Managing Change on the Waterfront

Absorption Corp is a Port tenant and employes about 65 people. A few years ago the Port bragged they had attracted Absorption to Bellingham and to Port property.

Now they want to boot Absorption out. Will not renew their lease that ends in 2005. Commissioners Walker and Smith firgure the Port can charge a higher rent for a lease to a retail store.

The problem is a retail store will have fewer employees and will contribute about 30% as much to the local economy as does a light industrial tenant.

There is also the issue of good business. How does the Port attract the next business with a track record of booting them out when they get tired of the businesses? And the Port refuses to pay any moving costs - which will be over $1.5 million.

If you are concerned about Bellingham's economic policies, then read this article. There could be any number of other company names substituted and it would be substantially the same.

The Port is also booting or threatening the following Port tenants so they can get higher rents from retail and condos.

- Mt. Baker Plywood

- Bellingham Bay Shipyard

- Redden Marine Supply

Managing Change on the Waterfront
by Doug Ellis, President of Absorption Corp.
October 2001

Waterfront areas in modern cities around the world are moving away from the traditional industry base to people friendly areas that encourage access and enjoyment of waters natural beauty. The process is often a slow metamorphosis as one by one antiquated factories move out into modern new locations. The jobs and economic spin off from these industries are the cornerstone of most healthy vibrant communities.

Retention of these jobs throughout a waterfront's transition requires political and community support in minimizing the economic impact on the companies and providing suitable viable infrastructure for the companies to relocate in the area. These industries provide family wage jobs from products that bring money in from outside the local area. The local economic benefit from this type of industry is often calculated to be over seven times the companies operating expenditures and two to three times higher than service and high tech companies.

Absorption Corp is a model primary industry company. Absorption manufactures using waste materials from Pacific North West industries has brought into the local community tens of millions of dollars in economic benefit. The company and its products have been nationally recognized for their environmentally responsible business model.

However, even though local City and Port government seduced the company into the area, in less than twelve years the support has disappeared and the company is now been forced to move at a cost of millions to the company.

Some times there are casualties associated with change. But responsible business and especially government needs to keep as a first priority ways to minimize the impact of these changes. Absorption has accepted the proposed waterfront changes and has tried work within that framework to provide creative and realistic ways to minimize the social and economic cost . Proposals to have structures built or altered to blend into local and future architecture, including the port building or Bellwether structures have been rejected.

Even a proposal to remove all industrial production equipment for a nominal five year extension was rejected. This was done even though the port's long term development proposal for the area anticipates fifteen years to grow out the area. Absorption Corp received a response from the Port six months after the request for an extension stating that the Port would not grant an extension because they "did not want to make it easy for us to leave" .

Absorption Corp's 65 employees are the core of the company. Moving out of the area to a more economically viable area is very possible but maintaining the company's employee base is a fundamental objective for Absorption Corp. Unfortunately, over the past year the company has not been able to find local industrial land with the infrastructure needed. The key items looked for are light industrial zoned acreage with basic utilities, and rail within easy reach of the local population centers. The Sumas and Cherry Point areas do not work for many industries due to the travel distance. Over the years, as core industries have been moved out of the cities traditional industrial areas there has been little infrastructure built to retain them in the area and attract new small to mid size industry.

If Absorption Corp has this hard of a time trying to relocate onto a viable local site how many small and mid size business opportunities are being lost and what is that cost to the local economy. With typical industrial multipliers, companies the size of Absorption put around one thousand dollars per capita into the local economy. Just a few industrial business of this size can make a major impact on the area's economic health while providing security in diversifying the employment base beyond a couple of major employers.

Attracting and retaining new business opportunities requires more than a nice City and suitable raw materials to justify a long term investment. Even beyond the right infrastructure, investors need to feel trust and a welcoming atmosphere from the local community. Wether it is one job or a thousand, businesses are the lifeblood of a thriving community and need to feel welcomed and worked with in mutually beneficial ways that encourage their commitment to investment continued growth in the area's economy..

The majority of local area industries we have contacted do not trust local government and find the overall local climate to be anti-industry. This needs to change if the community wants to keep and replace its shrinking economic base which is needed to support a healthy community. At a minimum the residents of the area need to be fully informed about the enormous cost they will have to bear as hundreds of millions of dollars in economic benefits are lost due to the direction and policies of current civic leaders.