Egils Milbergs Executive Director

Washington Economic Development Commission www.wedc.wa.gov

Four Pillars for Economic Growth and Job Creation

Making it in Washington February 1, 2012

Commission Members

Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics

Recovery: Non-farm Employment Monthly difference with start of recession (Q4 2007)

-208.1

-250

-200

-150

-100

-50

0

50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Dif

fere

nce

wit

h In

itia

l Pe

rio

d E

mp

loym

en

t

(Th

ou

san

ds

of

Wo

rke

rs)

Months of Recovery

2001 Recession (3 quarters) Since Q4 2007

Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics

Non-farm Employment Seattle-Bellevue-Tacoma Metropolitan Area

-118.9

-71.2

1,340

1,360

1,380

1,400

1,420

1,440

1,460

1,480

1,500

Au

g-0

7

Oct

-07

Dec

-07

Feb

-08

Ap

r-0

8

Jun

-08

Au

g-0

8

Oct

-08

Dec

-08

Feb

-09

Ap

r-0

9

Jun

-09

Au

g-0

9

Oct

-09

Dec

-09

Feb

-10

Ap

r-1

0

Jun

-10

Au

g-1

0

Oct

-10

Dec

-10

Feb

-11

Ap

r-1

1

Jun

-11

Au

g-1

1

Oct

-11

Dec

-11

Line indicates employment level in April 2008 (recent max)

Key Performance Comparisons (by range, state rank and trend)

5 WEDC 1.4

$45,464

1.8%

$43,564

0.442

4.0%

86

Real per capita GDP, 2010

Non-farm employment growth, Nov ‘11 3mma

Per capita personal income, 2010 (current USD)

Gini Coefficient, 2005-2009

Computer and mathematical occupations, as % total workforce, 2010

Patents (all types) per 100k residents

AK, DE, CT

ND, OK, UT

CT, MA, NJ

UT, AK, NH

VA, MD, WA

VT, WA, CA

Washington’s Rank

#14

#11

#14

#19

#3

#2

$29,318

0.8%

0.499

$31,046

4.6

-0.8%

$63,090

$54,877

4.9%

0.411

106.8

5.1%

(Scale in reverse)

(More than double 2005)

Data source: Washington State Employment Security Department.

Non-farm Absolute Gains and Losses, Year-over-Year Seattle-Bellevue-Tacoma Metropolitan Area, November 2011 (1000s workers)

-0.63

-0.33

-0.33

-0.33

-0.03

1.30

1.77

1.83

3.73

8.63

Credit Intermediation and Related Activities

Insurance Carriers and Related Activities

Accounting, Tax Preparation, Bookkeeping and Payroll

Truck Transportation

Air Transportation

Administrative and Support Services

Architectural, Engineering and Related Services

Software Publishers

Computer Systems Design and Related Services

Transportation Equipment Mfg

Larg

est

Lo

sse

s La

rge

st G

ain

s

The Good and the Bad

Reasons for Optimism

• Young, connected, smart people • Strong anchor companies:

aerospace, food, information technology, medical, non-profit

• Intellectual property hotspot • Attractive place to live • No income tax • Pacific Rim location • Potential defense opportunities • Growing entrepreneurial sector • Abundant energy sources

Reasons for Pessimism

• Global uncertainty • Long term unemployed • Skills mismatch • Short on engineering talent • Underperforming schools • Poor transport infrastructure • Lagging regions • Income disparity • Cost/complexity to start a new

business.

7 WEDC 1.4

To accelerate job creation, WA must make progress on four dimensions

Intellect

Investment

Infrastructure

International

Emphasize career transition, access to learning resources and the skills that employers need.

Create innovation ecosystem to foster new products, start-ups and manufacturing.

Design a 21st century infrastructure, an efficient regulatory system and align to regional objectives.

Grow the global presence of Washington’s business.

8 WEDC 1.4

Policy Specifics Around the Four Pillars

TALENT and WORKFORCE

1. Channel talent

pipeline to industry needs

2. Shift focus of UI to support new career prep.

3. Retain foreign student graduates

4. Navigate career choices with personalized information

INVESTMENT and

ENTREPRENEURSHIP

1. Recruit STARs

research teams

2. Provide operational funds for IPZs

3. Turn on FDI

4. Enhance tax policy to close gaps in commercialization

INFRASTRUCTURE and REGULATIONS

1. Assess economic

development outcomes.

