Snohomish County on the Rise

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Snohomish County, which sweeps across the region north of Seattle from the water-kissed shores of Puget Sound to the craggy slopes of the Cascade Mountains, has seen its economy transformed in recent decades from one based on farming, logging and paper to one centered on aerospace and national defense.

Now, thanks to a burgeoning, well-heeled population, a diversifying manufacturing sector, and reenergized retail and entertainment destinations, the county is developing its own regional identity, increasingly independent of the powerful magnetic pull of Seattle and the towering presence of the Boeing Company and the U.S. Navy. To top it off, the county airport at Paine Field could soon begin offering commercial airline service, helping to attract even more new businesses to the region.

“There is a real sense of optimism,” says Troy McClelland, CEO of Economic Alliance Snohomish County, a consortium of the Everett Area Chamber of Commerce, the South Snohomish County Chamber of Commerce and the Economic Development Council of Snohomish County. “We are a vitally separate entity that’s fueling the state’s future.”

It is a far cry from how things looked just a few years ago. In the recent recession, a collapse in the housing, banking and construction sectors hit the region particularly hard, pushing unemployment to 10.6 percent in 2010. Nearly half of the county’s independent banks disappeared, including Everett’s Frontier Bank and City Bank of Lynnwood. Then, when it looked as if things couldn’t get any worse, Kimberly-Clark Corporation announced in 2011 the shuttering of its Everett paper pulp plant, a move that led to the loss of as many as 900 jobs.

But Snohomish County is rising again, with its unemployment rate now down to 6.7 percent and its banks much healthier. Total population reached about 722,000 last year, up from 606,000 in 2000. By 2025, the number of county residents is expected to surpass 900,000.

Boeing’s Everett plant remains the backbone of the Snohomish County economy, and its presence has played a strong role in the county’s recent recovery. More than half of the 11,000 direct and indirect jobs the aerospace giant created in Washington state in 2011 were in Snohomish County. And the company continues to create at least 5,000 direct aerospace jobs a year, according to Snohomish County Executive Aaron Reardon. Strong sales of the Boeing 777 keep assembly lines humming, and expectations are high for increased production of the 787 Dreamliner in Everett, irrespective of its nagging assembly and safety issues. Also, Everett expects to reap a substantial number of the 11,000 jobs that are anticipated from Boeing’s success in winning an Air Force contract to supply a new-generation air tanker.

“The fact that our state is such an enormous player [in aerospace] is good news,” says McClelland. Those high-paying manufacturing jobs, he adds, have helped boost median personal income in the county to $62,000, up by $10,000 in the past decade and among the strongest increases in the United States.

Similarly, Naval Station Everett has been a mainstay of the local economy for a generation, with about 6,000 sailors and civilians assigned to commands there and creating a sprawling growth footprint among suburban communities. But the county’s economy has grown more complex and diversified in recent years, providing what County Executive Reardon calls “opportunities for personal and professional growth.”

Take manufacturing, which extends far beyond aerospace to include biotech firms like CMC Biologics and Philips, instrumentation companies like Fluke Corporation and Intermec, heavy machinery companies like Advanced Rail Concepts and exciting green startups like Microgreen Polymers.

The large pool of higher-income households is supporting broader, more diverse sectors in business services, retail, hospitality and entertainment. Marysville, the second-largest city in Snohomish County, has added restaurants, retailers, auto dealers and, more recently, a new hotel and clinic, says Mayor Jon Nehring. The city now has a population of 60,000, 10 times its size just 20 years ago. It has set aside 1,000 acres for a master planned site where it hopes to attract manufacturers. “We are a bedroom community now,” says Nehring. “We need to attract manufacturing to provide jobs that keep people here.”

Still, Nehring is pleased that many Marysville residents don’t have to leave the county for most of their needs. With the Comcast Arena at Everett, the retail center in Lynnwood and the Tulalip Tribe’s popular outlet mall and casino—all along the Interstate 5 corridor—Nehring says, “Snohomish County has become a huge entertainment center. Our citizens don’t have to go outside Snohomish County to get entertainment. In fact, we have people coming here.”

To make Everett an even more attractive destination, the Port of Everett plans to spend roughly $90 million in the next five years to redevelop Everett’s industrial waterfront. It will include a new marina for boating and commercial shipping, mixed-use housing and a “village heart” that features hotels, restaurants, retail shops and community spaces. Environmental cleanup in the area has already started and the port anticipates development of parts of the waterfront within the next 18 months.

