The Pacific Northwest is a four-season region. Its geography includes mountains, valleys, and rivers, and recreational activities abound for each season.

More importantly for manufacturers, the Pacific Northwest is the most direct route between the Pacific Rim and most of the U.S. It is also a region that has a high standard of living and quality of life, and a low cost of living and doing business, especially in relation to California and the Southwest U.S.

The region, on both sides of the U.S.-Canadian border, has numerous ports that allow for logistically efficient import and export opportunities.

Technology expertise

Companies are attracted to the Seattle metro area because a highly educated workforce that is skilled in state of the art technology. It is a direct result of being home to Microsoft and the many startup companies that spin off from the computer giant. The metro area is also home to many companies involved in the digital games and interactive media sectors, as well as other information technology categories.

“The technology expertise that exists [in Seattle] is an important factor in maintaining and building existing industry clusters and developing new ones,” says Tom Flavin, president and CEO of Enterprise Seattle, the economic development organization for 39 cities of King County, Washington. “There is a culture of innovation here. It is why companies are interested in [locating] in the metro.”

These companies do a substantial amount of business overseas, whether it is suppliers on the back end of the supply chain or customers on the front end.

The Seattle-Tacoma-Everett port region is the third-largest container complex in the U.S., behind only New York-New Jersey and Los Angeles-Long Beach.

Seattle and Tacoma have major trading relationships with Mexico; Brisbane, Australia; and West Midlands, England. Seattle is also the closest point in the contiguous 48 states to South Korea and the Pacific Rim.

“Our strategic location with regard to the Pacific Rim, our deepwater ports, and vast experience in international trade make Seattle one of the leading trading hubs on the West Coast,” Flavin points out.

There have been substantial improvements to rail service in the Seattle metro area, with a focus on freight mobility, Flavin says.

Handling odd-sized cargo

Aerospace is a large part of the manufacturing environment of Washington, with Boeing operating major assembly facilities in Renton and Everett. The aerospace giant imports much of its components into the U.S., and much those imports come into the Port of Everett.

“We pride ourselves in our ability to handle odd-sized cargo,” says Lisa Lefeber, spokeswoman for the Port of Everett. “That tends to be our niche. We specialize in oversized aerospace parts.”

The port handles the import of components for Boeing’s 777, 747, and 767 airplane programs. “One-hundred percent of the oversized parts for these programs come through our port,” Lefeber says.

The port opened a new satellite facility in 2008 that is specifically designed to transport those parts. While it was not built exclusively for Boeing or the aerospace industry, that is its current use.

The port barges aerospace parts to the satellite facility, then loads them onto rail cars for shipment to Boeing’s manufacturing plant.

Other major imports to the port include wind energy cargo, heavy machinery, transformers that eventually go to the Midwest and East Coast to upgrade power grids, and containerized cargo in support of the construction industry. The port also operates a bulk cement facility.

Major exports include cargo that supports the oil and gold mining industries in Far East Russia.

The port is on the Burlington Northern Santa Fe (BNSF) mainline to Chicago, and there is an effort to expand rail capabilities, Lefeber says. Recently, the port built a new 70-ton rail loading ramp at its terminal facilities to support the loading and unloading of heavy machinery and equipment. Later this year, construction will begin on 2,500 lineal feet of rail.

Quicker land route to the south

Though it is on the southernmost tip of Puget Sound, the Port of Olympia is centrally located. Its location south of Seattle-Tacoma and Vancouver, British Columbia, gives manufacturers importing product to a Pacific Northwest port a quicker land route to destinations in Oregon and California, says Jim Amador, marine terminal director for the Port of Olympia.

Amador describes the Port of Olympia as a niche port, specializing in break bulk cargo. Its major cargo is forest products, and it has a log export facility. Weyerhaeuser and Pacific Lumber and Shipping, two of the largest exporter of logs in the world, have operations in Olympia.

The benefit to having these two companies at the port is other forest product manufacturers have the ability to partner with them regarding space utilization on vessels, Amador says.

The port also handles wind energy cargo, including windmill blades.

It has access to Union Pacific and Burlington Northern railroads, and it sits in proximity to Interstate 5.

