Snohomish County on the Rise

| FROM THE PRINT EDITION |
 
 

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.

OfferUp's Mobile Marketplace

OfferUp's Mobile Marketplace

Building a better Craigslist: OfferUp quietly makes its move.
| FROM THE PRINT EDITION |
 
 
OfferUp cofounders Nick Huzar, left, and Arean Van Veelen.
 
We all know the mother of invention. Nick Huzar’s necessity was finding a way to clear out a room for his soon-to-arrive baby girl.
 
“My wife and I were at a spot where we wanted to have kids and when she said she was expecting, I kind of went into dad mode,” Huzar explains. “I remember standing in the doorway of this room, which was about to be my daughter’s room. It was just full of stuff and I’m thinking, ‘There’s got to be a better way to sell this stuff.’ It would take forever to sell it through existing channels.”
 
Having moved on from his previous startup — Konnects, a social media platform for magazines and newspapers — Huzar was ready for his next challenge. Still, he confesses, “I had no plans on doing another startup right away. It’s a lot of work.”
 
But the idea of streamlining the buying and selling process wouldn’t go away. “I was looking at my phone and just kept thinking, ‘Why can’t buying and selling be as simple as taking and sharing a photo?’” he says. “That was the spark for OfferUp.”
 
OfferUp is a Bellevue company that runs a mobile platform for buyers and sellers. Looking for a pair of size 12 Nike Richard Sherman trainers worn “only a few times”? In mid-March, Joey in Kent was offering them up for $150. Stephen in Renton offered up a 2014 Tesla Models S with 12,141 miles on the odometer for $76,000. Martin in Federal Way offered up a pogo stick “in good working condition” for $30.
 
Huzar says he and cofounder Arean Van Veelen did a lot of homework before launching. They talked with friends, family and around 100 local merchants. 
"There's a long history of companies that tried to compete in this space and failed,” says Huzar. “Keep in mind this was 2011 and the economy wasn’t that strong, so they gave me a lot of time. I learned a lot about what they do and how they promote their stores.”
 
Huzar’s research led him to distinguish his business from Craigslist by focusing on smartphones. Virtually everyone has a smartphone on his or her person most of the time. This lessens the “friction” involved in buying and selling things.
 
“Why do we have underutilized assets at all around us?” Huzar asks rhetorically. “Because there’s a ton of friction in the process. We look at those golf clubs sitting there, and we maybe move them out to the garage and then eventually they end up in the junkyard or somewhere else.”
 
Huzar realized smartphones offer an easy point-and-click way to photograph unwanted goods and offer them for sale on the spot. A computer-based option like Craigslist, which does not have its own app, requires you to photograph the product, transfer the picture to your computer, sign in to your account and finally post the item for sale.
 
OfferUp was designed from the beginning to be a mobile app. Available for iOS and Android, the app reads a user’s location and offers tiled photos of items for sale in the local area. Users can set the app to show items within a specified range of miles and to put either the newest items or the closest items at the top of the display. Buyers click a button to make an offer or to send questions to the seller. For those wishing to sell items, it’s as simple as snapping a photo and keying in a price. “You can easily post an item and offer up in less than 30 seconds,” says Huzar.
 
Huzar also realized that, especially for internet and mobile apps, trust and safety were critical issues. So Huzar’s team decided it was important to have a real-time presence in the OfferUp app. “In the chat system we are adding more tips,” says Huzar. “If we see things that we think are questionable, we are happy to engage. We are very proactive in that.” 
 
Even with the best of application design and management processes, of course, getting a marketplace up and running is a lot different from simply offering a product. There needs to be a critical mass of buyers and sellers. Building that critical mass was the next major challenge for Huzar and his team, which officially launched with a total of four employees, including the two founders.
 
“There are a lot of challenges in getting the gears moving,” says Huzar. He started by having his friends and family try the new platform.  But that wasn’t enough, so Huzar explored an array of marketing strategies.
 
“There were a lot of failed things for sure, a lot of experiments that didn’t bear a lot of fruit,” he says. “But we persisted to figure out the right mix.”
 
While not willing to give details about what the “right mix” turned out to be, Huzar says that his team tried pretty much everything. “Any way you could try to target an audience, we tried,” he says. “We even had a booth at the Bite of Seattle. We did experiments handing out fliers. We did print. We did digital. We did everything except skywriting.”
 
While offerup is still privately held and has flown pretty much under the radar of media coverage, its growth — at least as measured in terms of transactions and employees — has been somewhere between “strong” and “spectacular.”
 
Huzar says OfferUp has been downloaded 18 million times. It recorded $3.9 billion worth of transactions in 2015. And from a staff of four in 2011, it has grown to nearly 80 today. The staff has more than doubled in just the past year. “It’s hard to speculate where we will end the year,” says Huzar, “but we are hiring aggressively.”
 
Those numbers are impressive, but the company has yet to generate revenue. The service is currently offered free to buyers and sellers and there is no advertising on the site. The business also has plenty of competitors offering many of the same mobile-based conveniences. They include 5miles, an app developed in China that has its U.S. headquarters in Dallas and has already raised $50 million after just one year in operation. While far younger than OfferUp, 5miles, which places a strong emphasis on local service, already has six million downloads and $2 billion in transactions. It also operates in many international markets, including London, Manila, Mexico City and Sydney. Spain-based Wallapop is another company with a global footprint, and then there are niche players such as Canada’s VarageSale, which focuses on providing a safe market for moms, and Poshmark, which focuses on fashion.
 
Craigslist remains king of the hill, with 45 million unique visitors in January alone. But the company has done little in recent years to improve the site and its unique visitor number is actually down 12 percent from a year ago, according to Millward Brown Digital’s compete.com website. 
OfferUp, meanwhile, has raised $93 million in venture capital and keeps finding new ways to grow. “We don’t spend a lot of time worrying about our competition,” adds Huzar. “We are singularly focused on creating the best possible experience for our users, and our traction in the market reflects that.”  
 
The venture capital community, which reportedly values OfferUp at up to $1 billion, certainly seems to believe. “It’s obviously a little scary — big valuation, no monetization,” Josh Breinlinger, managing director of Jackson Square Ventures, told GeekWire. “It’s easy to throw up the bubble flag.” But Breinlinger insists OfferUp is no bubble: “We own all of the usage, we own billions and billions of dollars of transactions. We can monetize that.”
Huzar feels the same way. “There are many different monetization initiatives we’re exploring,” he says, though he declined to be specific about those initiatives or when the company plans to implement any of them. “We feel like we’re still in the first inning as a company. We just want to make sure when we roll out things that they really add a lot of value.”