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Home My WebLink AboutCity Council Committees - Operations - 09/16/2003 (3)Operations Committee Agenda Councilmembers: Tim Clark#Leona Orr#Rico Yingling, Chair September 16, 2003 4:00 p.m. Item Description Action Speaker Time Page 1. Approval of minutes dated August 19, 2003 YES 1 2. Approval of vouchers dated September 15, 2003 YES May Miller 05 Min. 3. Matricula Consular Identification Resolution YES Tom Brubaker 10 Min. 3 4. Impoundment Reservoir Property - YES Tom Brubaker 05 Min. 7 Designating the Property as Surplus 5. 2003-2008 Economic Development Strategic YES Nathan Torgelson 10 Min. 9 Plan Resolution 6. PC Replacement Plan 2003 YES Stan Waldrop 10 Min. 129 Chris Beagle 7. August Finance Report (Handout) YES May Miller 10 Min. Unless otherwise noted, the Operations Committee meets at 4:00 p.m. on the 1st and 3rd Tuesdays of each month. Council Chambers East, Kent City Hall, 220 4th Avenue South, Kent, 98032-5895. For information please contact Renee Cameron at (253) 856-5770. Any person requiring a disability accommodation should contact the City Clerk’s Office at (253) 856-5725 in advance. For TDD relay service call the Washington Telecommunications Relay Service at 1-800-833-6388. This page intentionally left blank. Operations Committee Minutes August 19, 2003 Committee Members Present: Chair Rico Yingling, Leona Orr, Tim Clark The meeting was called to order by Rico Yingling Chair at 4:02 P.M. Approval of Minutes of August 5, 2003 Tim Clark moved to approve the minutes of the August 5, 2003, Operations Committee meeting. The motion was seconded by Leona Orr and passed 3-0. Approval of Vouchers Dated August 15, 2003 Leona Orr moved to approve the vouchers dated August 15, 2003. Tim Clark seconded the motion, which passed 3-0. ORDINANCE AMENDING CHAPTER 3.10 OF THE KENT CITY CODE REGARDING DELINQUENT ACCOUNTS. City Attorney Tom Brubaker presented the proposed ordinance amending Chapter 3.10 of the Kent City Code that establishes interest charges for certain types of delinquent accounts. The proposed ordinance amends Ch. 3.10 to clarify penalties and interest charges assessed for invoices billed for services or for other amounts due to the City not otherwise established in the Kent City Code. In addition, this amendment aligns other related code sections regarding collection and unpaid charges for consistency, exempts donors or grantor agencies from delinquency charges, establishes a minimum interest charge of $2.00, and authorizes use of a collection agency. Tim Clark moved to recommend council adoption of the proposed ordinance amending Chapter 3.10 of the Kent City Code regarding delinquent accounts and the assessment of penalties and interest. The motion was seconded by Leona Orr and passed 3-0. AMENDING RESOLUTION NO 1200 TO ALLOW CITY CREDIT CARDS TO BE USED FOR NON-TRAVEL RELATED PURCHASES. Finance Director May Miller presented the proposed resolution amending Resolution No. 1200. The proposed amendment that clarifies employee use of credit cards for authorized non-travel purposes. City employees will be able to make small travel and non-travel related purchases simply and easily when appropriate and authorized by either a top-level manager or department director. Leona Orr moved to recommend council adoption of the proposed resolution clarifying City credit card use for authorized non-travel related purchases. The motion was seconded by Tim Clark and passed 3-0. Operations Committee, 8/19/03 2 ORDINANCE AMENDING 1ST HALF 2003 BUDGET Finance Director May Miller presented the proposed ordinance authorizing council to approve the gross consolidated budget adjustment ordinance totaling $15,851,033 for budget adjustments made between January 1, 2003, and June 30, 2003. Tim Clark moved to recommend council approve the consolidated budget adjustment ordinance for adjustments made between January 1, 2003, and June 20, 2003, totaling $15,851,033. The motion was seconded by Leona Orr and passed 3-0. The meeting was adjourned at 4:18 P.M. Renee Cameron Operations Committee Secretary 1 LAW DEPARTMENT Tom Brubaker, City Attorney Phone: 253-856-5770 Fax: 253-856-6770 Address: 220 Fourth Avenue S. Kent, WA. 98032-5895 DATE: September 16, 2003 TO: Operations Committee FROM: Tom Brubaker, City Attorney THROUGH: Jim White, Mayor SUBJECT: Mexican Matricula Consular Recognition and Recommendation - Resolution MOTION: Recommend Council adopt the proposed Resolution acknowledging and recognizing the Mexican Consular Identification Card as a valid form of identification for City services and recommending that private agencies and institutions within the City also accept the card when doing so will not conflict with state or federal law. SUMMARY: There are many Mexican nationals residing in the Kent area who do not possess a form of identification acknowledged by local public and private institutions. Many immigrants lack access to certain services from public and private agencies and institutions because they do not possess identification. In a number of cities across the nation, United Mexican Consulates and Consulates General have begun to issue identification cards to Mexican nationals who have an official birth certificate, a proper form of Mexican identification, and who have been residing in the United States for at least six months. This identification card is also known as a Matricula Consular. The Matricula Consular has been accepted by 74 United States banks, including four of the largest banks in Washington State—US Bank, Bank of America, Wells Fargo, and Washington Mutual. In addition, more than 800 police departments, 80 cities (including Seattle, Renton, and Bellevue), and 14 states (including California), have acknowledged the Matricula Consular as a valid form of identification. If this resolution is passed, City staff shall acknowledge and accept the Matricula Consular as a valid form of identification when it is presented for City services. However, the card will not be accepted as a valid form of identification when to do so would be contrary to Federal, State, or local laws. As an example, the Matricula Consular card is not suitable for identification purposes in the purchase of alcohol or tobacco products as it is not listed within the Revised Code of Washington (RCW 66.16.040) or the Washington Administrative Code (WAC 314-10- 050) as a valid form of identification. BUDGET IMPACT: None RESOLUTION NO. ___________ A RESOLUTION of the City Council of the City of Kent, Washington, acknowledging and recognizing the Mexican Consular Identification Card, or Matricula Consular, as a valid form of identification for City services, and recommending that private agencies and institutions conducting business within the City also acknowledge and recognize the Matricula Consular as a valid form of identification, when doing so will not conflict with state or federal law. WHEREAS, there are many Mexican nationals residing in the Kent area who do not possess a form of identification acknowledged by local police and private institutions; and WHEREAS, many immigrants lack access to certain services from public and private agencies and institutions because they do not possess identification; and WHEREAS, in a number of cities across the nation, Mexican Consulates and Consulates General have begun to issue identification cards to Mexican nationals who have an official birth certificate, a proper form of Mexican identification, and who have been residing in the United States for at least six months; and WHEREAS, use of the Mexican Consular identification cards will enable more residents of Kent to use public services; and WHEREAS, the Mexican Consular ID card, or Matricula Consular, has been accepted by 74 United States banks, including four of the largest banks in 1 Mexican Matricula Consular - Recognition and Recommendation Washington State—US Bank, Bank of America, Wells Fargo, and Washington Mutual; and WHEREAS, throughout the United States, more than 800 police departments, 80 cities (including Seattle, Bellevue, Renton, San Francisco, Los Angeles, and San Antonio), and 14 states (including California), have acknowledged the Matricula Consular as a valid form of identification; NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. – City Recognition. The Mexican Consular Identification Card, or Matricula Consular, may be acknowledged, recognized, and accepted by staff in City departments and agencies as a valid form of identification when presented by an individual seeking city services. SECTION 2. – Private Agency Recommendation. The City Council recommends that private agencies and institutions conducting business within the City of Kent also acknowledge, recognize, and accept the Mexican Consular Identification Card, or Matricula Consular, as a valid form of identification. SECTION 3. – Exception. The Mexican Consular ID card, or Matricula Consular, shall not be used as a valid form of identification if to do so would be contrary to Federal, State, or local laws. For example, and not by way of limitation, the Matricula Consular card is not suitable for identification purposes in the purchase of alcohol or tobacco products as it is not listed within RCW 66.16.040 and WAC 314-10-050 as a valid form of identification. SECTION 4. - Severability. If any section, subsection, paragraph, sentence, clause, or phrase of this resolution is declared unconstitutional or invalid for 2 Mexican Matricula Consular - Recognition and Recommendation 3 Mexican Matricula Consular - Recognition and Recommendation any reason, such decision shall not affect the validity of the remaining portions of this resolution. SECTION 5. - Effective Date. This resolution shall take effect and be in force immediately upon its passage. PASSED at a regular open public meeting by the City Council of the City of Kent, Washington, this _______ day of ______________________, 2003. CONCURRED in by the Mayor of the City of Kent this ______ day of _________________, 2003. __________________________________ JIM WHITE, MAYOR ATTEST: ________________________________ BRENDA JACOBER, CITY CLERK APPROVED AS TO FORM: _________________________________ TOM BRUBAKER, CITY ATTORNEY I hereby certify that this is a true and correct copy of Resolution No. ______ passed by the City Council of the City of Kent, Washington, the ________ day of _________________, _________. __________________________________ BRENDA JACOBER, CITY CLERK P:\Civil\Resolution\MatriculaConsular-Recognization.doc LAW DEPARTMENT Tom Brubaker, City Attorney Phone: 253-856-5770 Fax: 253-856-6770 Address: 220 Fourth Avenue S. Kent, WA. 98032-5895 DATE: September 16, 2003 TO: Operations Committee FROM: Tom Brubaker, City Attorney SUBJECT: Impoundment Reservoir - set hearing date on possible surplus of property FOR INFORMATION PURPOSES ONLY SUMMARY: Pursuant to state law, RCW 35.94.040, the City must hold a public hearing before determining whether or not to surplus any water utility property. In order to fulfill that obligation, staff has set October 7 as the date for the public hearing on the possible surplus of the City's Impoundment Reservoir property. The purpose of the hearing is to receive comments only. There will be no council action at the close of the hearing. RECOMMENDED BY: Staff BUDGET IMPACT: None 1 Legislature Home About Us E-Mail Lists Search Help RCW TITLES >> TITLE 35 >> CHAPTER 35.94 >> SECTION 35.94.040 Print Version 35.94.030 << 35.94.040 >> 35.94.050 RCW 35.94.040 Lease or sale of land or property originally acquired for public utility purposes. Whenever a city shall determine, by resolution of its legislative authority, that any lands, property, or equipment originally acquired for public utility purposes is surplus to the city's needs and is not required for providing continued public utility service, then such legislative authority by resolution and after a public hearing may cause such lands, property, or equipment to be leased, sold, or conveyed. Such resolution shall state the fair market value or the rent or consideration to be paid and such other terms and conditions for such disposition as the legislative authority deems to be in the best public interest. The provisions of RCW 35.94.020 and 35.94.030 shall not apply to dispositions authorized by this section. [1973 1st ex.s. c 95 § 1.] ADMINISTRATION Mike H. Martin, Chief Administrative Officer Phone: 253-856-5710 Fax: 253-856-6700 Address: 220 Fourth Avenue S. Kent, WA. 98032-5895 DATE: September 16, 2003 TO: Operations Committee FROM: Nathan Torgelson, Economic Development Manager THROUGH: Mayor Jim White SUBJECT: City of Kent Economic Development Strategic Plan 2003-2008 Resolution MOTION: Recommend Council approve the proposed Resolution adopting the City of Kent Economic Development Strategic Plan 2003-2008. SUMMARY: The City of Kent Economic Development Plan 2003-2008 is a five (5) year plan which sets forth a strategic economic agenda for the City of Kent and its business and community partners. The Plan builds on two of the City’s five strategic goals: A Vibrant Downtown and a Strong Local Economy. The purpose of the plan is to articulate a set of measurable strategies for the City’s future economic growth, to set a five-year workplan for the City’s Economic Development Manager, and to serve as a marketing document for the City’s business attraction, retention, expansion and investment efforts. The plan will provide focus and direction for future resource allocation and decision making. RECOMMENDED BY: Staff BUDGET IMPACT: None RESOLUTION NO. ______ A RESOLUTION of the City Council of the City of Kent, Washington, adopting the city’s 2003-2008 Economic Development Strategic Plan. WHEREAS, the Mayor and the City Council have had a longstanding vision to adopt an Economic Development Strategic Plan (“the Plan”) for the City of Kent; and WHEREAS, the Plan expands on two of the City’s five overall Strategic Plan Goals: A Vibrant Downtown and a Strong Local Economy; and WHEREAS, in February 2002, the Kent Chamber of Commerce, in partnership with the City, the Kent School District, the Kent Downtown Partnership, Green River Community College, Highline Community College, Renton Technical College and many community volunteers began a strategic planning effort for Kent’s economy. This planning group divided into four subgroups: “Workforce of the Future,” “Downtown Center of Excellence,” “International City,” and “Manufacturing Center,” and made short- term and long-term recommendations; and 1 2003–2008 Economic Development Strategic Plan WHEREAS in August 2003, the community representatives identified above confirmed the priority short-term and long-term recommendations of each subgroup at a Kent Economic Summit; and WHEREAS, the City’s Plan includes the priority community recommendations and includes other City priorities; and WHEREAS, the Plan also includes recommendations from an “Industry Market Trends in South King County and Kent” study completed in September 2003 by the University of Washington Evans School of Public Affairs; and WHEREAS, the Plan formalizes the City’s economic development policy, sets a five-year workplan for the City’s Economic Development Manager, and is a marketing document for the City’s business attraction, retention, expansion and investment efforts; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT, WASHINGTON, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1: The City Council adopts the 2003 through 2008 Economic Development Strategic Plan and the Technical Appendix, attached and incorporated as Exhibit “A”, which shall also be filed with the city clerk. PASSED at a regular meeting of the City Council of the City of Kent, Washington this _____ day of October, 2003. 2 2003–2008 Economic Development Strategic Plan 3 2003–2008 Economic Development Strategic Plan CONCURRED in by the Mayor of the City of Kent, this _____ day of October, 2003. __________________________________________ JIM WHITE, MAYOR ATTEST: _____________________________________ BRENDA JACOBER, CITY CLERK APPROVED AS TO FORM: _____________________________________ TOM BRUBAKER, CITY ATTORNEY I hereby certify that this is a true and correct copy of Resolution No. _______, passed by the City Council of the City of Kent, Washington, the _____ day of October, 2003. _________________________________(SEAL) BRENDA JACOBER, CITY CLERK P:\Civil\Resolution\2003-2008EconDevStratPlan.doc ECONOMIC DEVELOPMENT STRATEGIC PLAN 2003-2008 Positioning Kent as the Premier Location for Business and Community Vitality DRAFT September 2003 ECONOMIC DEVELOPMENT STRATEGIC PLAN 2 Positioning Kent as the Premier Location for Business and Community Vitality Acknowledgements A special thank you to the Kent Chamber of Commerce, who facilitated a 17-month economic development strategic planning process with the greater Kent community. This process served as the foundation for the City's Economic Development Plan. Thank you to the Kent Downtown Partner- ship, the Kent School District, Green River Community College, Highline Community College and Renton Technical College - all were key partners in the community dialogue. City of Kent Jim White, Mayor City Council Tim Clark Connie Epperly Leona Orr Julie Peterson Bruce White Judy Woods Rico Yingling Mike Martin, Chief Administrative Ofﬁ cer On the cover - Images of Kent: Sounder commuter train, Riverbend Golf Complex, CenterPoint Corporate Park, and a view of Mount Rainier Photos courtesy of Sound Transit, CenterPoint Corporate Park and the City of Kent. Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 3 This ﬁ ve-year Plan sets forth an ambitious yet achievable strategic economic development agenda for the City of Kent and its business and community partners. The Plan is keyed to two of the City's overall 2002-03 Strategic Plan goals - a Strong Economy and a Vibrant Downtown. The Economic Development Plan's purpose is to articulate a set of measurable strategies and actions to facilitate continued economic growth and new opportuni- ties for the City's business districts and neighborhoods, and to clearly deﬁ ne the roles and responsibilities of the City's economic development partners in achieving successful outcomes. The Plan will serve as a workplan for the City's economic development team, providing focus and direction for future resource allocation and decision making. As part of development of the Economic Development Strategic Plan, the City of Kent contracted with Dr. Paul Sommers at the University of Washington Evans School of Public Affairs to research industry market trends in Kent and South King County, as well as best practices in eco- nomic development throughout the U.S. This resulting report is included in the Technical Appendix. The City’s 2002-03 Strategic Goals PLAN PURPOSE AND PROCESS "A strong local economy is one of the primary goals in the City's Strategic Plan. Our City under- stands that a prosperous economy enhances the vitality and livability of our community." Mayor Jim White City of Kent Economic Development Strategic Plan 1. Vibrant Downtown 2. Safe Community 3. Effective Transportation System 4. Strong Local Economy 5. Valued Government Services ECONOMIC DEVELOPMENT STRATEGIC PLAN 4 Positioning Kent as the Premier Location for Business and Community Vitality Business & Community Partners Chamber of Commerce-Facilitated Economic Development Strategy Teams Provide Signiﬁ cant Input to this Plan. The City maintains a close relationship with the Kent Chamber of Commerce - a nonproﬁ t, membership-supported organization dedicated to promoting a better economic climate in the Kent area. In February 2002, the Chamber, in partnership with the City of Kent, the Kent School District, Kent Downtown Partnership, Green River and Highline Community Colleges and Renton Technical College, and many community volunteers began a strategic planning effort for Kent’s economy. Local businesses and civic volunteers met to discuss Kent’s competitive advantages and disadvantages, and develop initial economic strategies. The Kent Economic Strategic Planning Group divided into four subgroups: “Workforce of the Future,” “Downtown Center of Excellence,” “International City,” and “Manufacturing Center.” Each group identiﬁ ed gaps, made short-term and long-term recommendations (see Technical Appendix) and identiﬁ ed community leads for each recommendation. Priority short-term and long-term recommendations from each group are included in the Plan. KENT CHAMBER O F C O M M E R C E❖ Recent Milestones in Kent's History Kent incorporated in 1890 with 763 residents.18-hole City-owned golf course at Riverbend opens; currently busiest in State 1989 1993 Kent institutes 1% for human services - now provides partial funding for 20 local non-proﬁ ts Plan Purpose & Process Boeing Airspace Plant comes to Kent 1964 Starbucks Roasting Plant opens in Kent 1993 Kent Economic Summit On August 4, 2003, at the Kent Economic Summit, the subgroups' recommendations were conﬁ rmed by community representatives. Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 5 Plan Purpose & Process Great Wall Mall opens - Grows to 80,103 sq. ft. of retail space and home to 39 ethnic businesses by March 2003 1999 GMA Comprehensive Plan 1995 Downtown Strategic Plan 1998 3,372 acre Meridian annexation adds approximately 20,000 to Kent's population 1996 Kent Downtown Partnership Plays a Key Role. The City of Kent helps fund the Kent Downtown Partnership (KDP) efforts to revitalize downtown. The KDP, formed in 1992 to work on downtown business retention, development and recruitment, was a key participant in the Kent Chamber’s Downtown Center of Excellence strategy team. The recommendations crafted by this subgroup and the KDP’s goals and work plan, are encompassed in this Plan’s ﬁ rst goal – "Create a vibrant downtown to serve as a destination retail and community gathering place." Green River Community College in Auburn (6,360 full time equivalent (FTE) students), Highline Community College in Des Moines (6,240 FTE students) and Renton Technical College in Renton (5,020 FTE students) serve the Kent area and provide degrees and certiﬁ cates in academic, professional and technical programs, as well as courses in continuing eduction and development education. The Kent School District (KSD) is the fourth largest school district in the state, with more than 26,000 students and 3,165 employees. The District boundaries encompass 73 square miles and include four high schools. Employment in the City surpasses 60,000 1997 "The Kent community - City government, schools, businesses - has shown that the key to making great progress is working together. Our combined efforts achieve our desired future." Councilmember Rico Yingling City of Kent ECONOMIC DEVELOPMENT STRATEGIC PLAN 6 Positioning Kent as the Premier Location for Business and Community Vitality Planning Context Comprehensive Plan. The City of Kent adopted its Growth Management Act (GMA)-mandated Comprehensive Plan in 1995. The Comprehensive Plan sets broad policy guidance for the City in the areas of land use, community design, housing, human services, transportation, parks, utilities, capital facilities and economic development. The Economic Development component of the Comprehensive Plan articulates the vision for an expanded economic base for Kent. This Plan is consistent with the Comprehensive Plan. Consolidated Plan. The Consolidated Plan was prepared by the City to qualify for U.S. Department of Housing and Urban Development Community Development Block Grant funds, beginning in 2003. It describes an assessment of housing, human services and community development needs in Kent and outlines the City’s ﬁ ve-year housing and homeless, economic development and employment, livable communities, and antipoverty strategies, and a one- year action plan. The Economic Development Strategic Plan is committed to promotion and implementation of the Consolidated Plan’s economic development policies, which beneﬁ t low and moderate income families and individuals who live, work or want to start a business in Kent. Citywide Strategic Plan 1999 Permit Center opens - 90% of permits are produced on-time by years end 2001 City purchases Kent Station property - embarks on public/private partnership to create destination Downtown 2001 City partnership creates one of the largest ice arenas in the Paciﬁ c NW December 2001 Plan Purpose & Process City completes 196th St. Corridor Project and its part of 277th St. Corrior Project 2001 "I have always been impressed by the City's ability to be a leader in South King County in terms of addressing the needs of economic development, housing, growth man- agement issues and public safety." Dini Duclos Executive Director Multi Service Center Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 7 Downtown Strategic Action Plan. The 1998 Downtown Strategic Action Plan built on the City’s long-standing commitment to downtown revitalization, provided downtown subarea-speciﬁ c development goals and policies, and laid the framework for the Kent Station development. As part of the Downtown Strategic Action Plan, a vision for downtown was established, market opportunities and development potential were analyzed and a development strategy was identiﬁ ed. The State Ofﬁ ce of Financial Management announces population statistics - Kent moves from 8th to 7th largest city in State - 84,210 residents May 2002 Consolidated Plan October 2002 City secures water supply for future - through 2020 November 2002 El Grullo, Mexico becomes Kent’s sixth sister city April 2003 Plan Purpose & Process As a designated urban center under the State of Wash- ington’s Growth Management Act (GMA), Downtown Kent serves as the City’s core, and includes King County’s Re- gional Justice Center, City Hall and other City ofﬁ ces, the Police Station, King County Library, Kent Senior Center, and Kent Commons, the City’s recreation center. City starts construction of 228th St. Corridor Project 2004 Ice Arena 1/4 Mile Park & Ride 516 167 Kent Commons Regional Justice Center Skate Park Museum City Hall/Police Station Kent Station Library Senior Center ECONOMIC DEVELOPMENT STRATEGIC PLAN 8 Positioning Kent as the Premier Location for Business and Community Vitality ECONOMIC DEVELOPMENT GOALS GOAL 1 Create a Vibrant Downtown to Serve as a Destination Retail and Community Gathering Place GOAL 2 Strengthen and Grow the City's Major Manufacturing and Business Centers GOAL 3 Invest in Neighborhood Livability and Development of Neighborhood Centers GOAL 4 Promote the City's Image in the Region through Creation of Destination Activities, Marketing and Business-Friendly City Services "The City has a sound history of ﬁ - nancial management. The Mayor, Council and the staff leadership have earned Kent's excellent bond rating and the trust of the business community." Barb Ivanov - Executive Director Kent Chamber of Commerce Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 9 ACTION STRATEGIES Quality Downtown Development A. Develop Kent Station as the number one destination in South King County by completing construction of at least two phases of the project by 2008. Phase I will be an entertainment and educational center, and Phase II shall include at least one additional retail anchor. B. Encourage Green River Community College to attract a university-level program as part of its presence in the Kent Station Project by 2008. C. Encourage redevelopment and development of at least two key downtown properties by 2008, which may include King County Metro’s surplus Lincoln Park and Ride lot property. D. Partner with King County or a private developer for devel- opment of all or part of the Municipal Lot block, which includes City and privately-owned parcels, by 2008. Con- sider public parking, residential and commercial uses on the site, in addition to a municipal park/public plaza. Create a Vibrant Downtown to Serve as a Destination Retail and Community Gathering Place The City has a longstanding vision to create a more vital and identiﬁ - able Downtown, with retail, ofﬁ ce, res- idential and entertainment uses located adjacent to transit. To further this vision, the City has made strategic investments: In 1999, the City agreed to contribute $4 million to Sound Transit toward construction of structured parking at the Commuter Rail Station. Commuter rail service connected Kent commut- ers to downtown Seattle (and eventu- ally Tacoma) in February 2001. The parking structure opened in March 2002. The station will become a major King County-Metro bus stop. The City purchased nearly 20 acres of property adjacent to the station to stimulate and control redevelopment of prime downtown property. Tarragon Development is the lead developer for the Kent Station site. Phase I of the project will include a multiplex cinema, a branch campus of Green River Com- munity College, multiple restaurants and additional retail. Future phases of the project will include more re- tail, ofﬁ ce space and housing uses. GOAL 1 Downtown Kent ECONOMIC DEVELOPMENT STRATEGIC PLAN 10 Positioning Kent as the Premier Location for Business and Community Vitality E. Encourage the development of at least 200 units of new market rate housing downtown by 2008. Consider incen- tives for new housing construction such as: • Reduced or waived permit development fees. • Building code changes to allow ﬁ ve stories of wood frame construction above a concrete base. • Extending the multifamily tax exemption program to rental market rate housing. F. In partnership with the KDP, attract a conference and meeting center by 2008 that can accommodate at least 300 people. The center could include a hotel. Downtown Transportation Improvements G. Make downtown Kent the transportation hub of South King County: • Ensure that Sound Transit completes the Phase II Sounder commuter rail service expansion to 18 train stops daily by 2008. • Lobby King County Metro to increase Bus Route 918 service to link Kent Valley with every new commuter rail train that is added. Business Growth and Retention H. Attract two new businesses to downtown annually. (KDP has lead role.) I. Persuade three existing retail businesses annually to ex- pand their evening/weekend operating hours. (KDP has lead role.) Downtown Image, Activities and Pedestrian Experience J. Create a downtown streetscape and pedestrian plan (in conjunction with KDP) for key areas of downtown by 2006. In the short-term: • Create and implement a marketing strategy and Kent downtown brand to attract desired businesses, remain open some evening hours. (KDP has lead role, with City and Chamber involvement.) Vibrant Downtown - Retail Destination & Community Gathering Place Community Dialogue - Economic Development Strategic Plan Downtown Subgroup Recommendations "We have been in business in Downtown Kent for 21 years, and we've seen a lot of positive changes. However, the change we are most enthusiastic about is the addition and completion of Kent Station." June McElheran Co-Owner Kent Business Sounder Commuter Rail (See page 4 for background information) Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 11 The plan may include gateway features, signage, wayﬁ nd- ing, banners, public art, street furniture, landscaping, and other design features, as well as consideration for street vendors and performers. Phase I of the project shall focus on an attractive corridor along 2nd Avenue between Kent Station and the existing downtown. A later phase shall include Central Avenue. K. Provide matching grant funding to at least ﬁ ve downtown businesses through a pilot Façade Improvement Program funded through federal Community Development Block Grant (CDBG) dollars by 2006. L. Provide new landscaping and paint at least three build- ings in downtown that front along the Burlington Northern Railroad corridor by 2008. This corridor is Kent’s front door to Amtrak and Sounder train riders. (KDP has lead role.) M. Support the Lion’s Club efforts to return the farmers' mar- ket to a City-owned outdoor location in downtown Kent by 2004. N. Create a comprehensive special events strategy that brings people to downtown who will shop in downtown businesses. (KDP has lead role.) Support Kent Downtown Partnership as an Agent of Downtown Revitalization O. Continue to contract on an annual basis and partner with the KDP to complete City design, promotion and economic development goals for Downtown. P. Complete a downtown branding strategy and recruitment package and host a brokers event to unveil the brand by 2005. (KDP has lead role.) Q. Create a KDP website by 2004. (KDP has lead role.) • Market downtown school success stories to Kent citizens, realtors, develop- ers, employers, prospective employers and housing buyers. (KSD has lead role, with Chamber and KDP involvement.) In the long-term: • Attract a conference center and/or hotel with meeting space to hold 300- 500 seats. (KDP has lead role, with City and Kent Lodging Association involvement.) Vibrant Downtown - Retail Destination & Community Gathering Place "The downtown core of Kent is poised to turn the corner, and once again become a vibrant downtown." Bruce Anderson Kent Property Owner and Developer Kent Station Plan ECONOMIC DEVELOPMENT STRATEGIC PLAN 12 Positioning Kent as the Premier Location for Business and Community Vitality Manufacturing drives the economy in the Kent Valley. Over 67,000 people are employed in the manufacturing industry in Kent, Federal Way, Renton, Auburn and Tukwila. Manufacturing continues to support high-wage jobs: statewide aver- age manufacturing wages for 2001 exceeded $48,000 per year, the highest of all major industry groups. In King County, every manufac- turing job adds another one and a half to three jobs to the region’s economy, due to large supplier and distribution networks. Kent has invested more than $87 million in three major east-west transportation corridors, to enhance the future of its manufacturing and industrial centers. Workforce training and education is a vital strategy to ensure that Kent’s young and diverse workforce has the training and experience needed to reach livable wage employment, and to ﬁ ll skill-intensive jobs in the manufacturing sector. Many of Kent’s residents com- mute outside the City for jobs; the City should consider strategies to improve the accessibility of Kent's jobs to Kent residents. Manufacturing has long been subject to the ups and downs of regular market cycles and the pressures of an increasingly competi- tive global market. Globalization and the ability of other countries to export deﬂ ation have caused some U.S. manufacturers to lose pricing power. In the past ten years, South King County manu- facturers have built their success on being the low-cost producers of high-quality products. Some of these ﬁ rms may need outside assistance to make the strategic change to a focus on innovation. GOAL 2 Strengthen and Grow the City’s Major Manufacturing and Business Centers In the short-term: Manufacturing Center Subgroup Recommendation • Work collaboratively with the Chamber to clearly deﬁ ne the needs of Kent’s manufacturers and distributors. Conduct a Strengths, Weaknesses, Opportunities and Threats analysis. (City and Chamber took lead roles in completing this task in 2003.) See page 14-15 for long-term recommendations Community Dialogue - Economic Development Strategic Plan (See page 4 for background information) "The City is a good place to be whether you are a developer or a builder or anybody." Gary Volchok CB Commerical Kent is a major manufacturing center Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 13 ACTION STRATEGIES Center for Advanced Manufacturing A. Partner with the Kent Chamber of Commerce and area Colleges to create a Center for Advanced Manufacturing for South King County by 2008, which would include a research institution to transfer technology to commercial applications, a public access research library and librarian, and a teaching facility to develop a skilled workforce. Workforce of the Future Subgroup Recommendation • Build real life work problems into curriculum. Teachers should job shadow at businesses, carry back industry information and incorporate industry standards into the curriculum. (KSD has lead role with involvement of the Colleges.) International Subgroup Recommendation • Write a 21st Century Community Learning Center federal grant in order to offer adult education and after-school activities for English-language learn- ers. (KSD took lead role in completing this task in July 2003.) • Offer business assistance and training targeted to small, ethnic businesses. (Highline and Green River Community Colleges have lead role.) Strong Manufacturing & Business Centers Kent industrial employers draw broadly from the labor market in two counties - King and Pierce. Interestingly, ﬁ rm employees come from Seattle, Belleveue and Tacoma. Note: The map shows origination of all trips destined for Kent's industrial areas. The darkest areas show the highest concentrations of trip origins per acre. Source: Puget Sound Regional Council (2000 data) Lake Washington Kent Elliott Bay Tacoma Lake Sammamish Seattle Bellevue Federal Way Auburn Covington Burien SeaTac Des Moines Edgewood Puyallup Tukwila Renton Newcastle Issaquah Residence of Employees Working In Kent's Industrial Areas ECONOMIC DEVELOPMENT STRATEGIC PLAN 14 Positioning Kent as the Premier Location for Business and Community Vitality Kent has