The port recently completed a loop track that provides on-dock rail and added 5,839 feet of new track, bringing its total to 11,070 feet on the terminal.

“We’re focusing on project (heavy lift) cargo, with the ability to go right from vessel to rail,” Amador points out.

Opportunities for trade-dependent Oregon

The state of Oregon is one of the most heavily trade-dependent states in the country, and it has the fifth-largest export-supported employment base. That makes the Port of Portland a critical link to economic development in the state.

“The port provides economic opportunities to the state primarily through our ability to provide connections and access to international markets,” says Keith Leavitt, general manager of business and properties for the Port of Portland.

Oregon is home to a mix of companies that manufactures products for shipment to Asia, as well as warehouses and distribution centers that receive components and parts from overseas, Leavitt says.

“We have numerous headquarters [in Portland] with operations overseas,” he points out. “They need to be able to reach their overseas locations as direct as possible. Having the port focused on international service is a critical part of the business plan of Oregon.”

The port, which has four marine terminals and recently purchased two post-Panamax cranes, is in the final stages of a 20-year project to deepen the lower Columbia River. The project should be competed within the next year, Leavitt says.

There have also been major rail improvements between the port and the area’s largest industrial park, with BNSF and Union Pacific having dual access to its facilities.

“We’ve spent quite a bit of time and money in constructing rail improvements,” Leavitt says.

Shorter transit times

Between any destination in China or Asia and the Midwest U.S., the closest port is not located in the United States. It is located 600 miles north of Vancouver at Port of Prince Rupert. All roads and rail transportation go directly east to Canada and the United States, says Don Krusel, president and CEO of Prince Rupert Port Authority.

The port has seen dramatic success since it opened its first container terminal in 2007, transforming itself from a regional port to a major international gateway into the heartland of North America.

In 2009, container traffic increased 45.9 percent and overall port traffic 15 percent compared with 2008, during the global economic downturn when other North American ports were experiencing significant declines. In the first quarter of 2010, container traffic was up 87.3 percent and total tonnage increased 72.8 percent compared with the first three months of 2009.

 “Shippers are telling us that their containers are getting to their inland destination four to seven shipping days faster than they ever experienced before,” Krusel says. “That is why high-value (such as auto parts) and consumer goods with short shelf lives (such as fashion goods) are gravitating to Prince Rupert. If you can take days out of the logistics stream with products valued at several hundred thousands of dollars, you can save a lot of money.”

There are no issues moving product into the U.S. at the border crossing at International Falls, Manitoba. U.S.-bound containers undergo a much tougher level of security screening at Prince Rupert than at any West Coast U.S. port, Krusel says. (Prince Rupert was the first major container terminal built on the North American west coast after 9/11, meaning measures for 100 percent screening were built into the facility.) In addition, there is added security screening when the cargo reaches the border.

One of Prince Rupert’s main assets is its capacity to grow, and it is in the beginning stages of expanding container terminal capacity. The port expects to triple its container capacity size by 2014.

“We will spend $650 million (Canadian) to expand the terminal to accommodate 2 million TEU capacity on an annual basis,” Krusel says. “This will put us on par with Seattle and Tacoma. Preliminary plans call for a second container terminal when market conditions warrant. Eventually, we could build to a capacity of 5 million TEU.”

Access to consumer markets

Companies always struggle with trade offs. While they want to be close to the market, the cost of doing business near that market could be substantially higher. The state of Idaho likes to think it is in the sweet spot-close to large consumer markets but in a market with a lower cost of doing business. A base of 90 million consumers is within 650 miles of the state, says Lane Packwood, administrator of the Economic Development Division in the Idaho Department of Commerce.

Logistically, the state is centrally located for strategic access to the rest of the Pacific Northwest region, western Canada, the Upper Midwest, and Rocky Mountain region.

Lewiston, Idaho, is home to an inland seaport using the Columbia and Snake rivers from Portland. Companies can bring trans-Pacific cargo 450 miles up the rivers.

It is the shortest, cheapest route to get cargo to the oil fields of Alberta, and companies can also ship product overland to the upper Midwest U.S., as well, Packwood says.  wt



Ken Krizner is a freelancer writer based in Cleveland, Ohio, where he writes often on economic development and technology issues.