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.

The Amazing Rise of Amazon Studios

The Amazing Rise of Amazon Studios

A few years ago, no one was streaming new content from the retail giant. Roy Price has changed that dynamic.
| FROM THE PRINT EDITION |
 
 
 
When the 89th Academy Awards celebration begins on February 26, Roy Price is sure to be in the audience. If early predictions are accurate, he will be anticipating an award or two for Manchester by the Sea, a film that’s been the smash hit at all four major North American film festivals this season.
 
A huge comeback for writer/director Kenneth Lonergan, Manchester by the Sea stars Casey Affleck as a lost soul forced to contemplate adopting his reluctant teenage nephew. With Manchester receiving six Academy Award nominations, Roy Price could be a happy man on Oscar night. And Amazon.com shareholders, who have seen Amazon’s stock price rise 340 percent in the past six years, would likely be giving a standing ovation. 
 
Price, 49, who until recently lived in Seattle’s Laurelhurst neighborhood, is chief of Amazon Studios — the arm of the Jeff Bezos empire committed to revolutionizing entertainment. Based partly in Seattle but mostly in a new 85,000-square-foot Santa Monica production facility, Price’s team of renowned Hollywood execs and industry veterans has been responsible for more than 100 prestige movies and blockbuster shows. They now make and acquire original films and TV series, which are streamed via the company’s on-demand video service. 
 
Amazon is likely second only to Netflix in total streaming customers. And Manchester by the Sea is its first big Oscar contender. Even if Oscar snubs Amazon, its Hollywood profile is at an all-time high. Back in 1998, when Amazon began selling DVDs, Hollywood studios actually refused to make DVDs of their films available for sale online. Now, Hollywood returns Amazon’s calls, and Price can hire talent like directors Woody Allen, Steven Soderbergh and Spike Lee, and Manchester producer Matt Damon.
 
It’s a coup for Price, who started planning this Hollywood invasion in 2000, when he quit Disney after six years as animated-series VP to become a digital media consultant. He then joined Amazon in 2004, launching its video-on-demand service in 2008. When archrival Netflix started making its own shows, like the popular and critically acclaimed House of Cards, Price got the green light to launch Amazon Studios in 2010.
 
Netflix spends about $6 billion a year on 1,000-plus hours of original programming. Amazon’s production is ramping up sharply — in the second half of this year it said it was spending twice as much as  in the same period last year — but its attitude toward releasing actual numbers on its business is a lot like the secretary who defies Javier Bardem’s nosy killer character in No Country for Old Men: “Did you not hear me? We can’t give out no information!”
 
Regardless, Price is happily gobsmacked at how fast Amazon Studios has taken off. “Our first show, Garry Trudeau’s Alpha House, came out three years ago,” says Price, who has a mind sharp as a bear trap and a jaunty, quirky personal manner. 
 
Alpha House earned some applause, though no Emmys — something that changed in Amazon Studios’ second year, when it nabbed five Emmy Awards to Netflix’s four. Amazon’s first hits — Transparent, a noble, exquisitely trendy comedy-drama about a transsexual dad, and Mozart in the Jungle, about a madcap orchestra conductor (Gael García Bernal) and a young oboist (Lola Kirke) — won four Golden Globes in the past two years, plus an abundance of the industry’s most prestigious other prizes. 
 
Price plays everything close to the vest, but these days he doesn’t conceal his glee. In his first time at bat in the Oscar race, he has hit what could be a home run with Manchester by the Sea.
 
“We only came out with one movie last year,” Price remarks. “We’ll have 15 this year.”
 
And while he is all smiles about Amazon’s entry into the movie world, his ambitions for TV are just as energetic. He spent a reported $70 million for an eight-episode series from Mad Men creator Matt Weiner and $160 million for 16 episodes of a David O. Russell drama starring Robert De Niro and Julianne Moore.
 
Amazon hasn’t said yet when the programs will air. 
 
Amazon’s successes are catching the attention of media watchers.
 
