Olympia Business Watch

Brunell: Giving fish a ride helps ensure safe passage, electricity

Some activists believe there is no such thing as a good dam, AWB President Don Brunell writes in his weekly column. They want all of them removed.

A better approach is a more balanced one that starts with identifying which dams we can live with and which we can live without.

Some recent examples show when it makes sense to remove a dam and when it's possible to return fish runs through other means, such as trucking.

The Elwha and Glines Canyon dams were demolished last year on the Olympic Peninsula and the Condit Dam was breached on the White Salmon River, but it's a different story on the Lewis River, where PacifiCorp has agreed to spend $120 million to return fish runs.

On the Columbia and Snake rivers, fish ladders and barging have proven successful.

"If the dams on the Elwha and White Salmon rivers were constructed today, they would have included fish passage system," Brunell writes. "Because they did not, they came down.

"But not all dams have to come down," he adds. "When fish passages are an option, it is worth the investment to enchance fish habitat while providing low-cost electricity for our growing economy."

Gdansk Business Week Underway

Just blocks from where Republican Presidential Candidate Mitt Romney met with Polish Soladarity leader Lech Walesa and Polish officials, Poland Business Week was steaming into its second day.

Poland Business Week started four years ago in Gdynia and has since expanded to Gdansk, Boleslawowo and Minsk.  More than 500 students, adult business leaders and teachers from Poland and America are involved in the program which started in mid July and runs through late August.

American business leaders, teachers and students work side-by-side with Polish students and teachers for the hands-on experience in the market-based, Free Enterprise System.  Polish business leaders also are involved in the trade-show judging, board of director presentations and as speaker.

American program sponsors include Boeing, International Paper, Microsoft and the Association of Washington Business.  Washington Business Week started at the AWB in 1975 and since has spread to 26 states, Australia and now Poland.

The technical college where the program is housed is a stone's throw away from the Gdansk Shipyard.  The monument in which Lech Walesa and Romney met is located at the gate where Pollsh labor leaders conducted a series of strikes which eventually was the catalyst to bring down the Berlin Wall and end years of Communist domination.  That was 1990.

AWB President Don C. Brunell is in Gdansk for a second year helping with the Poland Business Week program.

 

French government, labor unions are killing Peugeot

Europe's deep economic woes are clobbering automakers. For example, Ford posted strong profits from North American sales, but lost $404 billion in Europe and posted smaller losses in Asia and South America. Meanwhile, Daimler, says slower growth in China -- which has a huge appetite for Mercedes-Benz and other German luxury cars -- is pinching that company's earnings.

Ford, despite political and labor opposition to factory closings, can shrink capacity in Europe.   But that is not the case for Peugeot, which needs to find $1.5 billion to stem the cash hemorrhage. The company faces nearly insurmountable pressure from the French government and labor unions.

According to The Wall Street Journal, European edition, Peugeot has been cutting production for years and needs to close an assembly plant north of Paris and lay off 8,000 workers. Successive government leaders have kept the plant open despite the well-known fact that high fixed costs from producing too many cars is killing the company. Since 2007, Peugeot sales have dropped 25 percent.

Peugeot's chief executive has called for a massive cut in labor costs that companies in France have to bear, as the family-controlled auto maker tries to influence pending government proposals to support the sputtering auto industry.

"We have the most expensive labor costs in Europe," Peugeot Chief Executive Philippe Varin said. "In France, we need to lower costs weighing on labor in a massive way."

Peugeot 's effort to increase sales outside Europe is not working and now is pinning its hopes on hybrids and electric cars. Meanwhile, the government will raise the subsidy for electric vehicles from 5,000 to 7,000 euros, a measure which is expected to cost the financially strapped French government, 490 million euros in 2013.

So what does this all mean for us? 

Simply put, when the government intervenes in the market, it is costly in both the short and long term. Hopefully, companies such as Ford will still be in a position to respond to markets and not be subjected to the same government restrictions, political pressures and labor actions that Peugeot faces. If that happens, production will shift offshore and foreign producers will have a market advantage.

