufacturing industry and one to Germany to view high technology
facilities, were also sponsored by WPCC in 1992.
Future and on-going program activities include:
Newsletter. Produce bi-monthly newsletters through June 1993 without association
membership requirement. Subsequently mandate association membership for receipt.
Perhaps initiate weekly fax of hot activities (perhaps working with Woodfax) such as
market opportunities, etc. Newsletter should include features on individual businesses
successful in value-added activities, profile WPCC programs, provide market and
economic data relevant to the industry. Perhaps it would have a classified section for used
equipment. Target publication cost: $5,000 per issue; $30,000 annually. Re-evaluate
newsletter frequency and develop a monthly publication as suitable. Initial Budget
$30,000. On-going activity.
Regional WPCC chapters. Regional chapters of the WPCC will be created to facilitate
regular communication among industry members. Each regional chapter will be
championed by a member of the Board of Directors. After chapters composed of firm
owners are developed, separate regional sessions could be held for plant managers,
personnel managers, purchasing managers, etc. Plant tours of members' facilities will be
encouraged. Further, participants from associated "supporting" industries -- the industrial
3
cluster -- such as design, architecture, equipment manufacturers, educators. and the
banking industry will be encouraged to participate in some of these sessions. Cost includes
meals and miscellaneous expenses for meetings. Budget $36,000. On-going activity.
Revenue generating activity.
Interdisciplinary educational tours. Provide stipends to partially offset the cost of
educational tours for interdisciplinary groups comprised of bankers, educators,
manufacturers and technology providers that will review competitiveness initiatives in
Oregon, the U.S., and overseas. WPCC advisory board members will also be included on
these educational tours to familiarize them with best practice in appropriate program areas.
This interdisciplinary approach supports the involvement of institutions critical to the
competitiveness of the secondary wood products industry in Oregon and lays the
groundwork for future collaborative activities. For example, if Oregon manufacturers are
to truly move up-market and develop high-end products for consumer use, capital will be
required to support the needed expansion in plant and facilities. And, if these products are
to truly meet the needs of today's sophisticated consumers, designers who understand both
consumer tastes and the issues of design for manufacturability will need to be trained in our
universities. The new vision for value-added manufacturing will be shared not only with
industry members, but also with bankers and educators whose supporting institutions are
essential for the development of this strategy. Budget $100,000. On-going activity.
Expansion of Buyers/Sellers Database. See activity description, Section III, Market
Development.
Collaborate with existing industry organizations in Oregon and the Northwest. Staff
activity, miscellaneous travel.
National wood products conference. Co-host a national wood products competitiveness
conference in Oregon in partnership with the National Institute for Standards and
Technology, USDA Coop Extension and Forestry, Northwest Policy Center, and other
appropriate organizations. Conference will provide Oregon firms with access to wood
products resource people from around the nation and serve to highlight the state's efforts
nationally. No budget, no initiation date.
Open lines of communication. Work with groups to jointly identify solutions to problems
ranging from forest and species protection to community and job stability. Staff activity,
miscellaneous travel.
Annual Report. In conjunction with the program assessment (see Section VIII, Other
Program Activity), WPCC will issue an annual report addressing the state of the secondary
wood products industry in Oregon. It will detail WPCC responses, successes, and failures
in meeting these challenges. Budget $10,000. Initiation: Spring 1993.
4
II. Access to Capital
This program is designerio enhance capital access from a variety of bank and non-bank
sources of debt, and from sources of equity capital. An important element of the program is to
improve communicatioetween the banking community and secondary wood products
manufacturers so that instified capital gaps can be alleviated or eliminated.
The WPCC has conduct a study to identify the capital gaps facing the industry, and held a
state-wide Bankers/Manacturers Conference in conjunction with the Oregon Bankers
Association (OBA) and Oregon Economic Development Department (OEDD) which
resulted in the identification of several priority programs. The WPCC is also working in close
cooperation with OEDD create a Value-Added Wood Products and Agricultural Products
Collatoralization Fund, cerently described as SB8I in the Oregon legislative process.
Future and on-going pregam activities include:
Encourage greater ammunication between bankers and manufacturers. Continue to
undertake activities encourage greater communication and understanding among bankers
and manufacturers. The WPCC will hold an on-going series of meetings and plant tours
between local banks and manufacturers, with the support of the OBA. Budget $30,000.
Initiation: Spring 193.
Provide industry infirmation. Provide industry information to the banking community that
will assist in loan miuation. At the request of several banks, the WPCC will generate
detailed market asssments and projections for leading wood products sectors and sub-
sectors to supportiesiness plans and loan requests from industry members. Budget
undetermined. Insation: Spring 1993. Revenue generating activity.
Identify service pruders. Assist manufacturers in identifying providers of needed
accounting supportousiness planning assistance, and staff educational resources. WPCC
should work close with private service providers and with public programs such as the
Small Business Deslopment Centers and the Community College system. Initiation:
Spring 1993, stafffinction.
