Winners, Losers, and the World Economy
Ameri/Wu Race Sets Stark Contrasts on Global Trade
By Jim Pasero
David Wu, Oregon’s representative from the state’s First Congressional District, could use a subscription to Business Week.
If he did, he’d find two September cover stories disturbing. They are about big global companies remaking the world—two of which are located in his district. Since these local companies are doing business in China, Wu would prefer not to notice. In three terms in Congress, Wu has consistently voted against U.S. business interests in Asia, especially China.
Business Week’s September 20 cover story, “The New Nike, No longer the brat of sports marketing, it has a higher level of discipline and performance,” focuses on Nike’s recent fast-paced growth and makes the point, “Last year, for the first time, international sales exceed U.S. sales.”
Business Week writer Stanley Holmes, comments about the Beaverton-based company with $13 billion in annual sales: “Nike is poised to become a $20 billion company by the end of the decade.”
Nike has 6,000 employees in Oregon with an average annual compensation of over $100,000.
Lee Weinstein, director of corporate responsibility for Nike, says, “All of our 89 footwear factories are outside of the U.S., with 36 percent of our production in China. At the end of December ’03, those factories employed 688,000 workers.”
Nike is not only manufacturing products in China, it is selling products there as well. Nike’s sales for its last fiscal quarter showed 17 percent growth in Asia. Paul Swangard, director of the Warsaw Sports Marketing Center at the University of Oregon recently gave the Oregonian his impression of Nike’s efforts in China. “‘China just sits out there as the culmination of a decade’s worth of investment.’ Rewards from that work will ‘manifest itself in 2008’ when Beijing hosts the summer Olympics.”
For Wu this is not good news.
In three terms in Congress, Wu, a Taiwanese immigrant to America, has proudly made a congressional career out of voting against free trade. In his first session, the 106th Congress, Wu voted against extending PNTR to China (the vote passed 260-170).
Wu declined an interview with BrainstormNW for this article, but at the time explained his rationale for voting against extending PNTR to China to Willamette Week: “People who are accusing me of having a Taiwan leaning are mistaking a commitment to Jeffersonian ideas for something which is based on geography. I have a bias toward democracy. I’ve taken a political risk with this stand, and I’m proud to do it.”
In the 107th Congress, Wu voted against giving the president Fast Track Authority to create a Free Trade Area of the Americas agreement (the vote passed the House 215-212). Last summer Wu voted against the United States-Singapore Free Trade Agreement. Wu said, “I voted the way I did because I believe we should use our financial leverage to enhance open democracy around the world and not use it to support authoritarian states simply because they have market-based economies. We ought to have free trade with free people.”
And, last summer, Wu went on record against the Bush administration’s Central American Free Trade Agreement (CAFTA).
At times Wu’s hostility towards business in Asia has gone well beyond congressional votes. It has turned emotional.
Carl Davis, Columbia Sportswear’s general counsel, recounts a conversation with his congressman. “Wu came to Columbia Sportswear about four year ago. His purpose was to come and ask for a campaign contribution. Gert (Boyle) and I met with him. At that meeting he told us to pull all of our business out of China, which was 40 percent of our production at the time. I told him that was impossible. He said, ‘You’ve got to do it.’
“Why,” asks Davis, “should we support someone who wants to put us out of business? It showed he didn’t understand the apparel business, free trade or the economy.”
Wu reminds Davis of another Oregon congressman who didn’t understand the benefits of free trade. His name was Willis Hawley. Hawley represented Oregon’s first district from 1907-33, and along with then Utah Sen. Jack Smoot, passed the Smoot-Hawley Tariff Act of 1930, which raised U.S. tariffs to historically high levels and contributed to the Great Depression.
Oregon may lead the world in the apparel industry, but it’s not just the clothing industry that has problems with Wu’s representation. He’s got problems with Oregon’s high-tech industry, which in 2001 represented a whopping 35 percent of Oregon’s gross state product, up from one percent in 1990.
On September 27, Business Week struck again with “Tech’s Future: The next 1 billion customers will come from come from China, India, Brazil, and other developing nations. The tech industry will never be the same.” This time the cover story featured Intel, another Oregon economic giant located in Wu’s district, and whose presence in Asia, and particularly China, is significant.
Says Bill MacKenzie, communications manager for Intel, “We are having our 30th anniversary here, and we’re as much a part of Oregon as Nike, with more employees, double the charity contributions, and most of our patents come out of here.
“Our economic impact might be greater than Nike’s,” says MacKenzie. “Our Ronler Acres campus was the second biggest construction project in the U.S. We’ve invested a billion dollars a year in Oregon in the last five years; that’s a significant contribution to the local economy. Intel has 15,000 employees in Washington Country with an average compensation of over $100,000, which represents 39 percent of Washington County’s business.”
