Washington State: Challenges, Opportunities And A Trade Mission

Monday, January 3, 2011 - 00:00

Patti Brooke is the Assistant Director of the Washington State Department of Commerce's Business Services Division (BSD). BSD has oversight of tourism, international trade and economic development for the agency. Brooke previously served in a variety of marketing, business development and mergers and acquisition leadership roles in a long career at Microsoft. In addition to her work at Microsoft, Brooke served as a consultant to Seattle area technology start-ups and the Port of Seattle in the areas of business strategy, marketing, and competitive analysis. She has been an engaged Seattle community leader through participation in Leadership Tomorrow, Social Venture Partners and as an early Board Chair of Rainier Scholars. Prior to moving to Seattle in 1993 to work for Microsoft, Brooke worked in a Congressional office in Washington D.C. and served as the Finance Director on an Alaskan U.S. Senate race. She has a B.A. from Lewis & Clark College and an M.B.A. with a Certificate in Trade and Transportation from the University of Washington. Patti completed her MBA internship with the Port of Seattle Marine Marketing group.

Aliment: What are some of the major assets of Washington State in terms of geography, climate, people and industries?

Brooke: The three most important assets Washington State offers to business include a highly educated workforce, a strategic position on the Pacific Rim, and our abundant and clean hydropower.

Washington workers have a well-earned reputation as talented, innovative and extremely productive. Seattle boasts the most educated workforce in the nation, based on U.S. Census data stating that more than 50 percent of the population has earned bachelor's degrees, and the Tri-Cities in eastern Washington has one of the highest concentrations of engineering talent in the country. For a state in which aerospace, information and communication technology and biomedical research are core industries, having access to a highly skilled workforce helps Washington companies in those sectors successfully compete on a world-class level.

In addition to a highly educated workforce, we also offer a key position for trade on the Pacific Rim. Washington ports are located a day closer to Asia than Los Angeles by sea. Washington is an ideal location for companies trading in the Pacific Rim, with two of the most modern and well-equipped deep-water ports in the U.S. The ports of Tacoma and Seattle handle the second-highest port traffic load on the entire West Coast. Washington ports also allow quick access to the Canadian market. As a result of our thriving trade sector, Washington is also home to a full landscape of trade professionals. Coupled with an extremely efficient intermodal transportation system, Washington is an ideal choice for moving product in and out of the U.S.

Another primary reason businesses choose Washington State is our inexpensive, abundant, and clean hydroelectric power. Recently, BMW and partner company SGL wanted to develop an electric vehicle fabricated out of carbon fiber. The process of making carbon fiber is extremely energy intensive. After looking around the world, they found Moses Lake, Washington to be the most cost-effective place to site their new carbon fiber facility - the most advanced in the world - due in large part to the availability of low cost hydropower.

Aliment: In what ways do Washington State's challenges and opportunities mimic those of the U.S. as a country? In what ways are they different, or state-specific?

Brooke: Washington's companies, like all U.S. companies, have been under pressure from increasing overseas competition. We've seen a number of manufacturing jobs go overseas in the last couple of decades, and Washington is not alone in this experience. What is encouraging is how Washington companies are responding to this challenge. They're working smarter, developing new and innovative products and their manufacturing processes have improved. One Washington glass manufacturing company is a great example. This company makes tempered glass, a traditional product in comparison to some of the other high-tech products made here in Washington. They installed high-efficiency, state-of-the-art robotics, and at the same time, the company made a decision to start supplying float glass to the solar panel market. Those new production measures and the new market development not only allowed them to survive this economic downturn, but to grow. It's that kind of innovation and determination to succeed that drives U.S. businesses and sets Washington State apart.

As far as some of the unique opportunities of Washington State, I think one of the most exciting opportunities is the electrification of our transportation network. Vehicle electrification might not make sense right now for many places, but for Washington, with its abundance of clean and renewable hydroelectric power, it makes perfect sense. Right now, through funding from the U.S. Department of Energy, we're planning for the first rapid charging stations along the Interstate 5 corridor, creating a border-to-border electrified highway from Oregon to British Columbia. We'll later add charging stations to electrify the Stevens Pass Greenway, a National Scenic Byway over U.S. Highway 2 in the north part of the state. Public-private partnerships are a key component of these vehicle electrification efforts as well, helping Washington solidify our place as an early adopter of this new transportation technology. For example, we're excited to see Nissan introduce their all-electric vehicle, the Nissan Leaf, here in the Washington market.