Identify capital sorces. Assist manufacturers in identifying potential capital sources. This
could involve listing of banks with loan caps and preferences, listings of non-bank debt
sources with caps ad preferences, and listings of equity sources. Initiation: Spring 1993,
staff function. Remue generating activity.
Loan Collatoralization Fund. Develop a program to facilitate the placement of additional
bank loans to seconary wood products manufacturers. Continue to work closely with the
Oregon EconomicJevelopment Department, the State Treasurer's office, and the
Legislature to crezia large ($25M - $50M) loan collatoralization fund [as described in
SB81] to supportad encourage additional bank loans, primarily for working capital, to the
5
industry. Initiation: Spring 1993, staff function. Additional consultative support $20,000.
Develop equity sources of capital. Develop sources of equity capital for market expansion
and product development opportunities. In conjunction with public and non-profit sources
of capital, the WPCC intends to develop targeted financing vehicles for equity investment
in the secondary wood products industry. The development of 'green' (environmentally
friendly) investment funds are one option, as are funds focusing on collaborative business
ventures (networks). Initiation: Spring/summer 1993, staff function. Revenue generating
activity.
Market Development Fund. Provide a flexible investment vehicle to support collaborative
ventures targeted at market development and expansion activities. Market Development
Fund (MDF) support will allow manufacturers to take advantage of market opportunities
that otherwise would be inaccessible. It is anticipated that this fund will participate in
projects that involve equity financing from the applicants. bank financing for collaterizable
assets, and MDF support to fill identified capital gaps. The MDF anticipates investments
will be repaid as a percentage of sales, creating a continuing source of capital to support
future collaborative projects. WPCC participation in this program will be supplemented by
support from other public and non-profit entities. Budget $100,000. Initiation Fall 1993.
Specialized financing. Identify appropriate specialized sources of equipment financing and
factoring sources for the industry. Work closely with equipment manufacturers to develop
financing programs. Also seek to facilitate placement of loans from existing economic
development revolving loan funds to qualified manufacturers. Initiation: Spring/summer
1993, staff function.
Bi-annual conference with banking community. WPCC will hold a bi-annual conference
between the wood products industry and the banking community. This conference will be
jointly organized by WPCC and the Oregon Banker's Association. Conference activities
will include: 1) independent educational sessions for the manufacturing community on the
requirements of the banking industry; 2)independent educational sessions for the banking
community on the strengths and opportunities of the wood products industry; and 3) a
dialogue, perhaps a series of small group discussions, between bankers and manufacturers
to resolve obstacles to capital access. Cost for first conference, 2/22 in Eugene, $5,000.
Full budget $30,000. Initiation: Fall 1993.
Wood Products Loan Officer/Specialist Program with banking industry. The WPCC will
work with the state bankers' association and private banks to implement a program to
facilitate understanding of wood industry strengths and opportunities by: 1) designating
wood products loan officers at selected regional bank offices that would maintain regular
contact with manufacturers in their regions and 2) periodically convening these loan
officers for small educational seminars with the industry. Staff activity. Cost for
educational seminars: $5,000 each (6 per annum); annual cost $30,000. Initiation: Fall
6
1993.
Purchasing Coop. WPCC will create a purchasing cooperative to provide a stable
predictable source of supply and provide payment terms for raw material purchase to
members. Revenues from this service will offset costs of operation. The Coop will also
attempt to lower raw material cost by aggregating secondary industry demand and
providing a consistent customer interface to primary mills. Eventually, two coops -- one
for eastern and one for western Oregon -- will need to be created; however, the available
funds will most likely allow the initial development of only one coop. The Coop is
envisioned as a for-profit subsidiary of a non-profit industry association. The WPCC will
leverage funds from the National Cooperative Bank and other institutions, require initial
investments from Coop members (based on firm size), and require members to eventually
invest sufficient reserves to collatoralize their average order size. The Coop will. Budget
$200,000. Initiation unknown. Revenue generating activity.
III. Market Development
The goal of the market development program is to assist Oregon's secondary wood products
manufacturers reach new markets, expand existing opportunities, and develop new products or
modify existing products. Programs will target moulding/millwork, cabinetry, furniture, and
specialty wood products producers. Target markets include national and regional retailers,
industrial customers, brokers and distributors, and the international marketplace. The program
will emphasize cooperation among manufacturers to meet identified market needs. The market
development program should generate revenue both for manufacturers and for the WPCC.
The WPCC has already held a Buyers/Sellers Conference attracting over 160 manufacturers to
meet with over a dozen senior buyers from the nation's largest retailers. The WPCC has also
created the Buyers/Sellers Database, containing the detailed capabilities of over 400 Oregon
manufacturers.