Writes Business Week’s Steve Hamm about the industry leading company and its work in Asia:
One of its [Intel’s] ethnographers, Genevieve Bell, visited 100 homes in Asia over the past three years and noticed that many Chinese families were reluctant to buy PCs … Parents were concerned that their children would listen to pop music or surf the Web, distracting them from school work.
Intel turned that insight into a product. At its User-Centered Design Group in Hillsboro, Ore., industrial designers and other specialists created “personas” of typical Chinese families and pasted pictures that Bell had taken of Chinese households on their walls … The result: Late this year, Intel expects a leading Chinese PC maker to start selling the China Home Learning PC. It comes with four education applications and a physical lock and key that allows parents to prevent their kids from goofing off when they should be studying.
While Intel is taking a neutral stance on Wu’s re-election campaign, the company is not happy about the business direction of the state. MacKenzie comments, “We need politicians that understand the needs of business and the role that business plays in the strength of the state.”
Like many business leaders in Oregon’s high-tech community, he isn’t echoing the typical Oregon politician’s view that businesses move here, or stay here, because of quality of life. Says MacKenzie, “It is to some degree delusional to think that quality of life keeps the economy strong. To assume that the high quality of life in Oregon is sufficient to maintain high-tech in Oregon is a fool’s errand…Austin, Texas has quality of life…Panang has quality of life.”
Vahe Sarkissian, an Armenian American, is the Chairman, President and CEO of FEI Company, which employs 1,700 people and makes tools for nanotechnology. FEI has offices in Massachusetts, The Netherlands and the Czech Republic, but maintains their world headquarters in Hillsboro. Sarkissian, an Oregonian for the past six years, finds himself becoming more active in politics because his company has become a significant world player in the nanotechnology industry and because he needs a stable business environment at home for their world headquarters.
Sarkissian is bothered by what he sees as an “entitlement culture” and he worries about excessive taxations and entitlements that choke business and eventually choke the state. He sees Oregon having great assets (natural resources) and believes because of the reasonably small population the state should be growth-oriented. He’s also seen Hillsboro’s government and local business work in harmony to accomplish some pretty successful things. Sarkissian believes that Sen. Wyden has worked hard on issues important to his industry. “He’s been an advocate for nanotechnology.”
But Sarkissian is not impressed with the representation he’s getting in Congress from Wu. “I invited him to the opening of our nanotechnology center, but he sent an aide saying he was too busy. He is chasing the social issues—that’s my impression. He has just awakened that the economy is an important issue, but it is late in the game. I cannot see the passion with Wu; he seems like a politician to me.”
Sarkissian is also not pleased with Wu’s position on Asia. “Wu cannot avoid China. We can’t put our head in the sand. We need to make sure we have a level playing field with China … but you can’t block China.”
Sarkissian, however, is impressed with Wu’s opponent in the race, Iranian immigrant Goli Ameri. “Goli has potential because she realizes that this district deserves the attention of Washington D.C., and she understands the balance between industry and quality of life.”
Sarkissian sees in Ameri someone who wants to participate in what can be a clean and long lasting ever-growing industry. “High-tech has that opportunity,” says Sarkissian. “Nanotechnology is clean, software is clean, and that’s what I hear Ameri say.”
Sarkissian isn’t sympathetic to the “outsourcing” conversations that are so topical and fad-driven this election cycle. “People will gravitate toward the lowest level cost production area, no matter what. Water flows downhill. The world is an open competitive place. Jobs go where things can be done better. It is a globalized world no matter what you say…and its dangerous to look for entitlements.”
That, Sarkissian believes, is the surest way to lower your living standard.
Ameri may have impressed Sarkissian because of the way she innovatively entered Oregon politics this year with a refusal to accept the old jurisdictional boundaries between federal issues and state issues. She became one of the leading financial backers and political advocates of the Measure 30 campaign, which defeated a temporary three-year increase in the state’s income tax.
“A few people came to me and said how can you do this? What about the schools? But I am a supply-sider,” says Ameri. “You can’t raise taxes when consumer debt is so high. Higher taxes take money away from investment. It’s a disconnect.”
Ameri is also passionate about Wu’s weak congressional record. “Why do we put up with this in Oregon?” asks Ameri. “Why do we put up with mediocrity? I don’t get it. I come from a high-tech background where if you don’t do the job, you’re fired.
“Wu blew his opportunity,” says Ameri succinctly. “He’s wasted that seat, showing no leadership.” She also recently sent out a press release showing The Information Technology Industrial Council giving Wu the lowest voting record of Oregon’s congressional delegation on high-tech issues.