When will the politicians learn that consumers pick winners and losers in the marketplace, not them?

AWB President Don C. Brunell is in Poland this week helping with Poland's version of Washington Business Week: "It is interesting looking at America and Europe from across the pond, as the British say."

When the Summer Games are over, the U.K and EU has an Olympic-size challenge with its economy

Jolly Old England has had alot to celebrate this summer.  The Olympics follow on the heels of the Queen's Diamond Jubilee. So today, all is rosy in a spruced-up London.  BUT when they blow out the Olympic torch and the party is over, the euphoria will likely quickly turn to angst. 

Here is why:

Great Britan's GDP is still contracting and Europe is in an economic funk. According to the Wall Street Journal European edition, the U.K.'s GDP fell by .7% last quarter and in England four years after the 2008 recession, output is 4.5% below its pre-recession peak.  And, Great Britain is in much better shape than Greece, Italy, Portugal and Spain. 

The pace of economic contraction in the euro-zone picked up in July compared with the previous month as consumer and business confidence weakened amid the deepening fiscal and banking crises, according to a measure of activity compiled by the Centre for Economic Policy Research and the Bank of Italy. 

A monthly survey also released Friday showed consumer confidence in France, the euro zone's second-largest economy, weakened in July, and the unemployment rate in Spain continued to rise in the second quarter, hitting a record high of 24.63%. In Italy, the euro zone's third largest economy, another monthly survey released Friday showed business confidence weakened as new orders dried up.

Why should we care?   What happens in Europe just doesn't stay in Europe.  For example, Ford Motor Co., the automaker which did not ask or receive government financial assistance, suffered  57% drop in earning during the second quarter despite good domestic sales.  The European economic slow down is impacting U.S. companies and Ford's European losses are expected to exceed $1 billion for the year.

So in today's world, we are more connected and interdependent than ever before.  Meanwhile, the U.S. Economy continues to struggle with anemic job growth. 

EDITOR'S NOTE:  AWB President Don Brunell is in Gdansk, Poland, for a week helping with Gdansk Business Week. He will be blogging from the other side of the pond, as they say in England.

 

Rail shipping company’s gamble pays off

Jim Kleist, vice president of the Northwest region for Railex, near Wallula. (Photo: Daniel Brunell/AWB)

Starting a multi-million dollar rail distribution company just before the Great Recession hit doesn’t seem like a winning business model, but for Railex LLC it was the right opportunity at the right time. Not only has the company’s original idea of shipping potatoes across the country worked well, but Railex has since expanded to ship other produce and wine.

The company recently announced that it’s expanding its operation in Wallula to include a $20 million, 500,000-square-foot wine storage and distribution center for wine from Ste. Michelle Wine Estates (PDF) and other wineries. It will allow the company to store up to 10 times more wine and add an estimated 25 employees. 

First profiled in AWB’s Washington Business in 2009, Railex started by shipping potatoes and other fresh produce via a rail  hub in the Tri-Cities to Albany, N.Y. Railex secured lease agreements with Union Pacific Railroad and CSX Transportation to pull the rail cars across the country with little stopping and no disconnecting. As a result, it could safely ship spuds across the country in just five days.

Dams hold potential for new, affordable electricity

Rather than remove dams, as some folks continue to advocate, how about converting some existing dams into electricity producers?

It might come as a surprise to residents of the Pacific Northwest, who rely heavily on hydropower, but only 3 percent of the nation’s 80,000 dams are designed to produce electricity. However, 70 percent of the non-powered dams have the potential to produce electricity.

A new report (PDF) from the U.S. Department of Energy claims that converting a small fraction of those dams into electricity generators could be an affordable way to add a large amount of renewable energy to America’s grid at a relatively low price. Most of that potential is concentrated in just 100 dams.

“The abundance, cost, and environmental favorability of [non-powered dams], combined with the reliability and predictability of hydropower, make these dams a highly attractive source for expanding the nation’s renewable energy supply,” according to the DOE report.

