Washington�s Economy � Fueling the Engine of Innovation

March 10, 2009

Good afternoon, and thank you Kirk (Nelson) for the kind introduction. Also, I want to thank the Greater Seattle Chamber of Commerce, the Prosperity Partnership, and the Washington Roundtable for sponsoring this lunch.

Before I start � I just want to mention that when I became governor I thought I was ready for anything � state budget fights, assorted meltdowns at the Legislature, floods, fires, and all the rest.

But then I learned there is one challenge that continually tests me, and also my favorite slogan � One Washington!

Just try that slogan out when the Cougs and the Dawgs face off like they did last Saturday � where the Dawgs would be conference champs unless the Cougars spoiled it.

Or how about last fall�s Apple Cup when the battle was which team would be last place in the Pac-10? One Washington indeed!

There are challenges to this job � and then there are challenges! Anyhow, congratulations to the UW Men�s Basketball for winning the championship, and here�s to the possibility of three Washington teams in the NCAA.

I�m pleased to be here today to introduce a remarkable person who will help me lead Washington into the 21st Century economy � an economy powered by the same fuel that got us where we are today � Innovation.

He is Rogers Weed, formerly a corporate vice president at Microsoft. Innovation has been at the center of Rogers� entire working life.

Rogers earned an undergraduate degree in computer science from Duke University and an MBA from Wharton at the University of Pennsylvania. He then joined Microsoft where he spent 15 years adding value to a half dozen different businesses within the company.

Rogers is the very essence of an innovator � as evidenced by his high-level contributions to Microsoft products ranging from Windows to Encarta to Pocket PCs.

Rogers is a proven leader. He served at Microsoft as a corporate vice-president and as a general manager � overseeing the work of hundreds of people planning, developing, and marketing Microsoft products all over the globe.

And Rogers is a family man, so he and his wife, Julie, want for their three children what we all want �a great future with a powerhouse 21st Century economy that will provide jobs for our kids.
I want Rogers to wake up every morning with a laser-focus on keeping the companies and jobs we have, and bringing new jobs and companies to our state. And I mean both large and small companies!

Rogers is going to do a great job, but building a strong Washington economy will take many hands and many great minds.

And if you look around this room, you will find a significant mix of backgrounds � people from business, labor, education, health care, and more.

Let us today commit to work together to build the economic future we all want for Washington.
For the rest of my time with you today, I�d like to share with you some thoughts about building a greater economic future for Washington.

First, I�d like to share with you two principles which I think must guide our economic development over the next few years. Then I will discuss the specific challenges I think we need to deal with.

Let�s start with those principles.

First and most important, we need to understand that the key to future prosperity lies in innovation.

The world is changing at lightning speed. The old days of solely a manufacturing-based economy and workers who spend an entire career with one company are long gone.

Just to show you how fast things are changing, consider a You Tube video by a gentleman by the name of Karl Fisch. He notes we are in a period of exponential change.

More unique information will be created this year than in the previous 5,000 years. And the top ten in-demand jobs for 2010 didn�t even exist in 2004.

Are we committed to preparing our kids and our workers for this kind of change?

We have a natural advantage. Washington has always been a hotbed of innovation, cutting-edge ideas, and world-class products. Boeing airplanes�Microsoft software, a world-class variety of apples and cherries� Costco� Starbucks� Paccar�s green trucks. These are global products, folks.

But with change occurring at mind-boggling speed, we can�t rest on our laurels, so let�s commit today to grooming a workforce and leaders who are agile, creative, and embrace innovation.

We can�t afford to be like Detroit.

Years ago, Detroit was like Washington today � filled with entrepreneurs busy building the best cars in the world. But then Detroit failed to see the future and the need to constantly innovate.
Today in Detroit, houses sell for under $20,000, unemployment exceeds 20 percent, and they�re asking the nation�s taxpayers to bail them out.

A Stanford economist once said a crisis is a terrible thing to waste.

That leads to my second principle. We can�t afford to just ride out this economic crisis and wait for things to turn around. We must successfully navigate through it, so that we find ourselves in an even stronger position exiting this great recession than entering it.

As hard as it may seem in these difficult times, we must make the kind of investments now that will allow us to seize the economic development opportunities that will occur when America rebounds.

All that change I talked about isn�t stopping just because the world is struggling economically. Here are a few other nuggets from Karl Fisch that hopefully will show you we have to keep up with change even while our economy is down.

Fisch notes that it took radio 38 years to finally reach an audience of 50 million people. TV reached 50 million people in 13 years, the Internet reached that number in four, i-POD in three, and Facebook did it in just two years.

If Facebook, which I admittedly would have considered something for kids two years ago, can now capture 50 million people, it tells me we can�t wait to ride out this recession.

I�d like to turn now to the specific challenges we need to tackle to help Washington achieve a powerhouse 21st century economy.