Aliment: Describe Washington State's traditionally close relationship with China and other countries in the Far East and unique benefits that accrue to Washington State as a result.

Brooke: Washington has had a long relationship with China and Asia. Washington Gov. Dixie Lee Ray was the first U.S. governor to visit China after relations with the People's Republic of China were normalized by President Nixon, and we were the first stop on Chinese leader Deng Xiaoping's historic first visit to the U.S. The Port of Seattle was the first U.S. port of call for a China Ocean Shipping Company vessel in 1979, the same year the China Relations Council was formed in Washington. Our state's relationship with China has been, and continues to be, one of the most important relationships we have. Even in 1909 a group of UW leaders recognized the importance of this relationship when they established a department which eventually developed into the Henry M. Jackson School of International Studies. This school addresses important issues that business and political leaders face, and the school provides talented graduates who will continue to develop that relationship into the future.

And let's not forget that Stan Barer, a Seattle attorney, created the legal interpretation of U.S. admiralty laws that turned around the national policies that had isolated the People's Republic of China since 1949. Stan forged the shipping agreement that allowed the Liulinhai to become the first Chinese merchant vessel in 30 years to enter a U.S. port, and that port was the Port of Seattle. Now China is Washington's number one export destination, with more than $9 billion worth of Washington's quality products shipped in 2009. We can only expect that number to increase, along with the harder-to-quantify services exports, in the years ahead.

The last two times President Hu Jin Tao came to the U.S. he first stopped in Washington State. So it is a very important relationship to both sides.

Aliment: How do the programs of the Asian Law Center at the University of Washington Law School fit into this picture?

Brooke: Developing one of the leading Asian law centers in the U.S. was a natural path for the University of Washington, given our long and close relationship with this area. The Asian Law Center's teaching, research and public policy work on Asia is one of the areas of excellence for which the University of Washington School of Law is known, nationally and internationally. The center is helping to build the next generation of lawyers, scholars and policy-makers in Asia.

By providing world-class legal education for U.S. and international lawyers focused on Asia, the center supports the legal profession and government agencies that are essential support structures for businesses who wish to expand into Asia. With the availability of expert research on Asian and developing legal systems, Washington businesses can gain the advantage they need to survive and succeed in that challenging market.

Aliment: Please discuss the trade mission to Beijing and Shanghai that the Governor went on this past September. IP protection was a significant topic of discussions during Washington State delegation meetings. Can you share the major points of these discussions?

Brooke: Historically, the September 2010 trade mission was the largest delegation from Washington to China and Vietnam. This was the Governor's second trade mission to China and her first mission to Vietnam. She was the third Washington State governor to lead an official visit to Vietnam, something that was well noted by our Vietnamese hosts.

The purpose of the trip was to promote the export of Washington's goods and services, inbound investment and tourism from China, and educational and cultural exchange with China and Vietnam.

The value of these trade missions is immeasurable. In 2005, when the Governor last visited Asia, the trip resulted in more than $1 million in immediate new sales to customers in Japan and $6 million in new contracts with companies in China. And in the subsequent years, those new business relationships brought in $23 million in additional sales for Washington companies.

Intellectual property or IP protection is a significant issue for Washington firms hoping to sell their products in markets where counterfeiting is a serious problem. The Governor raised this issue with the Vice Premier of China and the President of Vietnam. Both assured her they are very aware of the difficulty and are working to mitigate it. As both nations continue to develop, their own manufacturers are also faced with the threat of loss of intellectual property and are asking their leaders for help.

We are encouraged by China's Vice Premier Wang Qishan, who told the Governor this is a priority. He asked for our patience as China is a huge country and it will take time to overcome the problem.

Aliment: As part of the mission, we handed out the Washington State Bar Association book called Doing Business in Washington. Did the Chinese translation of the desk book prove useful to the efforts to bring jobs and investment back to our state and if so, how ?