2. Create Lean Institute for regulatory efficiency

3. Align infrastructure investments to local priorities

4. Pilot self financing of collaborative innovation.

INTERNATIONAL BUSINES (Exports)

1. Optimize export

services to SMEs

2. Modernize transportation infrastructure for freight mobility

3. Intensify innovation collaboration in the Pacific Northwest.

SOURCE: Statement of Priorities for Kick-starting Job Creation, Washington Economic Development Commission, Nov 22 , 2011 9 WEDC 1.4

Workforce Challenge

WA Economic Development Commission 10

Technical

Prof

Technical

Unskilled

Prof

Unskilled

Washington STAR Researchers

Michael Hochberg Birgitte Ahring

Chen-Ching Liu

Daniel Kirschen

UW

WSU – BSEL Center for Bioproducts and Bioenergy

Smart Grid

WSU

Hugh Hillhouse

Faces of Emerging Industries

Entrepreneurs-in-Residence

Lars Johansson

Ronald Berenson

Terri Butler

Henry Berg

Stephanie Amoss

Ken Myer

David Kaplan

David Croniser

Thomas Schulte

Bryan Zetlan

Lewis Rumpler

Peter Quinn

Karen Fleckner

Kevin Petersen

Jeff Canin

Chris Leyerle

Startup Weekend

WA Economic Development Commission 13

Whidbey Island Naval Air

Puget Sound Naval Shipyard

Joint Base Lewis McChord

Madigan Medical Center

Naval Submarine Base Bangor

Spokane Fairchild AFB

US Coast Guard

WA Nat’l Guard

US Army, Yakima US Marine Corps

Opportunities in Defense Technology

191,000 jobs $12.2 billion in output

$10.5 billion in labor income $5.2 billion in defense contracts

Intelligence, Surveillance, and Recon

Special forces and special operations

Network-centric operations

Cyber security

Composite materials

Unmanned systems – both air and sea

Energy efficiency

Environmental stewardship

Health care for veterans

Naval Station Everett

14

Transforming Infrastructure

Post “ICE” Age? Internal Combustion Engine

15

Leave oil before it leaves us!

15 WA Economic Development Commission

Innovation Partnership Zones

Bellingham Innovation Zone

Aerospace Convergence Zone

North Olympic IPZ

Tri-Cities Research District

South Lake Union Life Science IPZ

Spokane University District IPZ

Bothell Biomedical Manufacturing Corridor Central Washington Resource Energy Collaborative Grays Harbor Sustainable Industries

Pullman –Clean Tech Industries

Walla Walla IPZ

Interactive Media and Digital Arts King County Financial Services Collaborative Urban Clean Water Technology Zone

WA Economic Development Commission 17

Washington’s Global Health Ecosystem

T

S

R&D Assets

•University based research centers

•National Labs (gov’t)

•Corporate Labs

•Inventors (patent owners)

Transformers

•Entrepreneurs

•Start-ups

•Incubators

•Technology Development Initiatives

•Industry University Collaborations

T

Funders

•Government Policies/Programs/Incentives

•Venture Capital

•Angel/Seed Networks

•Corporate R&D

•IPOs

S

Support

•Regional Innovation Clusters

•Talent pool

•Professional (Legal, Accounting, HR , Mentors)

•Marketing and Branding

Innovation Ecosystem

Not just ingredients but the relationships

Adapted from Navi Radjou, Forrester Research 18 WA Economic Development Commission

Innovation Ecosystems Evolve

Growth

Transformational

Nascent

Emerging

None or few firms Growth potential

Few to many firms Fast growth

Some linkages

Accelerated collaboration Many linkages

Attraction of firms

Many nodes Dense linkages

Region to Region Next generation

STARS IPZs

R&D

EIRs Patents

Incubators

Innovation Triggers

Tax Incentives

Talent

Gap Funding SBIR

19 WA Economic Development Commission

21

Fiscal constraints require new priorities Some difficult choices for economic development

Reduce Create

Eliminate Invest

Tough Trade-offs

Economic Development

Programs Outcomes

Jobs

Income Distribution

Per capita GDP growth

Quality of life

Tax revenues

WEDC 1.4

22

Current Economic Development System Many pieces, but how do they work together?

Dept of Commerce 18 Programs

Governor’s Office Strategic Reserve Account

Employment Security

Department 15 Programs

Dept. of Agriculture 5 Programs

Dept. of Social & Health Service

3 Programs

WSDOT 2 Programs

OSPI /Early Learning

3Programs

WA SBCTC 10 Programs

Workforce Training Board

2 Programs

Washington State University

5 Programs

University of WA 6 Programs

36 other state economic programs

Recreation & Conservation Office

14 Programs

Innovate WA 8 Programs

Trade Associations Economic

Development Councils

Innovation Partnership

Zones

City & County Government

Federal Labs

SBA

Dept. of Agriculture

SBIR/STTR

Dept. of Defense

Business and Local Economic Development Organizations

Fed

eral P

rogram

s

Dept of Commerce

Associate Development Organizations

WEDC 1.4

PNWER Region (GDP/Pop.) State/Prov. GDP* Population

Wash. 322,778 6,549,224 Alberta 291,300 3,735,086 B.C. 191,006 4,551,853 Oregon 161,573 3,782,991 Idaho 52,747 1,545,801 Alaska 47,912 686,293 Sask. 41,296 1,049,701 Montana 29,885 974,989 NW Terr. 4,124 41,464 Yukon 2,026 34,157 Total 1,144,647 22,901,559

*2009 population & GDP in $US Million Data provided by PNWER – Pacific Northwest Economic Region

Pacific Northwest is an innovation powerhouse

If PNWER were a separate country,

it would rank 14th in total GDP

23 WA Economic Development Commission

If PNWER were a separate country,

it would rank 14th in total GDP

24 WA Economic Development Commission