taken the lead in the Seattle-Tacoma area in addressing transportation and freight mobility challenges by investing more than $87 million and leveraging an additional $120 million in the construc- tion of three east-west transportation corridors. These corridors link Kent’s manufacturing and industrial centers with Interstate 5 and the Valley Freeway (SR-167), and separate these three roadways from Kent’s railroad trafﬁ c. In the long-term: Manufacturing Center Subgroup Recommendation • Create a Kent Valley/South County Transitional Manufacturing Economic Plan and Center for Advanced Manufacturing. The Center may concen- trate on one manufacturing subsector and/or disciplines common to key subsectors, and offer: research institution to transfer technology to com- mercial applications in South County; a clearinghouse of best practices and national research; and training, curriculum and courses to develop a Community Dialogue - Economic Development Strategic Plan Strong Manufacturing & Business Centers "And the (transportation) improvements the City has made... Now it is world class." Dean Conti Vice President Alpha Precision Manufacturing, Inc. and Member of the Executive Committee of the Chamber's Board Cross Valley Corridor Investments Improve Access and Accessibility to Markets Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 15 Business Retention and Attraction B. Provide direct assistance to 25 existing Kent businesses annually targeted towards retention and expansion. Pro- mote the long-term stability of Kent businesses by pro- viding assistance to those who purchase their own real estate. C. Contact or provide recruitment assistance to a minimum of 25 businesses annually. Focus on businesses that could be recruited because of Kent’s locational advantages and competitive property and lease rates. D. Partner with Green River Community College to open a Small Business Development Center (SBDC) in Kent by providing partial funding through CDBG dollars, by 2004. The SBDC shall provide technical assistance and loan preparation services to a minimum of 30 Kent businesses or residents annually. Transportation Improvements E. Support and pursue freight mobility transportation im- provements to State highways that beneﬁ t Kent and the region, including: • Improvements to the Valley Freeway (HOV improve- ments between 15th Street SW to 15th Street NW, improvements between 277th Street and SR-516, and a wider bridge structure at SR-18). • Completion of SR-509, which will provide a continuous freight corridor between Kent, Sea-Tac International Airport and the Port of Seattle. • Completion of the SR-167 connection to I-5 (access to Port of Tacoma). F. Pursue additional funding for the South 228th Street Exten- sion and grade separations project and begin construction in 2004. skilled workforce with a focus on quality efﬁ ciency practices. (Chamber has lead role with City, Washington Manufacturing Services and Colleges as partners.) International Subgroup Recommendation • Kent Junior High becomes a high-achieving neighborhood middle school. May include math, science, language and/or international business options. (KSD has lead role with City, Chamber, KDP, and Colleges as partners.) Strong Manufacturing & Business Centers 196th Street Improvements Kent is home to many of the region's employers Courtesy of CenterPoint Corporate Park ECONOMIC DEVELOPMENT STRATEGIC PLAN 16 Positioning Kent as the Premier Location for Business and Community Vitality Property Redevelopment G. Complete environmental review and platting actions neces- sary for the future development of vacant parcels within the Paciﬁ c Gateway Business Park and Boeing’s Space Center, and for redevelopment or occupancy of any sur- plused buildings within Boeing’s Space Center by 2004. H. Create an inventory of brownﬁ elds property in Kent by 2005 and pursue assessment grants, cleanup grants and loans and remedial action grants from the Federal Environ- mental Protection Agency (EPA), the State Department of Ecology (DOE) and the State Department of Community, Trade and Economic Development (CTED). I. Support and use tools that encourage redevelopment of key parcels in Kent, including supporting future legisla- tive efforts to amend the State Tax Increment Financing (TIF) legislation and adopting a City-binding site plan ordinance. Workforce Development J. Partner with the Chamber and work collaboratively with Green River Community, Highline Community and Renton Technical Colleges to develop a consortium of training programs and niches serving the aerospace, furniture, manufacturing and construction sectors. K. Work with the City’s Housing and Human Services Division and the City’s Human Services Commission to annually fund Economic Development and Employment strategies as outlined in the City's Consolidated Plan to beneﬁ t low- and moderate income persons and promote sustainability and upward mobility. Strategies could include: Strong Manufacturing & Business Centers "We came here because the price of property and the infrastructure is a lot better in Kent." Doug MacLean President Vectra Fitness, Inc. Courtesy of Flow International Corporation 196th Street Corridor Ribbon Cutting (2001) Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 17 Partnerships and Collaboration M. Continue to work with the Governor and the Legislature on policies that impact the City’s major manufacturing and business centers. Focus on developing options for the State's sales tax streamlining legisla- tion, to minimize revenue impacts on the City of Kent. N. Continue collaboration and coordination on economic development issues and opportunities with the Kent Chamber of Commerce, the Port of Seattle, the Port of Tacoma, the Economic Development Council of Seattle-King County, the State Ofﬁ ce of Community, Trade and Economic Development, and local educational insti- tutions. 0. Through a public relations and education effort, work with local elected ofﬁ cials, the School District, colleges and area lead- ers to reinforce the importance of Kent's manufacturing and industrial center. Strong Manufacturing & Business Centers Those who work in Kent come from all over the region. There are two jobs per housing unit in Kent. This compares to 1.8 jobs per housing unit for King County, 1.0 for Pierce County, and 1.4 for the three-county region. Note: The map shows origination of all work-related trips destined for the City of Kent. The darkest areas show the highest concentrations of trip origins per acre. Source: Puget Sound Regional Council (2000 data), Wash- ington State Employment Security Department and Washington State Ofﬁ ce of Financial Management • Fund literacy-based, on-site basic skills training and soft-skill training to increase employee skills at Kent businesses. • Provide child care scholarships to im- prove the ability of low- and moderate income wage earners to maintain and progress in their jobs. L. Consider strategies to increase the per- centage of Kent residents who ﬁ nd employ- ment within the City. Lake Washington Kent Elliott Bay Tacoma Lake Sammamish Seattle Bellevue Federal Way Auburn Covington Burien SeaTac Des Moines Edgewood Puyallup Tukwila Renton Newcastle Issaquah Residence of all Kent Workers: Jobs-Housing Balance ECONOMIC DEVELOPMENT STRATEGIC PLAN 18 Positioning Kent as the Premier Location for Business and Community Vitality Commitment to the City's Neighborhoods. At the 2003 City Council Strategic Planning Retreat, the Council determined that an em- phasis on developing strong neighbor- hoods should be elevated to a Citywide strategic goal. This policy reﬂ ects a strengthened commitment to neigh- borhood involvement and broadened communications between neighbor- hoods and the City. A New Neighborhood Improve- ment Program will be Launched. The City has an opportunity to encour- age neighborhood residents, groups and organizations to propose a broad array of neighborhood-initiated and community-oriented improvements. Organizing and planning projects have encouraged connections be- tween neighbors, fostered civic in- volvement, increased neighborhood safety and community ownership in other cities (such as Renton and Se- attle) that fund such programs. An Opportunity to Enhance Neighborhood Character. A City’s livability is greatly determined by the quality and character of its neighbor- hoods. The City has an opportunity, through redevelopment of key parcels, to create interesting new commercial and residential development in neighborhoods throughout the City. By encouraging quality development of key neighborhood commercial and residential areas, the City can help to sponsor vibrant neighborhood cen- ters, that will serve as a focus for the neighborhood services, parks and civic facilities essential for a high quality of life. ACTION STRATEGIES Neighborhood Improvement Program A. Initiate a neighborhood-sponsored matching grant pilot program by 2006, to create community improvement projects and to foster neighborhood identity and connec- tions. Midway Area Redevelopment B. Encourage redevelopment of commercial property, includ- ing the Midway Drive-In theater site. C. Implement recommendations from the University of Wash- ington graduate student Midway Subarea Plan, includ- ing: • Preparation of a marketing and demographic proﬁ le for the neighborhood by 2004. • Establishment of a business association through a new organization or partnership with the Des Moines Chamber of Commerce by 2005. • Creation of distinct architectural gateways at key entry points into the Midway neighborhood by 2006. Other Key Neighborhood Locations D. Support the business and the redevelopment of key business district parcels in Kent. E. Sell the City’s Reservoir Property to a quality home-builder by 2005 to create a new neighborhood. GOAL 3 Invest in Neighborhood Livability and Development of Neighborhood Centers "We consider it a privilege to work in this City." Gary Young Senior Vice President Polygon Northwest Company A Focus on Neighborhood Livability and Quality Business Centers Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 19 The Midway Neighborhood Presents an Opportunity for Revitalization. Located along Paciﬁ c Highway South and directly west of Interstate 5 at the City's western boundary, the Midway neighborhood has experienced little redevelopment activity in recent years. Recent and planned improvements to Paciﬁ c Highway by the City of Kent and the potential for redevelopment of large parcels represent key opportunities to revitalize this neighborhood and to build a sense of community. Reservoir Property/Impoundment Site. In 1983 the City of Kent purchased approximately 156 acres of property in unincorporated King County for a municipal water impoundment reservoir. In 2002, the City purchased additional water rights from the Tacoma P5 Pipeline project, which resolves the water supply concerns that previously justiﬁ ed the reservoir project. Consequently, the City will be selling the property, which is located within Auburn’s Potential Annexation Area. Reservoir Property/ Impoundment Site is Located Outside City LimitsThe City has Many Neighborhoods ECONOMIC DEVELOPMENT STRATEGIC PLAN 20 Positioning Kent as the Premier Location for Business and Community Vitality A key element of the successful implementation of this Plan is communicating Kent’s story to businesses considering locating in Kent, current residents and to visitors who enjoy Kent’s destination recreation and sports facilities. Kent’s story is one of accomplishment. Kent is receptive and responsive to business and citizen needs – as demonstrated throughout this Plan and by the City's continued commitment to maintain a high quality of life and to foster an environment for business success. Key messages: • Kent has room to grow. Kent can communicate the City’s advantages to the development community, in- cluding its key location in the Seattle-Tacoma region and the demographics to support business investment. The ability to provide fast, efﬁ cient and dependable permits is also a signiﬁ cant competitive advantage. • A high quality, full service City. Kent’s commitment to its citizens is reﬂ ected in the City’s current facilities, Kent Station, and in continuous strategic investments in parks, recreation, human services, public safety and transportation. Kent intends to continue attract- ing tourists, conferences, sporting events and other recreational opportunities. • Destination Kent. Kent is an international community with recreation choices that include the State’s busi- est 18-hole golf course, one of the Northwest’s largest ice arenas and bicycle trails that link many of Kent’s parks. City-owned Riverbend Golf Course is the busiest 18-hole golf course in the State A 26-mile network of bicycle and walking trails link many of Kent's parks Kent Has A Good Story to Tell Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 21 ACTION STRATEGIES Tourism, Culture and Destinations A. Work with the Sounders professional soccer team to locate a soccer stadium and soccer ﬁ eld complex within Kent on a City-owned property with easy freeway access, by 2008. B. Issue annual or semi-annual request for proposals for non- proﬁ t organizations to use lodging tax dollars to promote hotel stays, beginning in 2005 or earlier, if resources al- low. C. Partner with the Kent Lodging Association to attract soc- cer, golf and softball tournaments with a regional draw to increase hotel stays. D. Pursue the feasibility of promoting Kent as a location for ﬁ lmmaking. GOAL 4 Promote the City's Image in the Region through Creation of Destination Activities, Marketing and Business-Friendly City Services Dragon Boat Festival at Cornucopia Days Soccer is a key foundation to Kent's Parks and Recreation Program ECONOMIC DEVELOPMENT STRATEGIC PLAN 22 Positioning Kent as the Premier Location for Business and Community Vitality Destination Activities, Marketing & Business-Friendly City Services Marketing Program E. Develop an overall community and economic development marketing plan and a media and real estate broker outreach strategy for the City by 2005, to improve the City’s image in the region and to attract new investment, development and residents. Consider marketing efforts targeted towards people who work but do not live in Kent. Market Kent's quality school district and diversity of housing options. F. Produce City marketing materials by 2004, including a community proﬁ le and brochures on Kent’s park and recreation facilities and investments in transportation corridors. G. Promote Kent through development of marketing materi- als as an International Community that welcomes and promotes diversity and is tied to the global marketplace, by 2004. "I am always impressed when I come back to Kent... the quality of life that I observe around this com- munity, the way that you support your families, your children and your school district." Mike Heinisch Director Valley Family & Youth Services Kent has 68 parks and 1,349 acres of parkland Positioning Kent as the Premier Location for Business and Community VitalityPositioning Kent as the Premier Location for Business and Community Vitality 23 Business-Friendly City Services H. Continue to improve, monitor and market the permitting and inspection process for development: • Establish a protocol for consistency between develop- ment inspections and plans examiners by 2004. • Explore the feasibility of developing an on-line permit- ting system and allowing on-line completion of permit application forms by 2005. • Market the success of the new permit center and improved permitting times. I. Develop and promote a one-stop business license process for City and State business licenses by 2004. J. Institute a City transportation mitigation fee program by 2005 to provide predictability for the development com- munity. K. Enhance the City’s image and improve accessibility to City information and services by redesigning the City's website. L. Improve the City’s Economic Development website by 2005, by adding more graphics, pictures and improving navigation. Monitor hits to the website before and after the improvements. M. Promote the City's Economic Development Manager as an advocate and ombudsperson within the City for the business community. Real Estate Database. In 2002, the City of Kent invested in an up-to-date, private sector-main- tained real estate database that includes all industrial, ofﬁ ce and commercial properties for lease or sale in Kent. The database is used by the City for business attraction and retention activities and is used as a resource for ﬁ rms considering locating in Kent. Destination Activities, Marketing & Business-Friendly City Services "In the last three to four years we have seen a marked improvement as to the efﬁ ciency and timelines for processing permits. We believe the new promptness and quality of service is directly related to the monies expended by the City to add staff and improve services." Bruce Anderson Kent Property Owner and Developer New Permit Center. In 2001, the City of Kent opened a state-of-the-art permit center combining building and planning services, ﬁ re prevention and public works engineering. As a result of improved coordination, on-time issuance of permits requiring plan review increased from 49% on-time in January 2001 to 97% in October 2002. For more information, please contact: Nathan Torgelson Economic Development Manager Telephone: (253) 856-5703 Fax: (253) 856-6700 ntorgelson@ci.kent.wa.us http://www.ci.kent.wa.us/ 220 Fourth Avenue South Kent, Washington 98032-5703 ECONOMIC DEVELOPMENT STRATEGIC PLAN 2003-2008 September 2003 TECHNICAL APPENDIX Positioning Kent as the Premier Location for Business and Community Vitality Technical Appendix Economic Development Strategic Plan Page 1 Technical Appendix Table of Contents Results of August 4, 2003 Kent Economic Summit Downtown Center of Excellence Subgroup Page 2 Manufacturing Center Subgroup Page 6 Workforce of the Future Subgroup Page 8 Kent: The International City Subgroup Page 10 Results of Community Dialogue Downtown Center of Excellence Subgroup Page 13 Manufacturing Center Subgroup Page 16 Workforce of the Future Subgroup Page 18 Kent: The International City Subgroup Page 19 Maps Population Density Page 21 Morning Peak Origination of Kent Industrial Employment Page 22 Morning Peak Origination of Kent Commercial Employment Page 23 Work-based Trips Originating in Kent Page 24 Morning Peak Origination of all Kent Employment Page 25 Economic Development In Kent: Industry Outlook and Recommended Economic Development Strategies, August 2003 Dr. Paul Sommers and Kursten Holabird Table of Contents Page 27 Executive Summary Page 28 Industry Analysis Page 36 Best Practices in Economic Development: Review of Selected Strategies Page 63 Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 2 Results of August 4, 2003 Kent Economic Summit In February 2002, the Chamber, in partnership with the City of Kent, the Kent School District, Kent Downtown Partnership, Green River and Highline Community Colleges and Renton Technical College, and many community volunteers began a strategic planning effort for Kent’s economy. Local businesses and civic volunteers met to discuss Kent’s competitive advantages and disadvantages, and develop initial economic strategies. The Kent Economic Strategic Planning Group divided into four subgroups: “Workforce of the Future,” “Downtown Center of Excellence,” “International City,” and “Prosperous Manufacturing and Wholesale.” Each group identified gaps, made short-term and long-term recommendations and identified community leads for each recommendation. The following section of the Technical Appendix summarizes recommendations resulting from an August 4, 2003 Kent Economic Summit – where the subgroup’s recommendations were confirmed by community representatives. A complete listing of each of the subgroup’s findings and preliminary recommendations follows the Kent Economic Summit recommendations. Downtown Center of Excellence Subgroup Goal 1: Improve downtown Kent's K-12 student achievement levels to drive improved housing Short-Term Recommendation: Market downtown school success stories to Kent citizens, realtors, developers, employers, prospective employers and housing buyers. Lead Responsible Parties: Kent School District & Kent Chamber of Commerce; Staffing: Kent School District Problem Statement: The schools must be attractive to homebuyers and parents who hold high standards for the education of their children. As the Kent School District embarks on establishing a world-class educational system, there needs to be ample and diverse communication to constituents (e.g., realtors, developers, employers, etc.) surrounding the success stories of our youth in our Kent schools. Recommendations and Timeline: Date Action October 15, 2003 Provide area service clubs with list of potential school success programs (topic, speaker, contact) to feature in meetings November 3, 2003 (with monthly updates) Provide realtors, developers, and chamber with compilation of Your Investment At Work stories describing productively working KSD graduates January 5, 2004 Develop and provide to chamber information packet describing Kent School District January 5, 2004 Create Kent downtown school fact sheet on test score results, for insertion in KDP marketing materials Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 3 Goal 2: Create a destination center with world-class amenities; K-12 educational achievement, higher education and cultural activities Short-Term Recommendation: Create marketing strategy and Kent downtown brand to attract desired businesses, some evening hours (such as ethnic retailers, farmers’ market, entertainment) Lead Responsible Party: Kent Downtown Partnership (KDP); Other partners: City of Kent and Chamber of Commerce Long-term recommendation: Implementation of downtown marketing strategy (TV ad campaign, etc.) Lead Responsible Party: Kent Downtown Partnership (KDP); Other partners: City of Kent Problem Statement: The Downtown Center of Excellence Subgroup identified lack of positive information and an image, or brand, for Downtown Kent as a current gap. The result is that people are less likely to come to Downtown Kent. Even Kent residents are not likely to visit downtown often. Just 43% go downtown at least once per week, according to a telephone survey of 400 Kent residents done this Spring. [2003 Citizen Survey Report]. That figure is down from 53% in 2002. Accomplishments to Date: The Kent Downtown Partnership Economic Development Committee has completed the process of articulating downtown Kent’s strategic messaging and brand personality and is ready to build on this foundation with a marketing brochure and marketing strategy that is designed to attract new businesses and customers to Downtown Kent. The public relations firm we are already working with has advised that we put less emphasis on traditional media like newspaper, T.V. and radio and more emphasis on physical improvements, community- building, loyalty campaigns (“shop locally”), events, media relations and “guerrilla” marketing. They advise that we target both shoppers/visitors and potential retail tenants. Date Action July 2002 – April 2003 KDP Economic Development Committee conducted a survey of business owners in downtown and a survey of 100 business customers and over 200 city employees to learn frequency of shopping and dining downtown, perceptions, and ideas of needed business; obtained demographic information about Kent’s trade area and sales surplus and leakage; and hired a public relations firm to do a branding/positioning strategy for downtown. April 2003 – July 2003 Branding/positioning completed July 2003 Signed contract with public relations firm that did branding to design and oversee production of brochure and inserts to be used in recruiting businesses/visitors to downtown Kent Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 4 Recommendations and Timeline: Date Action Budget August 2003 - October 2003 Design and print brochure with inserts $29,000 August 2003 – Feb. 2004 Hire public relations/marketing firm to define the scope of work and determine strategies, budget, and timeline for marketing. Work with public relations/marketing firm to develop market strategies including such things as events downtown, carefully placed media features, a “shop locally” campaign, direct mail to area residents, and other appeals to shoppers and potential retail tenants. $12,000 February 2004 – December 2005 Implement marketing plan (Includes $200,000 for physical improvements to downtown Kent) $318,500 Staffing: Add to work plan for Jacquie Alexander, KDP Executive Director; Nathan Torgelson, City of Kent Economic Development Manager; Barb Ivanov, Executive Director, Kent Chamber of Commerce. Volunteers: KDP Economic Development Committee Potential Resources: City of Kent Economic Development Section budget, Langly/Tarragon budget, KDP Fundraising, King County Journal Grants Goal 3: Create a destination center with world-class amenities; K-12 educational achievement, higher education and cultural activities Long-term recommendation: Attract conference center and/or hotel with meeting space to hold 300 – 500 seats Lead Responsible Party: Kent Downtown Partnership (KDP); Other partners: City of Kent and Kent Lodging Association Problem Statement: The Downtown Center of Excellence Subgroup identified the lack of a major hotel and conference center as a current gap in downtown Kent. The City of Kent is currently considered underserved in terms of the available conference and exhibition facilities. Kent Commons is a City-operated community center in downtown Kent that is able to accommodate banquets for up to 600 people. Kent Commons is heavily used throughout the year for wedding receptions, consumer shows and events, as well as for recreational and community activities. Numerous consumer shows and events are turned away each year due to lack of suitable space and as a result of City parks and recreation events. This usage level and demand indicates market potential for a more upscale dedicated meeting facility in downtown Kent. The Kent area hotel market consists primarily of limited service properties with minimal meeting space. As a result, little hotel demand accommodated in Kent is related to meetings. The Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 5 majority of room demand is generated by the local area commercial base and government presence in the area. The presence of a hotel/conference center would greatly benefit downtown merchants and restaurants. Recommendations and Timeline: Date Action Budget January—June 2004 Hire local hospitality/real estate consultant to review Convention Center Market Analysis (Report done by Hunter Interests in New York, April 2000) and update market feasibility given current market and review convention facilities and hotel occupancy rates in other cities $50,000 January—June 2004 Identify preferred locations for Hotel/Conference Center: consider Kent Station, Municipal Lot Block and Kent School District property. Talk to Kent Station developer about hotel/conference center in future phase of project June Assess market and feasibility of project June—October 2004 Assuming favorable market, put together recruitment package and strategy and select and meet with hotel/convention investors Staffing: Add to work plan for Jacquie Alexander, KDP Executive Director; Nathan Torgelson, City of Kent Economic Development Manager; and Raul Vaca, Kent Lodging Association Director; Volunteers: KDP Economic Development Committee, Kent Lodging Association Committee Potential Resources: City of Kent Lodging Tax Dollars, KDP Fundraising, City of Kent Economic Development Section budget Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 6 Manufacturing Center Subgroup Goal 1: Kent Valley/South County Transitional Manufacturing Economic Plan & Center of Advanced Manufacturing Long-Term Recommendation: The Puget Sound manufacturing community has formed a partnership to address the distinct, missing capability in the South County manufacturing center of Washington State: the development complement of a research facility. This proposal will move South County toward a more diversified, innovation-based economy, while at the same time acknowledging and strengthening the existing manufacturing base. The Center may concentrate on one manufacturing subsector and/or disciplines common to key subsectors, and offer: • Research institution to transfer technology to commercial applications in South County • Clearinghouse: locating best practices information, dissemination of national research, public access research library – online & searchable. Librarian support services to national audience. • Center for Quality Manufacturing. Offer ongoing training, curriculum and courses to develop skilled workforce, with focus on quality efficiency practices. The Center will teach manufacturing process improvement practices, including: strategy development, implementation assistance, productivity improvement, workforce and organizational development, and business process improvement to create successful organizations An excellent example of this type of facility is Battelle Memorial Institute next to Ohio State University in Columbus, Ohio. Germany has a network of these institutions known as Fraunhofer Institutes that are highly regarded by both industry and academics. Lead Responsible Party: Kent Chamber of Commerce; Staffing: Kent Chamber of Commerce and City of Kent Partners: City of Kent, Washington Manufacturing Services, Washington Technology Center, Green River & Highline Community Colleges, Renton Technical College Background: Manufacturing drives the economy in South King & East Pierce Counties. The Kent Valley is the most diverse mid-market manufacturing center in Washington State. Over 67,000 employees worked in the manufacturing sector in the core South County cities – Kent, Federal Way, Renton, Auburn & Tukwila - in 2002. Problem Statement: Manufacturing has long been subject to the ups and downs of regular market cycles and the pressures of an increasingly competitive global market. But the increasing pace of globalization and the ability of the world’s new manufacturing floor – China – to export deflation, has caused US manufacturers to lose all pricing power. Kent/South County manufacturers have developed good cost control ‘lean’ practices, but cannot compete in a global market on price, alone. Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 7 How will the region manage the potential loss of thousands of Boeing Company manufacturing jobs? Our historical advantages have been based on cheap land, a willing workforce and an excellent transportation system. How will we develop a new competitive advantage to succeed in the future? In the past ten years, South County manufacturers have built their success on being the low cost producers of high quality products. They will need outside assistance in order to make the radical strategic change to focus on innovation. Recommendations and Timeline: Date Action Budget August 2003 Kent community adopts Strategic Economic Plan Jun. 2003 – April 2004 Source funding & apply for technical assistance grants In kind Jun. 2003 - June 2004 Research South County manufacturers unmet needs & determine benefits of tech transfer to them. $ 70,000 June 2004 First cut Kent/South County transitional manufacturing economic plan. $150,000 Dec. 2004 Complete Kent/South County transitional manufacturing economic plan. $275,000 2005 Finalize Center of Advanced Manufacturing plan. 2004 - 2006 Finalize funding sources In kind 2007 - 2008 Implement Center of Advanced Manufacturing in South County TBD Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 8 Workforce of the Future Subgroup Goal 1: Create High Performance K-14 Educational System Short-Term Recommendation: Curriculum includes real-life work problems. Teachers job shadow at businesses, carry back industry information and incorporate such standards in to the curriculum. Lead Responsible Party: Kent School District; Partners: Community and Technical Colleges Problem Statement: Kent School District is focused on providing students with real-life work problems throughout the K-12 continuum. Because Career & Technical Education programs provide the environment where students can utilize their academic skills in a technical setting, real-life work problems are an integral part of the curriculum. It is critical to keep the Kent School District Career & Technical Education programs up-to-date with the goal of being able to provide our local community with a skilled workforce. Action Plan and Timelines: Date Action Review process happens twice each school year Keeping the technology used in the classroom current with local business standards The Kent School District is currently on a three-year replacement schedule for the computers used in the Career & Technical Education computer labs. The three-year timeframe is necessary in order to train students on current software that needs up-to-date computers to operate properly. Each year our advisory committees review the computers and other technology equipment that is being used in our classrooms and makes recommendations as to what equipment needs to be replaced during the current school year. The Kent School District is in the process of changing the curriculum used in our keyboarding courses to meet the current standards for Digital Communication. This new curriculum will incorporate what had been taught in keyboarding and also include training with scanners, digital imaging, and voice recognition software. This is an example of how a course’s curriculum is changing to keep up with the technology used in businesses. Ongoing Providing teachers with the opportunity to visit local employers to identify the skills needed by employees The Kent School District will continue to encourage the Career & Technical Education teachers to take every opportunity to visit local employers. This experience is valuable in determining if the curriculum being used in the classroom is meeting the needs of the students and local employers. During the school year it is very difficult for teachers to leave the classroom to visit employers due to the severe shortage of available substitutes. It would be beneficial if teacher visits could be arranged during school breaks or the summer. A central information source of employers that would be willing to host teacher visits could be facilitated by the Career & Technical Education Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 9 department. This same procedure could be used to identify employers that would be willing to host student field trips during the school year. This would allow both the teacher and students to benefit from the on-site experience. 2003-04 school year Gather real-life work problems from employers that could be used in Career & Technical Education curriculum to demonstrate to students how the skills they are learning are used in the workplace An action step for the Career & Technical Education advisory committees will be to gather real-life work problems so these examples can be incorporated into each curriculum. Each advisory committee will recommend a problem for students to solve during the fall meeting. The solution to each problem will be presented to the advisory committee at the spring meeting. Additional real-life work problems can be submitted through the Kent Chamber of Commerce Education Committee and distributed by the Career & Technical Education department to the appropriate program area. Requests for volunteers will be made one month prior to advisory committee meetings or student leadership organization events Encourage participation in Career & Technical Education advisory committees and student leadership organizations There are 20 advisory committees that are the curriculum review and recommendation body for the Kent School District’s Career & Technical Education programs. There is a need to increase the membership of the committees so input can be gathered from as many sources as possible to help focus the programs on the current needs of the business community. The student leadership organizations (FBLA, DECA, SkillUSA-VICA) are continually looking for community members to participate as judges and contest organizers. Most of the contests focus on having students solve real-life work problems. Requests will be made through the Kent Chamber of Commerce for volunteers to serve on the advisory committees and with the student leadership organizations. Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 10 Kent: The International City Subgroup Goal 1: Community welcomes diversity, immigration, international students, business and tourism Short-Term Recommendation: Partner to write a 21st Century Community Learning Center federal grant that includes adult education and after-school activities Lead Responsible Parties: Kent School District & Community Colleges; Staffing: Kent School District Problem Statement: Given that the diversity in the Kent community is growing, there is a need to provide adult education to the number of English-language learners (both family members and students) who live and work in the wider Kent community and whose children attend Kent School District schools. In order to help develop business and language skills as well as to celebrate the diversity within the community, a 21st century grant may help unite families, communities and schools under a common purpose of adult education and family literacy. Accomplishments to date: Date Action July 2003 Write a 21st Century Community Learning Center Grant If approved, the Kent School District will partner with community based agencies and non-profit organizations to provide: • Adult education classes offered at the schools and local library • Parenting classes • Family literacy programs (e.g., Motheread/Fatheread, Family Math Night) • Home Safe • Bridging Assets program to promote interaction between immigrants, ethnic groups and the schools • After-school activities (e.g. After-school Express, Game Club) Completed: August 4, 2003 Short-Term Recommendation: Business assistance for small, ethnic businesses Recommendations: The SBDC counselors and staff will increase outreach efforts to minority owned small and medium sized business. Outreach efforts would include contacting businesses, local community groups and associations. Follow-up meetings and presentations will be determined by the client needs. Outreach efforts will be evaluated on a quarterly basis with a goal of doing three presentations/meetings per quarter. The outcome of these meetings could result in individual assessment meetings, which are free to the client. Individual client meetings can vary in length, from a minimum of one hour to on-going assistance based on the client needs. Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 11 The SBDC, in conjunction with the continuing education programs, will provide training opportunities focusing on specific challenges that minority owned small and medium sized businesses. The training programs will be developed, on a quarterly basis or, on an as needed basis, as determined by the outreach efforts of the SBDC staff. In cooperation with the SBDC staff, the Centre for Global Education and Training (CGET) will work provide programs and resources targeting small and medium sized business that have an interest in expanding their business to include exporting products or services. Training will be developed, on an as needed basis as determined by the outreach efforts of the SBDC staff and other college, city and chamber initiatives. Access to resources for businesses including, minority owned businesses, will be available on the individual SBDC web pages and the CGET. These resources will be updated on a regular basis. As a result of individual client needs, staff from the SBDC and the CCET can connect the clients with mentors, provide them with information regarding opportunities to utilize college students, including international students, for internship or cooperative work-study opportunities. Timeline: To be completed by August 2004 Staffing: Highline and Green River Community Colleges Long-Term Recommendation: Kent Junior High becomes a high-achieving neighborhood school. Course options may include math, science, languages, and/or international business. Lead Responsible Party: Kent School District; Partners: City of Kent, Kent Chamber of Commerce, Kent Downtown Partnership, and Community Colleges Problem Statement: The Kent School District has recently announced plans to close Kent Junior High School for one year and reopen as a middle school in the fall of 2005. This provides an opportunity for members of the Kent community to provide the district with ideas on how the new middle school (which is now Kent Jr. High) can better meet the needs of the children who live within the school boundaries. Though the middle school will remain as a neighborhood school, decisions about what other programs that may be housed there have not been determined at this time. Technical Appendix Results of Kent Economic Summit Economic Development Strategic Plan Page 12 Recommendations and Timeline: Convene a Steering Committee comprised of parents, community members and district staff to design and develop a new middle school that will open in the fall of 2005. A timeline for the committee process and ensuing recommendation to the Kent School Board will be as follows: Date Action March 12, 2003 Charge from KSD Board to study KJ repurposing with a timeline established for action March 19, 2003 Work Session with KSD Board to consider the exploration of the following: • Repurposing KJ concept/rationale • Implications (e.g., boundaries, staff transfers, etc.) • Remodel and design plan • Timelines • Costs March 26, 2003 Superintendent Recommendation to KSD Board May 14, 2003 KSD Board decision regarding repurposing June 25, 2003 KSD Board to “commission” boundary and repurposing committees October 22, 2003 Boundary recommendation to KSD Board November 12, 2003 Repurposing “first draft” to KSD Board Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 3 Re s u l t s o f C o m m u n i t y D i a l o g u e Do w n t o w n C e n t e r o f E x c e l l e n ce S h o r t - T e r m R e c o m m e n d a t i o n s Ga p s Sh o r t - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Cu l t u r a l i s s u e s : H o w t o c o n n e c t e t h n i c g r o u p s I d e n t i f y bu i l d i n g s w i t h h i s t o r i c v a l u e C i t y a n d K D P Mi s s i n g b u s i n e s s e s : ( a n c h o r r e t a i l , v a r i e t y o f r e t a i l , en t e r t a i n m e n t , m e e t i n g s p a c e , o f f i c e s p a c e , h o t e l , d i n n e r re s t a u r a n t s , c h i l d c a r e ) Br o k e r s r e c e p t i o n t o r e c r u i t b u s i n e s s e s ( c o u l d b e he l d a t v a c a n t s p a c e ) KD P a n d C h a m b e r Go v e r n m e n t : C i t y l a c k s t o o l s f o r r e d e v e l o p m e n t ( E D G E , pe r m i t t i n g , t r a f f i c f l o w , t r a i n s v s . s t r e e t t r a f f i c ) T o o l s t o as s u r e f u t u r e s u p p l y o f w a t e r , e n e r g y I n c r e a s e tr a n s p o r t a t i o n o p t i o n s : S o u n d e r , b u s Ja z z - u p C i t y w e b s i t e t o p r o m o t e d o w n t o w n C i t y a n d K D P Cu l t u r a l i s s u e s : H o w t o c o n n e c t e t h n i c g r o u p s Of f e r t w o t o t h r e e c u l t u r a l e v e n t s p e r y e a r w i t h et h n i c t h e m e ( i n c l u d e e t h n i c t h e m e a t C a n t e r b u r y Fa i r e ) Ci t y a n d K D P Ho u s i n g : n o t e n o u g h ( X % ) o w n e r - o c c u p i e d Id e n t i f y a n d r e c o g n i z e t h o s e w h o b u i l d o w n e r - oc c u p i e d h o u s i n g i n d o w n t o w n KD P a n d C h a m b e r Sc h o o l s : a t t r a c t i v e n e s s t o h o m e b u y e r s a n d / o r p a r e n t s w i t h hi g h s t a n d a r d s ( n o t s e t t i n g w o r l d - c l a s s s t a n d a r d ) Ob t a i n m a t h c o a c h e s f o r g i r l s ’ c l u b s a n d h i g h sc h o o l p r o g r a m s KS D a n d C h a m b e r Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 4 Do w n t o w n C e n t e r o f E x c e l l e nc e L o n g - T e r m R e c o m m e n d a t i o n s Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Go v e r n m e n t : C i t y l a c k s t o o l s f o r r e d e v e l o p m e n t (E D G E , p e r m i t t i n g , t r a f f i c f l o w , t r a i n s v s . s t r e e t tr a f f i c ) T o o l s t o a s s u r e f u t u r e s u p p l y o f w a t e r , e n e r g y In c r e a s e t r a n s p o r t a t i o n o p t i o n s : S o u n d e r , b u s Cr e a t e f u n e n t r a n c e s t o d o w n t o w n ( w i t h l i g h t s , w a t e r , fo u n t a i n ) a n d b e a u t i f y t r a i n c o r r i d o r s Of f e r f i n a n c i a l i n c e n t i v e s t o u p g r a d e a l l d o w n t o w n bu i l d i n g s Cr e a t e g r a n d p r o m e n a d e / b o u l e v a r d o u t o f C e n t r a l A v e n u e Ci t y a n d K D P KD P a n d K L A Ci t y w o r k i n g w i t h pr o p e r t y o w n e r s Ho u s i n g : n o t e n o u g h ( X % ) o w n e r - o c c u p i e d Cr e a t e f a i r a n d e q u i t a b l e p e r m i t p r o c e s s Ma s t e r p l a n r o a d s , p e d e s t r i a n l i n k s a n d p a r k s i n do w n t o w n Re d e v e l o p m e n t o f m u n i c i p a l p a r k i n g b l o c k ( H a r r i s o n be t w e e n 2 n d a n d 4 t h ) t h a t i n c l u d e s p a r k i n g Ci t y a n d C h a m b e r Ci t y Ci t y a n d o t h e r pr o p e r t y o w n e r s Se r v i n g 9 A M – 5 P M p o p u l a t i o n , o n l y : 9 – 5 co m m u n i t y i s s e p a r a t e f r o m 2 4 h o u r c o m m u n i t y Of f e r c o m p r e h e n s i v e h i g h e r - e d p r o g r a m ( M B A , B u s i n e s s Ad m i n i s t r a t i o n ) a t G R C C d o w n t o w n c e n t e r a t K e n t St a t i o n GR C C a n d C h a m b e r Cu l t u r a l i s s u e s : H o w t o c o n n e c t e t h n i c g r o u p s Re s t a u r a n t r o w o f e t h n i c f o o d ( g l a s s c o v e r e d , s i d e w a l k ca f é - i s h l o o k ) Bu i l d p e r f o r m i n g a r t s c e n t e r w i t h 4 0 0 – 6 0 0 s e a t Bu i l d p r e - s c h o o l / e l e m e n t a r y c h i l d r e n ’ s p a r k Ed u c a t e c o m m u n i t y r e g a r d i n g K e n t H i s t o r y ( a r t , K e n t Hi s t o r i c a l S o c i e t y ) Ci t y a n d K D P Ke n t P e r f o r m i n g Ar t s O r g a n i z a t i o n an d C i t y Ci t y a n d S e r v i c e Cl u b s Ke n t H i s t o r i c a l So c i e t y Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 5 Do w n t o w n C e n t e r o f E x c e l l e n c e L o ng - T e r m R e c o m m e n d a t i o n s ( c o n t i n u e d ) Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Cu l t u r a l i s s u e s : H o w t o c o n n e c t e t h n i c g r o u p s Of f e r i n c e n t i v e s t o p r o p e r t y o w n e r s t o p r e s e r v e a n d re s t o r e b u i l d i n g s w i t h h i s t o r i c v a l u e KD P , C i t y , f e d e r a l , st a t e a n d c o u n t y Mi s s i n g b u s i n e s s e s : ( a n c h o r r e t a i l , v a r i e t y o f r e t a i l , en t e r t a i n m e n t , m e e t i n g s p a c e , o f f i c e s p a c e , h o t e l , d i n n e r re s t a u r a n t s , c h i l d c a r e ) Co - l o c a t e K D P , C h a m b e r , S B A A s s i s t a n c e C e n t e r an d C i t y E c o n o m i c D e v e l o p m e n t KD P , G R C C , C i t y an d C h a m b e r Sc h o o l s : a t t r a c t i v e n e s s t o h o m e b u y e r s a n d / o r p a r e n t s w i t h hi g h s t a n d a r d s ( n o t s e t t i n g w o r l d - c l a s s s t a n d a r d ) Ma i n t a i n a n d e x p a n d b u s i n e s s - e d u c a t i o n pa r t n e r s h i p p r o g r a m b e t w e e n C h a m b e r a n d K S D KS D a n d C h a m b e r Ho w t o d e f i n e a s o p h i s t i c a t e d w o r l d - c l a s s d e s t i n a t i o n ce n t e r ? De v e l o p p r o g r a m s w h e r e e l e m e n t a r y s c h o o l c h i l d r e n in t e r a c t w i t h s e n i o r c i t i z e n s a t t h e S e n i o r C e n t e r , se n i o r h o u s i n g o r K S D Ci t y P a r k s De p a r t m e n t a n d KS D Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 6 Ma n u f a c t u r i n g C e n t e r S h o r t - T e r m R e c o m m e n d a t i o n s Ga p s Sh o r t - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Im p r o v e K e n t ’ s p o o r b r a n d i m a g e : No r e g i o n a l p l a n f o r So u t h C o u n t y m f g . c t r . L i t t l e p u b l i c k n o w l e d g e o f K e n t mf g . s u c c e s s s t o r i e s Cr e a t e m a n u f a c t u r i n g r e c r u i t m e n t m a t e r i a l s a n d se n d K e n t t e a m o u t PR / m e d i a c a m p a i g n t o i m p r o v e p e r c e p t i o n o f ma n u f a c t u r i n g s e c t o r ( s o c i e t a l b e n e f i t s ) Ci t y a n d C h a m b e r Pu g e t S o u n d Ma n u f a c t u r i n g As s o c i a t i o n , C i t y , Ch a m b e r Li t t l e s u p p o r t f o r m a n u f a c t u r i n g e n t r e p r e n e u r : No s i n g l e po i n t o f c o n t a c t a n d s u p p o r t ; n o i n c u b a t o r p r o g r a m Co n n e c t w i t h n a t i o n a l m a n u f a c t u r i n g a s s o c i a t i o n s (N A M , A M A , U n i v e r s i t y o f M i c h i g a n ) Ch a m b e r La b o r : • Ed u c a t i o n s y s t e m n o t p r o d u c i n g e n o u g h p r o b l e m - so l v i n g , a n a l y t i c , r e l i a b l e e m p l o y e e s w i t h g o o d w o r k et h i c E S L / i m m i g r a n t i s s u e s • Sh o r t a g e o f h i g h - s k i l l e d p r o d u c t i o n t e c h n i c i a n s • Hi g h – c o s t h o u s i n g • Sh o r t a g e o f q u a l i f i e d e n t r y - l e v e l a p p l i c a n t s Of f e r l o w c o s t a n d / o r f r e e c l a s s e s K - 1 4 o n s o f t sk i l l s , c r i t i c a l t h i n k i n g KS D & C o l l e g e s , AP I C S Tr a n s p o r t a t i o n n e t w o r k c o n g e s t e d : La c k o f p u b l i c s u p p o r t f o r f u n d i n g f o r n e e d e d in f r a s t r u c t u r e PR c a m p a i g n e d u c a t i n g v o t e r s r e g a r d i n g v a l u e o f tr a n s p o r t a t i o n i m p r o v e m e n t s Se a t t l e C h a m b e r , Pu g e t S o u n d M f g . As s n . , G o o d R o a d s As s n . , E n g i n e e r i n g fi r m s Bu s i n e s s c l i m a t e i s e x p e n s i v e : • Co m m u n i t y / c i t i z e n e c o n o m i c l i t e r a c y i s l o w • La c k o f p r o g r e s s i v e l e a d e r s h i p • Er g o n o m i c – p o t e n t i a l l o s s e s • He a l t h c a r e c o s t s e s c a l a t i n g • Ta x e s : S t a t e u n c o m p e t i t i v e wi t h s o m e – s a l e s t a x & B& O • Ut i l i t i e s – p o t e n t i a l i n c r e a s e U I & L & I r a t e s r i s i n g H i g h pr o p e r t y t a x Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 7 Ma n u f a c t u r i n g C e n t e r L o n g - T e r m R e c o m m e n d a t i o n s Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Po o r i n d u s t r y v i s i b i l i t y : • No s t a t e m f g . a s s n . • No i n d u s t r y p r o m i n e n c e a t U W • No c o m m u n i t y k n o w l e d g e r e g a r d i n g m f g . ca r e e r s Fu n d W a s h i n g t o n S t a t e E c o n o m i c D e v e l o p m e n t p r o g r a m t o re c r u i t m a n u f a c t u r e r s a n d d i s t r i b u t o r s St a t e l e g i s l a t o r s i n Ke n t a r e a , K C C , SK C E D C , W M S Bu s i n e s s c l i m a t e i s e x p e n s i v e Re s t r u c t u r e s t a t e t a x c o d e ( b e s t p r a c t i c e r e v i e w o f o t h e r st a t e s ) • St a r t u p s – 2 - y e a r t a x h o l i d a y o n B & O B • UI , L & I • Bu n d l e d i n c e n t i v e s t o l u r e c o m p a n i e s t o l o c a t e i n Wa s h i n g t o n ( w o r k f o r c e f u n d i n g a n d t a x i n c e n t i v e s ) Im p r o v e f l e x i b i l i t y a n d p r e d i c t a b i l i t y o f r e g u l a t o r y c l i m a t e t o fa c i l i t a t e b u s i n e s s e x p a n s i o n ( w a t e r , f i s h , L & I ) Ma i n t a i n l o w - c o s t e n e r g y s u p p l y AW B , S e a t t l e Ch a m b e r , K C C Go v e r n o r , A W B , Co m p e t i t i v e n e s s Co m m i t t e e , E D C s , Ke n t l e g i s l a t o r s BP A - S t a t e e n e r g y of f i c e , P S E – pr i v a t e i n v e s t o r s La b o r C r e a t e m a g n e t a n d / o r c h a r t e r s c h o o l ( s ) d e d i c a t e d t o te c h n i c a l c a r e e r s i n m a n u f a c t u r i n g KS D , W M S , K C C , AE A , I S M , A P I C S , Ar e a m f g . co m p a n i e s Tr a n s p o r t a t i o n n e t w o r k c o n g e s t e d I m p r o v e t r a n s p o r t a t i o n s y s t e m : • Fr e i g h t m o b i l i t y • So u t h C o u n t y m a s s t r a n s i t s y s t e m Go v e r n o r & K i n g Co u n t y C o u n c i l : le a d s St a t e l e g i s l a t o r s Li t t l e s u p p o r t f o r m a n u f a c t u r i n g e n t r e p r e n e u r C r e a t e i n c u b a t o r p r o g r a m s ( i n d u s t r y e x p e r t s a s m e n t o r s , fi n a n c e ) Ci t y , K C C , A P I C S , UW , W S U , G R C C , HC C , R T C Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 8 Wo r k f o r c e o f t h e F u t u r e S h o r t - T e r m R e c o m m e n d a t i o n s Ga p s Sh o r t - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y Hi g h p e r c e n t a g e o f K - 1 2 g r a d u a t e s d o n ’ t m e e t em p l o y a b i l i t y s t a n d a r d s Co l l e g e s p r o v i d e e m p l o y a b i l i t y “ t o w o r k ” p r o g r a m fo r u n d e r - p r e p a r e d s t u d e n t s HC C , G R C C , R T C KS D l a c k s s y s t e m t o s u p p o r t b u s i n e s s i n v o l v e m e n t Cr e a t e d a t a b a s e ( w i t h s t a f f s u p p o r t ) f o r b u s i n e s s - ed u c a t i o n p a r t n e r s h i p s KS D & K e n t Ch a m b e r Hi g h p e r c e n t a g e o f K - 1 2 g r a d u a t e s d o n ’ t m e e t em p l o y a b i l i t y s t a n d a r d s Sc h o o l c a r e e r c e n t e r s i d e n t i f y j o b s a v a i l a b l e “H i r e m e f i r s t ” KS D & c o l l e g e s KS D & ? Se p a r a t i o n b e t w e e n t r a d i t i o n a l a c a d e m i c & c a r e e r - te c h n i c a l p r o g r a m m i n g Ac a d e m i c f a c u l t y j o b s h a d o w w i t h c a r e e r t e c h fa c u l t y KS D La c k o f f o c u s , b y t r a d i t i o n a l a c a d e m i c i n s t i t u t i o n s , o n pr e p a r i n g s t u d e n t s t o s u c c e e d i n w o r k f o r c e In d u s t r y g u e s t s i n c l a s s r o o m s B o e i n g Li t t l e c o m m u n i t y u n d e r s t a n d i n g o f w o r k f o r c e o p p o r t u n i ti e s P R c a m p a i g n b y C h a m b e r r e g a r d i n g m a n u f a c t u r i n g jo b s NA M & K e n t Ch a m b e r Sm a l l c o m p a n i e s u n d e r s e r v e d b y s y s t e m D e v e l o p c o l l e g e p r o g r a m r e g a r d i n g e n t r e p r e n e u r i a l po s s i b i l i t i e s Sm a l l B u s i n e s s As s i s t a n c e C e n t e r Ed u c a t i o n i n s t i t u t i o n s l a c k s y s t e m t o i d e n t i f y e m p l o y e r s ’ ne e d s Em p l o y e r s a d o p t s k i l l s t a n d a r d s K e n t C h a m b e r , Pi e r c e & K i n g Co u n t i e s T e c h P r e p Co n s o r t i u m Wo r k f o r c e o f t h e F u t u r e L o n g - T e r m R e c o m m e n d a t i o n s Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y La c k o f k n o w l e d g e a n d / o r i n c e n t i v e s f o r e m p l o y e r s t o pr o v i d e w o r k - l i f e b a l a n c e Fu n d i n g f o r d a y c a r e C i t y Ed u c a t i o n i n s t i t u t i o n s l a c k s y s t e m t o i d e n t i f y e m p l o y e r s ’ ne e d s De v e l o p p r e d i c t i v e m o d e l fo r s k i l l d e m a n d s C o l l e g e s Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 1 9 Ke n t : T h e I n t e r n a t i o n a l C i t y S h o r t - T e r m R e c o m m e n d a t i o n s Ga p s Sh o r t - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y At t r a c t i v e t o i n t e r n a t i o n a l s t u d e n t s ? · • Fe w i n t e r n s h i p s f o r c o m m u n i t y c o l l e g e s So u t h C o u n t y c o l l e g e s p o o l r e s o u r c e s t o c r e a t e a n d st a f f c a r e e r c e n t e r t o r e c r u i t b u s i n e s s e s t h a t w a n t in t e r n s Co l l e g e s , S t a t e Bo a r d f o r Co m m u n i t y & Te c h n i c a l C o l l e g e s We l c o m i n g t o d i v e r s e p o p u l a t i o n s ? · • Fi r s t g e n e r a t i o n i m m i g r a n t b u s i n e s s o w n e r s m a y l a c k bu s i n e s s s k i l l s · • Li t t l e / n o i n t e r a c t i o n b e t w e e n e t h n i c g r o u p s · • La c k o f c e l e b r a t i o n s & v i s i b i l i t y o f d i v e r s e p o p u l a t i o n s · • Di f f i c u l t t o c o m m u n i c a t e : S c h o o l s & i m m i g r a n t fa m i l i e s Mi x a n d l e a r n f r o m i n t e r n a t i o n a l s t u d e n t s a t co m m u n i t y e v e n t s KC C , K A P L A N , se r v i c e or g a n i z a t i o n s , S i s t e r Ci t y g r o u p s , W o r l d Tr a d e C e n t e r s Bu s i n e s s n o t l e v e r a g i n g e x i s t i n g c o n n e c t i o n s H o st m o n t h l y i n t e r n a t i o n a l e d u c a t i o n s e r i e s ( a t Gr e a t W a l l M a l l ) Om a r L e e , P O S , Si s t e r C i t y g r o u p s Ho w t o m i x a n d l e a r n f r o m i n t e r n a t i o n a l s t u d e n t s ? · • No p l a t f o r m / v e n u e t o m i x f a i t h c o m m u n i t i e s • No c e n t r a l i n f o r m a t i o n s o u r c e · • Di f f i c u l t t o g e t U S b u s i n e s s e s , e d u c a t o r s , a n d st u d e n t s t o g o o v e r s e a s f o r m o r e t h a n t w o w e e k s Cu l t u r a l p r o g r a m m i n g o n p u b l i c a c c e s s s t a t i o n C i t y , e t h n i c co m m u n i t i e s Ke n t : T h e I n t e r n a t i o n a l C i t y L o n g - T e r m R e c o m m e n d a t i o n s Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y In t e r n a t i o n a l k n o w l e d g e b a s e ? L a c k o f o n g o i n g s t r u c t u r e d le a r n i n g a p p r o a c h : • La n g u a g e s · • Ge o g r a p h y · • Hi s t o r y · • Cu l t u r e · • Me d i a Mo d e l U N p r o g r a m f o r h i g h s c h o o l a n d c o l l e g e st u d e n t s KS D , S e a t t l e W o r l d Af f a i r s C o u n c i l , TD A , H C C , G R C C , RT C , S i s t e r C i t y gr o u p s Te c h n i c a l A p p e n d i x Re s u l t s o f C o m m u n i t y D i a l o g u e E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 2 0 Ke n t : T h e I n t e r n a t i o n a l C i t y L o n g - T e r m R e c o m m e n d a t i o n s ( c o n t i n u e d ) Ga p s Lo n g - T e r m R e c o m m e n d a t i o n s Re s p o n s i b l e P a r t y In t e r n a t i o n a l k n o w l e d g e b a s e ? L a c k o f o n g o i n g s t r u c t u r e d le a r n i n g a p p r o a c h : • La n g u a g e s · • Ge o g r a p h y · • Hi s t o r y · • Cu l t u r e · • Me d i a Mo d e l U N p r o g r a m f o r h i g h s c h o o l a n d c o l l e g e st u d e n t s KS D , S e a t t l e W o r l d Af f a i r s C o u n c i l , TD A , H C C , G R C C , RT C , S i s t e r C i t y gr o u p s Bu s i n e s s n o t l e v e r a g i n g e x i s t i n g c o n n e c t i o n s C r e a t e c e n t r a l i n f o r m a t i o n s o u r c e ( w e b p a g e a n d pr i n t p i e c e s i n m u l t i p l e l a n g u a g e s ) . C o u l d b e o n e pa g e o f b u s i n e s s r e c r u i t m e n t p a c k a g e Ci t y , K C C , K S D , et h n i c n e w s p a p e r s , Si s t e r C i t y g r o u p s Co n n e c t e d t o o t h e r c o u n t r i e s ? · • In f o r m a l & f o r m a l r e l a t i o n s h i p · • Cu l t u r a l & e d u c a t i o n a l e x c h a n g e s U. S . s t u d e n t s s t u d y a b r o a d H C C , G R C C , K S D We l c o m i n g t o d i v e r s e p o p u l a t i o n s ? · • Et h n i c e n t r e p r e n e u r s · • Et h n i c c o m m u n i t i e s w i t h c r i t i c a l m a s s t o c r e a t e a ma r k e t In t e r n a t i o n a l f i l m f e s t i v a l w i t h d i s c u s s i o n a t K e n t St a t i o n Ed i t h a t G R C C , Pe r f o r m i n g A r t s Ce n t e r , K C C , C i t y Pa r k s D e p t Technical Appendix Maps Economic Development Strategic Plan Page 21 Maps The following maps were produced in conjunction with the development of the Economic Development Strategic Plan. Population Density The map below shows population density around the Puget Sound. The darkest areas show the highest concentrations of population. Source: Puget Sound Regional Council (2000 Data); US Census (2000) Tacoma Edgewood Federal Way Auburn Kent Covington Burien Seatac Seattle Tukwila Renton Newcastle Issaquah Bellevue Puget Sound Technical Appendix Maps Economic Development Strategic Plan Page 22 Morning Peak Origination of Kent Industrial Employment The map below shows origination of all trips destined for Kent’s industrial areas. The darkest areas show the highest concentrations of trip origins per acre. Source: Puget Sound Regional Council (2000 Data); US Census (2000) Tacoma Edgewood Federal Way Auburn Kent Covington Burien Seatac Seattle Tukwila Renton Newcastle Issaquah Bellevue Puget Sound Technical Appendix Maps Economic Development Strategic Plan Page 23 Morning Peak Origination of Kent Commercial Employment The map below shows origination of all trips destined for Kent’s commercial areas. The darkest areas show the highest concentrations of trip origins per acre. Source: Puget Sound Regional Council (2000 Data); US Census (2000) Tacoma Edgewood Federal Way Auburn Kent Covington Burien Seatac Seattle Tukwila Renton Newcastle Issaquah Bellevue Puget Sound Technical Appendix Maps Economic Development Strategic Plan Page 24 Work-Based Trips Originating in Kent The map below shows the destination of all work-related trips originating in Kent. The darkest areas show the highest concentrations of trip destinations per acre. Source: Puget Sound Regional Council (2000 Data); US Census (2000) Tacoma Edgewood Federal Way Auburn Kent Covington Burien Seatac Seattle Tukwila Renton Newcastle Issaquah Bellevue Puget Sound Technical Appendix Maps Economic Development Strategic Plan Page 25 Morning Peak Origination of All Kent Employment The map below shows origination of all trips destined for Kent. The darkest areas show the highest concentrations of trips origin per acre. Source: Puget Sound Regional Council (2000 Data); US Census (2000) Tacoma Edgewood Federal Way Auburn Kent Covington Burien Seatac Seattle Tukwila Renton Newcastle Issaquah Bellevue Puget Sound Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 26 ECONOMIC DEVELOPMENT IN KENT INDUSTRY OUTLOOK AND RECOMMENDED ECONOMIC DEVELOPMENT STRATEGIES Final Report August 2003 Paul Sommers and Kursten Holabird ` Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 27 TABLE OF CONTENTS Executive Summary Page 28 Introduction Page 33 Methodology Page 33 Industry Analysis Industrial Machinery, including Computer Equipment Page 36 Plastics Page 38 Furniture Page 42 Truck Manufacturing Page 45 Aerospace Page 47 Metal Fabrication Page 50 Warehousing Page 52 Printing and Publishing Page 54 Engineering Services Page 56 Construction Page 57 Food Processing Page 60 Review of Selected Strategies Moving K-14 Education System to High Performance Page 63 Foreign Direct Investment (FDI) Page 67 Improving Incumbent Workers Productivity Page 70 Investing in a Higher Functioning Workforce System Page 72 Technology Transfer Page 76 Technical and/or Business Education Page 83 Manufacturing Extension Partnership Page 85 Marketing Plans for Key Sectors Page 88 Attracting International Tourists, Businesses and Students Page 90 Using Arts and Culture to Attract International Business Page 91 Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 28 EXECUTIVE SUMMARY This report examines the competitive status and outlook for eleven major industries located in the city of Kent and the surrounding South King County region. The analysis considers what may happen in the future under alternative scenarios about economic development policy by answering four questions for each industry: • Will this sector grow (or decline) more or less rapidly than it has in the past? • What are the key roadblocks that are preventing faster growth in the Kent region and what are the critical issues for these sectors? • What could happen in these sectors in Kent if the City does nothing? • What actions could the City, Kent Chamber, and other agencies take that would influence the future growth of these sectors. Both quantitative and qualitative information is used to answer these questions. Employment data compiled specifically for Kent and the South King County region are analyzed using location quotients (values over 1.0 indicate competitive strength) and shift-share analysis (positive competitive shift effects indicate growing competitive strength). These metrics are defined in the text and provide alternative measures of competitiveness and changes in competitiveness over time. Competitive strength of industries in the Kent area was assessed between 1996 and 2001. The earlier year was chosen as a benchmark year during the strong period of economic expansion in the mid-1990s, and 2001 was the most recent year available. Projections of future growth are also included in the analysis, using the Washington Employment Security Department’s long term projections for the second half of the current decade (2005-2010). Qualitative information from interviews, websites, and other literature is used to enrich the picture of each industry derived from the quantitative analysis. Key results are summarized in two tables below. The seven industries at the top of the table above are the most competitive industries in the Kent area at present, as indicated by the location quotient values. However, several of them are losing some of that strength as shown by the shift-share analysis (competitive shift column in table above). In addition, only industrial machinery and plastics are expected to grow more rapidly than the overall rate of growth in the county from now to 2010. These projections, created by the Employment Security Department about a year ago, may be quite outdated given competitive threat that has emerged in China and other Asian countries in recent months. Rapid innovation will be required to maintain health U.S. manufacturing industries given this threat. A technology center, support from education programs at local high schools and community colleges, and stronger entrepreneurial development efforts are needed to offset the competitive threats Kent area firms face. These three recommendations show up frequently in the qualitative summary in the table below. The last four industries are not as strong in the Kent area, but Construction and Engineering Services have a foothold in the area and good growth prospects. Stronger education programs and broadband service quality are two factors that could assist these industries. The recommendations address all of the industries studied in this research project. It is tempting to identify those industries that are the strongest at present and to focus always scarce public resources on those areas of strength. However, Harvard’s Professor Michael Porter, the Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 29 leading researcher on industry clusters in the United States, counsels public agencies to be helpful to all industries or clusters that can benefit from public programs. As shown in this analysis, industries such as food processing, while not highly rated in the aggregate, can have strong individual firms and could benefit from technology or workforce programs that may be designed around the needs of the currently strong players. Other industries may gain strength over time with appropriate interventions. Unanticipated changes in the macroeconomic environment may change the positions of the players on the scorecard over time. Consequently, the best advice is to design programs around the needs of all industries, making sure that the key needs of major players are addressed but without excluding the opportunity to offer assistance to other interested firms. Te c h n i c a l A p p e n d i x In d u s t r y O u t l o o k a n d R e c o m m e n d e d E c o n o m i c D e v e l o p m e n t S t r a t e g i e s E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 3 0 Ke y F i n d i n g s a n d R e c o m m e n d a t i o n s In d u s t r y Lo c a t i o n Qu o t i e n t Co m p e t i t i v e Sh i f t Ke n t Em p l o y m e n t 20 0 1 Pr o j e c t e d Gr o w t h Ra t e ( % ) Fi n d i n g s Re c o m m e n d e d A c t i o n s In d u s t r i a l Ma c h i n e r y 2. 5 - 1 5 5 7 2 . 9 N o t a s t r o n g m a c h i n e b u i l d i n g re g i o n ; s p e c i a l t y f i r m s h a v e do n e w e l l ; t h r e a t f r o m l o w c o s t co u n t r i e s Te c h n o l o g y c e n t e r t o f o s t e r in n o v a t i o n a n d n e w p r o d u c t de v e l o p m e n t ; s u p p o r t t e c h ce n t e r w i t h e d u c a t i o n p r o g r a m s an d s e e k F o r e i g n D i r e c t In v e s t m e n t Pl a s t i c s 4. 2 - 8 6 7 2 . 3 N o t a m a j o r p l a s t i c i n d u s t r y ce n t e r b u t s t r o n g s p e c i a l t y fi r m s , e . g . , v i n y l w i n d o w s Bu i l d c l u s t e r l i n k a g e s t o tr a n s p o r t a t i o n e q u i p m e n t , in d u s t r i a l m a c h i n e r y ; u s e te c h n o l o g y c e n t e r t o d e v e l o p n e w pr o d u c t s & p r o c e s s e s ; b u i l d pl a s t i c s c u r r i c u l u m a t l o c a l co l l e g e s ; a s s i s t e n t r e p r e n e u r s Fu r n i t u r e 5. 3 + 7 9 6 1 . 2 S t r o n g r e g i o n a l c o m p e t i t i v e po s i t i o n a n d g r o w i n g l o c a l of f i c e f u r n i t u r e m a r k e t ; w e a k gr o w t h p r o j e c t i o n m a y b e a da t a a g g r e g a t i o n p r o b l e m ; th r e a t f r o m l o w c o s t c o u n t r i e s Bu i l d a f u r n i t u r e p r o g r a m a t co m m u n i t y c o l l e g e s ; u t i l i z e te c h n o l o g y c e n t e r t o i m p r o v e pr o d u c t i v i t y ; b u i l d l i n k a g e s t o lo c a l f i r m s w i t h m a n y r e t a i l ou t l e t s Tr u c k Ma n u f a c t u r i n g 3. 7 * * * S i n g l e m a j o r f i r m i n a r e a ; in d u s t r y i s s e n s i t i v e t o bu s i n e s s c y c l e ; c l u s t e r o f su p p l i e r s c o u l d b e st r e n g t h e n e d , g i v i n g m a j o r f i r m a s t r o n g e r r e a s o n s t o s t a y i n th e a r e a Ex a m i n e p o t e n t i a l t o b u i l d cl u s t e r b y i d e n t i f y i n g c o m p o n e n t ne e d s a n d p r o d u c t i o n / q u a l i t y re q u i r e m e n t s o f l e a d f i r m ; u s e te c h n o l o g y c e n t e r t o h e l p l e a d fi r m i n n o v a t e Te c h n i c a l A p p e n d i x In d u s t r y O u t l o o k a n d R e c o m m e n d e d E c o n o m i c D e v e l o p m e n t S t r a t e g i e s E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 3 1 In d u s t r y Lo c a t i o n Qu o t i e n t Co m p e t i t i v e Sh i f t Ke n t Em p l o y m e n t 20 0 1 Pr o j e c t e d Gr o w t h Ra t e ( % ) Fi n d i n g s Re c o m m e n d e d A c t i o n s Ae r o s p a c e 3. 7 * 5 0 0 0 + * B o e i n g p l a n t a n d s o m e B o e i n g su b c o n t r a c t o r s i n a r e a ; 9 / 1 1 an d W a r o n T e r r o r i s m h u r t i n g co m m e r c i a l a i r p l a n e i n d u s t r y ; mi s s i l e a n d s p a c e g r o u p h a s st r o n g e r p r o s p e c t s Te c h n o l o g y c e n t e r c o u l d h e l p su b c o n t r a c t o r s e n h a n c e co m p e t i t i v e n e s s ; c o m m u n i t y co l l e g e c a n a s s i s t B o e i n g a n d su b c o n t r a c t o r s w i t h s k i l l e d l a b o r su p p l y Me t a l Fa b r i c a t i o n 2. 9 - 1 2 6 4 1 . 7 M e t a l f a b r i c a t i o n f i r m s s u p p o r t ot h e r m a n u f a c t u r e r s , co n s t r u c t i o n , a n d m a r i n e in d u s t r i e s ; t h r e a t f r o m l o w c o s t co u n t r i e s Te c h n o l o g y c e n t e r c o u l d h e l p fi r m s i m p r o v e p r o c e s s e s o r de v e l o p n e w p r o d u c t s ; en t r e p r e n e u r i a l p r o g r a m c o u l d as s i s t s t a r t u p s a n d g r o w i n g f i r m s Wa r e h o u s i n g 4. 0 + 3 9 7 0 1 . 5 M a j o r , d e f i n i n g i n d u s t r y f o r Ke n t a r e a ; s t r o n g l i n k s t o p o r t s ; ke y a d v a n t a g e i s l o w c o s t l a b o r bu t t e c h n o l o g i c a l c h a n g e i s ra p i d i n i n d u s t r y n a t i o n w i d e Te c h n o l o g y c e n t e r c o u l d h e l p fi r m s u t i l i z e i n n o v a t i v e te c h n o l o g y a n d s t r e n g t h e n li n k a g e s t o s h i p p i n g a n d l a n d tr a n s p o r t a t i o n c o m p a n i e s ; pr o g r e s s n e e d e d o n f r e i g h t in f r a s t r u c t u r e Pr i n t i n g a n d Pu b l i s h i n g 1. 1 - 1 0 7 8 0 . 0 G r o w t h o f o n - l i n e a d v e r t i s i n g an d i n f o r m a t i o n d i s t r i b u t i o n ma y l i m i t f u t u r e m a r k e t f o r pr i n t e d m a t e r i a l s ; f e w m a j o r fi r m s i n r e g i o n No n e i d e n t i f i e d Te c h n i c a l A p p e n d i x In d u s t r y O u t l o o k a n d R e c o m m e n d e d E c o n o m i c D e v e l o p m e n t S t r a t e g i e s E c o n o m i c D e v e l o p m e n t S t r a t e g i c P l a n P a g e 3 2 In d u s t r y Lo c a t i o n Qu o t i e n t Co m p e t i t i v e Sh i f t Ke n t Em p l o y m e n t 20 0 1 Pr o j e c t e d Gr o w t h Ra t e ( % ) Fi n d i n g s Re c o m m e n d e d A c t i o n s En g i n e e r i n g Se r v i c e s 0. 4 + 1 0 3 8 2 . 4 N o t a s t r o n g i n d u s t r y i n K e n t al t h o u g h i t i s q u i t e l a r g e i n Ki n g C o u n t y u r b a n c e n t e r s ; lo c a l p u b l i c s e c t o r m a r k e t w i l l ex p a n d ; l i f e s t y l e e n t r e p r e n e u r s ma y d e s i r e a K e n t l o c a t i o n Sp e c i a l i z e d r e s e a r c h f a c i l i t i e s i n te c h n o l o g y c e n t e r m a y h e l p ; pu r s u e h i g h e s t p o s s i b l e br o a d b a n d s e r v i c e s t a n d a r d s t o en a b l e f i r m s t o o v e r c o m e t h e di s a d v a n t a g e o f b e i n g o u t s i d e th e u r b a n c e n t e r Co n s t r u c t i o n 1. 9 + 1 6 4 8 2 . 1 G o o d p r o s p e c t s i n p u b l i c se c t o r h e a v y c o n s t r u c t i o n a n d re s i d e n t i a l d e v e l o p m e n t Em p h a s i z e c o n s t r u c t i o n t r a d e s pr o g r a m s a t c o m m u n i t y c o l l e g e s Fo o d Pr o c e s s i n g 1. 1 + 1 4 0 4 0 . 