Obamacare makes it harder for small business to hire workers

The quarterly U.S. Chamber of Commerce survey of 1,225 small businesses around our country finds that of the small businesses surveyed, 72% said the health care law will make it harder for them to hire.  Specifically, they will scale back their workforce to avoid triggering the employer mandate and cut back on full-time workers.

Those surveyed employ fewer than 500 workers and have annual revenues less than $25 million.

The Harris Interactive poll found that nine out of ten small businesses are concerned about Congress’ ability to reach consensus on expiring tax rates and other business provisions coupled with sequestration cuts—the so-called “fiscal cliff.”  59% say failure to address the fiscal cliff will have a direct impact on their company’s growth.

Harris says 78% of small business owners are looking for government to “get out of the way,” noting that decisions in Washington impact their business. Additionally, 96% believe it is important to vote for a candidate that supports free enterprise.

THere is some good news. 

However, since July 2011, the small business outlook about their local economy has dramatically improved, with nearly twice as many small business leaders saying the economy is headed in the right direction today compared to one year ago. In July 2011, 27% of small business owners reported their local economy was headed in the right direction, while 47% of small business owners report their local economy is headed in the right direction today.

 

 

 

It takes dedicated teachers and business leaders to make Washington Business Week tick like a clock

Washington Business Week is not a state-funded program.  It runs on private contributions and people power. 

Washington Business Week was founded at the Association of Washington Business in 1975.  AWB continues to be the Founding Sponsor and AWB members are significant financial program underwriters.  AWB members are heavily involved as company advisers, speakers and judges.

The traditional summer program is in full-swing in Washington, Poland and Alaska.  In Washington alone, over the past 37 years nearly 50,000 students and teachers have graduated. 

Over the years, teachers have become integrated as advisers for the program. The combination of classroom teachers working with business leaders has helped make Washignton Business Week a strong program. 

For example,  Don T. Brunell is a high school teacher in a Houston suburb. He teachers government at Klein Forest High School.  For the past five years, he has been part of the Gonzaga team. 

For the next two years, he teams with Katharine Macy, a Longview Fibre Co. executive from Longview. to be chairs of the week at Gonzaga.  Last year she was a clinic adviser in the Health Care pathway. 

The chairs of the week work with Tracey Turcotte, Washington Business Week program director, to  lead and manage the Gonzaga Business Week and Health Care Week programs.

Over the years, integrating business leaders and teacher as the adult leaders of the program has paid dividends.  Teachers learn about what makes the business world tick and teachers help business leaders work with high school students.  It is proving to be a great combination.

 

Washington Business Week: Another Big Hit in 2012

The Washington Business Week program is in full swing in Washington, Alaska and Poland.  High school students from across Washington have graduated from the one-week programs at Western Washington and Gonzaga universities. 

In Poland, Polish students and teachers graduated from the Washington Business Week program in Boleslawowo last Friday. This Friday, Business Week students at the University of Alaska, Fairbanks, will graduate.

Yet to come are Washington Business Week programs at Central Washington and Pacific Lutheran universities and at Gdansk, Gdynia and Minsk, Poland.

Washington Business Week started in 1975 at the Association of Washington Business and on the campus of Central Washington University.  Since it has spread to 26 states as well as Australia and Poland.  More than 50,000 high school students have graduated from Washington Business Week. 

Since its inception, Washington Business Week staff has developed pathway programs for health care, energy, agribusiness and manufacturing.

Embraer making mark in U.S.where competition is fierce for lucrative single aisle airplane market

 

While Boeing is busily increasing production of its record-selling 737 and bringing its new 737Max on line, Embraer, the Brazil's single-aisle commercial jet is making a dent in America. 

According to USA Today, Embraer's E-series are "roomy enough for fliers and small enough for airlines."

The E-Jets — the E170 and E175 models with seating for 70 to 88 passengers and the E190 and E195 models with room for 93  to  124  passengers — help U.S. airlines reduce their capacity to match a lower demand for travel, as fewer people are flying in these tight economic times.

For passengers, E-Jets are popular because they're big enough to stand up in as you walk down the aisle — like 737s and 320s, but unlike other smaller regional jets, such as Bombardier's competing Canadair CRJs that seat from 50 to 100 passengers or Embraer's own, smaller ERJs (short for Embraer Regional Jets), they give passengers more comfort and room.