Future and on-going program activities include:
Major market development conferences. Hold additional conferences similar to the
Buyers/Sellers Conference focusing on specific market or industry segments. Initiation:
on-going. Budget $50,000. Revenue generating activity.
Expansion of Buyers/Sellers Database. Database will be expanded to include relevant
services required by manufacturers. Additionally, staff will continue to respond to
customer requests and actively generate additional requests. On-going staff activity. No
budget identified. Revenue generating activity.
Marketing Consortia. WPCC staff will attempt to develop marketing consortia. Marketing
consortia could represent firms at trade shows and work with existing wholesalers and
traders. WPCC could also invest in a "shared" marketing manager program. The program
7
would provide support for marketing expertise to networks. In return, WPCC might then
receive revenue derived from a commission on network sales. WPCC could also provide
stipends to partially offset costs for WPCC delegations and networks to attend wood
products trade shows in Atlanta, Oregon, and Hanover (Germany). WPCC will
collaborate with OEDD Forest Products International Trade Division in these international
trade activities. Budget: $200,000. Initiation: on-going. Revenue generating activity.
Network Broker and Network Identification. In collaboration with the Key Industries
Program of OEDD, a program to identify capable and interested wood products network
brokers and value added networks will be established. The program will rely on an
industry-oriented publicity campaign. Identified brokers will be encouraged to participate
in the feasibility grant and investment fund programs described below and be exposed to a
series of presentations from experienced wood products network brokers in the U.S.
Participants from associated "supporting" industries -- the industrial cluster -- such as
design, architecture, equipment manufacturers. wholesalers, educators, and the banking
industry will be encouraged to participate in some of these sessions. The WPCC feels that
a formal broker training program is unnecessary because sufficient capability exists within
the industry. Budget $20,000. Initiation: On-going.
Market Development Fund. See description Section II, Access to Capital.
Collection of market and economic trend data. Utilize WPCC staff or contract to collect
this data. Sharing costs with collaborating entities would reduce expenditures. Budget
$25,000. Initiation: Summer/fall 1993.
Green marketing program. Create a green market certification program similar to the
German green dot program. Initiation: Summer 1993, budget unknown.
Export consortia. Provide assistance to develop export consortia utilizing existing federal
and state programs for support. WPCC will collaborate with the Forest Products
International Trade Division of OEDD in undertaking these project activities. $20,000 of
cost offset by federal support. Initiation: unknown
Federal Export Services. Review activities of the federally-funded Hardwood Export
Center in West Virginia. Inquire, with support of Oregon and other Northwest
congressmen, about the creation of a similar organization in the Northwest. Also review
opportunities to access Foreign Agricultural Service programs (FAS). Initiation:
Spring/summer 1993.
For profit marketing subsidiary. Develop a for-profit marketing subsidiary of the non-
profit industry association to undertake a variety of revenue generating marketing activities
including:
8
Secondary Wood Products Showroom. Create a showroom and central marketing
office for Oregon secondary wood products. Showroom available for fee to
members of a privatized WPCC or designated secondary manufacturers' trade
association. Showroom would provide specialized marketing environments for each
product classification, i.e., furniture would be grouped, components would be
grouped, etc. Revenues could also be derived from commissions (1% - 2%) on
showroom initiated sales. On a fee-for-service basis, the showroom could develop
promotional materials for compatible product lines. Also utilize industry
capabilities directory in this effort. Perhaps leverage funds from National Coop
Bank. Initiation: unknown, no program budget.
Product development or design services. A privatized WPCC or designated
secondary manufacturers' trade association could offset the first $10,000 of product
development services, design services, or the development of promotional materials
contracted by groups of manufacturers with service providers. The association
would recoup expenses as commissions (2% - 3%) on closed sales. Budget:
$100,000. Initiation: Fall 1993.
National publicity campaign. Create a national Oregon wood products PR campaign. A
phrase like "Oregon Built", similar to "Made in Vermont", would make quality wood
products and Oregon wood products synonymous in public perception. Commodities
commission, described below in Other section, could fund this effort. Initiation: Fall
1993. No program budget.
Import Substitution. Contract to focus on import substitution activities for value added
Oregon manufactured wood products. Initiation unknown.
OEDD services. Leverage existing services provided by OEDD, such as Overseas Trade
Offices and the Forest Products International Trade Division.
Quantify processing of OR/NW fiber products. Quantify types of processing of
Oregon/Northwest fiber products for both domestic and foreign uses. Contract to collect
this data. Initiation: unknown, no budget.
Research overseas processes. Research overseas value added processes to Northwest fiber
to identify market opportunities and conduct a "technology assessment" of overseas process
capabilities. Would require extensive travel. Issue contract or WPCC staff could perform.
Cost: $50,000. Initiation: unknown, no budget.