1 M a t u r e i n d u s t r y b u t i n n o v a t i v e pr o d u c t s s t i l l p o s s i b l e ; n e w pr o c e s s t e c h n o l o g y k e y t o co n t i n u e d c o m p e t i t i v e n e s s un l e s s p r o d u c t i s v e r y di s t i n c t i v e Te c h n o l o g y c e n t e r c o u l d a s s i s t wi t h p r o c e s s a n d p a c k a g i n g te c h n o l o g i e s ; e n t r e p r e n e u r i a l pr o g r a m c o u l d a s s i s t s t a r t u p fi r m s *E m p l o y m e n t d a t a f r o m W a s h i n g t o n E m p l o y m e n t S e c u r i t y D e p a r t m e n t ; a s t e r i s k i n d i c a t e s d a t a t h a t c a n n o t b e d i s c l o s e d t o p r o t e c t co n f i d e n t i a l i n f o r m a t i o n ; a e r o s p a c e e s t i m a t e f r o m C i t y o f K e n t . Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 33 INTRODUCTION This report provides an examination of the competitive status and outlook for eleven major industries located in the city of Kent and the surrounding South King County region stretching from Renton south to Kent and Auburn, and west to the Puget Sound, embracing Tukwila, Covington, Federal Way, SeaTac, Burien, and Des Moines. The focus of the analysis is on the firms located in Kent, but set in the context of broader South King region because this region shares significant characteristics with Kent as shown in prior research.1 This report considers what may happen in the future under alternative scenarios about economic development policy by answering four questions for each industry: • Will this sector grow (or decline) more or less rapidly than it has in the past? • What are the key roadblocks that are preventing faster growth in the Kent region and what are the critical issues for these sectors? • What could happen in these sectors in Kent if the City does nothing? • What actions could the City, Kent Chamber, and other agencies take that would influence the future growth of these sectors. The suggestions made in answering the last question draw on a review of best practices in economic development provided in a second chapter to this report. METHODOLOGY The report uses quantitative forecasts prepared by the Washington Employment Security Department as part of their most recent long term occupational forecasts for the period from 2000 to 2010 for King County. In tables provided in the industry sections below, the long term forecast for each industry is presented for 2000 to 2005 and 2005 to 2010. Location quotients are provided for each industry in the sections below to assess the competitive strength of each industry in Kent and the South King region as compared to King County. Location quotients are ratios with the numerator consisting of the proportion of local area employment (Kent or South King) in a particular industry as compared to total employment in that same region, and the denominator showing the same proportion for King County as a whole. If the local area has a larger percentage of its total employment in a particular industry, then the location quotient will be greater than one, and the local area is said to have a competitive advantage in that industry relative to the county. Conversely, if the local area has a smaller percentage of its employment in a particular industry, then the location quotient will be less than one, and the local area is said to lack competitive advantage in that industry. In addition, a shift-share analysis was conducted comparing employment changes from 1996 to 2001, comparing changes in employment in Kent and the South King region to those that 1 Hebert Research, Inc. South County Economic Engine: Economic Analysis/Statistical Profile, November 2002. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 34 occurred in King County as a whole.2 These two sub-county regions are compared to the county following the spirit of economist Charles Tiebout, creator of the Tiebout theorem. Tiebout argued that residents of a metropolitan area “vote with their feet,” choosing a particular town to live in based on package of services, taxes, and local characteristics they find most appealing.3 If businesses are assumed to do likewise, then an analysis comparing trends in employment for sub-regions compared to a larger region will reveal the comparative advantages of the sub- regions, i.e., the industries that are most competitive in particular sub-regions. Shift-share analysis disaggregates total employment growth into three components: • Growth due to overall expansion of the countywide economy: o Countywide Growth Effect, sector i, region r = E(r,i)*g(s) • Growth due to the expansion of each industry group countywide: o Industry Mix Effect for sector i in region r = E(r,i)*(g(s,i)-g(s)) • Growth due to the unique pattern of growth at the regional level within each industry: o Competitive Effect for sector I in region r = E(r,i)*(g(r,i)-g(s,i)) For each industry reviewed below, the location quotients and shift share components are estimated using confidential establishment level data supplied by the Washington Employment Security Department under a data sharing agreement. Establishment level data were sorted by the address in the database for each establishment, permitting estimation of industry employment for establishments located in Kent, in the entire South King region, and in King County as a whole. This use of establishment level data is a unique aspect of the analysis in this report since Employment Security does not publish data at a sub-county level due to confidentiality issues. The tables provided below have been carefully screened to ensure that they comply with the confidentiality rules established by the federal government. The General Macroeconomic Outlook Since February the overall macroeconomic outlook has slowed due to the response to the war on Iraq and a generally tepid pace of recovery, according to the latest forecast from Global Insight (formerly DRI-WEFA). The US will lead the world economy with Asia and Europe experiencing very slow growth. Even China, which is posing a major competitive threat to US manufacturers, is growing at a slower pace than in the recent past, contributing to the overall sluggishness in Asia. Inflation and interest rates will remain low in this macroeconomic scenario, and GDP will begin growing at about 4 percent annually by the forth quarter of 2003. Employment growth will likely begin to recover nationally by the end of the summer, but is not expected to exceed 2.5 percent at any time out through 2005. Through the end of 2004, most business investment will 2 Several versions exist of this technique for decomposing change in a series over time. I have used the method laid out by Richard Barff and Prentice Knight, “Problems Associated with Comparative Static Approach,” http://www- rohan.sdsu.edu/faculty/fstutz/shiftshare.htm (April 2003). 3 Tiebout, C.M. 1956. "A Pure Theory of Local Expenditures.". Journal of Political Economy. LXIV. 416-24. October. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 35 be in computers and software, not structures or other equipment. “Conflict sensitive sectors” have been slowed by the Iraq war (airlines, tourism, luxury goods).4 The tepid pace of growth expected for the national economy is a factor influencing current perceptions of the outlook for each sector in Kent and the surrounding region. This state is likely to lag the nation in recovering from the recession since Boeing is expected to continue to reduce its workforce somewhat during the remainder of this year and possibly some more in 2004. There is no major force for growth to offset the drag created by further manufacturing job losses in the year or so ahead.5 Rather than dwelling on the lingering impacts of the recession, the long term outlook is stressed in the industry reviews below, based on long term forecasts from Employment Security as well as review of published industry sources, interviews with businesses in the region, and focus groups with manufacturers arranged by the Kent Chamber of Commerce 4 Notes from presentation by Nariman Behravesh, chief economist, Global Insight, at the Pacific Northwest Regional Economics Conference, Spokane, May 2003. 5 Office of the Forecast Council, Preliminary June Forecast for Washington, Olympia, June 2003. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 36 INDUSTRY ANALYSIS This section assesses the competitive strength and growth prospects for eleven major industries that constitute the economic base of Kent and the surrounding South King region. The future of these industries will determine the overall level of employment and incomes in this area because these basic industries create opportunities for secondary industries such as retailing and services through a multiplier process created by the payrolls of the basic industries as well as their purchases of goods and services from other firms. With the possible exceptions of construction and engineering services, all of the industries below can be considered basic in the sense that they draw income into the area from outside by selling their products or services to customers outside the area. Industrial Machinery, Including Computer Equipment Industrial/commercial machinery Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 1547 1557 10 2.5 325 -14 -301 South King Region 2385 2359 -26 1.2 500 -21 -505 King County 7648 9184 1536 Source: Employment Security and author’s calculations The industrial and commercial machinery industry is a relatively large manufacturing industry in the area, and it had an average wage of $46,534 countywide in 2001. Industry growth rate in the county was less than the countywide all industry growth rate; therefore the industry shift effect is negative for both Kent and the South King region. South King lost jobs in this industry, making the competitive shift effect very negative. Kent gained 10 jobs in this industry, resulting in a small positive competitive shift effect for this industry in Kent Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Industrial Machinery and Equipment 9400 9200 10600 -0.4% 2.9% Source: Employment Security The state’s long-term projection for this industry is a slight decline in the first half of the decade, followed by fairly strong growth in the second half. Based on a survey of members, the Association of Equipment Manufacturers anticipated a 2 percent expansion in US orders for construction equipment in 2003, accompanied by a 3.2 percent expansion in the Canadian market and 3.3 in the rest of the world. Crane, forklift, and other lifting equipment manufacturers anticipated declines in their markets in 2003 as of Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 37 February, but at a slower pace than in early 2002 foreshadowing a recovery in this market (see http://www.aem.org/News/). Employment levels in key occupations in these industries are projected to grow at a slower pace than the average of all jobs through 2010 according to BLS Occupational Outlook for Industrial Machinery Installation, Repair, and Maintenance Workers. More automated production equipment is coming into many industries, requiring more sophisticated maintenance skills for some tasks. However, the equipment often comes with self-diagnostic software, ultrasonic measuring tools, laser shaft alignment, and other sophisticated technologies that can reduce the need for maintenance workers or “de-skill” these jobs to some extent. Lower paid workers in classifications such as electronics technicians will assume some installation and maintenance duties. The net result of these trends is that most job openings will stem from a need to replace workers who retire or move on to other occupations (see http://www.bls.gov/oco/ocos191.htm). Growth Prospects. The industrial equipment industry has strong long term growth prospects according to the state’s long term forecast and Kent has a strong competitive position in this industry relative to the county and the South King region. However, there was negligible growth from 1996 to 2001 – a net increase of only 10 jobs. Compared to major industrial equipment manufacturing regions in the Upper Midwest states, this region does not have a terribly strong base in this industry. Consequently, the industry in this state may not do as well as Employment Security’s long term projection, but end up performing more like the industry nationally with a slow pace of expansion. Key Roadblocks. Low cost manufacturing services are being offered by many Asian countries, as well as Mexico, Eastern Europe, and Russia, expanding the range of opportunities for out- sourcing. Given the cost pressures on manufacturers today, many firms in the Kent area feel that they must out-source most part manufacturing and routine assembly operations. Even the leading firms in the area such as Flow and Red Dot are under significant pressure at present, and the entire nature of manufacturing may shift with most of the part manufacturing done offshore, while design, engineering, marketing, and customer service may survive in domestic establishments. Unless there are dramatic shifts in relative exchange rates or other factors affecting global commerce, the US manufacturing industry may change quite dramatically in the years ahead. Flow Research was founded in Kent, specializing in water jet cutting technology. An offshoot of this firm, Quest, remains in the area, providing “laser based instrumentation solutions for dimensional mapping” of the interior of tubular surfaces. This advanced technology is used to inspect pipes in nuclear equipment at Hanford. The innovative technology of these firms give them strong market positions in niche markets. Other firms in the sector will need to establish comparable market positions in specialized technologies to bring up the overall pace of growth in this industry. The much larger industrial equipment centers in the Midwest will likely continue to dominate the industry overall in the US, but with strong competition from European and Asian firms. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 38 No Action Scenario. If the city does nothing to stimulate growth in this sector, leading firms could conceivably decide to move to a stronger industrial machinery center at some point and other firms could languish, posing a substantial risk of decline in this sector rather than the strong growth projected for the second half of the decade. Positive Action Recommendations and Outcomes. This sector could benefit from creation of an advanced technology center with links to universities, national laboratories, and major industries requiring advanced industrial equipment. Such a center could influence the research agendas of the major research institutions (University of Washington and Battelle-operated Pacific Northwest National Laboratories) and assist existing local firms in commercializing technologies developed in these institutions. The center could also function somewhat as an incubator, with services to assist startup firms created around these technologies. With a technology transfer center as the centerpiece, technical education and other workforce programs at the community college could play an important supporting role in improving the productivity of existing firms and supplying a labor force for startups. Foreign direct investment would also be a possibility, since the weaker dollar is enhancing the prospects for exports from the United States, and German and Japanese industrial equipment manufacturers have an added incentive to consider investing in plant capacity in the United States to bolster their own market position. Kent should look for firms in these two countries in particular who might be interested in the key technology areas emerging from the research institutions. International programs of the city may help in identifying target companies in these other countries. Plastics Rubber, plastics Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 985 867 -118 4.2 207 -35 -289 South King Region 1313 1914 601 3.0 275 -47 373 King County 2471 2901 430 Source: Employment Security and author’s calculations Note that the industry title comes from the Standard Industrial Classification system, but rubber is not a major industry in the Puget Sound, whereas plastic extruders are a modestly sized industry in the area. The rubber and plastics industry declined by nearly 120 employees in Kent from 1996 to 2001, leaving an industry that still has a very high location quotient of 4.2. The average wage in the rubber and plastics industry was $33,126 in 2001. Kent clearly has a comparative advantage in the plastics industry, but it is a rather small industry in this area, and the negative competitive shift suggests a declining advantage in Kent. South King, on the other hand, has gained substantial employment in this industry and has a strong Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 39 positive competitive shift. This industry also has competitive strength in the whole South King County region, as shown by a location quotient of 3.0. Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Petroleum, Coal, Plastics 3600 3300 3700 -1.7% 2.3% Source: Employment Security Department According to the state’s most recent projections for King County, the petroleum coal, and plastics industry, a somewhat larger aggregated category than used in the previous table, is expected to decline quite sharply in the first half of this decade, and then rebound at a slightly higher rate in the second half of the decade, resulting in a net employment gain of 100 employees countywide over the entire decade. This growth is most likely due to expansion of the plastics component of the aggregated category, since there is no active coal production in the area, and petroleum refining is a very capital intensive industry that is not likely to add much employment. The basis for the projected growth in the second half of the decade is not apparent; it would represent a reversal of trends in the late 1990s as well as the first half of this decade. Plastic industry notes from “Sites and Parks” magazine • Used in practically every industry • New uses constantly created • Industry present everywhere but especially strong in California and Ohio • New uses may come at expense of metal products that are displaced – metal products shrinking as plastics expand • 26% increase in employment, 1991-98 Plants Sites & Parks magazine, February/March 1999 These notes describe a large open market for plastics products that can be met by plastic extrusion plants. Plastic can be used to create so many products that there seems to be no upper limit for the industry. On the other hand, barriers to entry into this industry are modest, and it is difficult to carve out a defensible niche that other firms cannot invade. Consequently, margins are often low and competition from many states and many other countries is possible. According to the Society of the Plastics Industry (SPI), Washington had 20,010 plastics industry jobs in 2001, 22nd rank in the nation. Employment increased from approximately 13000 in 1995. Industry shipments of $3.4B, 25th rank nationally, were up from about $16B in 1995. http://www.plasticsdatasource.org/facts/wa.pdf County level statistics from SPI: Employment Sales (mill) Plants Snohomish 1060 212 24 King 4206 931 130 Pierce 1944 408 41 http://www.plasticsdatasource.org/facts/seattle.pdf Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 40 Clark College is the only WA Community or Technical College program listed on the SPI website (http://www.plasticsindustry.org/outreach/institutions/index.htm). This industry could represent an opportunity for Kent area colleges since the industry has a strong presence in the Kent Valley. Clark College could provide a curriculum to get a program going in the Kent area. SPI’s Plastics End-Market Snapshots released in 2001: • Light trucks—market has grown rapidly, low interest rates help, but future sales uncertain • All other transportation equipment—growing market share for plastics but weak economy limiting demand growth • Medical devices—expanding market but major cost pressures will limit profits • Packaging—demand follows consumption patterns, lots of consolidation squeezing profits • Construction—one of the stronger markets in the current economy • Appliances—demand follows housing but over-capacity in the industry • Electrical/electronic equipment—waiting for the recovery in the tech economy This list of major customers for plastics companies suggests another advantage of focusing on this industry in the Kent area. Aircraft, trucks, boats, medical devices, and construction are all major industries in the area, suggesting a number of markets in which local plastics companies could compete. However, as noted above, competition is fierce in this industry and unique market niches may be necessary to succeed. A typical current product in the area, vinyl windows, is subject to competition from firms in many other areas. The pressure to improve productivity and cut costs in what has become the low end market standard for home construction is intense, and absent new, higher margin products, this industry is not likely to provide a lot of job growth in the Kent area. Market trend data from the industry are shown in the figure on the next page. Transportation equipment and construction products appear to be the most rapidly growing market segments for the plastics industry. Composites are displacing both traditional plastic and metal materials in many applications. According to the American Composites Manufacturers Association, composites can be defined as “a polymer matrix, either thermoset or thermoplastic, reinforced with a fiber or other material with a sufficient aspect ratio (length to thickness) to provide a discernable reinforcing function in one or more directions”. Composites are used in many products including structures (swimming pools, concrete forming pans, cooling towers, sandwich components, highway delineators and signs and pre-manufactured homes, bathroom components and fixtures. In addition there are many applications in transportation equipment, appliances, and various consumer and industrial products. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 41 Composites Industry Market Segment Trends Source: http://www.cfa-hq.org/industry/statistics.pdf (May 2003) Local plastics companies may need to develop capabilities to integrate composite products in their product line in order to survive or to develop additional product lines that will enable growth. For example, Paccar has substituted composite materials for steel in their large truck products to save weight and establish more streamlined profiles that reduce fuel consumption. Boeing is very aggressively adopting new technologies using composites to improve the fuel efficiency of its products. These two major manufacturers represent substantial market opportunities for innovative “plastics” firms. In addition, home and commercial construction projects are incorporating many engineered materials, including plastic and composite materials, again representing opportunities for innovative firms. Growth Prospects. This industry has been in decline in the Kent area, and county-level projections suggest continued shrinkage in the first half of the current decade, followed by a revival. The analysis above suggests that the key to the revival is high rates of innovation, bringing new technologies into the industry and carving out defensible market niches based on high rates of innovation for higher margin products. Key Roadblocks. The industry has not developed distinctive, high value products in this area and is accordingly competing in relatively low margin markets such as plastic construction materials. Foreign as well as domestic competition is rife is such markets. No Action Scenario. Continued decline is more likely than a revival of the industry in the second half of the decade if no action is taken to alter the prospects of firms in this industry. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 42 Positive Action Recommendations and Outcomes. A technology center as recommended for industrial machinery is the key recommendation for this industry. New process technologies and development of new products using innovative materials such as new composite materials is needed to change the competitive position of the industry. Either startup firms or existing companies may lead the transformation. Economic development agencies working with the industry and the proposed technology center can choose between a focus on startups or existing firms, or ideally find ways to work with both. The technology center should collaborate with the community college around workforce issues as they arise and as new technologies and processes are introduced by for-profit firms in the area. Existing firms use a relatively low skill workforce. These firms constantly need new workers because turnover tends to be high in low skill manufacturing jobs. These firms would benefit from stronger links to vocationally oriented programs in the K-14 education system. Furniture Furniture and fixtures Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 549 796 247 5.3 115 43 89 South King Region 919 1617 698 3.1 193 72 433 King County 1816 2340 524 Source: Employment Security and author’s calculations The furniture industry grew by 45 percent in Kent from 1996 to 2001, and it has a very high location coefficient of 5.3 indicating strong comparative advantage. The average wage in the furniture industry in 2001 was $31,172. The Kent-based firms constitute 30 percent of the countywide employment base in this industry, and 60 percent of industry employment in the South King region. South King also has a high location quotient for this industry, but not as high as Kent’s. Shift share analysis suggests that this industry is continuing to cluster in Kent and the South King region, with positive competitive shifts for both Kent and the South King region. The shift in comparative advantage is especially significant for the South King region, where the growth was at a somewhat faster pace (76 percent expansion) than in Kent (45 percent). Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Other Durable Goods 8,200 8,300 8,800 0.2% 1.2% Source: Employment Security Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 43 The state’s most recent long run projections do not show this industry separately, but as part of a miscellaneous “other durable goods” sector. The other durable goods sector is expected to expand by 0.2 percent in the first half of the decade and by 1.2 percent in the second half. This group of industries seems to have less volatility through the business cycle than other parts of Kent’s industrial base, with a smaller decline than other manufacturing industries in the recession of the first half of the decade, but also a less robust rate of expansion in the generally stronger economy expected in the second half of the decade. Forecast Notes. Nationally the office furniture market has not done terribly well due to the recession. Business investment drops dramatically in a recession, but can pick up equally rapidly in a recovery, thereby being one of the primary acceleration forces in business cycles. National sources indicate that the office furniture industry outlook is consistent with that for most forms of non-residential investment – modest growth in the year or so ahead due to a generally weak outlook for investment by businesses (see Office Furniture Outlook Weakens for 2002, Gradual Improvement Expected in 2003, www.mastio. com/pt/outlook.html). Automation is limiting the demand for furnisher finishers; some jobs moving offshore, most job openings will be due to retirements, according to the more recent notes from occupational forecasters; see Indiana Career Center http://icpac.indiana.edu/ careers/ careerprofiles/100091.xml/empout. The Puget Sound is not known as a center for furniture manufacturing. However, like any major urban center, architectural woodworking firms and a variety of custom office, restaurant, and other commercial furniture manufacturers supply niche markets with high value products. During major expansions in commercial space such as occurred in the last few years, office and other commercial furniture manufacturers have many opportunities in the local market. In addition, major retail chains such as Starbucks commission projects that can be installed over a wide geographic range in order to achieve a standard corporate image consumers readily recognize. The currently over-built office market in downtown Seattle and the Eastside will probably mean a slow pace of new orders in the next several years for the architectural woodworking firms and other manufacturers making products for office interiors. For others, unique trends in each niche market will be quite varied. Starbucks continues to expand quite rapidly. Turnover in restaurants seems to guarantee a business for firms that make restaurant interiors. Development of several major projects in South Lake Union suggests a market for office and biotechnology lab furnishings. Growth Prospects. While the national market for furniture manufacturers is slow at best, the Seattle area market has several unique characteristics that create a stronger environment for furniture manufacturing: • Substantial commercial real estate development activity • National and global retailers requiring standardized store furnishings • A cohort of young and wealthy individuals who are in the “nest building” stage of their lives, resulting in the construction of very large homes with high end furnishings • A market for commercial furniture products in Asia that may recover from its current doldrums; this regional market includes mainland China, a country that has “slowed” to a Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 44 7 percent annual growth rate and remains a major prospect for export oriented building products companies, including very high end interior furnishings. Consequently, the state’s outlook for the “other durable goods” category is not representative of prospects for furniture manufacturing in this area. No quantitative forecast is available, but a long run growth rate twice the rate anticipated for “other durable goods” is easily possible. Key Roadblocks. The uncertain timing of the national and state economic recovery is the single biggest obstacle to the sale of durable goods including commercial furniture. Corporate investment has been very sluggish for over 2 years. Over-building in the commercial office space market locally may imply a weak market for another 2+ years in the Puget Sound. However, other markets such as high end retail interiors, new investment in the South Lake Union area, and export markets for high end products in Asia may create opportunities for firms with the right product mix. In a stronger economy, labor supply is often a roadblock for manufacturers. No Action Scenario. In the absence of any new programs in the Kent area that could benefit manufacturers, this industry is likely to expand at least at the overall rate of expansion of the Puget Sound regional economy, and most likely faster if the right product mix is present to meet the requirements of tenants of new buildings in South Lake Union and in offshore markets. At the same time, manufacturers in this industry will face strong competition from name brand firms in the national marketplace, and from very low labor cost competitors in Asia. The product market may expand, but the competitiveness of domestic producers and the market share they earn is less certain than the anticipated market expansion. Positive Action Recommendations and Outcomes. Innovative design and continuous productivity improvement are both going to be needed for firms to remain competitive in furniture manufacturing. A program targeting both of these key issues could be created at a Kent area college. Such a program combining design and manufacturing issues would be a unique contribution in the community college system’s vocational and professional programs around the state. As such, it would likely draw students from outside the immediate region as well as serving the long run needs of local furniture manufacturers. Models for this sort of curriculum can be found in Europe (in Rosenheim, near Munich, Germany, and in Biele, Switzerland). In the early 1990s, staff of the Northwest Policy Center at the Evans School, University of Washington, led a Northwest delegation on a study tour of European approaches to education in the wood products industry. The Washington sub-group from this study tour also visited programs in the Vancouver, B.C. area modeled after the curriculum at Rosenheim (but with less emphasis on design issues). If there is interest in pursuing a furniture design/manufacturing initiative, new contacts with the Rosenheim and Biele schools should be initiated. International student exchanges are one way to get some trans-continental learning underway. In the past, one Biele student was placed in an internship at a company in the Tacoma area, and the key institution in Vancouver, the BC Institute of Technology, has facilitated placements of European students with Canadian secondary wood product manufacturers. Working with wood and metal fabrication firms in the Kent area, it is likely that a full-fledged international exchange program could push the local furniture industry to a new level of excellence, with substantial long term employment and income gains. The furniture sector in the Kent area is too small to sustain such initiatives on its own; such an aggressive initiative would have to be launched on a regional Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 45 basis, with strong support from firms throughout the South King region, and in Puyallup and Tacoma. Truck Manufacturing Due to the presence of Boeing in the aircraft industry and Paccar in the truck industry, the aggregated category “transportation equipment” cannot be broken down into more detailed categories without violating the confidentiality rules. This broad category includes ship and boat building and repair, and subcontractors to the two major firms in the aircraft and truck sectors. The average wage in Transportation Equipment in King County in 2001 was $65,098. In the Kent and South King regions, Boeing, Paccar, and their subcontractors are the major influence. Due to the cyclical nature of these industries as well as shifting market share between these two major firms and their respective competitors, many of the subcontractors have sought other markets for their transportation equipment products elsewhere in this country, overseas, or in other industries domestically or internationally. Transportation Equipment Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent * 5000+ * 3.7 * * * South King Region 21034 21329 295 1.7 4413 -4447 328 King County 58632 58539 -93 *Data suppressed to protect confidentiality; 2001 estimate provided by City of Kent based on public data on employment levels at Boeing and several subcontractors operating plants in Kent Source: Employment Security and author’s calculations As the table above shows, there has been little change in overall employment in this sector of the economy in King County between the two years 1996 and 2001. Employment in the South King region would have expanded by over 4400 jobs if the countywide overall rate of growth had been realized in this sector. Since the sector actually experienced a slight decline at the county level, an offsetting industry growth effect counter-balanced the county growth effect. The South King region ends up with a small positive competitive effect. Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Other Transportation Equipment 4,200 3,400 3,600 -4.1% 1.1% Source: Employment Security The long term outlook is presented above for “Other Transportation Equipment,” a category that includes both ship/boat building and repair, and truck manufacturing (aircraft manufacturing is reported separately at the county level in these projections a discussed below). The other Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 46 transportation equipment sector is expected to decline in the first half of the decade, and then expand at a very modest pace of 1.1 percent per year from 2005-10. Forecast Notes. Truck manufacturers “did not enjoy a banner year in 2002;” shipments for the year in the fell in the 145 thousand units range as compared to 300 thousand units in 1999. A “bright spot” is Class 8 truck trailers (the largest category, over 8,000 pounds, due to EPA regulations forcing companies to invest in new equipment. http://www.bizsites.com/2003/jan/article.asp?id=225. Fortunately for Kent/South King region, Class 8 tractor trailer rigs is exactly what Paccar produces at its Renton facility. Growth Prospects. This is not an “industry” in the usual sense but a single large firm with a collection of subcontractors in the surrounding communities. Consequently, it is probably only an historical accident that Paccar continues to manufacture large trucks in this area. The absence of key parts suppliers within a regional cluster is a limiting factor for future growth of this “industry.” Key Roadblocks. The lack of a complete cluster producing the myriad parts that go into a large truck is a key handicap to the truck building industry in the South King region. If other types of transportation equipment and the common components used across these diverse end products were rolling out of nearby factories, one could be more confident that truck manufacturing will remain a significant employer in the region. No Action Scenario. In the absence of any positive action to keep Paccar in the area as a manufacturer of trucks, it is conceivable that someday Paccar will close its doors, outsourcing most of the manufacturing process or moving final assembly to another state as Boeing is contemplating. In the best of future worlds but in the absence of any public initiative, the Renton facility will continue to produce 18-wheel rigs for a national market, relying increasingly on components and systems manufactured in other cities. Positive Action Recommendations and Outcomes. According to Harvard economist Michael Porter, the keys to success in an industry cluster include: • Multiple firms in a metropolitan area that compete for customers, suppliers, and labor; • Demanding local customers who push for increases in quality, • Supportive institutions especially research universities or other research institutes, and • Support industries that are eager for the business of the core manufacturers in an industry. These four key success factors constitute Porter’s “diamond theory” of cluster-based economic development. The nearest competitor for Paccar in truck manufacturing is in Portland, Oregon, so it is hard to meet the first criterion for success (unless Kent takes the lead in recruiting in additional truck or other transportation equipment manufacturers). The truck market is national, so local customers are not large enough to meet the second criterion. Thus, the possibilities for enhancing the competitiveness of this industry fall mainly in the last two corners of Porter’s diamond. