Cascadia Report

Category: Business

  • These Cascadia companies make case for core values

    For businesses struggling to overcome the pandemic, maybe it's time to focus on core values.

    Consider REI Co-op, PCC Community Markets, and MEC — three iconic community-based Cascadia businesses whose survival may depend on returning to practices closer to their roots.

    Seattle’s REI Co-op recently suffered self-inflicted wounds. PCC Community Markets undermined its success with tone-deaf leadership. MEC is trying to reset under new ownership. They previously put too much emphasis on growth and now show varying signs of potential.

    Sign inside Seattle REI store low inventory July 2021These are member-owned cooperatives — a popular form of corporate governance in Cascadia — so benefit from extremely loyal customers. As icons they matter more than most generic retailers.

    Missing the outdoor surge

    REI, founded by Seattle climbers in 1938, boomed over the last 40 years as it broadened into clothes and lifestyle equipment. Critics always say it has lost its way, yet business doubled in the 2010s to about about $3 billion annually. Still, something seemed to change after it hired a Coach executive as CEO in 2013. Stores increasing were located in strip malls, and it closed its climbing-forward store in Redmond next to trails and transit, in favor of a traditional box near freeways.

    In mid 2019 a longtime retail-finance executive became CEO and shored up the books. In 2020 REI reported zero profit, but only after an $80 million gain from selling its headquarters properties, including selling a new purpose-built office complex to Facebook. The company is debt-free and has plenty of credit. Yet it sales fell as it cut inventory — it performed worse than peers, despite the pandemic-era boom in outdoor activities.

    REI has a history of blaming poor business decisions on external factors rather than its own business decisions. For example, it blamed an ill-fated foray into Japan 20 years ago on the poor economy rather than its execution. Moves in 2021 to focus on products and initiatives on carbon-reduction and conservation seem aimed at shoring up support, though lack of inventory remains a challenge.

    Tone-deaf grocery leadership

    PCC was started by 15 Seattle families in 1953, long before organic foods could be found in major stores. As competition increased it gradually went upscale, managing to keep loyalists with ever-stricter food standards while adding locations and a fancier shopping experience. Yet the largest community-owned grocery in U.S. fueled criticism that growth was its main goal, hiring one CEO from Starbucks and another from Kroger. 

    This grousing became headline news when the CEO publicly campaigned against COVID compensation for workers in Seattle, despite the company seeing a 26% increase in both net income and sales, to $2.6 million and $383 million, respectively during the year. A backlash among members led to two longtime store employees being elected to the board over management's choices, with pledges to rethink the company's practices. The CEO quit. In stores, there appears to be more employee turnover and concern about the organization's direction.

    Co-op gone wrong

    MEC, started in Vancouver in 1971 as Mountain Equipment Co-op, stretched the support of its loyal customers by pursing branding and growth like any other retailer. Management strayed from the cooperative ethos and still growth stalled. In 2019 MEC reported a loss of $16 million on sales of $462 million. In 2020 losses grew to nearly $23 million while sales stagnated at $463 million. By Sept. 2020 the board had sold out: a California private equity firm paid $150 million and converted MEC into a private company.

    The buyers gained a trove of consumer data that alone makes the deal worthwhile, though they pledge to keep stores and employees. This weekend the Victoria store was packed and seems fully stocked, but it's unclear if that traffic translates into sales. Will MEC succeed as a regular company or will it need to return to its roots? The direction will say a lot about the viability of the co-op model.

  • Avoiding a Climate Disaster in Cascadia

    Triple-digit temperatures along the Salish Sea this summer should make it clear that the climate crisis is real. 

    Cascadia is a "green" region well known for generations of feel-good environmentalism. But now it needs policies to help solve the climate crisis by incentivizing decarbonization of our economy, a shift that is in our self-interest and a moral imperative.

    oregon wildfire 2021, from reuters.comI'll admit that I previously considered climate an ambiguous, distant problem. I've made the case that Seattle and Cascadia — among the richest places in the world — should be a model for how to develop a sustainable, equitable economy. But the problem is actually more urgent, and working for solutions could be a significant boon to our economy. 

    How does the crisis concretely affect us? A record heatwave killed many vulnerable residents and even erased a British Columbia town. Mt. Rainier's snowcap melted more than ever. Shellfish were cooked in water along the coast. Heat and drought are altering our food supply. Wildfires are so bad they're changing the weather.

    In his latest book, How to Avoid a Climate Disaster, Bill Gates provides a surprisingly clear overview of the global challenge and argues that we need to get to net zero carbon use globally by 2050. New technology will be developed to do this, but the "green premium," or extra cost of low-carbon options, needs to shrink for the technology to be adopted. A summary of the book is available here. (As a technologist he has blind spots; see this review, for example.)