IV. Develop Stable Source of Supply
The WPCC will undertake a series of activities to ensure a stable source of raw material for
the state's secondary manufacturers. Some of these activities are described in other sections,
such as the development of a purchasing consortium or improved communication between the
9
primary and secondary industries. Other activities relate to representing the needs and
concerns of the secondary industry in the federal decision making process following the Forest
Conference.
To date, the WPCC has funded the World Forestry Center to undertake "World Wood for the
Northwest", a study of overseas availability of useful species.
Specific projects as yet undefined. No budget identified.
V. Workforce Preparation
Training efforts will focus on developing the technical skills -- both in manufacturing and
support services -- required for value added manufacturing. Activities will rely on
partnerships with existing state educational institutions, and focus on such initiatives as the
development of apprenticeship programs.
To date WPCC has held three educational seminars for the industry on such topics as
programmable controllers, cost accounting, and alternate sources of wood supply. Future and
on-going program activities include:
Improve educational opportunities. Working with existing programs such as Workforce
2000, Workforce Quality Council, and Schools for the 21st Century to tailor wood
products training activities to industry needs. These activities include involvement in the 2
+ 2 Tech Prep program, structured work experience-for students, business internships for
educators, Advanced Technology Center development, and TQM training. WPCC
involvement with these programs could serve as a model for other industries within the
state. WPCC contribution/budget $20,000. Initiation: Fall 1993.
Apprenticeship development. In conjunction with above programs, develop plans to
implement a secondary wood products youth apprenticeship program within the state.
Should planning activities prove fruitful. a subsidiary of the non-profit industry association
will be created to manage the apprenticeship program and coordinate the educational
support efforts of state institutions. Estimated total cost of planning activities: $100,000
less matching contributions from state educational entities and private foundation. WPCC
budget $25,000. Initiation: Fall 1993.
Educate Educators. Working with existing education programs, provide opportunities for
educators to train in real plant environments. Initiation: Fall 1993. No budget identified
Seminars. WPCC will contract for a series of educational forums across the state that will
target a variety of critical business functions, such as: quality control; plant layout; cost
accounting and estimating; MRP-JIT systems implementation; design; ISO 9000 training;
financial statement preparation; environmental and OSHA compliance; and marketing.
Funds will be provided to develop curricula for the seminars; however, since a valuable
10
seminar is worth paying for, WPCC expects the seminars will generate revenue. WPCC
will jointly sponsor the seminars and share program revenues with the contractor. Budget
$25,000. On-going activity. Revenue generating activity.
Design for manufacturability. In conjunction with design schools and designers, create
industry internships to expose designers to manufacturing processes. Staff activity.
VI. Real Services
Real services implies the provision of useful and needed services to the industry. WPCC will
rely on existing private sector service providers and public sector partners to provide the
services required by manufacturers. One priority program is the creation of a technology
extension system for the industry which will deploy the market expansion, capital access, and
training and technology services WPCC is creating/marshaling for the industry.
To date, WPCC has participated in a variety of meetings with state partners to create an
extension system for the secondary wood products industry. WPCC has also funded a study to
assess the feasibility of creating a low-cost health and workers compensation insurance
program for the industry. Future and on-going program activities include:
Low cost industry services. Develop a program to provide low cost services from private
service providers to the industry. Services could include: cost accounting; financial
statement preparation; cost estimating; environmental and OSHA compliance; product
design; inventory control; scheduling; plant layout; engineering; and technical assistance.
A privatized WPCC or designated secondary manufacturers' trade association could
contract with any interested service providers for a reduced rate for members. Service
providers would benefit from the exposure WPCC could provide. Further, WPCC could
maintain a "performance file" consisting of manufacturers' assessments of the work
performed by the providers. These evaluations would be available to manufacturers who
are seeking services but are unfamiliar with a provider's reputation. Cost sharing through
the promotion of network activities could further reduce costs to firms. No cost - staff
activity. Initiation: Fall 1993.
Self-insurance plan for workers' compensation. Contract with a private insurance
specialist to examine the feasibility of creating a self-insured workers' compensation
program for an industry trade association. Self-insurance will allow employers to set their
own incident level ratings and recoup and distribute excess accumulated premiums. This
insurance program shall function as a for-profit subsidiary within a non-profit trade
association or privatized WPCC. Budget $20,000. On-going activity.
Retired Exec program. Create a "SCORE" program for the wood products industry in
Oregon. Provide to the industry a listing, by specialty and location, of retired executives.
This could be a revenue generating activity -- a privatized WPCC or designated secondary
manufacturers' trade association could charge manufacturers a small fee for the service,
11
reimburse the retired executive for travel costs, and retain a portion of the revenue for the
maintenance of the program. Nominal cost - staff activity, small publishing costs. travel,
etc. On-going activity.