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 47 Research institutions could be supporting innovation in truck equipment by developing more efficient engines or better vehicle designs to improve fuel economy, or improved communications systems to allow truckers to stay in frequent or continuous contact with their customers. The creation of WiFi hot cells at truck stops is an example of an innovation that allows truckers to communicate better with their customers. A local truck stop is allegedly beta testing such a system that could be rolled out nationally. Just as Boeing is adding on-board internet services to its aircraft, Paccar could work with local information technology hardware and software companies to add new communications capabilities to its large trucks, thereby making them more competitive in the national marketplace. Similar joint ventures with other firms could add new layers of sophistication to the truck itself to make diagnosis and correction of maintenance issues more reliable and timely, reducing long run maintenance costs on costly pieces of equipment. The composites technologies used in aircraft manufacturing may have applications in truck manufacturing as well, another area for technology development by Paccar or key subcontractors in the area. The technology center proposed for the Kent area could play a key role in brokering projects on topics such as these, and in helping startup firms access Small Business Innovation Research grants or other federal funds to carry out product development programs, assuming that Paccar is interested in such an approach. Creation of new support industries through technology-led economic development efforts of the sort discussed in the previous paragraph may be the best bet for the support industry corner of the diamond. Prior attempts by Paccar to induce local manufacturers to bid for its business or to shift with them to new technologies have not always met with success, and Paccar relies on a global network of suppliers to produce its truck products. Aerospace The industry trends and shift share analysis presented in the trucking section above are reproduced below; due to the major influence of Boeing in this aggregated Transportation Equipment sector, the aerospace industry cannot be shown separately. The average wage in Transportation Equipment in 2001 was $65,098, a figure that reflects the predominant influence of Boeing in the sector. Boeing and some of its subcontractors clearly have a major influence on the Kent and South King regions. Transportation Equipment Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent * 5000+ * 3.7 * * * South King Region 21034 21329 295 1.7 4413 -4447 328 King County 58632 58539 -93 *Data suppressed to protect confidentiality Source: Employment Security and author’s calculations; Kent estimate from City of Kent based on public information about Boeing and other companies operating facilities in Kent. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 48 Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Aircraft and Parts 53,100 42,500 45,100 -4.4% 1.2% Long term projections are available at the county level for aircraft and parts. This industry is expected to contract substantially in the first half of the decade, and to expand at a very modest pace of 1.2 percent annually from 2005 to 2010. Forecast Notes: • 9/11 impacts lingering – recovery was 7 % below pre-9/11 volume-- Aerospace Industry Association • After 9/11, the U.S. aerospace industry lost about 80,000 jobs • In the general aviation sector—all aircraft other than military and commercial airlines— manufacturers delivered 17 percent fewer airplanes in the first half of 2002 • For the fourth year in a row, the industry set a new record for business jet shipments. Total shipments of business jets increased 3.6 percent between 2000 and 2001. • Outside the United States, China’s air transportation market will expand at a rate of 7.6 percent annually and is expected to become the second-largest aviation market in the world, according to Boeing http://www.bizsites.com/2003/jan/article.asp?id=225 The five major points above are a mix of good and bad news for Boeing. The business jet market is the only bright spot in the outlook but this is in effect a small side market for Boeing, because its product line is too large for most business jet applications. China remains the big open market for large jet transports, and Boeing is doing well in that market. However, it may be forced to eventually build much more of its products in China in order to compete effectively for orders from Chinese airlines, limiting the potential benefit to the Puget Sound region. At meetings of the Governor’s Forecast Council, confidential data on the profitability of US and international airlines has been discussed. Few airlines anywhere in the world are making profits in the post-9/11 environment, and some experts are skeptical that a recovery in airline profitability is feasible without major reorganization of the route structure and pricing. In other words, an even more drastic crisis may be necessary before the industry can recover to an extent that it can afford to buy a substantial number of new airplanes. Consequently, the outlook for Boeing, one of two manufacturers of large commercial jet aircraft globally, is rather bleak in the long term in this key market segment. The military market is going to continue to be very important for Boeing, with the decision just made to use creative financing techniques to allow the Pentagon to lease 767-tanker aircraft from a privately financed company that will acquire them from Boeing. This decision will keep the 767 line operating for several years, providing a predictable market for subcontractors in the area as well. Alan Mullaly, head of Boeing Commercial Airplane Division, spoke at the Technology Alliance luncheon in Seattle on May 12,, 2003. He said that the future of the Commercial Airplane Division is riding on the new 7e7 model. This new plane will be a massive technology shift relative to the 777 which is the most advanced model now. He advised regional leaders Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 49 interested in influencing Boeing’s decision about where to build this plane to move ahead on all outstanding issues affecting the business climate, including congestion, education, taxes, and regulation. Various sources indicate that there will be far less local content in the new model airplane, including less work performed by Boeing employees as well as the likely prospect of less work for subcontractors in the area since major portions of the plane will be shipped in from Japan and other countries. The Boeing Company has since published its criteria for making the site decision. Water access is a criterion on which the Puget Sound appears to have a clear advantage, but labor and overall business costs may place this region at a disadvantage relative to other areas competing for this production facility. Recent actions of the state legislature to reform the unemployment insurance system and to create special tax abatement incentives for Boeing if and only if it builds the 7e7 plant in this state may improve the competitiveness of this state’s proposal to Boeing. Whether that package of incentives is enough to swing the decision will be known in a few weeks. Boeing has hired a consulting company based in South Carolina to advise the company on the site selection process. McCallum Sweeney will be reviewing proposals from states interested in hosting this plant. Proposals were due by June 20, 2003, and a decision is likely before the end of 2003. See the following websites for more details: http://www.mccallumsweeney.com/news.php?ni=36 http://www.boeing.com/commercial/7e7/criteria.pdf Boeing’ defense and space businesses seem to have stronger business prospects, at least for the next several years as the nation struggles with difficult security issues. Recent penalties for federal contract law violations notwithstanding, Boeing is a major military contractor with a strong position in several fields. The Boeing plant in Kent specializes in space and defense products and that plant has been hiring new staff lately, according to the Kent Chamber of Commerce, while the commercial airplane division has been reducing its workforce quite substantially. Growth Prospects. Growth prospects for Boeing and its key suppliers in the Puget Sound appear to be limited by shortage of profitable airline customers worldwide, and post-9/11 sluggishness in the air transportation industry. The most rapidly growing commercial airplane market open to Boeing is in China, but competition with Airbus and requirements for local content are limiting the potential benefit to local workers and companies. If the 7e7 truly represent the future of the Commercial Airplane Division of Boeing, then the outcome of the 7e7 plant siting process is a key factor in assessing future growth (or decline) of this sector. On the defense and space products side, the market outlook is stronger, at least for the next several years. Key Roadblocks. Sluggish markets driven by unprofitable airlines are the major roadblock to growth of the market for large jet transports. Local business climate, infrastructure problems, and labor costs are listed by Boeing as inhibitors to its potential expansion in this metro area. Whether these business climate issues will also affect future decisions of the defense and space business groups at Boeing is unclear. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 50 No Action Scenario. Absent any substantial action beyond those taken by the state legislature in 2003, the likely “no action” scenario is continued long run decline in aerospace employment in the Puget Sound. Positive Action Recommendations and Outcomes. The City of Kent is a very small jurisdiction to deal effectively with a giant global corporation such as Boeing. Beyond general support for legislative responses to Boeing’s demands, the most productive course for Kent would be to work with local subcontractors to help them develop new products and processes to meet needs of Boeing and other customers through the proposed technology transfer center. In addition, workforce programs at Kent area colleges could assist Boeing and other manufacturers in training a qualified, high-skilled manufacturing workforce. While these efforts may not influence Boeing’s decisions to any great degree, they may have substantial impacts on participating subcontractors. Metal Fabrication Fabricated metal products Shift Share Analysis Region 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 1372 1264 -108 2.9 288 -238 -158 South King Region 1714 1684 -30 1.4 360 -298 -92 King County 5291 5482 191 Source: Employment Security and author’s calculations The fabricated metals industry has shrunk slightly in Kent and the South King region, while expanding a bit at the county level, from 1996 to 2001. A small loss of competitive advantage is suggested for Kent and South King in the shift-share analysis despite the strong location quotients shown for this industry. In 2001, the average wage in this industry in King County was $37,410. Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Fabricated Metals 5,600 5,700 6,200 0.4% 1.7% Source: Employment Security This industry expected to grow very slightly from 2000-05 and a modest pace from 2005 to 2010. Forecast Notes: • Foreign competition is a major factor in the outlook for the fabricated metals industry; much lower labor costs are available in Asia and Mexico, and many manufacturers are out-sourcing production. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 51 • Replacing retiring workers is very difficult—at both the engineering and machine operator levels—and skill requirements increasing as machines get networked in the plant. • The shortage of trained workers means the local availability of custom training programs has become more important than ever as a site selection criteria for metal fabricators, says Bob Price, a principal with Lockwood Greene Consulting in Somerset, N.J. http://www.bizsites.com/2000/JJ00/industry_outlook.html The metal fabrication industry in the Puget Sound serves the local construction market, Boeing, ship/boat building and repair including ferries, fishing vessels, and other commercial vessels, and a specialty recreational vessel market. Other customers include electronic or other component manufacturing companies needing a box to house their equipment; Heart Interface and Red Dot Manufacturing are examples of such companies. These companies are a stable presence in the industrial area stretching south from the edge of downtown Seattle, Renton, and throughout the Kent Valley. Growth Prospects. The growth prospects for this industry are not good given growing foreign competition in many manufacturing fields, except for companies that have a unique product or process, and except for job shops that are linked to unique product companies. That is a very big and important exception. A company like Red Dot with a line of state of the art environmental control systems may contract with local metal fabricators, heat treaters, power coaters, etc. Some of these job shops may have unique capabilities that foreign competitors cannot easily match given the unusual nature of the final products being manufactured in the area (e.g., water jet cutting equipment). For companies that have unique market niches, prospects may be good, but the temptation to out-source all part manufacturing to low wage countries such as Mexico or China is very great. Key Roadblocks. Local labor costs are a roadblock to expansion unless new technologies can be employed to use more sophisticated equipment and processes to drive down total costs, or unless very rapid product development cycles are used to stay ahead of foreign competition, creating very high margin, innovative products with short life cycles. Regulatory issues are also a problem for firms that must find ways to cut costs on a continuous basis. No Action Scenario. In the absence of any initiative by local jurisdictions or the state, much of the local metal fabrication sector may fade away except for very specialized manufacturing services and some local HVAC systems fabrication linked to local construction. “It doesn’t pay to ship air” is an old adage in the manufacturing arena that may preserve a market for HVAC fabricators. Positive Action Recommendations and Outcomes. A technology center could assist firms in developing unique capabilities or products, or in getting involved in the supply chain for a unique product or an Original Equipment Manufacturer pursuing the rapid product development model. Subcontractors in such a supply chain should expect significant pressure for continuous productivity improvement, however. If such strategies prove successful, metal fabrication could survive, and perhaps expand in the years ahead. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 52 Warehousing Motor freight transportation/warehousing Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 3266 3970 704 4.0 685 -660 679 South King Region 5053 6587 1534 2.5 1060 -1021 1495 King County 11933 12026 93 Source: Employment Security and author’s calculations Warehousing and associated transportation services are a key ingredient in the Kent area. This is a relatively large industry that is growing, both in Kent and the South King region. The average wage in this industry in 2001 was $36,466. Both Kent and South King have very strong location quotients for this industry, with the level of 4.0 in Kent showing that this is one of the strongest components of the Kent area economy. The shift share analysis demonstrates a strong competitive shift for Kent and South King because the industry as a whole in King County has not been growing very much. One factor influencing these trends is that older warehouses in Seattle’s industrial area are no longer competitive with the more modern operations in the Kent Valley. Estimated Projected Growth Rates 2000 2005 2010 2000-2005 2005-2010 Other Transportation Services 27,200 28,800 31,100 1.1% 1.5% Source: Employment Security The state’s long-term employment forecast for “Other Transportation Services,” a category that includes trucking, warehousing, and municipal transportation services, is for modest growth rates in both the first and second half of the decade. In contrast to most of the manufacturing sectors, growth is projected during the recession-plagued first half of the decade. On the other hand, not much of a bounce is projected for the second half of the decade when the economy should be doing better overall. Forecast Notes. Major trends in the warehousing industry: • Continuing labor shortages • Increased materials handling automation • Rapid penetration of new technologies: dimensional bar codes, radio frequency responder tags, and speech recognition, systems integration http://www.manufacturing.net/mmh/index.asp?layout=articleCurrentWeb&articleid=CA144 853 • The number of warehouses continues to shrink; and there are a small number of new facilities, which tend to be large in size and located in the West or Mid-Atlantic regions Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 53 • Consolidation and increased use of 3rd Party Logistics Providers. Modern Materials Handling, November 1, 2002: http://www.manufacturing.net/mmh/index.asp?layout=articleWebzine&stt=001&articleid= CA261541&pubdate=12%2F01%2F02 The warehousing industry is experiencing a substantial amount of technological change. There is a trend towards increasing use of automated handling systems and tracking technologies permitting customers to track their shipments through long, multi-modal shipment processes. Globalization, supply chain management, just-in-time production processes and an interest in minimizing inventory costs on the part of both manufacturers and retailers, place warehouses in a key position in evolving market structures. Large sophisticated warehouse operations strategically located at intermodal shipment points have a solid future. Smaller and less progressive operations may be squeezed out in a relentless search for “cheaper, better, faster” ways of doing business. Even quite new and sophisticated operations have no guaranteed future in a globally linked and very dynamic economy. For example, in interviews conducted in another study, the author learned that Amazon had opened a state-of-the-art warehouse facility in the Atlanta area about two years ago, and then closed it 18 months later as that company found a less expensive way of getting its products to customers in the southeast. Kent appears to have benefited from its strategic location and ability to serve needs of intermodal shippers moving goods from ships to other forms of transportation landside. Seattle area warehouses have not been able to take advantage of this growing market due to land constraints in the older industrial area. This historical advantage is linked, however, to the competitive advantage of the ports themselves. Seattle and Tacoma compete for west coast bound traffic with Los Angeles/Long Beach and Vancouver, BC. As ships get larger and make fewer port calls, the market share of Seattle and Tacoma is by no means certain, even though the total traffic through the west coast ports is likely to continue to grow due to linkages between the US and Asian regions. Growth Prospects. The growth prospects for this industry are good, provided that the two key ports continue to expand containerized shipments. However, competition for market share is intense among West Coast ports, especially LA/Long Beach and Vancouver, BC as container ships continue to grow larger, suggesting a substantial downside risk in an otherwise rosy outlook. Key Roadblocks. Freight mobility is a key issue for this industry. To stay competitive, the ports, railroads, and truckers need to continue to work closely with the warehousing industry to convince state and local authorities to move ahead on freight mobility projects such as separated rail/road crossings, highway capacity expansion, and state-of-the-art intermodal facilities. No Action Scenario. Decades of expansion in this key industry may be reversed if action is not taken on freight mobility issues, or if the ports fail to maintain or expand their market share vis á vis competitive West Coast ports. Positive Action Recommendations and Outcomes. The rate of expansion anticipated in the long term ESD forecast may be achieved of timely actions are taken on freight mobility. As they have in the past, Kent area leaders should continue to press for resolution of these key infrastructure Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 54 issues. Aggressive implementation of new technologies may represent an opportunity to improve competitive advantage by giving customers more information about where their goods are in the transportation system and by improving the flow of goods from ship to truck or train and on to the next inter-modal transition somewhere in the Midwest. The proposed Kent area technology center could foster this transformation by developing partnerships among transportation companies, smart device manufacturers, communications companies, and software developers. Printing and Publishing Printing and publishing Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 1226 1078 -148 1.1 257 -233 -172 South King Region 2018 1927 -91 0.7 423 -383 -131 King County 11652 11883 231 Source: Employment Security and author’s calculations Printing and publishing is a modestly sized industry in the Kent and South King region; the bulk of the industry is located elsewhere in King County. The average wage in printing and publishing in King County in 2001 was $42,598. Very modest growth from 1996 to 2001 in the county as a whole was accompanied by declines in Kent and South King. Kent’s location quotient is slightly above one, but the decline in employment during a five year period, when the industry was growing countywide, suggests that competitive advantage is slipping away from Kent and the South King region as a whole. This is confirmed by the shift-share analysis which shows negative competitive shifts for Kent and South King. Estimated Projected Growth Rates 2000 2005 2010 2000-2005 2005-2010 Printing and Publishing 12,200 12,100 12,100 -0.2% 0.0% Source: Employment Security The state’s long term projections for the printing and publishing industry suggest a small decline of 100 employees in the first half of the decade and stability afterwards in the second half of the decade. Forecast Notes. Drivers of local printing industry in King County include newspaper advertising, direct mail advertising, and technical manuals – NPC study in mid-1990s. Technical manuals have shifted to CDs and/or the web – there is much less actual printing, but CD or on-line Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 55 manuals still require document design work. The 63rd largest media company in the US is in Seattle – the Seattle Times. However this is the only Top 100 media company in Washington. http://www.adage.com/page.cms?pageId=940http://www.adage.com/page.cms?pageId=940 A 0.2 percent decline in printing and publishing employment is expected nationally from 2000- 2010, while overall employment in the US will expand by 16 percent in the same time period according to the Bureau of Labor Statistics Occupational Outlook Handbook, 2002-3. Competition from non-print media, including the Internet, and increasing computerization of printing processes that displace skilled labor are major factors in this decline at a time when the economy is likely to be expanding. Companies that used to contract out much of their printing requirements are doing more of it in-house using new software and hardware tools. Newspapers face increasing competition from broadcast and internet news services, and the advertising market is adjusting to these consumer trends by cutting back on print advertising. Periodicals, including professional, scientific and technical journals, are expected to be a relatively strong segment of the printing and publishing market. However, this segment is rapidly migrating to web-based publications as libraries cut back on publication budgets. The handbook summarizes key issues at an occupational level: “Employment growth will differ among the various occupations in the printing and publishing industry, largely due to technological advances. Processes currently performed manually will be automated in the future, causing a shift from craft occupations to related occupations that perform the same function using electronic equipment. For example, employment of desktop publishing specialists is expected to increase much faster than the average for all occupations over the 2000-10 period as the elements of print production, including layout, design, and printing, increasingly are performed electronically. In contrast, demand for prepress technicians and workers who perform these tasks manually, including paste-up workers, photoengravers, camera operators, film strippers, and platemakers, is expected to decline. Job printers, however, are expected to experience growth as some firms contract out typesetting and composition work to small shops, where job printers are primarily employed. In response to the growth in electronic printing, employment of press operators is expected to grow very little, as are bookbinders and bindery workers.“ In short, absent the growth of periodical publishers or other specialized niche market printing operations, the outlook for printing and publishing in the Kent area is not terribly strong. One of the daily newspapers in Seattle may shut down if the Joint Operating Agreement between the Times and PI is dissolved, which would either throw the display ad industry into turmoil, or induce further shifts to the Internet or other non-print media. General growth of the economy in the Kent area will drive some demand for locally produced printed material, but this is not likely to be a growth sector unless some new entrepreneurial energy coalesces around a new market. Growth Prospects. In the face of competition from non-print media, no growth is expected in King County in this industry. Key Roadblocks. An apparently irreversible shift to non-print media is underway for display advertising, direct mail, technical manuals and professional periodicals. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 56 No Action Scenario. In the absence of any action by local or state authorities, continued slippage in employment in printing and publishing is likely. Positive Action Recommendations and Outcomes. No positive action has been identified that could change these trends. Engineering Services Engineering, accounting, and research services Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 479 1038 559 0.4 100 161 297 South King Region 1739 3051 1312 0.3 365 585 362 King County 29668 45880 16212 Source: Employment Security and author’s calculations Engineering services are aggregated with several other professional service industries, including accounting and research services, in the employment data. In the Kent and South King regions, these sectors are relatively small but growing at substantial rates. These industries more than doubled in size in Kent from 1996 to 2001, and they expanded by 75 percent in the entire South King region. However, Kent and South King have very low location quotients relative to the county as a whole. This industry is strongly concentrated in the major urban centers. The shift share analysis shows positive components for both county wide industry growth as well as the regional shift component. Given the dramatic growth of these sectors county-wide, the Kent and South King regions may be getting some spillover of the creation of over 16,200 jobs in these industries countywide from 1996 to 2001. The average wage in engineering and management services in King County was $55,323 in 2001. Estimated Projected Growth Rates INDUSTRY 2000 2005 2010 2000-2005 2005-2010 Engineering and Management Services 43,100 48,400 54,400 2.3% 2.4% Source: Employment Security The engineering and management services industry is listed separately from accounting and research services in the long term employment projections from the Employment Security Department. This sector is expected to grow quite strongly in the recessionary first half of the decade and in the second half as well. This is a relatively large component of the county economy, and with strong growth projected throughout the decade, the Kent and South King regions could continue to receive the spillover that is suggested in the historical data. Forecast Notes. No industry association or trade journal forecasts have been located for engineering services. However, a number of public sector transportation projects will be moving Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 57 forward in the next several years, including the monorail, light rail, and highways and ferries included in the legislative transportation package that passed in 2003. General population growth in the Puget Sound will bring other opportunities for civil engineering firms. Should Washington succeed in Boeing’s 7e7 competition the design and construction of the plant will provide major engineering opportunities for subcontractors who want to remain part of the “Boeing team.” Finally, enhanced interest in security following 9/11 and the Iraq war will create opportunities for firms expert in designing security systems for airports, marine ports, and a variety of public facilities. Growth Prospects. This industry has excellent growth prospects county wide. The issue for Kent is how to attract more of that growth given that the industry tends to concentrate in major urban areas, possibly due to a need for many college graduates and advanced degree holders who prefer to locate near a university, research libraries, or clients such as public agencies and major development companies who themselves tend to be located in urban centers. Key Roadblocks. Kent and South King are “locationally disadvantaged” for this industry, but will get some expansion as the industry as a whole expands. Good research facilities at the community college branch in downtown may help to overcome this obstacle, as well as excellent broadband links including video conferencing. No Action Scenario. Given the growth expected at the county level, this industry will continue to expand modestly in Kent and South King without any action by local leaders. Positive Action Recommendations and Outcomes. Creation of specialized research capacities in the proposed technology center, and development of state-of-the-art broadband services including very affordable high resolution videoconferencing may help to overcome the disadvantages of a location well removed from the urban centers where government agencies and major developers cluster. Initiatives of this sort could result in attraction of more engineering services companies into Kent to take advantage of lower space rents or propinquity to local south county projects. Construction Construction-special trade Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 2377 4025 1648 1.9 499 754 395 South King Region 5611 10130 4519 1.2 1177 1780 1562 King County 25401 38788 13387 Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 58 Heavy construction Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 386 539 153 1.3 81 -30 102 South King Region 1756 1726 -30 1.4 368 -134 -264 King County 5087 5765 678 Building construction Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 461 354 -107 0.4 97 48 -252 South King Region 2054 1871 -183 0.5 431 214 -828 King County 12148 15963 3815 Source: Employment Security and author’s calculations The construction industry picture is a bit complicated since there are three separate subsectors to track. The historical data are presented in the table above for these three industry segments, and the long run forecast information follows this paragraph. Building construction, also known as general contractors, is the least competitive segment in the Kent/South King region, with low location quotients and declining employment within this region. It is also the segment projected to grow the least in the future. The average wage in King County in this industry was $46,641 in 2001. Accordingly, it will not be discussed further. Heavy construction – roads, bridges, and other infrastructure construction, is a strong industry as indicated by location quotients, but has grown only modestly in Kent and it has declined in the South King region as a whole. The average wage in this industry in King County was $52,365 in 2001. Substantial growth is expected countywide in both the first and second half of the decade, reflecting the large public transportation projects and general population growth in the Puget Sound. Special trade construction – plumber, carpenters, electricians, etc. – is an even stronger industry segment in Kent and the South King region. It is also larger and growing more rapidly than heavy construction, and is expected to grow fairly strongly in the second half of the decade after treading water in the first half. The average wage in this industry in King County was $42,396 in 2001. INDUSTRY 2000 2005 2010 Percent Change 00-05 Percent Change 05-10 CONSTRUCTION 66,600 67,000 74,200 0.1% 2.1% General Building Contractors 19,100 19,100 20,600 0.0% 1.5% Heavy Construction, Except Buildings 5,900 6,200 6,700 1.0% 1.6% Special Trade Contractors 41,600 41,700 46,900 0.0% 2.4% Source: Employment Security Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 59 Forecast Notes. Due to low interest rates, construction has remained fairly strong nationwide through the recession. Even in the Puget Sound, a region that has been hit harder than many other regions in the recession, construction has held up due to several factors: • Continued but slower in-migration • Increased housing affordability • Public construction (e.g, Seattle municipal complex and library; road construction, SeaTac airport expansion) • Overhang of commercial projects being finished despite overall slack demand for commercial space. Because of the strength through the recession, there is less of the pent up demand that normally accompanies a recovery, and therefore there will not be quite the acceleration of construction that normally leads the economy out of a recession. According to the chief economist of the Associated General Contractors “the months ahead are likely to be uneven.” In many states, a slowdown in public sector construction is anticipated. http://rockproducts.com/ar/rock_experts_mixed_construction/ However, in Washington, due to the gas tax increase just passed by the 2003 Legislature, the on- going Sound Transit and monorail projects, and the third runway project at SeaTac, public sector construction should be fairly strong. If employment growth resumes as projected later this year and continuing on into 2004 and 2005, home construction should stay at least at present levels. In addition, continued concerns about security issues may lead to new projects at airports and marine ports. Growth Prospects. The best prospects for growth in construction in Kent appear to lie in the quite small heavy construction industry in the area, driven by public sector projects. In addition, with regional population continuing to grow, and developable land in the Kent area, special trade contractors will also be a growth area. Key Roadblocks. Countywide, labor scarcity has been a problem for