“As soon as Amazon entered the awards race, that scrappy media player zoomed to the front of the pack,” says Tom O’Neil, editor of the Gold Derby awards-prediction website. “Transparent won Best Comedy Actor for Jeffrey Tambor at the Emmy Awards in 2015, the first time a streaming service won a top Emmy category. Amazon not only proved it was a serious player, but it’s playing for the long haul ahead.”
 
Amazon is betting big money — O’Neil estimates about $2 million — on the Emmy and Oscar races. In December, as part of the studio’s marketing campaign, Damon and Bezos hosted a party under a big tent at Bezos’s Beverly Hills mansion, stocked for the occasion with the best scotch, plenty of shrimp and lots of stars.
 
Bezos spoke to Anne Thompson of the independent-film website IndieWire, who reports, “[Bezos] wants to build a brand that means taste and class, and the person he leans on for advice is pal Harvey Weinstein.” Weinstein is the legendary Hollywood mogul whose films have earned more than 300 Oscar nominations. The Hollywood Reporter notes that not since Weinstein’s 1999 battle for Shakespeare in Love against Steven Spielberg’s Saving Private Ryan has there been a dramatic, bragging-rights Oscar contest like Amazon’s Manchester vs. Netflix’s 13th, a hot Oscar contender in the documentary category, which would be Netflix’s fourth Oscar nomination.
 
“Amazon is following the same strategy HBO pursued at the Emmys back when it was the New Media Kid in Town,” O’Neil explains. “In the 1980s, HBO craved the approval of its peers and so campaigned aggressively to win Emmys. … Now, HBO is The Establishment and it’s facing hungry new foes like Amazon.”
 
To O’Neil’s point, HBO, which dominated the Oscars and Emmys for two decades, didn’t make the Oscar documentary semifinalist list of 15 contenders this year. Netflix, with 13th, and Amazon, which acquired the U.S. rights to Gleason, did. Clearly, back in 2000, Price guessed right about the future of internet entertainment.
 
In 2008, Amazon’s digital video sales generated revenues comparable to that of a neighborhood Blockbuster store. How on Earth did Roy Price turn this modest digital store into a rocket ship to Emmy and Oscar acclaim?
 
It helps that he is Hollywood royalty. Price’s mom, Katherine Crawford, was an actress who appeared on the 1970s Seattle-set show Here Come the Brides. His dad, Frank Price, ran Columbia and Universal studios, and his namesake maternal grandpa, Roy Huggins, created and produced breakthrough TV shows like The Fugitive, The Rockford Files and Maverick
 
Perpetually clad in jeans and a black leather jacket, Price can swim with Hollywood sharks, speak their upbeat lingo and still talk digital business jargon with the nerdiest of nerds. His parents tried to steer him away from too much show biz, but after graduating from exclusive East Coast schools (Phillips Academy Andover and Harvard University), he went to USC’s Gould School of Law, worked as an assistant for an agent who grew up to run Hollywood’s top talent agency, CAA, and went into the family business.
 
He is irreverent, puckish and infinitely bolder than most Hollywood execs, who live in fear of making a mistake and getting fired. Price takes entertainment seriously — he actually rewrote the story of Bosch, Amazon’s adaptation of the Michael Connelly crime novels, but he isn’t self-important. The Disney film The Barefoot Executive, about a chimpanzee that’s adept at picking TV hits, is one of his favorites.
 
“That is an awesome, awesome movie,” says Price, who loves monkeying with Hollywood tradition. “You’re not going to find the most interesting new show on TV by being easily put off by risk. You have to be sort of bold. In today’s competitive environment, the conservative path is the riskiest path.” 
 
Price doesn’t seem to need a chimp to pick hits. Like his forebears, he is a maverick with an analytical streak. His grandpa’s show, The Fugitive, which became a $387 million movie, broke all the rules of its day. “Every network passed on The Fugitive at least once,” he says. “You couldn’t have a guy wanted for murder as your protagonist! The whole concept was offensive! But it was a huge hit, and the offbeat protagonist has become very popular.” 
 