    What to do about it

    One thing B.C., Washington, and Oregon should do is aggressively price carbon to make clean alternatives viable. B.C. started in 2008 but Oregon has failed to follow. This year Washington finally passed a plan, though it was linked to highway expansion.

    Cities should create density so there's less need to drive (vehicles are the biggest culprit of greenhouse gas emissions in Seattle), electrify their fleets, and improve building codes. Voters should ask every candidate exactly what they will do to take dramatic action on this issue.

    Companies also should lead on this issue and push government to create better policy. Many companies incentivize transit and biking. But Microsoft is currently building an underground parking garage big enough to hold 8,000 school buses — the exact opposite of what Bill Gates calls for in his book. Rather than greenwashing, Microsoft should get the city of Redmond to relax parking requirements and encourage vastly more housing near its offices.

    Longer term, the technology to help the world decarbonize needs to be developed and honed. If Cascadia sets the right incentives, that work could happen here. The world will add the equivalent of one New York City's worth of built environment every month through 2060, Gates says, so there's massive demand for new clean technology.

    The next mayor of Seattle should meet with Gates and create a concrete plan of how the city can encourage more innovate clean technology companies here. Accelerate transit, overhaul zoning to allow more density, and make this a top priority. Serving this huge market could result in the next Boeing.

  • Solar farms grow in new energy mix

    If Cascadia is going to get serious about leading on the global climate crisis, it will need more forms of clean energy, in addition to benefitting from its lucky inheritance of hydropower.

    According to my former colleague Hal Bernton, there are 21 proposed projects that would cover 22,000 acres in Eastern Washington with solar panels, a source of clean power and income in an economically challenged area:

    “The sun is a crop and I think we need to harvest it too if we are going to move away from fossil fuels … Anyone who thinks that the climate isn’t changing is crazy and we need to do our part,” one landowner said.

    This is a potential boon for Cascadia, both as an opportunity to build and expand new industry and to demonstrate how to combat climate change.

    The epicenter is Goldendale — where I've been traveling for 25 years — and where wind power is a booming industry. There are lots of crosscurrents between new and old residents and businesses. The story doesn't detail the potential electricity generation or grid connections.

    Hopefully Klickitat County guides development and lifts its moratorium on new solar farms, rather than letting nimbys prevail. 

    Looking for inspiration? Consider this dramatic growth in India. Or Australia and China. Or urban environments that could be partial models for Cascadia.

    Compare this to the early days of Cascadia Report less than 15 years ago:

     

  • After a year of COVID-19, ready for a cruise

    Cruises may soon resume between Alaska and Washington, boosting tourism in both states but cutting out British Columbia.

    Alaska cruises typically stop in B.C. because U.S. law prohibits foreign-flagged vessels – most of the industry – from transporting passengers directly between two American ports. In 2019, Victoria and Vancouver had a combined total of 553 ship visits.

    COVID-19 cruise to alaska from seattle skip vancouver and victoria

    After Ottawa extended its ban on cruises until Feb. 2022 – saying these sailing petri dishes potentially tax the healthcare system – Alaska’s U.S. senators announced plans for an exemption that would allow cruises to skip Canada.

    Given  a year of COVID-19, a cruise may not be on everyone’s to-do list. Yet the industry is a driver of Cascadia’s previously booming tourism sector, even if the environmental impacts are severe and the economic benefits are probably overstated.

    The ships are floating cities, burning dirty fuel and bringing a city’s worth of sewage. Canada should use the current hiatus as an opportunity to ban dumping raw waste and cut emissions, notes a recent report. (Luckily Victoria's Mr. Floatie isn't fully retired yet.)

    The biggest economic benefit goes to home ports, which get the flights, hotel stays, restaurant visits and shopping before and after sailings. Vancouver had the Alaska cruise market to itself until 1999, when Seattle's terminal opened and faster ships made it attractive, especially for American passengers. In 20 years, Seattle's business grew to 1.2 million annual passengers, generating $900 million and 5,500 jobs in 2019, according to the Port of Seattle. Despite the competition, Vancouver still had 800,000 passengers in the last year before the pandemic.

    The growth wasn't a straight line. For example, in 2006 Cascadia Report wrote about Seattle losing a cruise line to Vancouver. That turned out to be a blip.

    Surely cruises will be back eventually. Now is a chance for some towns to take Sitka's example and reorient toward independent travel and for the region to rethink blind investment given the pros and cons of the industry.

  • The best way to get more, faster Web access

    Just after paying my $145 monthly telecom bill, I noticed this Wall Street Journal story about how cities nationwide are trying to promote faster broadband Internet service.Ethernet cable

    The problem is that much of the U.S. is falling behind other industrialized economies in terms of Web access speed and cost, which potentially hinders innovation — not to mention convenience. How is it that high-speed Internet is just a quarter as costly in Japan and even Canada has faster service?