According to The Lethbridge Herald (Lethbridge, Alberta) for Boeing, this year's Paris Air Show offers a chance for its revamped 737, called the 737 Max, to close a gap with a rival jet. The Max has a more fuel-efficient engine than its predecessor and will compete with Airbus' A320neo, another top-selling plane in the same size range that is getting a new engine. Higher fuel prices mean airlines are willing to pay for more fuel efficiency.

Airbus got a jump on Boeing, offering the neo much earlier. It's already got 1,325 orders from 25 customers. Boeing has orders for 451 Maxes and commitments for more of the planes, which have a list price between $78 million and $102 million.

According to USA Today, "thanks in large part to the popularity of its small to mid-size jets in the U.S., Embraer has emerged as a competitor against Canada's Bombardier for the title of the world's third-biggest manufacturer of commercial planes behind  U.S. giant Boeing and Europe's Airbus."

The success of Brazil's Embraer in the U.S. market is something that other developing nations that seek to undertake world-class commercial aircraft production, such as China and Russia, now only aspire to.

Competition is keen today.  While Boeing is increasing its production of 737s to 42 each month, it is important that the Seattle-based commerical airplane company remain competitive and not let the foreign competitors creep in and undercut its markets.  Boeing is a mainstay in Washington's economic success.

 Don C Brunell, President (DonB@awb.org)

 

Larry the Lonesome Sockeye has a record number of wild followers returning to the Columbia River system

SUNDAY BLOG:

Remember our old friend Larry the Lonesome Sockeye? In 1992, he was the single male sockeye salmon who managed to swim 900 miles from the mouth of the Columbia River to central Idaho's Redfish Lake.

Well he has a record number of "WILD" followers this year.

In 2012, a record run of more than 400,000 of the Columbia Basin's farthest-swimming salmon are expected to return, almost all of them wild fish bred in rivers and spawning lakes, not the hatcheries that produce most Northwest salmon.

According to The Columbian this week, Tuesday's count of 41,573 at Bonneville Dam was a record-high, topping Monday's count of 38,756. The old daily count record was 30,690 on June 24, 2010.

Since Bonneville Dam outside Portland, Ore., was built in 1938, there have been  plenty of times there weren't 38,000 sockeye salmon swimming over the fish ladders in a whole year.

Things have been changing rapidly for the best even with the dams on the lower Columbia and Snake rivers intact -- and at Redfish Lake deep in the Sawtooth Mountains following efforts years ago to irradicate the sockeye run completely.

The Snake and lower Columbia river drainages are not the only places where Sockeye salmon are returning in record numbers. Sockeye cross nine dams to reach spawning grounds in northern Washington and Canada.

Biologists credit habitat improvements in the Okanagan Basin of northern Washington and Canada, improved dam operations, and favorable ocean conditions for the numbers. Okanagan sockeye swim more than 500 miles to spawn.

Cindy LeFleur of the Washington Department of Fish and Wildlife, chair of the Columbia River Technical Advisory Committee, confirmed the record run told The Columbian the panel of scientists determined on Monday the sockeye run is on track to be the forecasted record of 462,000. 

In the same story, Steve Smith, a Canby, Ore., fisheries consultant who works extensively with the Colville tribe, said "It's an exciting success story of water management and ever-improving passage over the dams." Smith credits more spill and surface bypass systems at the Columbia River dams have helped sockeye, just as chinook are benefitting.

The Canadians have helped as well. They changed the water levels in the Okanogan River reservoirs, balancing the flows and keeping them high enough to protect the eggs in the gravel.

Sockeye migrate through the lower Columbia in June and July, with the peak counts at Bonneville normally about July 1.They are an inland-origin fish, which needs rearing lakes in their natal watershed as part of their life cycle.

So dams and fish can  and do co-exit. Fish and farming and logging can co-exist.....and fish and people can co-exist. That's good news to start July with.....very good news.

Don C. Brunell, President (DonB@awb.org)