Snohomish County has also developed a unified economic plan and has become more strategic about promoting its interests with state government in Olympia. The Economic Alliance Snohomish County put forward a plan last year that calls for training more workers for manufacturing and aerospace (see page 30), improving the overloaded roadway infrastructure with new construction and attracting new businesses to the region.

One development that could play a significant role in helping draw new business is the potential emergence of Paine Field in Everett as a regional airport. Alaska Air has asked for permission to schedule regular flights from Paine Field to Maui, Honolulu, Portland and Las Vegas starting next year. If the county builds a terminal at Paine Field and those flights begin, other airlines are likely to follow.

Local executives say Paine Field could be a significant boost to the region. “I recall one day when a CEO and his relocation team were scheduled to meet me at a building in Everett,” recalls Tom Hoban, CEO of the Coast Group of Companies, an Everett-based commercial real estate sales, leasing, management and investment firm. “They flew into Sea-Tac and it took them three hours to get here in midday traffic.” Having a more convenient airport, says Hoban, would make Snohomish County a far more desirable place in which to operate a business.

Although some communities, including Mukilteo, are opposed to commercial aviation at Paine Field, with the Federal Aviation Administration threatening to cut off millions of dollars in subsidies to Paine Field if the county does not allow such flights, and with three good-sized runways at the airfield because it is used by Boeing, it seems likely that Paine Field will ultimately emerge as an important alternative to SeaTac Airport for the 1.4 million residents who live within a 45-minute drive of Paine Field.

That scenario could take some time to work out. But in the short term, real estate, which contributed to the sharp economic downturn in the recent recession, could soon contribute to economic growth. Glenn Crellin, a researcher with the Runstad Center for Real Estate Studies at the University of Washington, says real estate in Snohomish County was stronger in 2012 than the market statewide. Sales of single-family homes, for example, rose 15 percent last year. Median prices were up 7 percent, compared to just 4.5 percent statewide.

Reardon credits “smart growth management” for that success. By keeping permitting and development costs low vis-à-vis surrounding counties, by not collecting impact fees until the end of a project and by holding property taxes the lowest of any county in the state, Reardon says Snohomish County has attracted more lower-cost commercial and residential construction.

With population and greater wealth comes increased demand for medical services. Providence, the region’s largest health care provider, recently completed the biggest investment in its 155-year history when it spent $580 million on a 680,000-square-foot medical tower in Everett. Providence is also building a new $22 million center in Monroe.

“From a business standpoint, it is keeping care local and being able to provide care as efficiently as possible to drive low costs,” says Preston Simmons, interim director of Providence Regional Medical Center in Everett.

By keeping things local with local manufacturing, a local airport and local entertainment, Snohomish may well be on its way to creating a thriving community with greater control over its own destiny.

 

TECH SUPPORT

One of Snohomish County’s most successful economic development efforts has been the promotion of workforce training. The county already has the state’s second-largest technical workforce, comprising 63,000 workers, second only to King County’s 250,000 technical workers. With manufacturers demanding even more skilled workers who possess a broader range of skills, the county has moved rapidly to upgrade its workforce.

Everett Community College added a composite manufacturing and maintenance program and Washington State University in Everett is building up its engineering program. Edmonds Community College teamed up with Snohomish County and Kent-based Aerospace Futures Alliance, an industry advocacy group, to build and fund a training center focused specifically on generating an educated workforce to fill family-wage jobs. The center opened in 2010 with 19 students in its first class. Now, with a mix of current high school graduates and adults looking for new careers, the program enrolls about 180 people a month and has graduated nearly 500 students. Its job placement success rate is 90 percent.

By training a strong technical workforce, says Economic Alliance CEO Troy McClelland, the county manufacturers will have access to the workers they need to broaden their portfolio beyond aerospace. “The aerospace parts providers don’t want to get locked into just one industry,” he notes. Many of the 200 or so aerospace suppliers in the region have already reduced their dependence on Boeing by serving other clients. And across the region in Arlington, Monroe and Bothell, vibrant manufacturing regions are popping up. — T.N.

 

HEALTHY SIGNS

The Bothell Biomedical Manufacturing Corridor may not have the catchiest name, but it has become a magnet for biotech and medical instrument companies. Whether they’re developing methods for diagnosing and treating diseases or researching and creating new products, this grouping of medical device manufacturers close to major research and educational institutions has given Snohomish County yet another important growth sector.

