History of Spokane Economic Plans – Part 4 – Innovation Economy

By 2000, right at the peak of the “dot com” revolution, and just prior to its crash, Dr. David Kazlow produced an economic study for the City of Spokane’s Mayors Office that called for an expanded role for high tech including software development, IT, bio-tech, electronics manufacturing and medical instrumentation. (Source: www.mrsc.org/GovDocs/S73StratEDPlan.pdf)

This was one of the first reports pointing towards an innovation based economy, although it did not phrase it that way. But as of 2000, this report identified some issues with Spokane’s economy that were causing problems:

• Lack of recognition nationally/internationally as a business location
• Lack of industrial location and business development incentives, including tax increment financing and a Port Authority
• High business taxes (a state level issue)
• Lack of qualified high tech workers
• Low percentage of college graduates in the workforce compared to western portion of State (slightly above the U.S. average, but two percentage points below that of the State, based on 1990 Census)
• Limited availability of quality business/high tech parks
• Local regulatory and permitting impediments to development
• Significant areas of the downtown are deteriorating
• Lack of a strong graduate ­level research capability in the local institutions of higher education

I highlighted the first bullet point – Spokane is suitable for regional businesses but is generally not seen as a location for

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national and certainly not world-class businesses. (There are exceptions such as Hollister-Stiers, a contract pharma manufacturer, and Itron, a utility industry electrical power meter company.)

I highlighted the last bullet point because that situation has gotten worse since then. As of 2008, EWU graduated one Masters in computer science and three Masters in Biology. WSU-Spokane has a program in exercise science but I do not know how many graduates it produced. There are no other science, technical or engineering graduate degrees offered in the immediate area and no research doctorates. Both Gonzaga and WSU-Spokane previously offered graduate degrees in engineering and/or computer science, depending on how far back we go – but these are no longer offered.

I will come back to this point again because there are several reports that note the need for strong graduate programs in science, technology and engineering in order for Spokane to create a sustainable environment for science and high technology innovation businesses. Without such programs, we will probably not have much of an innovation ecosystem.

Dr. Kazlow also wrote that Spokane should:

Be an internationally competitive region that aggressively advocates business development and investment that raises our employee compensation levels and lowers the region’s poverty rates.

That darned chronic low wage issue rose again in that 2000 report.

Around this time was a growing awareness of globalization – and that low wages were probably not going to be a good way to compete in the future. Instead, 21st century economic success would come from sustainable innovation, derived from science and technology and a highly educated and highly skilled workforce.

Simultaneously, State economic development staff were jumping on to the “industry clusters” band wagon. The idea behind “clusters” is that when similar businesses locate in the same geographic area, synergies and network effects take hold that enable each of them to compete more effectively. We see this in the aerospace and software industry “clusters” in the Seattle area, for example.

In 2003, SIRTI, Intec, and EDC commissioned a report titled “Developing an Innovation Economy: A Strategic Action Plan for Spokane & The Inland Northwest” whose Executive Summary begins by summarizing the now predictable text of yet-another economic development plan for Spokane:

“For too long now, the Inland Northwest economy-and that of Spokane in particular-has been the poster child of unmet expectations, unrealized potential and unrelenting mediocrity. In spite of an impressive asset base and deep pool of talent, our economy has produced but scant gains in recent years. A review of key measures (such as wage growth, economic growth and technology sector growth) shows that we have significantly underperformed relative to the peer regions including Boise and Seattle.”

Source: Executive summary – www.morganleigh.net/images/IE_1.pdf. The Morgan Leigh Group, a small consulting business, produced the report.

Little has changed from 1991, 1995, 1999, 2000 – and a few more reports I am skipping over to these comments in the 2003 report. The statements made here are strong and damning in regards to the lack of meaningful progress. As we come up to 2010, the situation has deteriorated further with the loss of the majority of the large tech businesses and several large manufacturers that had made a home in Spokane.

This report called for the establishment of an innovation economy “fueled by innovation, technology and talent” together with “extremely active networks of people and organizations. Such an economy quickly adapts to change, effectively responds to opportunity and is centered around smart, talented and skilled individuals“.

Sadly, the loss of the existing technology businesses meant the loss of the networks of technology workers in the Spokane area.

The key point is that nothing changed in spite of numerous preceding economic development reports that say the same thing and present similar plans for new directions. In fact, things are probably worse than a decade ago. Major manufacturers and tech companies have left and the graduate programs in science and engineering have largely ceased to exist.