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Monday, August 16, 2010

Be nice to Intel

Making chips and computer components exporting them to China seems to be the main thing the Portland area is doing these days. Apparently thanks to that industry, Portland is one of just four metropolitan areas in the country that doubled their exports between 2003 and 2008, according to a new study. Exports made up more than 20% of Portland's "gross metropolitan product," the experts say, with more than $1 billion of computer and electronic products leaving for China, in 2008.

Things have slowed down quite a bit since then, of course, but no doubt the region still has a lot of its eggs in that basket.

Comments (7)

Yes, the Portland area has contributed more than its fair share toward China's economy surpassing #2 Japan's:

"SHANGHAI — After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower." [NYT 15 August]

Perhaps productivity gains realized by our local industries through dismissal of employees will allow China's GDP (about $1.3T) to surpass the US's GDP (about $14T) prior to 2030, the anticipated date. We are a generous people.

We sell it to them until they figure out how to make it themselves. Then, they're gone from our customer lists.

"but no doubt the region still has a lot of its eggs in that basket."

Which means the region is especially susceptible to economic disruption when Intel ultimately moves wholesale to China or India, or moves it's Oregon operations back closer to headquarters or to a more business-friendly U.S. state in the face of growing competition from India and China.

While the complex, highly-paid work of designing processors and other technologies does still happen in the US and other western countries, China and India make no secret of wanting to move up the value chain to do design and engineering work as well and not just be our low-paid sweatshops. At some point they will have the intellectual capital to offer Intel R&D services, or develop their own processors that will undercut Intel on price.

Either way, if native-US Intel employees are not busy learning Hindi or Mandarin, they'd be wise to get started. And Oregon political leaders should be preparing for a statewide recession on the inevitable day when Intel announces it's moving it's Oregon operations to Shanghai or Mumbai or back home to Garden Grove or to the Research Triangle in North Carolina (some work has already moved from Oregon to China).

PoP, take note: It is likely that very few of these newer products require marine terminal facilities for shipping. The more likely shipping channel was air freight.

And no, I'm not advocating for runway expansion. A lot of freight is moved at night, and the operations are pretty slow at the airport at that time.

We're #4

Top 4 Metropolitan Areas for $Exports/Citizen

1. Seattle – Tacoma: $13,794
2. Houston - Sugar Land: $13,559
3. Detroit: $10,114
4. Portland – Vancouver: $7,182

The dying citys of Portland and Detroit don't contribute squat...it's their vibrant suburbs that keep them going.

Intel isn't moving their Oregon campuses any time soon. They built those billion dollar lithography fans here for two very good reasons: cheap, plentiful water and cheap plentiful electricity at wholesale prices.

However, there's no reason to think that Sam Adams meddling in the affairs of PGE (Boardman) couldn't remove one of those reasons...

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