construction companies in recent years. As the Puget Sound recovers from the recession, tight labor markets for construction workers may well re-occur. This could be a significant roadblock to expansion of this industry. No Action Scenario. The heavy construction industry will benefit from public transportation projects, to the extent that Kent area firms can compete for a portion of the anticipated construction. Positive Action Recommendations and Outcomes. Additional efforts by the local community college to expand the supply of skilled workers could assist the special trade contractor industry. In addition, heavy construction has a number of very highly skilled and specialized equipment operator and maintenance occupations, as well as requirements for surveyors, engineering technicians, and other fields that can be trained at community colleges. These occupational needs may represent an opportunity for expansion of community college technical/professional programs. Successful programs at the community college could help local firms gain a larger Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 60 market share in the regional construction market due to their ability to attract qualified workers out of these programs. Food Processing Food and Kindred Products Shift Share Analysis Industry 1996 2001 Change LQ Countywide Growth Countywide Industry Growth Regional Competitive Shift Kent 1224 1404 180 1.1 257 -443 366 South King Region 1677 2502 825 0.9 352 -607 1080 King County 15757 13360 -2397 Source: Employment Security and author’s calculations The food processing industry had an average wage of $44,219 in 2001. Food processing has a location quotient of just over 1 in Kent and just under 1 in the South King region as a whole. These figures suggest relatively low levels of competitiveness relative to many of the other manufacturing sectors reviewed in this report. However, the industry grew in both of these sub- regions of the county from 1996 to 2001, while it shed nearly 2400 jobs county-wide. Consequently, there are substantial competitive shifts in favor of Kent and the South King region. INDUSTRY 2000 2005 2010 Percent Change 00-05 Percent Change 05-10 Food and Kindred Products 13,600 13,500 13,600 -0.1% 0.1% Source: Employment Security The long term employment projections suggest an almost stable industry, declining 0.1 percent in the first half of the decade and expanding by 0.1 percent in the second half. That projection, together with the historical shift in competitive advantage, suggests that food processing may continue to expand by a few hundred jobs over the decade in Kent and the South King region. Forecast Notes. Food processing is a mature industry with little employment growth foreseen in the regional labor market. However, the best known firm in the entire region is probably Starbucks, a firm that has maintained a high rate of growth for many years by being a leader and innovator in the coffee industry. Any substantial expansion of the industry is likely to come from exports or by introducing new products that capture the domestic consumer’s attention as Starbucks has. Many of the innovations in recent years have come in packaging and marketing, accompanied by process control and waste management innovations to reduce costs. A substantial discussion of these factors can be found on the International Labour Organization website: Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 61 http://www.ilo.org/public/english/dialogue/sector/sectors/food/research.htm New technology in food processing is the subject of major international conferences; see for example a spring 2003 European food industry conference with 200 participating companies discussed at the following site: http://www.foodproductiondaily.com/news/news.asp?id=2629 Topics discussed at this conference included: • Accessing over 200 food-related technology and research organizations • Artificial vision for grading, process control, quality control, and security • New developments in enzymes • Aseptic packaging Other research notes include the claim that Finnish companies are leading the way in biodegradable packaging, including “eco ties” for bakery goods. Finland leads the way in biodegradable packaging made from a “bio- plastic.”http://www.foodproductiondaily.com/news/news.asp?id=2684 These claims from Europe indicate the importance of staying on top of research and technology trends in this industry. Equally important are tracking consumer preferences, supply chain management, and global sourcing opportunities. Food processing, not typically thought of as a “high tech” industry is, however, an industry that makes extensive use of advanced technology to remain competitive. Growth Prospects. This industry has only modest prospects for continued growth. Growth is most likely to come from export markets or through innovative technologies and novel product development. Combining these factors into innovative products for export markets may be a successful strategy. For example, a micro-brewery in Oregon developed a special line of products for the Japanese market in the early 1990s, with Japanese language labels and product names chosen for their appeal in the Japanese culture. This microbrew was the first entry by a microbrewery into the Japanese market. Strong innovation and export product marketing systems need to be built to foster growth by these means. Key Roadblocks. The key roadblocks to expansion of food process lie in the mature nature of the industry and a tendency by American consumers to spend any increases in disposable income on other types of products, or on restaurant meals rather than home-cooked meals. Innovative companies have to find ways around these roadblocks through exports, innovative products, or pre-processed products for the expanding restaurant industry. No Action Scenario. In the absence of any new initiatives, employment in this industry is likely to remain stable or decline at a slow rate of decline. Positive Action Recommendations and Outcomes. Innovation in the food processing industry can come from many sources: • Publicly funded technology research and development programs resulting in process and packaging improvements; • Education programs emphasizing product development; and Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 62 • Individual company product development programs such as the effort by Flow to enter the food processing equipment market. These observations suggest two possible intervention points: • Community college programs training students for careers in food processing, with an emphasis on product development • University technology programs emphasizing cost-reducing process technologies. The first program could be an innovative twist in the usual community college culinary arts program that could be funded by the State Board for Community and Technical Colleges. The second type of program could be incorporated in the proposed Kent area technology center. Small Business Innovation Grants, available through several federal agencies, would be one way for a startup firm to finance part of the required process technology development costs. A program at the Washington Technology Center offers information to manufacturers about SBIRs and other federal programs. The likely outcome of such efforts would be to modestly increase the growth rate of this industry through successful startup companies, and/or additional competitive strength for existing firms. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 63 Best Practices in Economic Development: Review of Selected Strategies This chapter reviews best practices in economic development on selected topics requested by the City of Kent. The review is based on literature review, web searches, and interviews with leading practitioners and think tank representatives. The following topics are included: • Moving K-14 education system to high performance • Foreign Direct Investment (FDI) • Improving incumbent workers productivity • Investing in a higher functioning workforce system • Technology transfer • Technical and/or Business Education • Marketing Plans for Key Sectors • Attracting International Tourists, Business and Students In reviewing material on these topics, the authors have focused on ways in which these strategies can affect two key desired outcomes in the Kent area: • Increase start-ups in sectors as identified in the sector analysis, and • Help develop/transition entrepreneurial small companies into professionally managed national/global corporations. Moving K-14 Education System to High Performance The following section discusses four strategies to improve the performance of K-14 education system. The discussion includes results of independent evaluations and examples of other local communities or states that have implemented the strategy. 1) Develop a commission or council to address reform in local K-14 schools Impacts of school-to-career programs: School to work programs (internships and apprenticeships) have documented positive results for both students and participating businesses. Measurable benefits to employees include: • Reduced recruitment costs; • Reduced training and supervision costs; • Reduced turnover; • Increased retention rates; • Higher productivity and promotion rates of School To Work program graduates who are hired compared with other newly hired employees. School To Work is also directed toward increasing teachers’ understanding of the skill sets required by employers. To that end, programs have been created to bring educators up to speed on current skill requirements of employers: Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 64 • Educator in the Workforce, a program that placed 92 teachers from Adam, Franklin and York counties placed in work environments for the summer, and • Preparing Students for the Future Workforce, a professional development course offered jointly by Millersville University and MANTEC. • http://www.mantec.org/press/newsletters/Aug1999.pdf According to studies in Wisconsin, Philadelphia, Boston and Michigan, students have lower rates of absenteeism and drop-out, choose more rigorous college preparatory courses and have higher grade point average when they can tie their academics to the world of work. School-to-Career initiatives result in more serious, motivated students who understand the relevance of what they're being taught. The partnering and networking that School-to-Career encourages — from teacher internships in the workplace to collaborations with college faculty — lead to professional development that educators say is enriching and rewarding. Educators say they feel their vital role as teachers is enhanced because of School-to-Career partnerships. School-to-Career gives employers a proactive, hands-on approach to improving education. Employers can work with educators to develop curriculum ideas and can get involved in one-on- one instruction to better Rhode Island's future workforce through School-to-Career. Because School-to-Career is a partnership between schools and the community, it offers parents new ways to become involved with their children's learning. School-to-Career also provides a reason and a structure for parents to discuss — beginning at an early age — careers in which their children are interested. http://www.ristc.org/general_stcneeds.htm Examples of school-to-work programs: Rhode Island's School-to-Career is part of a national movement to link schools and work that was prompted by industry's need to keep pace with the global economy. The 1992 Rhode Island Skills Commissions report, “Rhode Island's Choice: High Skills or Low Wages,” identified the inextricable link between education and the economy and recommended the development of high standards for all students, performance measures of student achievement, and the development of multiple paths for student success that would link school-based and work-based learning. School-to-Career is based on the premise that education works best — delivering the highest standards and preparing students to get the best jobs — when students can connect their academics to the world of work, their future careers and their daily lives. School-to-Career seeks to enhance education with strong business, community and family involvement. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 65 School-to-Career initiatives take many forms. These experiences can take place at school, at a workplace or in an activity that integrates the two. These activities can include: • Job shadowing, mentoring, internships and apprenticeships: Job shadowing gives students a glimpse of a typical day at work. Mentoring allows students and employers to work together to build knowledge and set goals. Internships and apprenticeships teach students an occupation in a structured program sponsored by employers, labor unions or employee associations. • Enhanced school curricula: School-to-Career activities provide relevancy for academic lessons, giving students another incentive to learn and an opportunity to apply classroom learning in other settings. • Job exploration: Career fairs, workplace tours and classroom visits by employers can expose students to the range and requirements of different careers. • Technical preparation: These programs combine the last two years of high school with community college work toward a technical degree. • Career academies: These schools within schools are focused on a single career theme, such as travel and tourism. The curriculum integrates academic learning and on-the-job skills training. • Career awareness: Students do research or choose course work that helps them learn more about future careers. • Enterprise projects: Students identify community needs and develop projects to meet them. • Cooperative learning: Part-time jobs are coordinated with school-based learning to provide students with another enriched experience. The Boston Private Industry Council has been recognized as a leading intermediary bringing Boston’s Public School System together with local employers. The main goal of the Council is to design innovative programs for students who do not plan to attend college to make a smoother transition from school to career. See http://www.bostonpic.org for more details. The Manufacturing Industries Careers Alliance (MICA) was created by the National Alliance of Manufacturers to promote manufacturing career opportunities for young people; address declining student participation in training and preparation for manufacturing careers; and improve the quality of the available training and work-readiness of students. See http://www.nam.org for more information. Minneapolis Public Schools-Work Opportunity Center The WOC uses a seven-step process for students to create an individualized Life Work Portfolio. The process prepares all students for the transition from school to a career and adult life. All enrolled students are encouraged to complete the graduation portfolio process in order to prepare for adult life. Outcomes of this process have been tracked since the 1991/92 school year. About 90% of the student population completes a portfolio. Students are able to use the process to prepare themselves for both work and post-secondary education. The process is used to prepare for internships during school and summer as well as employment with businesses in the community. The process is promoted as on going and can be repeated periodically through adult work life. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 66 The seven performance assessments making up the portfolio include: 1. interests and learning style 2. resume preparation 3. application to work and post-secondary institution 4. placement exams required 5. financial aid FAFSA 6. essay of past, present, or future autobiography (English instructor, volunteer graduate students, and Media Specialist assist with this step) 7. letters of recommendation. For more information see http://ici.umn.edu/all/awardsite17.html 2) Fund institutions based on demonstrated performance (outcome based system). Educational institutions can be rewarded for developing education and training programs that support industry clusters. In Colorado, public post secondary institutions receive incentive funds for better than predicted performance on 10 indicators including enrollment and graduation rates of low income students and achievement scores on professional and graduate exams. 3) Seek greater equity in the formula between noncredit career and technical classes and more traditional academic degree programs. This would provide a stable source of revenues to support lifelong learning. California, North Carolina and Texas provide per-pupil funding for noncredit career and technical classes while Oregon provides the same level of funding for professional and technical education programs. This sends a clear message about the importance of workforce training 4) Promote greater participation and choice when modifying financial aid policies Barriers to financial aid for non-degree or part-time study should be removed. Policies should be created to promote the broadening of eligibility for federal and state grants and loans to include students who attend school less than half-time, are in non-degree programs, or who are seeking a certificate. Also, tuition waivers and supplements can be offered to low-income students to make up for gaps in Pell funding, because these gaps particularly affect part-time students and those in non-credit programs. Often these students are enrolled in vocational and professional programs that focus on preparing students for careers. Too often, financial aid is restricted those going on to a traditional 4-year university program. Also, progressive education systems promote greater use of federal and state tax incentives supporting post secondary education and training. For example, colleges can make sure that students are aware of the HOPE and Lifetime Learning tax credits, which pay for tuition and fee expenses. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 67 Foreign Direct Investment (FDI) FDI refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment. FDI is distinct from financial investments, i.e., just buying stock in a publicly traded corporation without accumulating a significant percentage of the company’s total stock value. Due to foreign investment, the US economy is no longer a 'domestic' economy in the traditional sense. The total of foreign investments grew from $748 billion in 1982 to $6.6 trillion in 1998. The U.S. economy is heavily reliant on foreign capital inflows, which have led to the establishment of new industries as well as job creation in the U.S. FDI is calculated to include all kinds of capital contributions, such as the purchases of stock in a company, as well as the reinvestment of earnings by a wholly owned company incorporated abroad (subsidiary), and the lending of funds to a foreign subsidiary or branch. The reinvestment of earnings and transfer of assets between a parent company and its subsidiary often constitutes a significant part of FDI calculations. An investor's earnings on FDI take the form of profits such as dividends, retained earnings, management fees and royalty Foreign Direct Investors tend to look at a number of factors relating to how they will be able to operate in a foreign country: the rules and regulations pertaining to the entry and operations of foreign investors standards of treatment of foreign affiliates, compared to "nationals" of the host country the functioning and efficiency of local markets trade policy and privatization policy business facilitation measures, such as investment promotion, incentives, improvements in amenities and other measures to reduce the cost of doing business. For example, some countries set up special export processing zones, which may be free of customs or duties, or offer special tax breaks for new investors restrictions, if any, on bringing home ("repatriating") earnings or profits in the form of dividends, royalties, interest or other Impacts of foreign direct investment: The World Trade Organization produced a report that examines the interaction of trade and FDI, including the impact of FDI on trade of home and host countries. The report reviews the perceived costs and benefits of FDI, and considers the implications of competition for FDI among host countries. The report also contains a review of the regulations governing foreign investment, together with a brief discussion of existing investment-related WTO rules and disciplines. See www.wto.org and search the site for foreign direct investment Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 68 An example of a state Foreign Direct Investment plan: International Trade Division (ITD) of Ohio’s Department of Development Ohio's international offices promote Ohio to foreign companies as an excellent location for building a business. The international offices work closely with international business liaisons for Asia, Europe and Canada, housed within the Ohio Department of Development's Economic Development Division, to identify prospects for foreign direct investment in Ohio and guide them to successful investment within the state. Foreign direct investment activities comprise a significant part of the workload in the Ohio Asian Office in Tokyo, the Ohio European Office in Brussels, and the Ohio Canadian Office in Toronto. These activities also comprise a portion of the workload in the Ohio Office of East and Southeast Asia in Hong Kong, the Ohio Mexico Office in Mexico City, and the Ohio Eastern Mediterranean Office. ITD organizes Ohio business missions, often led by the Governor, to international markets. These business missions focus on promoting foreign direct investment in Ohio and on promoting international trade opportunities for Ohio companies. Investment mission delegations are comprised of economic development executives from across Ohio. Trade mission delegations are comprised of Ohio companies seeking export sales and other Ohio organizations, such as universities, chambers of commerce, and port authorities, seeking long-term, mutually beneficial international relationships. http://www.exportohio.state.oh.us/investment.htm Ohio’s five ways to foster foreign direct investment: 1) Trade shows. ITD identifies the best trade shows and encourages Ohio companies to participate in one of two ways - as exhibitors at the shows or via catalog with ITD representation. In addition, trade shows often serve as tools to promote foreign direct investment in Ohio. 2) Education and recognition. International Trade Division staff members organize events and produce publications designed to raise the level of awareness of international opportunities in the Ohio business community. Among the highlights of these activities in 2001 were the following: ITD significantly enhanced its Web site, www.exportohio.state.oh.us. Improvements made the Web site more user-friendly and increased the international trade content available to Ohio companies. 3) Seminars and workshops In an effort to educate Ohio companies about international trade opportunities and ITD's services, ITD staff participated in many seminars and workshops throughout the state by presenting information regarding exporting and international trade 4) Quarterly newsletter ITD continued to publish Export Ohio, a quarterly newsletter with exporting advice and information, distributed to more than 5,000 Ohio companies and organizations. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 69 5) Build Partnerships ITD recognizes and values the contributions of many organizations committed to enhancing international trade opportunities for Ohio companies. ITD has developed strong partnerships with these organizations, including the U.S. Department of Commerce, the Greater Cleveland Growth Association and World Trade Center Cleveland, the Regional Growth Partnership (Toledo), the Greater Cincinnati Chamber of Commerce, the Miami Valley International Trade Association, the Greater Akron Chamber of Commerce, the Greater Columbus Chamber of Commerce, and many other local and regional chambers of commerce and economic development organizations. As this last point about partnerships makes clear, effective use of a state program often requires local level partnerships. In the Puget Sound, the Trade Development Alliance of Greater Seattle is such a partner, working with the state Department of Community, Trade, and Economic Development and on its own initiative, to organize trade missions, host visiting foreign delegations, and otherwise promote two-way trade with selected countries and businesses in the Puget Sound. Kent area businesses wishing to develop international business can work directly with CTED’s International Trade Division or the Trade Development Alliance. One way the Kent area could move local firms to a new level of performance in the international arena would be to establish a trade advisory office linked to the Trade Development Alliance or CTED. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 70 Improving Incumbent Workers Productivity Impacts of secondary career and technical education. A study commissioned by the Washington State Workforce Training and Education Coordinating Board reached the following key conclusions: • Career and technical education has sizeable positive impacts on employment and earnings • Career and technical education substantially enhances the lifetime earnings of program completers. Gains in earnings and employee benefits far outweigh the costs of career and technical education to the public. Another study completed by the Workforce Alliance reveals the documented effectiveness of skills training. A growing number of studies have shown that: • Skills training can increase earnings. Recent studies of training programs serving low- income adults have documented annual earnings impacts of anywhere from 10 percent to 156percent beyond what similar job seekers had been able to gain without training or with job search services only. Many of these increases were the result of access to jobs with higher hourly wages, as well as increases in the number of work hours available to them. • Skills training can improve access to employer-paid benefits. Several studies have shown that low-income participants in skills training stand a better chance of getting jobs with benefits (e.g., employer-provided healthcare, retirement plans and paid leave) than do non-participants, or than they themselves were able to access prior to training. • Skills training can increase steady work. According to several studies, training graduates worked more regularly than they had prior to receiving training, or more consistently than individuals who did not receive training. • http://www.workforcealliance.org/Skills%20Training%20Works%20Report.pdf Examples of increasing productivity in incumbent workers: 1) The Eastern Washington Agriculture and Food Processing Partnership helped to transform a traditional labor market into an industry prepared for the future. This innovative public/private partnership was created to meet the needs of employers to upgrade the skills of incumbent workers in two of Washington's largest and most labor-intensive industries -- food processing and farming. Six state agencies, organized labor, four Workforce Development Councils, five Eastern Washington community colleges, the U.S. Department of Labor, Community Based Organizations, training providers, and many employers worked together to find solutions to closing a widening skill gap problem. Federal and state agencies contributed nearly $1.3 million and extensive expertise to the project. Participating employers responded positively by contributing $1.5 in industry match. The Northwest Food Processors Association and the Washington Growers League guided the partnership by identifying jobs common to both industries and by setting skill standards Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 71 associated with these jobs. An existing labor-management committee provided leadership and project oversight. The Tri-County Workforce Council provided administrative guidance. Results of this customer driven initiative: • Created 26 customized training courses offering certification and opportunities for specific career advancement. • Delivered training events for more than 32 companies at 70 work sites. • Exceeded Governor Gary Locke's goal of training 400 employees by more than 75 percent, ultimately providing 785 training opportunities for current workers. • Achieved trainee wage increases due to increased productivity. Workers earned an additional $300 to $600 over a 4-month period following training. • http://www.co.yakima.wa.us/e&t/agfood.htm 2) Incumbent workers training-manufacturing Washington State Tri-County Workforce Council. (Yakima, Kittitas, and Klickitat Counties) The Workforce Development Board endorsed the use of local monies to upgrade skills with the current workforce, and subsequently, appealed to the Washington State Employment Security Department to experiment by using “WIA” Incentive Monies” for incumbent worker training in industries central to Tri-county economic development. WIA Incentive Monies were used for training incumbent workers in the Manufacturing Industry. The Tri-County WDC has embarked on an incumbent worker training program with manufacturing companies in the three-county region. This project came about as a direct result of the two earlier projects which identified skill upgrade needs in the Woods, Metals, and Plastics industries. This recent project has included 20 companies from the 3 counties, training approximately 50 incumbent workers as well as one business outreach liaison from each WorkSource Center and affiliate site throughout the Tri-County region. www.co.yakima.wa.us/e&t/manufacturing.htm 3) Florida incumbent worker training program This program is funded by the Federal Workforce Investment Act and is administered by Workforce Florida, Inc. This program us a grant to provide training to currently employed workers to keep a company's employees competitive and to retain existing businesses. • Can be provided through Florida's community colleges, school districts, area vocational- technical centers, state universities or licensed and certified private institutions (when approved) • Can be conducted at the business's own facility, at the training provider's facility or at a combination of sites • Instructors can be either full or part-time educators or professional trainers from the business Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 72 Investing in a Higher Functioning Workforce System Challenges of the 21st Century Workforce 1) Workforce systems do not reflect market needs 2) Public education is falling short in preparing individuals for the New Economy 3) Workers need to navigate a changing career path 4).Many low-wage workers need work supports 5) Shortage of workers and diversity in the workforce Impacts of workforce development The Annie E. Casey Foundation published an extensive analysis in Economic Development Quarterly: Learning from the Field: Economic Growth and Workforce Development in the 1990’s that addresses some of the challenges above. The abstract is as follows: Although attention to labor market preparation, access, and retention for disadvantaged workers has experienced a dramatic turnaround in the past 6 years for economic and policy reasons, serious challenges remain. Today's workforce development implies more than employment training in the narrow sense: It means substantial employer engagement, deep community connections, career advancement, integrative human service supports, contextual and industry-driven education and training, reformed community colleges, and connective tissue of networks. This article discusses six areas of workforce development learning: (a) retention and advancement, (b) employer and jobseeker customers, (c) regions and neighborhoods, (d) race and labor markets, (e) best practices and replication, and (f) labor market reform. In addition to inevitable economic downturns, optimism should be tempered by three big challenges: the underlying patterns of wage and income inequality, the persistence of race and gender inequalities, and our historic failure to create effective links between schools and labor markets. For more information: Economic Development Quarterly, vol.14, no. 4 (November 2000). Ways to address the five challenges listed above The following section discusses five primary ways to meet the challenges of the 21st century workforce. 1) Connect workforce development to economic needs • Organize workforce development programs around industry clusters The Occupational Supply and Demand Study for the Washington State Board for Community and Technical Colleges has identified key workforce gaps for major industry clusters within 7 multi-county regions in Washington State and for the 12 regional Workforce Development Areas. • Encourage local economic development officials to broker relationships between employers and education and training providers to develop qualified workers and link them to jobs. Example: Seattle Jobs Initiative (SJI) is a non-profit community based organization that brokers relationships. SJI links low-income residents to beginning family wage jobs by Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 73 meeting the needs of two critical customers: Seattle City residents and local employers. SJI also addresses other challenges faced by low income clients through support service programs (transportation, child care, financial planning, etc.). See www.seattlejobsinitiative.com for more info. 2) Expand opportunities for continuous learning • Increase the use of community colleges for workforce training. Over the past few years, Washington State has been implementing regional workforce policies where local employers and community colleges are working together to identify and design training programs that are region specific. Training could include adult base education, English as a second language, vocational skills, and entrepreneurial training. This strategy works the best if an area has clearly designated industries to organize around. • Link adults with low skills and language barriers to continuous learning opportunities. Adult basic education (ABE) and English as a Second Language (ESL) are vital resources in a diverse workforce such as Kent’s. There have been numerous, innovative ways to address this need including offering classes on the job, community colleges and community based organizations. Example: Rhode Island Workforce Literacy Collaborative (RIWLC)--a group of 15 agencies funded by the Human Resource Investment Council to provide workforce or worksite literacy services to adults in Rhode Island. These services are designed to upgrade the literacy services of those who are employed or seeking employment in order to help Rhode Island achieve a high-performance workforce. In addition to their individual projects, the agencies come together as the RIWLC to work toward the development of a seamless system for serving adults in need of literacy services in the state. The RIWLC has a set of objectives to help achieve its goals of continuous improvement for individuals and agencies providing educational services to the workforce. These goals include staff development, sharing best practice, the use of a common referral form among literacy organizations, and involving employers in the discussion about literacy. • Promote workplace learning opportunities. Supporting workplace learning is an important strategy for worker advancement and increasing productivity. Experience with customized training programs indicates that investing in courses offered through employers increases employer investment in training. Example: Mission College in Santa Clara, CA provides full degree programs at work sites through courses that are customized to meet the needs of the employer and employees. The college developed associate degree programs for employees at Intel, Cisco Systems and National Semiconductor. This program required collaboration between employers, community college system and the public workforce development system. 3) Enhance workers ability to manage their careers. Efforts in this area can be led by workers, employers or the educational institutions. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 74 • Promote the use of skills based assessment and credentials. These have proven to be effective for a few reasons. One, working adults who are balancing work and family responsibilities are likely to increase their skills incrementally by participating in on-the- job formal and informal training. Two, skills based learning can create learning pathways to higher education by paving the way for educational institutions to award credits for certain work experiences and accomplishments outside a formal classroom. 