Develop industry benchmarks. WPCC will collect or contract with an eligible private or
public entity to collect and aggregate industry benchmark data including: financial
indicators, manufacturing performance indicators, market development indicators, etc.
Aggregate benchmarks by firm size and industry segment, and publish. Cost $30,000 to
contract to produce data; revenue from sale of documents to offset publishing costs. No
initiation date, no budget.
Extension Service. In collaboration with USDA Coop Extension, US Forestry Service,
Oregon Coop Extension, OSU Schools of Forestry and Engineering, the Small Business
Development Centers (SBDC), and the community college system, develop a plan to
create/expand an extension service for the secondary wood products industry - initially in
Oregon and subsequently in the Northwest. Use recognized excellent programs such as
Georgia Tech as models. Additionally, in conjunction with the above Oregon partners,
contract to develop an application for a Manufacturing Technology Center (MTC) focusing
on the wood products industry. This $12M federal program could focus on the entire
Northwest, with an initial focus on Oregon. A privatized WPCC or designated secondary
manufacturers' trade association could house and manage the MTC, collecting fees for
service and ensuring industry oversight, while field activities could be contracted with the
above partners. Such a program could also encourage industry collaboration/networking.
Use existing excellent programs, such as CAMP in Cleveland, as models. Staff will assist
in planning for specialized extension service. Travel costs for WPCC and partial travel
subsidy for partners: $10,000. Federal Coop Extension/USDA/Forestry Service will
support implementation. Cost to develop MTC proposal: $100,000 less partners'
contribution; net WPCC cost $25,000. Budget $25,000. On-going activity.
ISO 9000 certification. Within MTC program, develop capacity to certify manufacturers
as ISO 9000 capable. This could be a substantial revenue generating activity as few U.S.
entities can provide this expensive service. However, it could require a substantial
investment in personnel and systems - perhaps $100,000. No initiation date, no budget.
Voucher system. Contract to develop a plan for a viable state or federally supported
voucher system to support the provision of technical services to the industry and encourage
industry collaboration. Cost $20,000. No initiation date, no budget.
VII. Privatization
The WPCC has undertaken a variety of activities to support the transition from a state agency
to a private industry association. These activities resulted in the unanimous legislative passage
of SB179 and the Governor's signing of the bill on March 24. WPCC anticipates that on May
12
7, 1993 the Board of Directors will approve the contract enabling a private industry association
to undertake the activities outlined in this business plan. The private industry association is
anticipate to commence operations by June 1, 1993.
VIII. Other
Additional WPCC activities include:
Board Retreat. As needed, hold retreats to facilitate board discussion and long-range
planning. Budget $7,500. Initiation: On-going.
Regional solutions. Participate in fostering regional solutions to the industry's problems.
Work with PNWER, BC Wood Specialties/Trade Development, etc. Staff activity, travel
budget: $5,000. On-going activity.
Commodities Commission. Look into creating a commodities commission for secondary
wood products or collaborate with existing wood products commodity commissions in
Oregon. Ability to "tax" commodities to provide industry services and promotion. Ability
to control or manage fiber flow. Could be powerful. Review existing models. No
initiation date. Budget not identified.
Special Programs. The WPCC will develop initiatives as part of the above program
structure to target the economic development needs of rural communities, Native
American, handicapped, and other minority- and women-owned businesses. WPCC will
work closely with existing Oregon entities. WPCC will attempt to identify sources of
grant funds to supplement these activities. No initiation date. No budget.
Baseline industry data. This data will set a baseline for WPCC activities, allowing for the
measurement of program impact. Collection of data could occur in conjunction with
preparation of industry capabilities document; thereby incurring no additional costs. No
initiation date.
Program/Organizational Assessment. WPCC will issue a competitive RFP to contract with
an independent organization not involved in WPCC activities to conduct a program review
for presentation to the legislature prior to sunset in July 1993 and create an annual report
for WPCC. A contractor will be sought that can identify a source of grant funds to offset
these assessment costs. This contractor will also determine progress related to the Oregon
benchmarks. See Section I, Communication and Cooperation.
Discretionary Fund. A discretionary fund was approved by the Board of Directors to be
used at the discretion of the Executive Director to fund important programs on a timely
basis. Budget $20,000. On-going activity.
