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Remarks by Governor Kitzhaber at the Port of Portland Gateway to the Globe Luncheon

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Last fall, I led a business and trade mission to Japan, South Korea, and China with Port executive director Bill Wyatt and others from the Port of Portland. We took with us leaders from the public sector and business leaders from diverse economic sectors representing all corners of the state. Many of you are here with us today. Our goal was to promote the sale of Oregon goods and services to Asian markets and to attract more Asian companies to do business here in Oregon.

This was my first trip to Asia since the fall of 2002, and it's fair to say that a lot has changed since then. Our delegation began our trip in Japan, Oregon's fourth largest export market and destination of Portland International Airport's daily nonstop passenger flight to Tokyo. Oregon and Japan have a long history of trade and Japan has been in our top three or four export markets for years. Visiting Japan in the wake of the devastating earthquake and tsunami was a sobering experience but one which also provided countless signs of hope and courage -- strong evidence that Japan will emerge stronger and more resilient than ever.

We then moved on to South Korea. With almost a billion dollars in Oregon products going to South Korea each year, it is our fifth largest export market --supported by Portland's three nonstop cargo flights to each week. While in Seoul, I signed a memorandum of understanding with the Korea International Trade Association sealing our commitment to work together to further increase trade and investment.

Finally, we went to Beijing, Tianjin and Shanghai, China where the changes that have taken place over the past decade were especially dramatic. When I left office in 2003 Oregon exported less than $700 million dollars worth of goods to China annually. Last year we had $3.2 billion dollars of exports to China. In just the last four years, China has leaped ahead of other Asian countries and Canada to become Oregon's top trading partner.

Throughout the trip -- in each city we visited, in each conversation I had with local leaders -- I was struck by the strength of the relationships and trust that have been built over years and even decades with these three countries. Oregon is a unique place -- and Portland is, some might say, an even more unique, even weird, place -- but we're not an isolated place. Oregon is the ninth most trade dependent state in the nation, so our relationships with Asia and with countries around the world is and will continue to be crucial to our economic success.

Today, nearly 5,000 Oregon companies export their products and services abroad, and one-quarter of Oregon's manufacturing jobs are export-dependent. All of this translates to real dollars, real jobs, and real local paychecks, starting right here with the Port of Portland. Last year, 13 million tons of goods moved through the Port -- the third highest volume in Port's history -- with containerized imports up four percent over the previous year as Oregon's economy has begun to recover. Businesses reported $4.6 billion in revenue generated at Port facilities, and more than 26,600 Oregonians work at jobs associated with or at the Port of Portland.

Statistics like these remind us that we are here today not merely to celebrate and learn about the city of Portland's local port. We are here because the Port of Portland is really the Port of Oregon, which -- along with its sister ports up and down the Columbia River and along our coast -- is the key to helping Oregon businesses thrive here at home and abroad. We are here because if we are going to raise our per capita income back up above the national average by 2020; and if we are going to fulfill our goal to create 25,000 new Oregon jobs this year and every year for the next decade -- we must ensure that Oregonians have reliable access to foreign markets.

International trade has long been a cornerstone of Oregon's economy, from the earliest Native Americans trading along the Columbia River, to wheat coming down the Willamette River in the early 1800s destined for England -- long before the city of Portland was even incorporated.

Today, products from all corners of our state find enthusiastic markets not only in the countries we visited last fall, but also in Taiwan, the Philippines, Brazil, Germany, the Dominican Republic, and many more. Forest products from southern Oregon are sold in Australia; grass seed and onions go to Chile and Vietnam. From apples to wheat; from crab to hazelnuts: Oregon agricultural goods are competitive in the global marketplace, and sought after for their unsurpassed quality. In fact, last year, all but two Oregon counties reported an increase in agricultural sales, for a state-wide record of $5.2 billion.

On the technology side, companies like TriQuint and Intel are exporting microprocessors and other advanced technology to Malaysia and China, with Intel alone providing more than $17 billion in economic activity to Oregon. According to a recent Brookings Institution study, Intel accounts for more than half the value of Oregon's exported products to China -- and it is numbers like these that have moved Portland to third out of the 100 largest U.S. metropolitan areas in terms of the share of their economy made up by exports.

State-wide, Oregon export value has grown 23 percent since 2009, but I think we've only scratched the surface of our potential. And I'm convinced we will see exponential increases in the export of value-added products from Oregon over the next decade, which will pay huge dividends for our citizens. For every billion dollars in additional goods sold overseas, 5,400 new jobs are created here in Oregon, which is why my administration is scouring the state to find export-capable companies and helping them with grants, expertise and global connections to get them selling overseas to bring new revenue home.

We have also found that one of our most promising export opportunities lies not in our products or natural resources, but in our people, including many of the 13.5 million people who flew out of Portland International Airport last year. Oregonians' ingenuity and know-how -- and our ability to innovate ahead of the curve to remain competitive in the years and decades to come -- are resources other countries are seeking. In fields like the clean economy, green building and green chemistry, footwear and apparel, and advanced manufacturing, Oregonians are leading the way.

No one knows this better than Hermiston's Fred Ziari, who traveled with us on the trade mission to Asia. As President and CEO of IRZ Consulting, Fred's new office is in Beijing. He is there because his company has developed irrigation technology that's being exported to fast-growing Asian markets. This effort not only supports his company's expansion plans; it is also an important win for efficiency and water conservation in food production.