4) Strengthen work supports to promote employment retention and Career advancement • Encourage outreach efforts of social service agencies with employers to make employees aware of the benefits that they are eligible for. This is especially important in industries that high a high number of immigrant and or low-wage workers. Providing worker supports has been shown to be a successful way to retain workers. For example, the State of Idaho has programs that go to businesses that hire high numbers of immigrant farm labor to encourage them to educate their employees. Example: In Lacey, Washington there is a program called “WebMatch-An Employers Assistance Project.” Basically, it is a tool to match workers with employers. Collaboration is built and maintained through the Local Area Planning Executive Council which includes all partner agencies (DSHS, ES, WDC, Community Action, Community College, The Career Transition Center, Division of Child Support, Department of Vocational Rehabilitation, CTED, Chamber of Commerce) and the Consortium which includes representatives from all community social service agencies, front line staff, contractors and members of the executive council. The WebMatch technology provides an interactive experience for the user. Each web page is created specifically for the individual user’s requirements of the moment. 5) Career Ladders Boston Workforce Development Council The Coalition's Career Ladders Committee has been working for two years to develop and promote career ladders for entry-level workers. The purpose of the Committee is to help develop opportunities for low-income and entry-level workers to move up to better-paying, more responsible and skilled positions. • Work with employers and business groups to assist them in developing pathways, structures, training and support for workers to move up. • Encourage employers to invest in their current workforce by putting career ladders in place, retaining and better utilizing their current workers. • Show industry how their dollars may be better spent training, encouraging, and promoting their current workers than on recruiting and hiring new workers constantly in a "revolving door" for entry-level workers. Over the past year, the Career Ladders Committee has focused on two different sectors of the economy: Long-Term Care and Telecommunications. In both sectors, there has been effective partnering with employer groups, and development of the pathways that workers and employers need in place to support career ladders. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 75 The Center for Community Economic Development, at the University of Massachusetts in Boston, has conducted significant labor market research for the Boston Workforce Development Council, which helps to target initiatives. The Career Ladders Committee includes about 50 community-based organizations, unions, public agencies and employers who meet together every month to plan the Coalition's career ladders work. The Washington State Early Childhood Education Career Development Ladder is a $4 million pilot program that directly addresses key factors in the quality of child care. The Career Ladder uses wage increments linked to education, experience, and responsibility to reduce staff turnover and provide an incentive for child care workers to improve their education and make child care a lifelong career. Participating in the pilot project are 1500 child care workers who work in 124 centers around the state and care for 20,000 children. For more information on the Career Development Ladder, visit the Economic Opportunity Institute at www.eoionline.org Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 76 Technology Transfer Technology transfer is the process by which existing knowledge, facilities, or capabilities developed under federal research and development (R&D) funding are utilized to fulfill public and private needs. Since 1980, major legislative changes have been implemented to more fully optimize the private sector utilization of the research results and research capabilities of the federal laboratories. These changes were fueled by the realization that although the United States was a world leader in scientific research, we were lagging behind our allies in applying the fruits of our research. There are over 700 Federal laboratories employing more than 100,000 scientists and engineers in every area of science and technology. Academia, industry, and the federal government all realize many benefits from technology transfer activities. Cooperative Research and Development Agencies (CRADAs) with private industry and academia improve the knowledge and productivity of government and private-sector employees. These cooperative efforts result in better products for the taxpayer and improve the national economic competitiveness. CRADAs enable partners to reduce costs by leveraging their investments during all stages of Research, Development, Test and Evaluation (RDT&E). For more information, see http://www.afrl.af.mil/techtran/handbk/transferdocs/introduction.pdf A menu of technology transfer best practices For more information about the topics below, see, http://www.millkern.com/rkcarr/flpart2.html Transferring technology locally Laboratories and state and local economic development authorities in many areas have an interest in using federal labs to spur local technological and economic development. Several technology transfer techniques appear to have encouraged such investment. Location Incentives in Licenses: Some federal labs offer more favorable license terms for firms that agree to locate in the state or locality around the federal lab. In addition to the investment that could occur as part of the license commercialization process, licensee firms may also move some of their scientists to locations near federal labs in order to be close to continuing developments. Technical Assistance to Local Industry: An effective method for transferring technology to the local economy is through participation in local or regional technology assistance or extension networks. Often federal labs participate along with local universities as the back end of networks developed and managed by the state government or a regional organization. These networks connect local firms having technology-based problems with the technologies and know-how of the back end institutions. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 77 Organizing the technology transfer function A number of organizational models for technology transfer are being used at the federal labs and research universities surveyed. The most active technology transfer labs tend to have technology transfer organized at least at the division level with technology transfer policy and operations combined within the same organization. Management Encouragement and Support: Another technology transfer cliché states that a successful technology transfer effort requires support from the highest levels of lab management. This is certainly true, but several technology transfer professionals have pointed out that support from all levels of management is equally important. Technology Transfer Networks: Several labs have created formal or informal technology transfer networks. In general, these networks link the central technology transfer office and the group level and are made up of personnel in groups who are interested in and knowledgeable of technology transfer. Changing the Culture: The culture of many federal laboratories does not encourage the identification and commercialization of inventions. In fact, many scientists and other lab employees many not recognize potential intellectual property. Training and familiarization of technology transfer officials, members of technology transfer networks and scientists themselves to recognize intellectual property will contribute to changing part of the laboratory culture which works against technology transfer. An Inventor-Friendly Disclosure and Patenting Process: The disclosure and patenting process is complex and time consuming. If too much of the burden is levied on the inventor, it will become a disincentive to disclose. Therefore, the many labs strive to make the process as simple and effortless as possible to the inventor. Incentives for Inventors: Many institutions have found it worthwhile to provide incentives to inventors, not for doing good and useful science, but for participating in the patent process. Federal legislation and university practice grant significant percentages of any royalties to inventors. However, these are distant and often minimal rewards. Thus, many institutions also offer incentives to inventors for patents applied for or received (or both). Marketing laboratory technologies The choice and implementation of a marketing strategy is bounded by the institution's interpretation of its obligations under fairness of opportunity strictures and by the human and financial resources available to the technology transfer office, among other things. The following are among the more effective strategies: First Contact Marketing Strategies: Institutions that use this strategy, including many universities, attempt to locate a licensee from information provided by the inventor or from the technology transfer office's own knowledge of firms. Institutions employing this strategy will often conclude a license, even an exclusive license, with the first firm with which demonstrates sufficient interest Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 78 and capability. Proponents of this approach argue that it conserves scarce technology transfer resources. A simplistic explanation of their argument is as follows: Contacting and negotiating with only one company requires as little as one unit of technology transfer resources. Unless multiple licensees are intentionally sought (i.e., a non-exclusive license), contacting many firms will utilize many units of technology transfer resources to conclude the same license, transfer the same technology and eventually produce the same royalty income. MIT, which uses the first contact marketing strategy, produces a licensing volume equal to the entire DOE laboratory system with only seven technology transfer professionals and an equal number of support personnel. Focused Publicity Marketing Strategies: Some institutions use a focused publicity marketing strategy which usually consists of a press release announcing the availability of the technology with distribution to trade publications. In addition, some institutions use carefully targeted mailings. Labs and universities taking the focused publicity approach believe that firms which are seriously interested in acquiring external technologies will be monitoring the trade press and feel this level of publicity is adequate to meet fairness of opportunity requirements. Institutions which use focused publicity usually take simultaneous proactive measures to locate licensees as do those employing the first contact strategy. Bulletin Boards Bulletin boards are a subset of the focused publicity marketing strategy. There are a number of computer bulletin boards which list new and available technologies, usually by type. Advertising technologies on one or more bulletin boards is a relatively simple matter, requiring minimal resources on the part of technology transfer offices. Institutions can advertise more widely (in the Commerce Business Daily, for example) that all their technologies are to be found on a particular bulletin board, and assume that interested firms will monitor the boards. The NIH technology transfer program uses a bulletin board as its principal method of advertising technology transfer policies, methodologies as well as licensing and cooperative research and development agreement (CRADA) opportunities. Preparing the technologies for commercialization Most federal lab inventions are far from a commercial stage, even though they may appear to have great potential. Much additional development is usually required before they become part of a commercial product or process. Furthermore, it is much more difficult to interest firms in immature technologies unless a proof of concept or prototype exists. Several techniques are used to make inventions more attractive to firms. Using technology transfer intermediaries Several interesting models involving intermediaries have developed to facilitate the transfer of technologies from federal labs and universities. These models employ intermediary organizations which are private sector entities, operationally independent of the laboratory or university and Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 79 thus are free from some of the restraints imposed on technology transfer activities in public institutions. ARCH: The Argonne Chicago Development Corporation is a not-for-profit [501(c)(3)] corporation which is affiliated with the University of Chicago, the DOE contractor for Argonne National Laboratory. ARCH has a contractual agreement with the University under which it can take title to intellectual properties developed in University and ANL research. ARCH focuses its efforts on founding start-up companies, but it also employs other commercialization methods, including joint ventures with private industry, technology licensing, and combinations of all three. ARCH is an experiment designed to bridge the gap between the different cultures of the University/Laboratory and the business sector. It has its organizational home in the Chicago School of Business, where its CEO is an Associate Dean. It employs the services of Business School graduate students to work on ARCH commercialization projects and has hired a number of Business School Graduates. Industry Associations: The Department of Agriculture's Agricultural Extension Service and the Technology Transfer Information Center at the National Agricultural Library are undertaking a project in which they are working with an industry association to foster technology transfer based on genuine market pull. The project began with the identification of an industry association (in this case the Hardwood Research Council) which represents a large number of relatively small firms. The industry association served as a forum in which to identify the technology-based problems faced by the industry as a whole. Once the problems were identified, the services of a technology agent were employed to produce reports which contain (a) a thorough technical discussion of the problem and the deficiencies of the available technologies; (b) the industry parameters within which the technologies must work; (c) an analysis and evaluation of the potential technologies compared to the industry-established parameters; (d) a recommendation on which technologies should be investigated further for possible commercialization; and (e) a business opportunity statement that discusses the size of the market for the commercialized technology, replacement cycles, cost constraints, and other pertinent factors. Venture Capital Firms: Some institutions use venture capital (v.c.) firms as intermediaries to develop start-up firms. MIT is perhaps the best example of this approach. In the last five years, MIT has spawned 40 start-up companies, in spite of a policy of limiting the Institute's direct role in the formation of start ups. Its approach is to locate a v.c. firm interested in an MIT technology, and then to pass further start-up responsibilities to the v.c. firm (i.e., doing a market analysis of the technology, writing a business plan, locating management and organizing the company). The invention is subsequently licensed to the start up created by the v.c. firm. Involving a v.c. firm at the earliest stages of a start-up venture limits the Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 80 involvement of the MIT Technology Licensing Office, and increases the influence of the market on the process of forming the new venture. MIT does not have an in house venture capital fund and does not invest in its own start ups, preferring to let the market make all the decisions about the commercial viability of such endeavors. However, it does take equities, often in lieu of up front fees and initial royalties. These equities are managed by the MIT Treasurers Office which handles them as it would any part of the Institute's portfolio, making further decisions (e.g., to sell) just as they would for any equity in their portfolio. Battelle Memorial Institute: The Battelle Memorial Institute (BMI) operates Pacific Northwest National Laboratories and has a unique relationship with the lab. Battelle is a not-for-profit corporation which has significant R&D operations beyond those undertaken by PNNL at its Richland, Washington site. In fact, PNNL is a floating subset of the BMI Richland operation, which can grow or shrink almost on a weekly basis as BMI resources are shifted in and out of DOE contract work. The Institute often uses its own funds to enhance technology transfer activities based on federally-funded inventions. BMI also uses its own funds for scale-up activities based on government funded technologies. BMI employs an innovative concept in its technology transfer operation. The BMI Office of Technology Transfer has portfolio officers, who unlike their counterparts in other technology transfer offices function as idea managers. They take responsibility for ideas which come to the attention of the Office of Technology Transfer as invention disclosures or through the Institute's technology transfer network. These idea managers will take a new idea all the way through to commercialization. They have the responsibility for evaluating the commercialization potential of the technology, recommending additional R&D funding from the Institute (approved by a panel) and carrying the idea through to licensing or, in a few cases, a start-up company. Technology Brokers: There are a number of commercial firms in the United States and elsewhere (Research Corporation Technologies, British Technology Group) which market technologies developed in labs and universities. It Most technology transfer professionals feel that using these firms can be advantageous to smaller, less well known R&D institutions, particularly those which do not have the internal resources for patenting, marketing and licensing inventions. Generally, such firms will relieve the institution of the costs of patenting, marketing and licensing in exchange for a percentage of the eventually royalty stream. Such firms generally skim the cream of institution's invention disclosures, effectively leaving the rest unpatented and unmarketed. The California Technology Venture Corporation Proposal: The University of California's Office of Technology Transfer is preparing a proposal to the University Regents to establish a technology commercialization venture to be called the California Technology Ventures Corporation (CTVC). The CTVC is visualized as a profit making firm created to bridge the gap between the University and the private sector. The Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 81 current proposal envisions the University of California with majority ownership of the CTVC and private high technology firms (a number of such firms have already expressed an interest) with a minority interest. The University would not invest its own funds in the corporation, the private minority owners providing all the liquid investment. CTVC's purpose would be to fund further development of UC inventions (i.e., provide maturation funds) in order to produce a prototype or otherwise enhance the commercial potential of the technology. The commercialization development funded by CTVC would take place in the University laboratory which made the invention or would be done by a commercial engineering or technology firm, as appropriate. Other examples of technology transfer programs: University of Arkansas As a nationally-competitive research institution, the University offers industry partners considerable science and technology resources in specific fields of inquiry. The Office of Research and Sponsored Programs and Technology Transfer (RSSP) provides access to the University research community, campus lab facilities, and the intellectual property portfolio. From centers of excellence in retailing and poultry science, advanced spatial technologies (CAST), sensing technologies and research (CSTAR), high density electronics (HiDEC), from alternative pest control to better methods of assessing and maintaining highway quality, from antibacterial films to materials coatings to animal vaccines to microelectromechanical systems, the University is a source of research and development expertise and intellectual property assets. One example of a technological innovation that has resulted from the technology transfer program is the method to extrapolate a substrate with metal, no matter how rough the substrate. Electroplating onto a rough substrate is complicated by the tendency of electrodeposition to occur only at the peaks of the rough surface. This is because, on a rough surface, the electric fields are far stronger at the peaks than in the valleys, and all the charge accumulates there. This is the same phenomenon that is at work with lightning rods. To counter this, the rate of oxidation is adjusted so that there is no excess charge. Electroplating then occurs inside the valleys, smoothening the surface. Example of a technology transfer with a federal laboratory rather than a university Air Force Research Laboratory Low Cost Composite Processing (LCCP), centered on non-autoclave processable materials technology, has effectively demonstrated a tremendous potential for improving the affordability of composite structures for aerospace and automotive applications. Research in this area, conducted at the Air Force Research Laboratory (AFRL), will lead to dramatic cost savings in the future through increased freedom to design large, complex, unitized structures and decreased tooling costs. Research conducted by the AFRL Materials and Manufacturing Directorate led to the development and technology transfer of LCCP methods that use lightweight aerospace Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 82 composite materials based on resins that can be cured at temperatures much lower (60°C) than those used for conventional composite materials (177°C). The result is a major reduction in the cost of applying organic matrix composites to aerospace structures, through the elimination of parts processing requirements in autoclaves. Autoclave processing typically utilizes high temperatures and pressures, and requires expensive and long lead-time autoclave-hardened tooling. Research with Boeing-St. Louis enabled a 40 percent reduction in fabrication cost for a composite aircraft wing, using non-autoclave processing versus conventional processing. For more information, see” www.federallabs.org Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 83 Technical and/or Business Education Community colleges are important technical education resources in many communities. By offering degree and certificate programs, and short-term customized training in fields desired by local companies, such colleges become an important element in the local workforce development system. The key element of best practice is understanding the needs of local companies with respect to entry level and incumbent workers. That understanding has both quantitative dimensions (how many openings in particular occupational fields) and skill set implications (what do these students need to learn to be competitive applicants for the jobs that become available). Each state operates an occupational forecasting system in its employment agency that is tasked with answering such questions. Colleges typically have advisory committees for all vocational and professional programs that also work on these issues. Successful technical education programs often go beyond these standard mechanisms, using student and faculty internships in local companies to gain a deeper understanding of changing technologies and work practices that affect skill requirements, and developing relationships between placement offices at the college (often at an informal departmental level rather than a central college office) and human resource departments or executives of local companies. In addition, marketing staff who work closely with curriculum developers are needed at business-sensitive colleges to assess needs among local companies for customized training programs. While considerable expertise resides in this state’s State Board for Community and Technical Colleges, especially in the Workforce Division, and at selected colleges, the 35 institutions are managed independently and show varied levels of commitment to technical and professional education, and varied levels of skill in implementing such programs. One source of expertise on these issues is Regional Technology Strategies, Inc., in North Carolina. The firm’s principal is Dr. Stuart Rosenfeld, who has forged a working consortium among technology-oriented community colleges in the US and Europe. For additional information, see: http://www.rtsinc.org/, especially their publications page and the report entitled A Governor's Guide to Creating a 21st Century Workforce. Example of a best practice college program: Cuyahoga Community College: Manufacturing and applied technology division The Manufacturing Center provides you with affordable, high-quality training that results in portable skill credentials. The Center offers credit, non-credit, certificate, and customized programs in manufacturing foundation skills, manufacturing technologies, applied industrial maintenance, pre-apprenticeship and apprenticeship training. The Manufacturing Center features over 12,000 square feet of completely renovated shop floor space that supports the latest equipment that regional manufacturers either currently use or will use in the future. Training programs also emphasize “soft skills,” such as attendance, communications and teamwork. All of the Manufacturing Center’s courses are designed to meet the growing demands of regional MANUFACTURERS. Most importantly, they are designed to meet your needs for quality, affordability and career advancement. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 84 Programs Include: • Applied Industrial Maintenance Technology • Computer Aided Design (CAD) • Computer Numerical Control Machining (CNC) • Manufacturing Technology-Apprenticeship Training (AIT) • Manufacturing-Technical Readiness • Precision Machining Technology (PMT) - Fast Track Certificate Programs • Welding Technology Certificate Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 85 Manufacturing Extension Partnership Manufacturing Extension Partnership. MEP is a nationwide network of not-for-profit centers in over 400 locations nationwide, whose sole purpose is to provide small and medium sized manufacturers with the help they need to succeed. The centers, serving all 50 States and Puerto Rico, are linked together through the Department of Commerce's National Institute of Standards and Technology. Centers are funded by federal, state, local and private resources to serve manufacturers. That makes it possible for even the smallest firms to tap into the expertise of knowledgeable manufacturing and business specialists all over the United States. These specialists are people who have had experience on manufacturing floors and in plant operations. Each center works directly with area manufacturers to provide expertise and services tailored to their most critical needs, which range from process improvements and worker training to business practices and applications of information technology. Solutions are offered through a combination of direct assistance from center staff and outside consultants. Centers often help small firms overcome barriers in locating and obtaining private-sector resources. Since the beginning of MEP, we've assisted over 149,000 firms and growing Impact and Results By measuring short- and long-term impacts, NIST MEP can assess economic returns on the federal investment in manufacturing extension services. Many studies are finding that small manufacturers who work with their local NIST MEP center show dramatic improvements. For example, in a survey of NIST MEP clients served from October 2000 through September 2001, 4,800 companies around the country reported that, as a result of NIST MEP services, they: • created or retained 25,000 jobs • increased or retained $2.2 billion in sales; • realized $442 million in cost savings; and • invested $681 million in modernization, including plant and equipment, information systems, and workforce and training. The Office of Applied Economics, National Institute of Standards and Technology published an article in the Economic Development Quarterly (February, 2001) that indicates that two Illinois manufacturing extension centers affiliated with the national manufacturing extension partnership have improved the performance of small Illinois firms and the Illinois state economy. During a 2- year period, the centers directly helped client firms create $22.5 million in sales and create or retain 483 jobs. These benefits, through their direct and indirect effects on the state economy, generated an estimated $119 million in new state output and 450 new state jobs during a 4-year period. State and local tax revenues increased by $9.5 million during the same period, comparing favorably with the $6 million 2-year funding for the two centers. These client-firm impacts occurred in industries important to state economic growth, high-wage employment, and competitiveness relative to the rest of the nation. Example of a manufacturing extension program: Cleveland Advanced Manufacturing Program (CAMP Inc). is a non-profit, professional organization that delivers expert, hands-on, engineering, business and training services to Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 86 manufacturers and other technology-based partners. The mission is to help manufacturing and emerging technology-based companies excel and grow through understanding, adopting and implementing innovative methods and technologies. Since 1984, CAMP has assisted more than 1,500 manufacturers with hands-on manufacturing improvement projects, resulting in more than $410 million of economic impact on Northeast Ohio companies. Engineers, trainers and industry experts work with regional manufacturers developing and implementing practical solutions that promote continuous improvement throughout the organization. Topics CAMP has worked on with local firms include: Manufacturing Process Improvement Quality Systems Business Systems & Strategies Innovation & Commercialization Product & Process Development Workforce & Organizational Development Manufacturing Process Improvement Skilled engineers and consultants enlist a wide range of tools including: Analysis & Strategy Development Lean Training & Facilitation Lean Implementation Assistance Occupational Health & Safety Quality Systems Experts can help firms implement an approved Quality system using: ISO/QS Productivity Improvement Six Sigma Process Improvement Business Systems & Strategies From planning through implementation, Business Systems and Strategies group supports firms by employing: Information Systems Planning, Selection, Design and Implementation Business Process Improvement / Lean for the Office Business Analysis & Strategy Planning Web-based Application Design, Implementation and Integration Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 87 Security Vulnerability Assessment, Testing, Recommendation Implementation, Maintenance Strategic and Tactical Marketing Asset Management Evaluation and Planning Product & Process Development Investments in new product design and advanced manufacturing technologies pave the way for continuous improvement and a stronger competitive edge for a company. CAMP’s experienced and skilled engineering staff offer: Inline Test and Inspection Systems Product Design & Development Instrumentation Design & Development Custom Automation Design & Development Innovation & Commercialization Building Businesses through Innovation, Learning & Doing, otherwise known as CAMP’s “BUILD” initiative, provides an entrepreneur or emerging company with the critical services, infrastructure and networking needed to launch a successful technology-based business. Services include: Technology Assessment Market Research & Strategy Development Business & Financial Planning Assistance Funding Source Identification Management Team Mentoring Intellectual Property Services Workforce & Organizational Development Empower employees with the knowledge, motivation and skills they need to improve productivity in your organization. CAMP provides customized programs based on the companies specific needs in Management & Supervisory Development Organizational Development Technical Skills Training & Development Web-based Training Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 88 Marketing Plans for Key Sectors Governor Booth Gardner created “Team Washington” to involve any business person visiting clients in other states or nations in Washington’s external marketing program. The idea was that an additional call or two could be squeezed into many business travelers’ schedules to market the state as a location for business. Persons agreeing to join the “Team” were enrolled in short training sessions and designated as “ambassadors” for the state. In addition, the Department of Trade and Economic Development was created and several key industry programs were created (software, biotech, and forest products). Staff at DTED assigned to lead these programs worked with private associations and industry members organized in steering committees to develop work programs designed to use the capabilities of DTED to solve problems faced by each industry, such as: • developing marketing strategies, • accessing capital, • negotiating their way through complicated regulatory processes, • identifying opportunities for other inter-firm collaborative strategies such as forming flexible networks, and • assisting industries in forming industry associations to move these activities into the private sector. One program used extensively by these key industry representatives was the International Division of DTED, which assisted firms in entering foreign markets with advice on regulatory and export procedures, and provided contacts in each country through export offices located in Japan, Russia, and Europe. Several industry associations were formed as a consequence of these efforts including: • WSA (formerly Washington Software Alliance, initial staffing provided by DTED) • Washington Biotechnology and Biomedical Association (initial staffing provided by DTED) • Washington Aerospace Alliance (contracts subsidized association costs for several years using a defense diversification grant from the federal government) • Evergreen Wood Products Association (contracts assisted this association in developing foreign market strategies including a “Washington Village” development in the Kansai region in Japan to demonstrate western 2x4 construction technology in a real housing development). As state budgets tightened under Governors Lowry and Locke, all of these sectoral programs were eliminated. The International Trade Division still exists and limited support is provided for other external marketing programs by DTEDs successor, the Department of Community, Trade and Economic Development. Oregon offers another example, called the Key Industries program. This program also started in the mid-1980s. The state’s Office of Economic Development designated 14 key industries based on an analysis of the state’s economic base. Programs for each key industry were developed in partnership with representatives of the industry, including a number of marketing efforts that were subsidized with state funds. This program existed for only 2-4 years, after Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 89 which a dedicated funding source, the Oregon State Lottery, was partially re-allocated to other state programs. In both of these examples, there was no natural role for municipalities or local economic development programs. States formed partnerships with industry representatives, leaving local government and local economic development somewhat out of the picture. However, there is no conceptual reason why a local jurisdiction could not mount a similar effort. Best practice lessons derived from these state programs include: • Form close partnerships with industry representatives to ensure the thrust of the program is beneficial to industry, and to leverage public resources with private resources • Focus on ways to transitioning the effort in to private associations or other organizational structures such as private joint ventures to ensure sustainability of the effort • Eliminate cumbersome and uncertain regulatory processes by identifying the key regulatory bottlenecks faced by the target industry Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 90 Attracting International Tourists, Business and Students During the mid-1980s and early 1990s, attraction of foreign direct investment was a staple of Washington State’s economic development policy. Team Washington ambassadors who happened to be on foreign trips were encouraged to call on business people in that country to market the state as a location for foreign direct investment. In addition, a series of foreign offices were opened to look for export opportunities for Washington businesses as well as to look for potential investors in foreign countries who might want to open a plant located in Washington to penetrate the US market or to export goods back to the investor’s home country. Successes of this program included wood products plants located on the Olympic Peninsula that shipped