13
Potential Partners
WPCC will make attempts to partner program activities with the organizations listed below:
American Plywood Association
Chambers of Commerce
Community Colleges
Job Training and Partnership Program (JTPA)
Oregon Advanced Technology Consortium
Oregon Business Development Fund (OBDF)
Oregon Economic Development Department (OEDD)
Oregon Forest Resources Institute (OFRI)
Oregon Innovation Center
Oregon Intergovernmental Councils
Oregon Institute of Technology (OIT)
Oregon Marketplace
Oregon Resource & Technology Development Corporation (ORTDC)
Oregon State University (OSU)
Rural Development Institute (RDI)
Small Business Development Centers
University of Oregon
Western Wood Products Association (WWPA)
Wood Products Center of the World Forestry Center (WPC)
Wood Molding & Millwork Producers Association (WMMPA)
wpdata\daffner\doc\buspin.41
14
WPCC BUSINESS PLAN
BUDGET
April 1, 1993
BUDGETED EXPENDITURES
WPCC
Leveraged
Expenditures
Funds
Program Expenditures
Access to Capital
$430,000
$25,000,000
Workforce Preparation
$70,000
$200,000
Real Services
$55,000
$12,000,000
Market Development
$505,000
$370,000
Communications and Cooperation
$196,000
$75,000
Other
$52,000
$30,000
$1,308,000
$37,675,000
Operating Costs
Expenses thru 7/31/92
$157,288
Operating Costs 8/92 - 6/93
$300,000
Reserves -
#
$450,000
$907,288
TOTAL EXPENDITURES
$2,215,288
$37,675,000
$39,890,288
C:123w/owpcc/implem5.wk3
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Recommended Program Responses -
Secondary Wood Products Industry
Federal Forest Conference Response
April 2, Portland
Statement:
The WPCC believes that adding more value to the natural resource before it leaves the
region is one way to effectively resolve both the environmental and economic
challenges facing the Northwest. Just as Germany, Sweden, and many developing
nations have had to adjust to finite timber resources, Oregon and the Northwest must
strategically identify uses for the region's limited, though enormous, fiber resources.
Every effort must be made to maximize employment levels as well as the efficiency of
fiber processing and utilization through such activities as increased secondary wood
products manufacturing.
Initial studies reveal that typical primary fiber processing (sawmills) employs
approximately three persons annually per million board feet (MMBF) of lumber
processed. Manufacturers of moulding and millwork products and components employ
approximately 12 - 18 persons annually per MMBF of processed fiber; while furniture
manufacturers employ 80 persons annually to process the same quantity of raw
material. By adding more value to the products they produce, manufacturers will be
able to maintain stable employment levels even as they reduce the volume of raw
material processed.
Additionally, the manufacture of value-added products often requires firms to move
upmarket to high-margin niche products that generate greater profits. More profitable
companies are able to reinvest their profits in plant improvements and sophisticated
equipment to retain their competitive edge in international markets. And the increasing
sophistication of equipment and manufacturing practices requires manufacturers to hire
high-skill employees -- well trained employees for family wage jobs. Clearly, adding
more value to the natural resource before it leaves the region is one effective strategy to
resolve both the environmental and economic challenges facing the region.
The following is a brief outline of recommended program responses -- investments in
the Northwest's small and medium-sized secondary wood products industry that will
improve the competitiveness of this critical industry and create jobs even while
reducing the quantity of lumber processed. These recommendations do not involve
direct grants to private businesses, but instead rely on a series of activities to improve
WPCC is Funded by the Oregon Lottery
market opportunities, enhance access to capital, improve training programs, and
promote collaboration among the region's secondary manufacturers. These programs
all rely on a partnership between the public and private sectors, but it is important that
these activities remain industry-led to ensure industry acceptance and successful
implementation. The emphasis of these programs should be on assisting small and
medium-sized manufacturers and funding is anticipated to come primarily from federal
sources. Additional detail can be provided on any of these items upon request.
Federal Programs
Creation of a federal forest bidding system that gives preference on timber sales to
companies based upon the quantity of lumber they sell to local and regional value-
added manufacturers. This system need not be driven by tax incentives; it could be
structured to have no net revenue impact. This could be modeled after a successful
system used in British -Columbia.
Eliminate export subsidies for U.S. timber and primary forest products. Re-assess
federal rules and regulations to promote the manufacture of value-added products.
Consider targeting Foreign Agricultural Service support to small-and medium sized
value-added manufacturers.
Eliminate foreign import tariffs on U.S. component and finished wood products.
Regional Programs
Industry Competitiveness
Creation of a Manufacturing Technology Center and/or subsidiary Manufacturing
Outreach Centers to support competitiveness improvement efforts within the industry
and among support industries. This program would focus on promoting industry
collaboration (manufacturing network development) primarily in the area of market
development, with additional program emphasis in the areas of process improvement
and technical assistance, training, and quality improvement. This program should be
led by the industry, with the close cooperation and use of existing extension,
community college, and university resources. Cost: $12M over 5 years, existing US
Department of Commerce program. (Program draft available)
Access to Capital
Creation of a targeted federal loan collateralization program to enable banks to make
needed working capital loans to manufacturers. In the existing business climate,
banks are reluctant to provide the needed working capital to secondary manufacturers.
Equipment and inventory are typically valued at only a fraction of their market value.