Ameri is bullish on the district. “The first district is the economic engine of Oregon. It’s the world headquarters of the sports apparel industry. Oregon is the third largest high-tech state. It’s the home of burgundy wine (pinot noir) in the U.S., it has an amazing agriculture industry, and 90 percent of Intel’s intellectual capital comes from here.”
Jim Craven, lobbyist for the Oregon chapter of American Electronics Association, points out that the relationship between his member companies and Representative Wu would be far worse if the anti-free trade votes that Wu cast in the last two Congresses had been on the winning side of those issues.
Implying that at some point his members are willing to move on rather than hold a grudge, Craven asks, “How long does Wu pay for those votes?
“We don’t like to write anybody off,” says Craven. Besides, he adds, “China isn’t the perfect trading partner with their currency manipulation and piracy.”
One of the reasons that Wu may have achieved a temporary truce with Craven and the AEA is because of his co-sponsorship this summer of Congress’ Stock Option Accounting Reform Act. The bill blocked implementation of a proposed accounting rule (Sarbanes-Oxley reforms) that would require firms that provide employees with options to buy company stock to deduct the value of the stock options from their reported profits. Wu commented at the time of the vote, “I am strongly supportive of stock option plans, which are a great way for companies to attract and retain employees.”
“This was the number one through ten issues for our high-tech members,” says Craven.
He’s come to this position very late in the game, says Ameri, about Wu’s defense of high-tech stock options. She adds that his co-sponsorship of the measure required really nothing more than putting his name on the bill. “He’s done very little,” says Ameri. “He is not an entity in Congress, compared to Greg Walden.”
Tim Hibbitts, veteran Northwest pollster sees the race in the First District as considerably more competitive than during either of Wu’s first two re-election races. “At first glance, the race suggests a 55-45 contest (in Wu’s favor). How can Ameri make up the last five points?” asks Hibbitts. “She has some compelling things in her favor. She has a great story to tell being an immigrant, and she’s articulate, but it is a tough thing to go against an incumbent who has money.”
Fox News has called Ameri a “GOP Star” and Cook Political Report lists the Wu-Ameri race as one the top 20 competitive House races held by a Democratic incumbent.
If Goli Ameri is running a competitive campaign against David Wu, it has a lot to do with the broad view she’s taking: “Oregon has a leadership crisis, and we don’t have people with passion and energy”—and the narrow, more static view that Wu has stuck to in his three terms: “We ought to have free trade with free people.”
Wally Rhines, CEO and Chairman of the Board of Directors at MentorGraphics, the Wilsonville-based technology company with 3,800 employees and centers in San Jose and Colorado and 28 engineering sites worldwide, is officially neutral in the First Congressional race. Rhines who has worked closely with Gov. Kulongoski on higher education issues as chairman of Oregon’s Engineering Industrial Technology Council is watching the First District race with interest.
Rhines, whose biggest need is to find qualified engineers and who hires the majority of them from out of state, comments on Oregon’s high-tech growth over the last 15 years. “It’s a remarkable beneficial transition for a state that had natural resources as its primary source of wealth creation. It now has a totally different source. And that’s been a big benefit.”
Rhines then talks about the downturn. “There’s a risk for government to spend in anticipation that a temporary boom will stay for a long time. California got hurt more than Oregon. It was like every other high-tech boom I’ve been through. The booms and busts are bigger than in more mature parts of the economy.”
What does Rhines think would help Oregon be more competitive globally? “There are many things that Oregon could benefit from re-aligning,” says Rhines. “Land use regulations and taxes are big negatives in Oregon. Higher education is a positive, but just not positive enough. OSU turns out good engineering graduates, just not enough of them, and they need to achieve a top 25 national ranking.”
But in the long run, Rhines in bullish on Oregon. “I envy Oregon’s position in how well it will benefit from a recovering high-tech industry. Technology is a continuous growth business, as long as we keep the country oriented to free trade…anything that hampers free trade hurts Oregon businesses around the world.”
Which brings Ameri back to the reason that she’s determined to unseat Wu. Ameri questions Wu’s past and future record with global companies that make their home in his district, especially when those businesses employ thousands of Oregonians at very high salaries. “When a person is consistently against their interests, how much worse can it get?”
Wu may or may not be re-elected to Oregon’s First Congressional District this November. But his record of congressional service for the district is an anachronism. While Nike prepares for the Beijing Olympics in 2008, and Intel designs products that allow Chinese parents to monitor their children’s educations, Wu has dug in, committed to his parochial view that he knows how to pick winners and losers in the world economy better than the marketplace.
Willis Hawley probably never had a subscription to Business Week either.
BrainstormNW - Oct 2004