While there is much to do, I�d like to focus on six things:
� Education,
� Health care,
� Infrastructure,
� Positive, problem-solving working relationships,
� Innovative government,
� And development of a green economy.

Let�s start with education, and to put some real flesh on these challenges, I�d like to do it through the life of a girl.

Let�s call her Laura. And let�s imagine our journey with Laura begins as a four-year-old in Tacoma.

Here�s what we need to do for Laura � all of us as partners. Here�s what we need to do to make sure Laura has a place in an economy driven by innovation.

We start by providing world-class education starting in early childhood. I believe it�s the smartest investment we can make with the greatest return on investment. We know for a fact it�s the foundation for all social, emotional, and creative skills. Laura must be ready to learn when she enters kindergarten.

Again, my reference to Karl Fisch. He has some other facts that point to the urgency of Laura being ready to learn and the need for great educators.

He contends the amount of new technical information is doubling every two years.

That means that for students starting a four-year technical degree, one half of what they learn in the first year of study could be outdated by their third year!

So when Laura gets to our K-12 system, she needs a learner-focused, rigorous education with an emphasis on math and science � that�s the language of international competition.
And Laura needs to meet academic standards to graduate! I don�t care what you call the test, but we cannot falter.

If Laura fails, let�s help her pass, but don�t just abandon her so she finds herself in the real test of her life � a job application she fails.

A world-class education requires energized, competent, inspiring teachers. That means we must provide exceptional training, demand accountability, and pay decent salaries.

And we need good leaders at the helm. Show me a great school and I�ll show you a great principal.

Once out of high school, Laura and her friends need more education opportunities � be it apprenticeship training or a Ph.D.

We need more of the kind of innovation we�re seeing at our community colleges. Thanks to a lot of hard work, 14,000 Washington students have now earned degrees or certificates on-line. That�s equivalent to four new brick and mortar community colleges!

We need our community colleges and our four-year institutions to find more ways to give us skilled workers in fields where we have the greatest need now and in the future.

In the last three years, our higher education system produced a grand total of about 86 math teachers � to serve nearly 300 school districts in our state! We have got to do better!

Meanwhile, our universities are ranked back at 36th among the states in terms of science and engineering graduates. But we are number one in terms of demand for science and engineering graduates. We have got to do better if we expect to compete in a world economy.

Now, make no mistake. If we want world-class education, I for one, believe we must demand it, and we must be prepared to pay for it. The return on investment is there � for your families and your businesses � so let�s make it happen.

So Laura gets a great education and joins the workforce, but she faces another challenge along with millions of other families and businesses. Will she have health care coverage � now or in the future?
And the truth is, if we fail Laura and if we fail as a state and a nation to address this critical issue, we simply won�t be able to compete.

Today Americans fear they are one illness or accident away from bankruptcy. The American automobile is a symbol of the problem. Up to $2,000 of every new car reflects the cost of health care for the people who built that car.

In our own government, state expenditures for medical care have jumped from more than $3 billion to about $7 billion in the past 10 years � or more than 100 percent. True, inflation accounts for part of that � but at the same time our K-12 investment rose by just 27 percent.

The $3 billion jump in health care costs could have bought us, for example, 20,000 additional teachers.

We can�t keep pouring new money into our out-dated health care system. It�s time for national reform.

One example is from our own state.

We just developed a surgical checklist through the University of Washington and 42 hospitals across Washington have embraced it.

It was modeled on the checklist concept of commercial airline pilots.

One study shows that when surgeons use the checklist, patients are 50 percent less likely to die, 33 percent less likely to have complications, and the nation could save up to $25 billion a year.

I am on the Health Care Reform Committee at the National Governor�s Association. And make no mistake, solutions to this issue will determine how competitive this state and country will be.

Along with health care, Laura and her family need and want 21st Century roads, bridges, ferries, freight mobility, broadband, water, energy, and sewer.

But we will fail them if we don�t understand and act on two basic facts about our infrastructure: First, we must continually invest in it, and second, it isn�t free.

Let�s look just at transportation. Years ago, the federal government paid 90 percent of the cost of a new freeway. Those days disappeared with the Ozzie and Harriet Show.

Our state and nation�s infrastructure is aging. And we are stuck with a 20th Century funding mechanism. Our ferry system is on the verge of a financial crisis but what we hear is simply that we want more and better ferries without additional investment.

The federal government continues to provide less and less in large part because it relies on a gas tax, and we�re trying to cut gas consumption.

We need a new model �nationally and in our state. Why not bonding at the national level just as we do locally � a National Infrastructure Bank as the President has suggested?

Why not consider ideas like more �user-pay� models based on tolls, or the most recent controversial idea � vehicle miles traveled? I�m ready to put ALL ideas on the table and I am working on it at the national level, too.

Here in our state, we need to get critical mega-projects done � whether it�s those in Puget Sound, the Columbia River Crossing or the North/South freeway in Spokane.