Last year, the medical devices sector in Snohomish County saw sales increase 18 percent from the year before, and Bothell’s Innovation Partnership Zone (IPZ) is now home to 22 percent of all the state’s biotech and biomedical companies. Designated in 2007, the IPZ involves putting university researchers close to private-sector partners to help develop prototypes, incubate startups and develop training programs, all while luring and keeping top talent.

Two of the biggest employers in the area are Philips and SonoSite. Philips came to the state in 1998 and has since acquired three companies here, moving its global sales and service operation to Bothell, where it employs 1,900, and manufactures ultrasound and automated external defibrillator devices that are shipped around the globe. SonoSite, launched in Bothell in 1998 with fewer than 50 employees, has become a worldwide ultrasound manufacturer that employs roughly 1,000 in Snohomish County.

The company, bought by Fuji Film in 2012, specializes in bedside and point-of-care ultrasound machines.“This is a really large growth area and the entire sector is buoyed by the strength of these two companies,” says Economic Alliance CEO Troy McClelland. “There are very favorable signals coming out of the medical device sector.” — T.N.

From Farm to Tavern: a Grain of Truth

From Farm to Tavern: a Grain of Truth

With so many local craft breweries and local distilleries, it only makes sense that the malt be local, too.
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At Skagit Valley Malting, Wayne Carpenter presides over a rapidly increasing assortment of squat metal silos that store the grain he buys from local farmers. Carpenter started Skagit Valley Malting to take advantage of the grain supply and to specialize in low-protein malt for craft brewers, producing custom malt on demand. His customers have varying requirements for their malts, from performance characteristics (temperature, humidity) to quantity (as much as eight tons), which SVM is able to replicate from one order to the next. The result: new flavors for brewers, distillers and bakers. 

Malt is the backbone of beer, its heart and soul, really. By this definition, virtually no beer in Washington is truly local. Malted grain typically arrives at Washington’s breweries and distilleries in 50-pound bags from the Midwest and Canada. Malt is created when grain — such as barley, wheat, rye, oats, millet, sorghum, corn and triticale (a hybrid of wheat and rye) — is allowed to sprout so the germinating seeds begin to release their sugar. It is then dried — “roasted,” in industry parlance — to arrest the process.

Specialty brewers overwhelmingly favor barley because it can be roasted to produce a wide range of colors and flavors. Of the 30,000 varieties of grain on the planet, only about a dozen are used for the industrial brewing of commercial beer, let alone for distilling. It’s a bit like wine; there are thousands of varieties of grapes, but only a dozen or so readily available on the shelf.

“The entire industry is monolithic,” says Carpenter, who for his efforts was named a 2016 James Beard Awards semifinalist in the category of Outstanding Wine, Beer or Spirits Professional. He’d like to change that dynamic because it seems a shame to let that natural advantage go to waste selling Skagit grain into the commodities market. “Why should the Chicago Mercantile Exchange set the price for our crops?” he muses.

A former software executive with a knack for tinkering, Carpenter works in a windowless building surrounded by grain silos on a 10-acre section of the Bayview Business Park. A skunk works, they would have called it in Grandpa’s day, where he and his staff of engineers have built a phalanx of secret machines worth about a million dollars each to customize the malting process for thousands of grain varieties, unlocking a world of choice and flavor for its customers.

“With our precise, adjustable malt equipment, we are ushering in a new, modernized era of malt,” Carpenter declares. “Our equipment can customize every phase of the malting process to develop the best characteristics of the grain. That means we can adapt the process to any kind of grain varietal.”

To control the experiment at every point in the malting process, sensors monitor for size, moisture content, color and texture of each type of grain. International patents are still pending, so Carpenter allows no public access or photographs.

A 50-pound bag of industrial malt will produce two 50-gallon kegs of beer, enough for 250 pints at the pub. The cost of a bag from an industrial supplier is roughly $18. The good stuff from Skagit Valley Malting goes for $50. Craft beer, to name just one use, requires up to 4 ounces of malt per glass. If you do the math, you can see the obvious benefit to Carpenter’s business — and to Skagit Valley farmers.

The Port of Skagit County, which operates Bayview Business Park, believes Carpenter has the answer to a big agricultural concern: falling prices for crops that have long been considered commodities. By turning the barley crop into a specialty product for discerning brewers and distillers, value will be added and prices will rise. 