Offbeat protagonists are the foundation of Price’s empire: trans dads, madcap maestros, Nazis running half of America in Philip K. Dick’s The Man in the High Castle, and a Vietnam-era writer who sells out his talent in Woody Allen’s Crisis in Six Scenes. As with The Fugitive, he notes, “Every studio passed on Transparent.”  
 
Price also doesn’t fret about industry headlines, which note that shows by Netflix, FX, HBO and Hulu often get more viewers than Amazon. Though he’s in competition with traditional studios for viewers in theaters, on TV and on devices, he’s in a different position because Amazon’s business model is unique. He needs to grow viewership, but he doesn’t make money from ads whose prices are based on viewership ratings, which (natch!) Amazon won’t disclose.
 
Instead, he must grow membership in Amazon Prime, a service that costs Amazon customers $99 a year (or $10.99 a month), for which they get free two-day shipping on products purchased through Amazon and streaming of all the Amazon shows they can watch. Analysts say Price drove much of Amazon’s 53 percent growth in Prime membership in 2015 to an estimated 54 million (it’s now over 60 million). Prime members effectively subsidize all the shows Price is busy creating, whether or not they watch anything.
 
“Their strong belief is the more time you spend in the Amazon ecosystem, the more money you spend with Amazon,” media analyst Richard Greenfield told The Los Angeles Times last year. “The key for Amazon is how do they get you to spend more time in that ecosystem — and it’s with having a deep catalog of movies, TV and music.”
 
Much more important than ratings, then, is converting casual customers into Amazon Prime members — who buy three times as much from Amazon as non-Prime customers — and breaking through the noise of the vast landscape of entertainment options.
 
“You’ve got to make it interesting and worthwhile and buzzworthy to stand out in a crowded market,” says Price. “What you’re really looking for is that really ambitious, completely addictive, binge-worthy show that’s in the top 20 or 10 — or one — that people are talking about. In 1977, you could get a lot out of a show that simply retained the audience of a previous show. But today, it’s on demand — they have to demand it. So you’ve got to earn that.”
 
Audience habits are changing at warp speed, something Price and his boss, Bezos, who devotes serious time to Amazon Studios, are obviously factoring into their plans. Most Hollywood programmers live or die by ratings and first-weekend grosses. Bezos and Price play a longer game. Their goal is to retain audiences for years, not weekends, and they have the benefit of the world’s largest database of consumer behavior. 
 
Instead of relying on Nielsen polls of viewers, who can lie about what they watch and are increasingly hard to reach as people ditch their land lines, Amazon and its tech rivals can tell exactly what its customers are watching, and algorithms tell an informative story about particular products they might like. Netflix mined data showing its customers loved the original British House of Cards and Kevin Spacey before shelling out $100 million for the United States version, but Amazon has even more customers and data (just not more streaming customers—yet). These tech game changers are making Hollywood nimbler, less irrationally traditional, more customer-driven. Cable companies give you mostly channels you don’t want; Amazon, ever more cleverly, gives you what you do want. 
 
The key question is whether the ability of Amazon and Netflix to observe individual customer behavior gives them an advantage over broadcasters’ Nielsen survey data, says Michael D. Smith, a Carnegie-Mellon University information tech and marketing expert, “and so far, the answer seems to be ‘yes.’ As Amazon and Netflix emerge as competitors, it will be interesting to see whether Amazon’s ability to observe both retail purchase data and video views gives it an advantage over Netflix’s video-only data — and the jury is still out on that one.”
 
There’s also no telling what else Bezos will take over. But it’s worth remembering that the bestselling bio about him is called The Everything Store and his original name for Amazon was “Relentless.com.”
 
An Oscar could provide an altogether different type of boost in visibility. Guests at December’s Manchester by the Sea Oscar campaign bash say Price and Bezos’s hunger for the gold doll was absolutely palpable. Yet many — maybe most — people have no idea Amazon is in the movie and TV business. So if a $2 million Oscar campaign can catch the eye of 300 Academy voters, it could produce recognition for a movie that might then be watched by one billion people.
 
Even for the famously frugal Bezos, whose Amazon executives fly coach, that kind of return is definitely worth a $2 million investment.