Fred is just one example of our state's emerging economy of innovation, where Oregon entrepreneurs design, build, and export the products, technologies, and expertise of the 21st century. This innovation is founded on locally-driven ingenuity that's rooted in our strengths: our solid base in agricultural, forest and advanced manufacturing industries; our promising technology research and development; and our strategic location on the Pacific Rim with access to growing Asia markets. The Port of Portland is essential to the emerging innovation economy, providing pathways to points around the globe, and also serving as Oregon's front door for businesses, products, and visitors making their way to our state.

This access is significant to our economy now and will be no less significant in the future, and we must make sure that Oregon's next generation of local innovations is be able to reach the entire globe, too. So how we do that?

First, we have to foster a business environment that connects manufacturers with suppliers right here in Oregon. When we can identify and source market-competitive, Oregon-made products, we enhance Oregon's "cluster" strategy and see economic multipliers all over the state in the form of family-wage jobs and continued increases in our exports.

At both the state and regional level, we have to build the right environment for private investment and innovation. When it comes to job creation, the private sector has to take the lead, but state and regional governments can play an important role as accelerators and barrier-busters. In particular, government can help catalyze new markets through smart research and development and strategic workforce investments; through consistent policies that encourage and reward private investment; and through the patient development of industrial lands for future growth opportunities.

Our Regional Solutions Centers are redefining economic development in Oregon with local offices guided by local leadership that allow us the flexibility and responsiveness to solve local problems, create and retain jobs, streamline permitting, and ensure state agency coordination.

With the recent passage of the Oregon Investment Act, we will now be able to leverage public resources to encourage a greater level of private investment in Oregon. Unlocking private credit -- which has been stuck sitting on the sidelines -- is essential to helping our local businesses gain access to the capital they need to grow.

To support local manufacturing we must also support the infrastructure that moves Oregon-made goods abroad and helps ensure that globally-sourced products find their way here. We do this by making sure that goods can easily be transported to, around, and through the state, whether it's through maintaining the Columbia River channel or investing in public works projects, including the Columbia River Crossing. These projects support traded sector businesses both small and large in every corner of Oregon, creating local employment. Furthermore, I remain committed to ensuring that projects like these become models for local hiring and contracting in communities desperately in need of jobs and workforce training opportunities.

All these strategies focus squarely on job creation and economic development, and all are important. But there are two other areas which I have made priorities for my administration -- areas that are inextricably linked to the traded sector; to our economic well-being as a state; and to putting Oregon on the pathway to an enduring prosperity. One is health care and the other is education.

When I meet with industry leaders and Oregon's major employers, the first thing they ask is not "how can we lower our taxes?" or "what can we do to control wages?" Instead, it's "what can we do about the cost of health care and better understand what we are buying?" Let me give you an example.

Ford motor company spends far more on health care than they do on steel. They know everything there is to know about the steel they buy: its molecular structure, its tensile strength, its weight and its melting point. But they know almost nothing about what they are getting for the huge and growing expenditure they are making on health care. Something is badly wrong with this picture.

With out-of-control medical inflation, unpredictable costs year-to-year, and no indication that we are getting better results for those costs, Oregon's health care reform efforts offer the potential for one of the most profound cost advantages for small and large businesses alike. And we are well on our way.

In the two decades we've reformed our worker's compensation system, Oregon businesses have saved over $14 billion. Imagine the competitive advantage those same businesses would enjoy if we could reduce the rate of medical inflation. That is exactly the long-term objective of Oregon's health care reform effort, moving away from an emphasis on after-the-fact, acute care and toward promoting wellness, prevention, and community-based management of chronic conditions.

We made remarkable progress in 2011, and again in the February 2012 session to begin implementing the changes to put us on track to save $2.5 billion in health care costs over the next five years through a more patient-centered system that will improve health outcomes while reducing cost. This is a potential game changer -- one that can give a huge competitive advantage to businesses throughout Oregon and attract new businesses to our state.

The second priority is education. We want every child in the state to have a pathway to success and to upward mobility. We want to ensure that a well-educated Oregon workforce is ready to support the companies of the 21st century. So we've set a goal for Oregon that by 2025 we will have a 100 percent high school graduation rate; that 40 percent of those graduates will go on to get at least two years of post-secondary training; and that another 40 percent to get a bachelor degree or higher.

Making smart investments in education programs with demonstrated results for learners of all ages; setting goals that help our students prepare for the future; and holding ourselves accountable for giving every child an equal opportunity to excel will help ensure that Oregon is a competitive place for businesses to locate and to find people with the skills and knowledge to succeed in the 21st century. It also means that today's youth will be prepared to come up with the next generation of innovations, keeping Oregon thriving for decades to come.

Investing in education and workforce development lifts up all of Oregon. Reducing the cost of health care and improving health outcomes provides a more secure future for both employers and workers. We can pursue every economic development opportunity out there, but if we aren't reducing the cost of health care and investing in education, our job creation efforts won't be enough. By pursuing all three, guided by a clear vision of where we want to end up, Oregon can and will be more prosperous, and this prosperity can and will reach all our citizens while influencing the rest of the world.

Our airports and seaports remind us -- with each take off and landing; with each port of call -- that we are not alone in this world.

I have always believed that Oregon will not be a good place for any of us to live unless it is a good place for all of us to live. And when it comes to making Oregon a better place for all of us, our progress depends on collaboration at every level. So building connection across countries, across rivers, and across oceans is essential to our success.

The Port of Portland provides good example of how this is done by literally connecting Oregon to points around the globe. And the Port also shows us how it is done in their continued and dedicated support of farmers, business, and citizens across our great state.

So thank you to the Port of Portland.


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