Government guarantees will enable banks to make the necessary loans based on a
businesse's ability to repay, overcoming the lack of real estate or more liquid assets
for collateral. Government guarantee commitments of $50M. Possible support from
USDOC-Economic Development Administration. (Program draft available)
Creation of a 'green' Market Development Fund to provide needed capital to the
industry for market expansion and development activities. Often equity infusions are
needed for manufacturers to take advantage of market opportunities. Creation of a
fund will enable manufacturers to pursue specific market opportunities, expanding
business and employment base. Cost $5M, with participation from private
investment groups and environmental organizations.
Market Development
Creation of a green marketing/certification program to encourage product
development efforts that emphasize sustainable use of the resource base. This
program could be modeled after the successful German program. Cost: $5M. This
program could be supported by the USFS or other Department of Agriculture
programs.
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Secondary Wood Products
Market Development Fund
Position Paper
Draft - 3/2/93
Goal: To provide a flexible investment vehicle to support collaborative ventures
targeted at market development and expansion activities. Market Development Fund
(MDF) support will allow manufacturers to take advantage of market opportunities that
otherwise would be inaccessible. It is anticipated that this fund will participate in
projects that involve equity financing from the applicants, bank financing for
collaterizable assets, and MDF support to fill identified capital gaps. The MDF
anticipates investments will be repaid, creating a continuing source of capital to support
future collaborative projects.
Eligibility: All Oregon secondary wood products manufacturers will be eligible to
participate in this program. Support will be provided to groups of three or more firms
to be used primarily for market development or expansion activities. Support will be
prioritized among the following areas:
1) Developmental support - market plan development, market research,
packaging development, etc.
2) Operational support - support required to respond to specific market
opportunities, new product introductions, preparation of promotional
materials, advertising, operational systems development (EDI, Bar-coding,
...) etc.
Ineligible costs include normal production costs, prototype development, and
investments in major equipment or real property.
Potential Partners: Potential partners to be approached to supplement the initial
allocation to the fund include the National Cooperative Bank, federal programs such as
SSBIC, and program related investment (PRI) groups of major foundations such as the
Ford Foundation. It is expected that participation by partners will likely target selected
constituencies, such as a Ford PRI subsidy directed for investment in rural firms.
Structure: An independent $500,000+ fund will be established to promote interfirm
collaboration among Oregon secondary wood products manufacturers targeted at
product and market development activities. Groups of firms will make application to a
3 - 5 member advisory board consisting of industry representatives and financial
WPCC is Funded by the Oregon Lottery
professionals. WPCC staff will review all applications, make recommendations to the
advisory board for approval, and manage fund assets. Initial applications to the fund
shall be no longer then 3 pages in length but a full business plan could be required for
consideration. Applications will be reviewed on a monthly basis and personal
interviews could be required.
Applications will be evaluated using the following criteria:
At least three or more firms are involved in the project.
The project directly expands existing sales or develops new market
opportunities.
The MDF investment is matched at least 2:1 by equity investments from the
participants or debt financing from private financial institutions.
The project has a reasonable expectation of success, and of repayment to the
fund.
The project involves value-added manufacturing activities, and has a positive
impact on job creation.
The maximum investment in a project will be $100,000. Distributions to applicants
can be made either in initial lump sum payments, upon completion of identified project
milestones, or upon receipt of invoices documenting activity. WPCC staff will track
and approve all disbursements. Quarterly updates from fund recipients will be required
and more frequent reports can be requested.
Mandated repayment schedules for fund investments will be linked to the successful
sale of the identified products. WPCC staff will recommend repayment schedules on a
project by project basis, for the approval of the review board. Projects of average risk
level will be required to repay the fund at a rate of % of the annual sales of the
identified product, up to % of the original invested amount. Repayment schedules
shall not exceed: % of actual sales annually; % of the initial invested amount
over the life of the repayment; and a three year repayment term. Repayment of
proceeds shall be used first to re-capitalize the fund and can be used, at the discretion
of the advisory board, to provide support to offset WPCC related staff and program
expense.
Implementation:
1) The WPCC Board of Directors and OEDD staff will jointly refine and approve the
concept.
2) OEDD will contract with WPCC (and its private successor) to manage the project,
and will disburse program funds to WPCC (and its private successor).
3) WPCC will generate detailed application and selection guidelines for the fund, and
select initial advisory board members.
4) WPCC will conduct a training session for advisory board members.
5) WPCC will produce promotional materials for the program. The program will be
promoted to the industry through the following channels:
* WPCC newsletter, 1,200 firms distribution
*
WPCC regional chapters, 150 firms participating
*
WPCC market development program, 200 firms participating
*
WPCC Buyers/Sellers Guide database, 420 firms participating
*
OEDD Key Industries Program
*
Additional avenues as necessary
6) WPCC will continue to identify sources of matching support for expansion of the
fund.