Brooke: The "Guide for Foreign Business and Investment" is a valuable tool in our attraction of Foreign Direct Investment. When The Washington State Department of Commerce initially approached the Bar Association and asked them to collaborate on this project, it was to address a particular need to educate foreign investors who may not be entirely familiar with the process. Today the world is seeing an unprecedented transfer of capital from China as they move their foreign exchange reserves into a multitude of investments across the globe. But these investors are relative newcomers to the Foreign Direct Investment community and often don't have the experience that our traditional foreign sources of investment have developed. The objective of the Guide was to provide a better understanding of the investment process and provide a framework with services providers here in the U.S., such as attorneys, accountants, business consultants, and so on. Has it been successful? I think so, but it's a long-term initiative to educate that particular investment group about the unique aspects of investing in the U.S., and Washington specifically, so it will take time to see its full benefits.

Aliment: Washington State has very strong clean energy technology. What is the state doing to encourage this activity and do you think Washington will become a national leader in this emerging industry? Will Washington be able to encourage cooperative efforts in this regard with China?

Brooke: Clean energy is a key industry sector in Washington State and was one of the key areas of focus for the trade mission to Asia. On that mission, the Governor emphasized at a forum on sustainability in Shanghai, China how our state is proud of our work to become more energy efficient, to foster renewable energy and embrace clean technology.

At the state level, we have taken steps to accelerate our transition to a clean energy future. We have adopted statewide targets to reduce greenhouse gas emissions, and clean energy standards for electrical power and vehicles and to build greener, highly efficient buildings. Tax incentives and public investments have been put in place to support these initiatives and help drive innovation and private investment in clean energy.

Washington recently announced a new "electric highway" - a network of public-access electric vehicle recharging stations that will extend the range, utility and practical market access for electric vehicles along the I-5 corridor from Canada to Oregon.

Additionally, the citizens of Washington State enacted a law to require, by 2020, an additional 15 percent of electricity generation from renewable energy - from wind, solar, bioenergy or other sources. This requirement is separate from and on top of our current hydropower base. In total, we are on course to have over 80 percent of our electrical power from clean, renewable sources by 2020. Two-thirds of the state's electrical power is generated by hydropower. That said, smart grid researchers and engineers at Pacific Northwest National Labs and the Bonneville Power Administration as well as our local utilities and private companies are working together to ensure that as more energy from renewable sources comes online, we'll be able to plan for and effectively integrate that new green power into our transmission grid.

Our focus on clean energy and green technology attracts businesses interested in helping the world become less energy dependent. With their new Washington state facility, BMW and partner SGL, will integrate carbon fiber material into basic automotive manufacturing for the first time. BMW plans to use this carbon fiber material made in Washington in its future Megacity electric vehicle.

Washington State has tax incentives for wind and solar energy projects, as well as energy from biomass, ocean waves and tides, geothermal sources, anaerobic digestion, waste heat and even algae.

In 2001, we produced virtually no wind power in Washington State. Today, Washington is fourth among American states in the production of wind power. Washington State seeks global partners in many areas, in other governments and business to business; where our state's interests would like to partner with Chinese organizations and others. For example, as a result of the recent trade mission to China, Washington clean-tech company 3Tier signed an agreement to work with Shanghai Electric, which powers one of the world's most modern skylines.

Aliment: Are you actively encouraging foreign businesses to come to Washington State? What tax or other benefits are offered to companies that set up businesses in the state? Are there any issues of concern to business that still need to be addressed? How do you measure your success?

Brooke: Yes, we are encouraging foreign businesses to locate in Washington State. We welcome international investment. All laws, regulations, incentives and market opportunities are equally available to domestic and foreign corporations. Foreign companies can conduct business here on the same basis as a U.S. company. Success is measured in capital investment and jobs that these foreign companies bring to our state. That's why the SGL/BMW project is particularly exciting due to the large capital investment and the high number of family wage jobs that will be available in Grant County when the plant is fully operational.

Aliment: Does Washington State regularly enlist the help of the business community, including law and accounting firms, to promote doing business in Washington State?

Brooke: Yes, all Washington businesses, and all Washingtonians, are our partners in promoting Washington as a great place to do businesses. Our successful and well-known Washington companies are our best ambassadors. In the past, when the Governor or other state officials have traveled abroad, contingents of CEOs and other leaders of Washington companies accompany the mission. We rely on them as key partners to share their story about why Washington State is a great place for business.