 

And brewers aren’t the only ones looking for better raw materials. Washington’s eight-year-old craft distilling industry is required by law to source at least half of its grain locally, and Skagit barley is a natural. The largest whiskey distillery west of the Mississippi, Seattle’s 60,000-bottle Westland Distillery, is an enthusiastic adopter of Skagit Valley Malting’s output, even though the malt is several times more expensive — and the distillery needs four pounds of malt per bottle.

Westland’s master distiller, Matt Hofmann, a Bellarmine Prep grad who left the University of Washington to study the distilling craft in Scotland, swears by Skagit Valley Malting and looks forward to the day in three years or so that his peated single-malt whiskey using SVM grain reaches maturity. 

The term “single malt” has specific meaning in Scotland, referring to a distillery’s location as well as the ingredients, but there’s room on bar shelves for “American Single Malt” as well. Westland, which has a distillery in SoDo and matures its casks at a rack house in the cold, moist air of Hoquiam, was recently named the world’s best craft distillery by Whisky Magazine. 

The very first svm adopter was the Pike Brewing Company, a sprawling, 300-seat brewpub that occupies several levels of the Pike Place Market. Charles and Rose Ann Finkel brew most of their beers and ales with distiller’s malt from suppliers like Briess Malt & Ingredients Company in Chilton, Wisconsin. But a couple of bags, shipped from Burlington, bear the name Skagit Valley Malting, and they’re quite tasty. Alba, developed at Oregon State University, has a lemony fragrance like sauvignon blanc. Copeland, a hybrid from the Washington State University, is more like a spicy syrah. 

To differentiate the locally malted beers from its long-established brands like Naughtie Nellie and Kilt Lifter, Pike calls these beers its Pike Locale series. “It’s one of the most exciting things in beer,” says Charles Finkel, who spent the first two decades of his professional career in the wine world (see story at right). “Malt sets a foundation for the hops.” 

Bart Watson, chief economist for the Brewers Association, the nation’s trade group for small and independent breweries, points out that 75 percent of Americans now live within 10 miles of a brewery, and that there are more breweries in the United States today than at any time within the past 150 years. 

Not every pint of beer or bottle of bourbon made from local grain will be a winner. Jamie Boudreau, owner of the now-iconic Capitol Hill bar called Canon, always tastes new products, including bottlings from the local distilleries. “Unfortunately,” he says, “there is a lot more questionable product out there than there is quality.”

Regardless, the sudden windfall of locally brewed beer and locally distilled spirits will most likely turn out to be a good thing. Local products take the accident of geography — our unique location — and turn it into a commercial advantage: beers and whiskeys that simply have more individuality, more character than the mass-produced offerings. They become a central element of our local identity, an integral part of our culture. 

Or, as Carpenter notes, “The new era of malting unlocks unlimited potential for variety in taste and flavor. We’re excited to share our palette with those who want to explore the potential of their craft. When you taste it, you’ll get it.” 

Brew the beer; the grain will follow.
When national brands like Budweiser and Coors began dominating the beer business a couple of generations ago, they essentially doused the tradition of brewing beer locally. Anything with flavor, anything with character, was stigmatized as “specialty beer.”

So Seattle entrepreneur Charles Finkel, formerly sales director for Chateau Ste. Michelle, launched a company named Merchant du Vin to import bottled beer from Belgium, Germany  and England for discerning beer drinkers in the United States.

Just as there was a hidden demand for decent coffee, it turns out there was a thirst for specialty beer. Within a couple of years, the British press named Seattle and Portland the top two craft beer markets in the world. Finkel conceived or revived many classic styles, such as oatmeal stout, now brewed by craft brewers worldwide.  Finkel and his wife, Rose Ann, then became supporters of a new wave of craft brewers like Redhook Brewery (now partially owned by Anheuser-Busch InBev) and Bert Grant’s now defunct Yakima Brewing & Malting Company.

In 1989, when the Finkels started Pike Brewing Company, the field was growing rapidly. By 2015, Washington had more new breweries than any other state, and was second to California in the total number of craft breweries.

Wherever there’s craft beer, there’s got to be grain. Washington State University maintains a research station in Mount Vernon to monitor a project that would double the local yield by producing two crops a year. “We grow thousands of different barley and wheat types each year to see what does well,” says Dr. Stephen Jones. “Because of that, we can work directly with farmers and the end users to identify types that work throughout the whole system, from the field to the end product.”