OREGON WOOD PRODUCTS
COMPETITIVENESS CORPORATION
Deschutes Business Center
20354 Empire Avenue, Suite D3
Bend, OR 97701
(503) 388-6372 (503) 388-6362 Fax
Toll Free in Oregon (800) 548-8438
Common Questions and Answers
About the Secondary Wood Products Industry
1.
WHAT IS THE SECONDARY WOOD PRODUCTS INDUSTRY?
The secondary wood products industry is composed of small- and medium-sized
businesses that manufacture intermediate components or finished wood products-
millwork, cabinetry, furniture, and specialty products. In Oregon, there are
roughly 800 secondary wood products companies.
2.
How MANY PEOPLE ARE EMPLOYED IN THE SECONDARY INDUSTRY? How DOES IT
COMPARE WITH THE PRIMARY INDUSTRY?
Oregon's secondary wood products industry employs nearly 20,000 people-about
29% of the state's entire forest products industry. The secondary industry sets
itself apart from the rest of the forest products industry because it offers job
growth. Over the last four years, virtually every sector of the Northwest forest
products industry experienced job losses, but the secondary manufacturing
industry showed absolute job growth in millwork and other sectors.
In addition, the secondary segment of the industry employs more people per
board foot of raw material than the primary industry because it is considerably
more labor intensive than its primary counterpart.
Primary fiber processing operations (sawmills) employ roughly 3 people
per million board feet of lumber processed each year.
Secondary wood products manufacturers employ 12-18 people (for
moulding and millwork products) and up to 80 people (furniture
manufacturing) annually to process the same quantity of raw material.
A transition to more secondary manufacturing, therefore, would significantly
increase employment in the region.
WPCC is Funded {'} the Oregon Lottery
3.
WHERE ARE THE JOBS IN THE SECONDARY INDUSTRY?
CAN THEY REPLACE JOBS IN THE PRIMARY INDUSTRY THAT HAVE DISAPPEARED?
ARE THE SKILLS FROM THE PRIMARY INDUSTRY TRANSFERABLE?
Secondary manufacturing jobs are spread across every region in the state of
Oregon, including many in eastern, southern, and other rural areas where workers
in the primary industry have been dislocated. Many jobs are transferable because
the stages of the secondary manufacturing process require skills similar to those
used in primary sawmills.
Moreover, the secondary industry is investing in the Pacific Northwest, leading to
a stronger economy and new, higher-skilled, higher-wage jobs. When firms
manufacture value-added products, they often move up-market to high-margin
niche products that generate greater profits. These more profitable companies are
then able to reinvest their profits in plant improvements and sophisticated
equipment to retain their edge in international markets. As firms invest in more
sophisticated equipment, they will require additional higher-skill, higher-wage
employees.
4.
WHAT ARE THE MAJOR PROBLEMS THAT SECONDARY WOOD PRODUCTS
BUSINESSES FACE TODAY?
The major problems these businesses face are common to many small and
medium-sized businesses, particularly those which are commodity-based. In order
to succeed, the secondary wood products needs:
a steady supply of raw material
access to capital for new technology and raw material
assistance with market development both in the U.S. and abroad
available technical assistance and training.
Questions and Answers about the Secondary Wood Products Industry, page 2
5.
WHAT KINDS OF SOLUTIONS/PROGRAMS WOULD STIMULATE THIS INDUSTRY
AND CREATE JOBS?
WPCC has developed a papers that detail a number of programs to tackle each of
the above problems. These include the following:
To provide a steady supply of raw material, WPCC recommends removing
subsidies that encourage primary manufacturers to export raw logs, and providing
incentives that would reward them for selling their materials to the domestic
market. To provide capital, WPCC recommends a federal loan collateralization
program that would enable private financial institutions to lend manufacturers the
working capital they need. To facilitate market development, WPCC
recommends establishing a green marketing/certification program (patterned after
the successful German program) that will encourage product development efforts
that emphasize sustainable use of the resource base. To provide technical
assistance and to improve the competitiveness of the industry, WPCC
recommends locating a Manufacturing Technology Center in the region.
6.
WHY SHOULD THE GOVERNMENT SUPPORT THESE PRIVATE BUSINESSES?
ISN'T IT IMPORTANT THAT THEY MAKE IT ON THEIR OWN?
The programs recommended by WPCC are designed to enhance the
competitiveness of secondary wood products businesses, not to provide companies
with direct federal resources. None requires direct assistance from the federal
government to private businesses. Instead, they establish new public-private
partnerships designed to improve market opportunities, enhance access to capital,
improve training, and promote collaboration among businesses.
Industries of other nations are using all the resources at their disposal to enter and
dominate international markets. In order to be internationally competitive, U.S.
secondary manufacturers will need to build on our country's infrastructure and
create partnerships with a variety of players including government, the financial
community, technology providers, educational institutions, utilities, service
providers, and others.
Questions and Answers about the Secondary Wood Products Industry, page 3