metric dimension lumber and pulp products back to Japan, the home country of the investors. Governor Mike Lowry continued these efforts, personalizing the approach with several high profile trade missions to Asian countries. In addition to these state initiatives, Edmonds Community College established a branch campus in Japan that provided instruction in English to students who needed to learn English as a second language, or for expatriates in Japan who wanted to continue their education in English. Several cities, most notably Seattle, established a number of sister city relationships. A major purpose of these relationships was to promote trade between the sister cities. Cultural exchanges were a constant feature of these exchanges, but educational exchanges were not a major feature of these programs. Tie-ins between economic development programs and foreign students studying at Washington colleges and universities were never contemplated. Technical Appendix Industry Outlook and Recommended Economic Development Strategies Economic Development Strategic Plan Page 91 Using Arts and Culture to Attract International Business The Economic and Technology Policy Studies reports on how states are using arts and culture to strengthen their global trade development. As new international trade and investment treaty negotiations by the federal government progress, governors will be called upon to promote their states' businesses in a tight budget environment. Several states - looking for a greater edge in an increasingly competitive marketplace - are incorporating arts and cultural exchanges in their international trade and business development approaches. This aspect of state-level diplomacy undergirds and complements more traditional trade promotion efforts that focus on generating immediate exports. One state official describes these activities as building a network of personal ties, or "a human infrastructure," that is an indispensable tool for expanding trade. Relationships of understanding, respect and trust with other nations will not alone guarantee expanded trade development, but they can form an effective foundation upon which trade partnerships rest. Some successful approaches that states have used to incorporate arts and culture into international trade development include: • initiating cultural exchanges with foreign countries; • developing "sister state" relationships; • including cultural leaders on trade missions; • making grants to communities and educational institutions that are initiating contact abroad; creating state-level commissions and signing bilateral agreements that For more information, see: http://www.nga.org/center/divisions/ 1,1188,T_CEN_ECON_TECH^C_ISSUE_BRIEF^D_5271,00.html INFORMATION TECHNOLOGY Stan Waldrop, Interim Director Phone: 253-856-4600 Fax: 253-856-4700 Address: 220 Fourth Avenue S. Kent, WA. 98032-5895 DATE: September 5, 2003 TO: Kent City Council Operations Committee FROM: Stan Waldrop, Interim Information Technology Director THROUGH: Mayor Jim White SUBJECT: PC Replacement Plan – 2003 SUMMARY: The City has approximately 576 desktop computers on a 4-year replacement cycle. This would mean replacing 144 computers this year. However, we are recommending replacement of only 120 desktop computers due to budget constraints. This will eliminate the City’s 120 oldest computers and maintain an adequate desktop computing environment to operate the City’s business and productivity applications. The desktop computers eliminated will be the 350 Mhz through 500 Mhz processor models. This replacement does not include monitors. Monitors are purchased separately and are replaced only as failures occur. BUDGET IMPACT: 2003 CIP Computer Replacement Plan Budget – estimate $106,654 MOTION: I move to recommend that the Council authorize the Mayor to sign purchase orders for replacement computers and vendor services not to exceed $106,654 pending City Attorney approval of contract documents. BACKGROUND The City’s desktop computer standard is Hewlett-Packard which are purchased from the Washington State D.I.S contract. This pricing is typically used as a base and further discounts are negotiated based on the quantity and model ordered. The proposed model will be a Pentium IV – 2.4 Ghz computer with 512 MB RAM. To facilitate a rapid deployment and work within the current resource constraints, we propose to use a vendor to perform the work associated with this project. The services provided will include: ♦ Receiving new computers at the vendor’s facility. ♦ Preparing the computers with the City’s standard configuration. ♦ Delivering the computers to the desktop. ♦ Removing the old computer for disposal or redeployment. The vendor pricing anticipates replacing a specific number of computers in each department at department’s direction, then redeploying the displaced computer to eliminate the 350 Mhz through 500 Mhz models. The table shown below provides a cost breakdown. Project Component Budget Estimate 120 HP D330 Desktop Computers @ $681 each $81,720 Estimated Vendor Services to Deploy Computers $12,000 8.8% Sales Tax $8,248 5% Contingency $4,686 Project Total $106,654 Attachments: HP Quote Goods & Services Agreement Big Deal # Deal Description: Deal Dates: Version #93859 07/28/03 4 Customer : CITY OF KENT WASHINGTON, KENT WA Desktops MC Code Country Code 01/31/04 Order From:Order To: Quote Distribution Date Direct/Agent Deal 09/02/03 US Price Term SLEDDeal Lead:KARISSA CRAVEN OPG Number: Price List Code Currency US US $ HP Quote Customer Quote Local Government Cash Disc. Percent Cash Payment Days 0 30 % 07/28/03 01/31/04 Ship Begin Ship End: Complex Deal Agent Deal N N Referral Partners Product Number Offerings Product Number Description Price Offer Type End Opt Begin DatePL DateUS $ Est Qty Min Max Max Ord Rsl Ln R73YR NBD DESKPRO EX NO MONITOR218348-002 1 45.00 BD Net60.00 07/28/03 01/31/04 7FD530 USDT Base ModelDB670AV 120 215.00 BD Net254.00 08/19/03 01/31/04 7FD530 CMT Base ModelDC577AV 100 235.00 BD Net298.00 08/06/03 01/31/04 7FD330 ST Base Model LPDC581AV 1 145.00 BD Net185.00 08/06/03 01/31/04 7F40GB ATA/100 5400RPM HD 1stDD573AV 1 42.00 BD Net59.00 08/06/03 01/31/04 7F40GB ATA/100 7200RPM HD 1stDD575AV 120 60.00 BD Net79.00 08/19/03 01/31/04 7FPS/2 Scroll Mouse HP carboniteDD595AV 1 5.00 BD Net5.00 08/15/03 01/31/04 7F1.44MB Floppy DriveDD602AV 1 10.00 BD Net15.00 08/06/03 01/31/04 7F48X/24X/48X CDRW DriveDD640AV 1 50.00 BD Net68.00 08/06/03 01/31/04 7FPS/2 kbd HP carbonite/slvr EAKDD655AV 1 10.00 BD Net10.00 08/15/03 01/31/04 7FMicrosoft Windows XP Pro SP1DD680AV 1 110.00 BD Net138.00 08/06/03 01/31/04 7F40GB ATA/100 7200RPM HD 1stDD707AV 100 80.00 BD Net99.00 08/06/03 01/31/04 7FMultiBay 24X CD-ROM DriveDD719AV 120 40.00 BD Net49.00 08/19/03 01/31/04 7F512MB DDR PC2700DD727AV 100 150.00 BD Net188.00 08/06/03 01/31/04 7FPS/2 scroll mse HP carboniteDD733AV 100 5.00 BD Net5.00 08/06/03 01/31/04 7FUSB scroll mse HP carboniteDD734AV 120 5.00 BD Net5.00 08/19/03 01/31/04 7F1.44MB Floppy DriveDD740AV 100 8.00 BD Net10.00 08/06/03 01/31/04 7F48X DVD-CDRW Combo DriveDD774AV 100 78.00 BD Net98.00 08/06/03 01/31/04 7FPS/2 kbd HP carbonite/slvr EAKDD777AV 100 12.00 BD Net12.00 08/06/03 01/31/04 7FUSB kbd HP carbonite/slvr EAKDD779AV 120 12.00 BD Net12.00 08/19/03 01/31/04 7FNorton AntiVirus 2003DD803AV 1 5.00 BD Net5.00 08/06/03 08/28/03 0.00 BD Net5.00 08/29/03 01/31/04* 7FHP Restore Plus! CD KitDD809AV 100 1.00 BD Net1.00 08/06/03 01/31/04 7FCountry kit - d530/d330DD811AV 1 0.00 BD Net15.00 07/28/03 01/31/04 7FMicrosoft Works 2003DD813AV 1 10.00 BD Net15.00 08/06/03 08/28/03 0.00 BD Net15.00 08/29/03 01/31/04* 7FCountry kit d530 USDTDD866AV 120 0.00 BD Net15.00 08/19/03 01/31/04 7FIntel Pentium 4 2.4G/533DE656AV 1 130.00 BD Net168.00 08/06/03 01/31/04 7FThermal KitDE665AV 100 1.00 BD Net1.00 08/06/03 01/31/04 7FThermal Kit USDTDE905AV 120 1.00 BD Net1.00 08/19/03 01/31/04 7F512MB DDR PC2700 (2x256)DE926AV 1 150.00 BD Net198.00 08/06/03 01/31/04 7FIntel Pentium 4 2.4G/533DE933AV 100 190.00 BD Net228.00 08/06/03 01/31/04 7F48X CD-ROM DriveDG681AV 120 16.00 BD Net20.00 08/19/03 01/31/04 All Big Deal quotes are subject to the Big Deals Terms and Conditions, which are fully incorporated into this quote by reference. HP Direct Terms and Conditions The following is a subset of HP Direct terms and conditions provided for information only, and should not be construed as a complete contract. All orders are subject to complete signature and HP acceptance. Customized product and service orders can only be accepted after set-up is complete. 1)Prices do not include shipping, handling, and delivery charges unless otherwise indicated in this quotation. 2)End-users must purchase product for their own internal use; resales are not eligible for special pricing discounts or rebates. 3)Special pricing outlined within the agreements may not be combined with any other Special Program or Promotion unless specifically indicated within the terms and conditions of the agreement letters. 4)Prices remain valid for 90 days unless otherwise indicated in this quotation. 5)Prices are exclusive of applicable sales, use, service, value added or like taxes. 6) Pricing is based upon estimated volumes. If estimated volumes are not met, HP reserves the right to adjust related pricing in the next ordering period. 7) Customer may cancel orders for products up to five (5) business days prior to shipment. 8) HP will accept defective-upon-arrival ("DOA") returns up to thirty (30) days following shipment date. 9) Payment terms are subject to HP credit approval. 10) Standard warranties specified and provided by third parties apply. HP will not necessarily provide warranty coverage on third party products. The quotation for each non-standard offering is valid for 30 days. If the business is not awarded by the End User within this timeframe, HP reserves the right to re-quote or withdraw this offer. Quote Definitions : (These definitions are provided for clarification purposes only. For legal considerations, please refer to the Big Deal Terms and Conditions.) Hewlett-Packard Company : For purposes of this quote, the terms "Hewlett-Packard Company" or "HP" may be used to refer both to HP and its past or current subsidiaries, including Compaq Computer Corporation and Compaq Federal, LLC. Reseller B : Reseller that sells to the End User or an Agent that performs a service for the End User. Referral Partner : Reseller who solicits sales to be made directly by HP to the End User. Offering Types : Product Line (PL): Offering which applies to all of the HP product numbers within the quoted PL. Product Family (PF): Offering which applies to all of the HP product numbers within an HP PF. PF is often a subset of PL. Product Series (SR): Offering which applies to all of the HP product numbers within an HP SR. SR is a subset of PF. Product Model (MD): Offering which applies to all of the HP product numbers within an HP MD. MD is a subset of SR. Product Number (PN): Offering which applies to the designated product number only. Net Price (BD NET): Net Price offered on the Product Number. Incremental Discount Amount (IDA): Discount expressed as a dollar amount which is tied to the list price on the quote for the line item. When the list price changes, the IDA is no longer valid. % of List: Authorized discount off of the HP List price. Offering Type : Indication of which special offering discount is authorized for each product number on the quote; Net Price, IDA, % of HP List. Indicators: HP Direct Deal : Indicates that this quote reflects End User pricing for sales to be made directly by HP to the identified End User. United States/ Canada : "Y" indicates quote is valid for this country. OPG Number : Reference number for a Global deal, not applicable within US or Canada MC Code : Miscellaneous Charge code for internal discount accounting purposes Global : "Y" indicates there is a global offering associated with this deal as outlined in the Special Terms and Conditions outlined on the quote. *: Indicates this line is new, or modified with this current version of the quote Dates : Deal Duration : Date range indicating the earliest Effective Date and latest End Date of any offering line item on the quote. Effective Date : First End User shipment date the offering is available on the line item. End Date : Last End User shipment date the offering is available on the line item. Version Date : Date this version of the quote was released for quotation. Special Configurations: When HP generates a quote for a Special Configuration, a TBx Option is initially specified on the quote. On the subsequent version of the quote, the TBx Option is replaced by HP with an orderable SKU number. For the latest version of the Big Deal quote, please contact your HP Sales Representative. HP has financing options for technology solutions for the End User. If in the U.S., please contact the local HP Technology Finance representative or call 1-888-999-HPTF(4783) for more information; if in Canada, please call 1-800-HP LEASE (1-800-475-3273). HP Quote EVO D330 Slim Tower with CD PART NUMBER DESCRIPTION CITY OF KENT PRICE PRICE VALID START DATE PRICE VALID END DATE 218348-002 3YR NBD DESKPRO EX NO MONITOR $45.00 7/28/2003 1/31/2004 DC581AV D330 ST Base Model LP $145.00 8/6/2003 1/31/2004 DD575AV 40GB ATA/100 7200RPM HD 1st $60.00 8/19/2003 1/31/2004 DD602AV 1.44MB Floppy Drive $10.00 8/6/2003 1/31/2004 DG681AV 48X CD-ROM Drive $16.00 8/19/2003 1/31/2004 DD680AV Microsoft Windows XP Pro SP1 $110.00 8/6/2003 1/31/2004 DD595AV PS/2 scroll mse HP carbonite $5.00 8/6/2003 1/31/2004 DD655AV PS/2 kbd HP carbonite/slvr EAK $10.00 8/6/2003 1/31/2004 DD803AV Norton AntiVirus 2003 $0.00 8/6/2003 1/31/2004 DD811AV Country kit - d530/d330 $0.00 7/28/2003 1/31/2004 DD813AV Microsoft Works 2003 $0.00 8/6/2003 1/31/2004 DE656AV Intel Pentium 4 2.4G/533 $130.00 8/6/2003 1/31/2004 DE926AV 512MB DDR PC2700 (2x256) $150.00 8/6/2003 1/31/2004 TOTAL SYSTEM PRICE $681.00 GOODS & SERVICES AGREEMENT - 1 (Over $10,000.00, including WSST) GOODS & SERVICES AGREEMENT between the City of Kent and Edge Systems THIS AGREEMENT is made by and between the City of Kent, a Washington municipal corporation (hereinafter the "City"), and Edge Systems organized under the laws of the State of Washington, located and doing business at 9730 Lathrop Industrial Drive SW, Ste F-1, Olympia, Washington (hereinafter the "Vendor"). AGREEMENT I. DESCRIPTION OF WORK. Vendor shall provide the following goods and materials and/or perform the following services for the City: See Exhibit 1, Edge Systems Proposal dated September 4, 2003, for a description of the work to be performed. It is anticipated Vendor will receive and deploy 120 new computers and redeploy 120 computers for a total of 240. However, the actual number of computers redeployed will vary therefore the pricing stated in section III, Compensation, is a price not to exceed. Vendor acknowledges and understands that it is not the City’s exclusive provider of these goods, materials, or services and that the City maintains its unqualified right to obtain these goods, materials, and services through other sources. II. TIME OF COMPLETION. Upon the effective date of this Agreement, Vendor shall complete the work and provide all goods, materials, and services within 60 days of receipt of the new computer equipment at the Vendor’s facility. . III. COMPENSATION. The City shall pay the Vendor an amount not to exceed $12,000, excluding applicable Washington State Sales Tax, for the goods, materials, and services contemplated in this Agreement. The City shall pay the Vendor the following amounts according to the following schedule: GOODS & SERVICES AGREEMENT - 2 (Over $10,000.00, including WSST) The services shall be billed on a monthly basis with a final invoice upon completion of the work. If the City objects to all or any portion of an invoice, it shall notify Vendor and reserves the option to only pay that portion of the invoice not in dispute. In that event, the parties will immediately make every effort to settle the disputed portion. A. Defective or Unauthorized Work. The City reserves its right to withhold payment from Vendor for any defective or unauthorized goods, materials or services. If Vendor is unable, for any reason, to complete any part of this Agreement, the City may obtain the goods, materials or services from other sources, and Vendor shall be liable to the City for any additional costs incurred by the City. "Additional costs" shall mean all reasonable costs, including legal costs and attorney fees, incurred by the City beyond the maximum Agreement price specified above. The City further reserves its right to deduct these additional costs incurred to complete this Agreement with other sources, from any and all amounts due or to become due the Vendor. B. Final Payment: Waiver of Claims. THE MAKING OF FINAL PAYMENT SHALL CONSTITUTE A WAIVER OF CLAIMS, EXCEPT THOSE PREVIOUSLY AND PROPERLY MADE AND IDENTIFIED BY VENDOR AS UNSETTLED AT THE TIME REQUEST FOR FINAL PAYMENT IS MADE. IV. INDEPENDENT CONTRACTOR. The parties intend that an Independent Contractor- Employer Relationship will be created by this Agreement and that the Vendor has the ability to control and direct the performance and details of its work, the City being interested only in the results obtained under this Agreement. V. TERMINATION. Either party may terminate this Agreement, with or without cause, upon providing the other party thirty (30) days written notice at its address set forth on the signature block of this Agreement. VI. CHANGES. The City may issue a written change order for any change in the goods, materials or services to be provided during the performance of this Agreement. If the Vendor determines, for any reason, that a change order is necessary, Vendor must submit a written change order request to the person listed in the notice provision section of this Agreement, section XIV(D), within fourteen (14) calendar days of the date Vendor knew or should have known of the facts and events giving rise to the requested change. If the City determines that the change increases or decreases the Vendor's costs or time for performance, the City will make an equitable adjustment. The City will attempt, in good faith, to reach agreement with the Vendor on all equitable adjustments. However, if the parties are unable to agree, the City will determine the equitable adjustment as it deems appropriate. The Vendor shall proceed with the change order work upon receiving either a written change order from the City or an oral order from the City before actually receiving the written change order. If the Vendor fails to require a change order within the time allowed, the Vendor waives its right to make any claim or submit subsequent change order requests for that portion of the contract work. If the Vendor disagrees with the equitable adjustment, the Vendor must complete the change order work; however, the GOODS & SERVICES AGREEMENT - 3 (Over $10,000.00, including WSST) Vendor may elect to protest the adjustment as provided in subsections A through E of Section VII, Claims, below. The Vendor accepts all requirements of a change order by: (1) endorsing it, (2) writing a separate acceptance, or (3) not protesting in the way this section provides. A change order that is accepted by Vendor as provided in this section shall constitute full payment and final settlement of all claims for contract time and for direct, indirect and consequential costs, including costs of delays related to any work, either covered or affected by the change. VII. CLAIMS. If the Vendor disagrees with anything required by a change order, another written order, or an oral order from the City, including any direction, instruction, interpretation, or determination by the City, the Vendor may file a claim as provided in this section. The Vendor shall give written notice to the City of all claims within fourteen (14) calendar days of the occurrence of the events giving rise to the claims, or within fourteen (14) calendar days of the date the Vendor knew or should have known of the facts or events giving rise to the claim, whichever occurs first . Any claim for damages, additional payment for any reason, or extension of time, whether under this Agreement or otherwise, shall be conclusively deemed to have been waived by the Vendor unless a timely written claim is made in strict accordance with the applicable provisions of this Agreement. At a minimum, a Vendor's written claim shall include the information set forth in subsections A, items 1 through 5 below. FAILURE TO PROVIDE A COMPLETE, WRITTEN NOTIFICATION OF CLAIM WITHIN THE TIME ALLOWED SHALL BE AN ABSOLUTE WAIVER OF ANY CLAIMS ARISING IN ANY WAY FROM THE FACTS OR EVENTS SURROUNDING THAT CLAIM OR CAUSED BY THAT DELAY. A. Notice of Claim. Provide a signed written notice of claim that provides the following information: 1. The date of the Vendor's claim; 2. The nature and circumstances that caused the claim; 3. The provisions in this Agreement that support the claim; 4. The estimated dollar cost, if any, of the claimed work and how that estimate was determined; and 5. An analysis of the progress schedule showing the schedule change or disruption if the Vendor is asserting a schedule change or disruption. B. Records. The Vendor shall keep complete records of extra costs and time incurred as a result of the asserted events giving rise to the claim. The City shall have access to any of the Vendor's records needed for evaluating the protest. The City will evaluate all claims, provided the procedures in this section are followed. If the City determines that a claim is valid, the City will adjust payment for work or time by an equitable adjustment. No adjustment will be made for an invalid protest. C. Vendor's Duty to Complete Protested Work. In spite of any claim, the Vendor shall proceed promptly to provide the goods, materials and services required by the City under this Agreement. GOODS & SERVICES AGREEMENT - 4 (Over $10,000.00, including WSST) D. Failure to Protest Constitutes Waiver. By not protesting as this section provides, the Vendor also waives any additional entitlement and accepts from the City any written or oral order (including directions, instructions, interpretations, and determination). E. Failure to Follow Procedures Constitutes Waiver. By failing to follow the procedures of this section, the Vendor completely waives any claims for protested work and accepts from the City any written or oral order (including directions, instructions, interpretations, and determination). VIII. LIMITATION OF ACTIONS. VENDOR MUST, IN ANY EVENT, FILE ANY LAWSUIT ARISING FROM OR CONNECTED WITH THIS AGREEMENT WITHIN 120 CALENDAR DAYS FROM THE DATE THE CONTRACT WORK IS COMPLETE OR VENDOR’S ABILITY TO FILE THAT SUIT SHALL BE FOREVER BARRED. THIS SECTION FURTHER LIMITS ANY APPLICABLE STATUTORY LIMITATIONS PERIOD. IX. WARRANTY. This Agreement is subject to all warranty provisions established under the Uniform Commercial Code, Title 62A, Revised Code of Washington. Vendor warrants goods are merchantable, are fit for the particular purpose for which they were obtained, and will perform in accordance with their specifications and Vendor’s representations to City. The Vendor shall correct all defects in workmanship and materials within one (1) year from the date of the City's acceptance of the Contract work. In the event any part of the goods are repaired, only original replacement parts shall be used—rebuilt or used parts will not be acceptable. When defects are corrected, the warranty for that portion of the work shall extend for one (1) year from the date such correction is completed and accepted by the City. The Vendor shall begin to correct any defects within seven (7) calendar days of its receipt of notice from the City of the defect. If the Vendor does not accomplish the corrections within a reasonable time as determined by the City, the City may complete the corrections and the Vendor shall pay all costs incurred by the City in order to accomplish the correction. X. DISCRIMINATION. In the hiring of employees for the performance of work under this Agreement or any sub-contract, the Vendor, its sub-contractors, or any person acting on behalf of the Vendor or sub-contractor shall not, by reason of race, religion, color, sex, age, sexual orientation, national origin, or the presence of any sensory, mental, or physical disability, discriminate against any person who is qualified and available to perform the work to which the employment relates. Vendor shall execute the attached City of Kent Equal Employment Opportunity Policy Declaration, Comply with City Administrative Policy 1.2, and upon completion of the contract work, file the attached Compliance Statement. XI. INDEMNIFICATION. Vendor shall defend, indemnify and hold the City, its officers, officials, employees, agents and volunteers harmless from any and all claims, injuries, damages, losses or suits, including all legal costs and attorney fees, arising out of or in connection with the Vendor's performance of this Agreement, except for that portion of the injuries and damages caused by the City's negligence. The City's inspection or acceptance of any of Vendor's work when completed shall not be grounds to avoid any of these covenants of indemnification. IT IS FURTHER SPECIFICALLY AND EXPRESSLY UNDERSTOOD THAT THE INDEMNIFICATION PROVIDED HEREIN CONSTITUTES THE VENDOR'S WAIVER OF IMMUNITY UNDER INDUSTRIAL INSURANCE, TITLE 51 RCW, SOLELY FOR THE PURPOSES OF THIS INDEMNIFICATION. THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE MUTUALLY NEGOTIATED THIS WAIVER. GOODS & SERVICES AGREEMENT - 5 (Over $10,000.00, including WSST) The provisions of this section shall survive the expiration or termination of this Agreement. XII. INSURANCE. The Vendor shall procure and maintain for the duration of the Agreement, insurance of the types and in the amounts described in Exhibit 2 attached and incorporated by this reference. XIII. WORK PERFORMED AT VENDOR'S RISK. Vendor shall take all necessary precautions and shall be responsible for the safety of its employees, agents, and subcontractors in the performance of the contract work and shall utilize all protection necessary for that purpose. All work shall be done at Vendor's own risk, and Vendor shall be responsible for any loss of or damage to materials, tools, or other articles used or held for use in connection with the work. XIV. MISCELLANEOUS PROVISIONS. A. Recyclable Materials. Pursuant to Chapter 3.80 of the Kent City Code, the City requires its contractors and consultants to use recycled and recyclable products whenever practicable. A price preference may be available for any designated recycled product. B. Non-Waiver of Breach. The failure of the City to insist upon strict performance of any of the covenants and agreements contained in this Agreement, or to exercise any option conferred by this Agreement in one or more instances shall not be construed to be a waiver or relinquishment of those covenants, agreements or options, and the same shall be and remain in full force and effect. C. Resolution of Disputes and Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. If the parties are unable to settle any dispute, difference or claim arising from the parties’ performance of this Agreement, the exclusive means of resolving that dispute, difference or claim, shall only be by filing suit exclusively under the venue, rules and jurisdiction of the King County Superior Court, King County, Washington, unless the parties agree in writing to an alternative dispute resolution process. In any claim or lawsuit for damages arising from the parties' performance of this Agreement, each party shall pay all its legal costs and attorney's fees incurred in defending or bringing such claim or lawsuit, in addition to any other recovery or award provided by law; provided, however, nothing in this paragraph shall be construed to limit the City's right to indemnification under Section XI of this Agreement. D. Written Notice. All communications regarding this Agreement shall be sent to the parties at the addresses listed on the signature page of the Agreement, unless notified to the contrary. Any written notice hereunder shall become effective three (3) business days after the date of mailing by registered or certified mail, and shall be deemed sufficiently given if sent to the addressee at the address stated in this Agreement or such other address as may be hereafter specified in writing. E. Assignment. Any assignment of this Agreement by either party without the written consent of the non-assigning party shall be void. If the non-assigning party gives its consent to any assignment, the terms of this Agreement shall continue in full force and effect and no further assignment shall be made without additional written consent. F. Modification. No waiver, alteration, or modification of any of the provisions of this Agreement shall be binding unless in writing and signed by a duly authorized representative of the City and Vendor. G. Entire Agreement. The written provisions and terms of this Agreement, together with any Exhibits attached hereto, shall supersede all prior verbal statements of any officer or other representative of the City, and such statements shall not be effective or be construed as entering into or forming a part of or altering in any manner this Agreement. All of the above documents are hereby made a part of this Agreement. GOODS & SERVICES AGREEMENT - 6 (Over $10,000.00, including WSST) However, should any language in any of the Exhibits to this Agreement conflict with any language contained in this Agreement, the terms of this Agreement shall prevail. H. Compliance with Laws. The Vendor agrees to comply with all federal, state, and municipal laws, rules, and regulations that are now effective or in the future become applicable to Vendor's business, equipment, and personnel engaged in operations covered by this Agreement or accruing out of the performance of those operations. IN WITNESS, the parties below execute this Agreement, which shall become effective on the last date entered below. VENDOR: By: (signature) Print Name: Its (Title) DATE: CITY OF KENT: By: (signature) Print Name: Jim White Its Mayor DATE: NOTICES TO BE SENT TO: VENDOR: Casey DeBow Edge Systems 9730 Lathrop Industrial Dr, SW Ste F-1 Olympia, WA 98512 (360)943-3343 (telephone) (360)943-3340 (facsimile) NOTICES TO BE SENT TO: CITY OF KENT: Chris Beagle City of Kent 220 Fourth Avenue South Kent, WA 98032 (253) 856-4612 (telephone) (253) 856-4700 (facsimile) APPROVED AS TO FORM: Kent City Attorney EEO COMPLIANCE DOCUMENTS - 1 of 3 DECLARATION CITY OF KENT EQUAL EMPLOYMENT OPPORTUNITY POLICY The City of Kent is committed to conform to Federal and State laws regarding equal opportunity. As such all contractors, subcontractors and suppliers who perform work with relation to this Agreement shall comply with the regulations of the City’s equal employment opportunity policies. The following questions specifically identify the requirements the City deems necessary for any contractor, subcontractor or supplier on this specific Agreement to adhere to. An affirmative response is required on all of the following questions for this Agreement to be valid and binding. If any contractor, subcontractor or supplier willfully misrepresents themselves with regard to the directives outlines, it will be considered a breach of contract and it will be at the City’s sole determination regarding suspension or termination for all or part of the Agreement; The questions are as follows: 1. I have read the attached City of Kent administrative policy number 1.2. 2. During the time of this Agreement I will not discriminate in employment on the basis of sex, race, color, national origin, age, or the presence of all sensory, mental or physical disability. 3. During the time of this Agreement the prime contractor will provide a written statement to all new employees and subcontractors indicating commitment as an equal opportunity employer. 4. During the time of the Agreement I, the prime contractor, will actively consider hiring and promotion of women and minorities. 5. Before acceptance of this Agreement, an adherence statement will be signed by me, the Prime Contractor, that the Prime Contractor complied with the requirements as set forth above. By signing below, I agree to fulfill the five requirements referenced above. Dated this day of , 200__. By:___________________________________________________ For: __________________________________________________ Title: _________________________________________________ Date: _________________________________________________ EEO COMPLIANCE DOCUMENTS - 2 of 3 CITY OF KENT ADMINISTRATIVE POLICY NUMBER: 1.2 EFFECTIVE DATE: January 1, 1998 SUBJECT: MINORITY AND WOMEN SUPERSEDES: April 1, 1996 CONTRACTORS APPROVED BY Jim White, Mayor POLICY: Equal employment opportunity requirements for the City of Kent will conform to federal and state laws. All contractors, subcontractors, consultants and suppliers of the City must guarantee equal employment opportunity within their organization and, if holding Agreements with the City amounting to $10,000 or more within any given year, must take the following affirmative steps: 1. Provide a written statement to all new employees and subcontractors indicating commitment as an equal opportunity employer. 2. Actively consider for promotion and advancement available minorities and women. Any contractor, subcontractor, consultant or supplier who willfully disregards the City’s nondiscrimination and equal opportunity requirements shall be considered in breach of contract and subject to suspension or termination for all or part of the Agreement. Contract Compliance Officers will be appointed by the Directors of Planning, Parks, and Public Works Departments to assume the following duties for their respective departments. 1. Ensuring that contractors, subcontractors, consultants, and suppliers subject to these regulations are familiar with the regulations and the City’s equal employment opportunity policy. 2. Monitoring to assure adherence to federal, state and local laws, policies and guidelines. EEO COMPLIANCE DOCUMENTS - 3 of 3 CITY OF KENT EQUAL EMPLOYMENT OPPORTUNITY COMPLIANCE STATEMENT This form shall be filled out AFTER COMPLETION of this project by the Contractor awarded the Agreement. I, the undersigned, a duly represented agent of Company, hereby acknowledge and declare that the before-mentioned company was the prime contractor for the Agreement known as that was entered into on the (date) , between the firm I represent and the City of Kent. I declare that I complied fully with all of the requirements and obligations as outlined in the City of Kent Administrative Policy 1.2 and the Declaration City of Kent Equal Employment Opportunity Policy that was part of the before-mentioned Agreement. Dated this day of , 200___. By:___________________________________________________ For: __________________________________________________ Title: _________________________________________________ Date: _________________________________________________ EXHIBIT 1 EDGE SYSTEMS PROPOSAL DATED SEPTEMBER 4, 2003 EXHIBIT 2 INSURANCE REQUIREMENTS Insurance Requirements Automobile Liability Automobile liability insurance (including commercial automobile liability insurance) with limits no less than $1,000,000 combined single limit per accident for bodily injury and property damage; and Commercial General Liability Commercial General Liability insurance written on an occurrence basis with limits no less than $1,000,000 combined single limit per occurrence and in the aggregate for personal injury, bodily injury, and property damage. Coverage shall include but not be limited to: blanket contractual; products/completed operations/broad form property damage; explosion, and employer's liability. Deductible Any payment of deductible or self-insured retention shall be the sole responsibility of VENDOR. Endorsement Prior to contract execution, the CITY, its officers, officials, employees, agents, and volunteers shall be named as an additional insured on the insurance policy, as respects work performed by or on behalf of VENDOR and a copy of the endorsement naming the CITY as additional insured shall be attached to the Certificate of Insurance. Copies of such documents shall be provided to the CITY prior to contract execution. Coverage VENDOR's insurance shall contain a clause stating that coverage shall apply separately to each insured against whom claim is made or suit is brought, except with respects to the limits of the insurer's liability. Primary VENDOR's insurance shall be primary insurance as respects the CITY, and the CITY shall be given thirty (30) calendar days prior written notice by certified mail, return receipt requested, of any cancellation, suspension or material change in coverage. Failure A failure to provide insurance coverage and written acceptance of the tendered policy shall be deemed to constitute a material breach of contract by VENDOR. The CITY reserves the right to then award the contract to another bidder. In order to protect the public interest and notwithstanding any provisions herein to the contrary, VENDOR's failure to comply with any provision in this section shall subject the contract to immediate termination without notice and without recourse by any person.