    Washington in particular lags behind. See this post. Tacoma has a municipal network and this year Gov. Gregoire signed a law to begin planning broader system. But those seem like very small steps.

    Several U.S. cities are investing in their own networks, against the wishes of telecom firms that nearly have a stranglehold. According to the article, telecoms seem to have two main arguments. The local projects are an unfair competitive threat, they say, and the projects will be more costly than local governments project. (Here’s the latest from Qwest.)

    Should local governments here be doing more to help?

  • B.C. may boost exports of trash

    Vancouver wants to dramatically boost its Washington-bound exports of one product it has too much of: trash.

    And why not? Canadians would pay more to cover the cost of sending trash trains to a landfill on the Washington side of the Columbia River Gorge, helping the economy of rural Klickitat County, according to the Seattle P-I. At the landfill the trash would be turned into sellable energy.

    The shipments would begin just ahead of the supposedly eco-friendly Olympics and, predictably, the idea is already riling residents who live along the prospective route of trash trains. Whistler and Seattle already export their trash elsewhere in the region and other reports suggest there may, in fact, be other B.C. alternatives.

    But the richest part of the P-I article is the appeal to regional sympathy by one of the proponents:

    Marvin Hunt, a councilor in Surrey, B.C., and chairman of the Metro Vancouver Waste Management Committee, said the garbage shipment is just temporary until a new facility is ready in the province.

    “This is the Northwest. We feel like this is all family here in Cascadia,” Hunt said.

    “We have a little problem right now, and when you have a problem, you ask your brothers and sisters to help you out.”

  • Hooray for the carbon tax

    This week British Columbia passed North America’s first carbon tax, a big step toward tying sustainability, transportation and market forces. Why can’t the rest of Cascadia build on the example?

    The tax has been in the works for a while but I missed the passage until I arrived in Vancouver Friday night and noticed it was all over the papers and TV. Looking back, I can’t find a single reference in mainstream Seattle-area media.

    This policy is huge news because it stands to begin discouraging emissions while making taxation more progressive. Here are some interesting first takes:

    — There are some links to more details and praise for the potential environmental impact here.

    — The business community is glad that there’s finally a law, according to yesterday’s Globe and Mail.

    — The Tyee looks at whether the tax is fair, here.

    — Progressive Economics points out some flaws yet ends up praising the idea here.

  • Coming soon: Seattle-Northern B.C. connection

    Seattle is about to get its first nonstop flights to northern British Columbia — another step toward integrating Cascadia.

    map of B.C.; traininpg.comAlaska Airlines will fly to Prince George, a city 500 miles north of Vancouver at the heart of B.C. timber and mining industry. Unless you like looong drives, the only way to get there now is on the three daily Air Canada flights from YVR.

    The convenience almost makes me pine for the days when I was a reporter covering Weyerhaueser and the cross-border timber industry.

    More importantly, it suggests that there’s demand for this sort of regional travel. The news slipped by while I was dizzy about new nonstops to China, Germany, Mexico and France.

  • Fed up with cattle class? Try yoga to China

    If you like in-flight yoga, it’s a good day. You’ll soon be able to fly nonstop to China from Seattle on an airline that offers that amenity.

    The new flight to Beijing on Hainan Airlines is the latest increase between the two countries and the latest of several new international offerings from Sea-Tac. This one is probably a boost for tourism and some business travelers.

    But flights four times a week hardly makes Seattle the Cascadia gateway for the China market. Vancouver has daily nonstops to Beijing, Shanghai and Hong Kong — with 30 a week to Hong Kong alone.

  • We have money — but no good way to send it

    Sending money between the U.S. and Canada ranks with border delays and underdeveloped transportation infrastructure as obstacles facing regionally minded Cascadia citizens.

    sending money; projo.comRecently I tried to pay a bill in Canada by sending C$113 from Seattle to Victoria. Apparently I ran afoul of post-9/11 inconvenience, anti-money-laundering worries and maybe even technology. I can accept some confusion, but there’s got to be a better way.

    When I went to a Washington Mutual branch asking for a money order, payable in Canadian funds, the teller looked at me like I was crazy. Bank of America said they could order a money order in about a week. Western Union was willing to help me for a hefty fee, but only if I wired the cash to an individual, who then would have to pick up the cash at another Western Union outlet.

    Desperately seeking a good money changer, I called the Canadian consulate in Seattle. The single main phone number leads to choices in the automated system that all lead to a dead ends. After nearly three minutes of messages in English and French, I picked tourism. Then the message said there is no longer a tourism office and suggested calling immigration. The immigration line said they no longer take telephone inquiries.

    My solution was to find a friend who happens to have an account in a Canadian bank — a move he took post-9/11 in order to handle details related to his Whistler rental. He says his bank puts a 45-business-day hold on USD checks (even if he writes it to himself) so he’s resigned to simply planning way ahead. It’s nearly enough to keep us on our respective sides of the border.