We need the kind of innovation we find today in the brand new Tacoma Narrows Bridge. It�s a story that doesn�t get told enough�incredible mobility�incredible safety�and amazing technology.

The morning commute used to crawl at 12 miles an hour. Now it moves at 60 miles an hour. During the six years prior to the new bridge opening 17 months ago, there were 15 fatal or serious-injury accidents. Since then there have been no fatalities and no serious injuries.

And finally, 85 percent of the motorists who use that bridge pay electronic trolling, when we were told at best we could expect 50 percent. How�s that for innovation?

The core mission for me, for Rogers, and for all our partners is to help Laura get a family wage job. And that means attracting new companies and keeping the ones we have.


Take Boeing, where Laura�s husband, Paul, might work as a machinist. Boeing is just one example of the continuing need to partner with management, labor, community groups, and government.

And I want to tell Laura and Paul, and all of you, that I will do everything in my power to ensure the new refueling tanker is made in America � and that means Washington State.

And I will do everything in my power as Boeing cranks up production to make sure a second 787 line is located here in Washington State. Some issues are beyond my control, but when I can help, I will help, and we get things done by working together.

We know we have a great economic foundation. We must be known as a state with an innovative, skilled workforce, an effective and cost efficient regulatory framework and a tax structure that is fair and competitive�.

�A place where labor and management have shown more than once that they can work together to solve problems.

And just as we market our goods and services internationally, we need to market ourselves at home as a great state in which to raise a family and do business.

And we are a great state. We have independent confirmation that we�re at the top of the heap for livable cities�a green environment�business friendliness...the new economy�.and just last week we were named the state where the most graduates of the best universities stay to live and work.

But�.and let me be candid here�.too often I see some from business beating up Washington state. When Forbes, for instance, rated Washington as a top state to do business, they challenged the findings! Why not celebrate it?

Today, our economy suffers from a lack of confidence, and the consequences are huge. So let�s unify, address our challenges and market Washington as a great place to do business and the source of great ideas, cutting-edge business strategies, and world class products.

That doesn�t mean we can�t have our differences, but let�s work together to send the message world wide.

Washington State is open for business!

Now I know state government does not make a strong economy. But we are and should be a strong catalyst for the kind of innovation we need to thrive. And we must be well run, efficient and innovative ourselves.

That�s why I was pleased last year to see Washington rated by an independent agency as one of the three best-managed states in the nation.

We are doing what businesses all around this state are doing � innovating, streamlining, cutting, merging and restructuring.

For instance, we are closing 26 under-used state driver�s license offices and providing kiosks so people can renew on-line.

Speaking of streamlining, I am determined to eliminate at least 150 boards and commissions. Don�t you think we can survive without the Acupuncture Ad Hoc Advisory Committee, the Health Care Assistants Ad Hoc Committee, or the Roads to Community Living Collaborative Team?

I also think it is about time we give economic development the focus it needs in state government.

Today it is housed in the Community, Trade and Economic Development Department. What you need to know is that over the years, as the Legislature created new programs, most it seems, were housed in CTED.

So today, economic development is in an agency that is also responsible for emergency food assistance, offender-reentry, control of lead hazards, crime victim advocacy, retired senior volunteers, and much, much more.

Don�t you think Rogers should be able to focus on jobs and the economy? Well so do I, and that�s why I am proposing creation of a new, streamlined Department of Commerce.

And I know any economy of the 21st Century must be a green economy. We saw last year how energy costs suddenly helped bring this country to its knees. In the past, we�ve enjoyed cheap energy. But it�s time to reboot.

And we have the innovators and risk takers to lead us. Just look what we have done in the past four years � Our Department of Employment Security says we already have 47,000 green-collar jobs.

We�re the 5th largest producer of wind power. We�re building solar-power components, and making break-throughs in bio-energy.

We have McKinstry in Seattle leading the way in construction of green buildings�Inland Empire Oilseeds in Odessa with a multi-million dollar biofuel plant..and newcomers like Blue Marble Energy and Bionavitas working to turn algae into fuel.

At the Pacific Northwest National Lab in Richland we are developing grid-friendly appliances and moving to a smart grid that, if adopted throughout our country, could result in savings of about $70 billion dollars over 20 years.

And I�m working with my fellow Governors of Oregon and California to create a green I-5 freeway from the Canadian border to Mexico which will be the first of its kind in the nation.

We are in very difficult times. But tough times never last. And today I ask all of you here � the business community, the labor community � all of us � to come together with me and Rogers around one goal.

And that�s to use our brains and imaginations to give Laura and all of Washington�s children a state where they can prosper in the years to come.

Our kids deserve a Washington filled with the same powerful, exciting innovation our parents gave us.

We owe it to them � and we owe it to ourselves � to emerge from this recession stronger than ever.

Thank you!

And now that Rogers has his marching orders � (and he hasn�t run from the room never to be seen again) � I wonder if he�s ready to say something. This will be, after all, the first words he speaks as the new Washington State Commerce Director. Rogers?