Governor Gary Locke’s Remarks
Economic Development Conference
November 20, 2003

Good morning, and welcome. I am delighted to see so many here for this second annual economic development conference.

I want to start by indulging in a little celebration. Last week Boeing signed an agreement with China for the purchase of Boeing airplanes. It was another important milestone for Boeing and our state.

The Boeing-China agreement was the culmination of a long-term promotional and negotiating effort. The effort included our trade mission to China last month. It included my visit to China last December to celebrate the 30th anniversary of the first Boeing passenger jet sale to China.

In each trip we met with high-ranking government and airline officials to push the sale of Boeing airplanes.

The airplane agreement will bring hundreds of millions of dollars to Washington, and sustain thousands of jobs. It opens the door wider for additional future airplane sales to China in the future. For China is a market with nearly unlimited potential needing thousands of new airplanes over the next decade.

This is just one example of the successes we have had in the past year. But we cannot relax. For we are at a unique and critical point in our state’s economic development. We have established important momentum in the past year. The question is: What are our next steps in long-term economic development?

This morning I’d like to highlight a few key areas of progress for our state this year. Then I’ll talk about how I believe we can best capitalize on our progress.

This year we’ve made strong gains in three key areas:

· Competitiveness
· Education reform, and
· International trade

First, competitiveness. We did an exceptional job this year in improving our state’s business climate.

The Competitiveness Council Scorecard issued at the end of the 2003 legislative session tallied 32 bills that the Legislature passed and I signed into law this year—32 bills that advanced the Competitiveness Council agenda. There were many other recommendations that were implemented by executive order.

Our centerpiece accomplishment: We passed a 10-year transportation improvement plan, with $4.2 billion in new transportation improvements across the state.

We didn’t give up after voters rejected a 9-cent increase last fall.

We said we had to address the issue in Olympia. And we did.

This is a great start. We must continue to improve our transportation system.

And we must make sure Central Puget Sound has the tools it needs to improve its key regional transportation corridors.

We also made substantial progress in regulatory reform. The Department of Ecology, for example, has set a goal to act on 90% of water quality permits within 90 days. We’re on target to meet this goal.

We simplified municipal B&O taxation, and prohibited “double taxation” of the same activity by two cities, giving greater predictability and fairness and encouraging businesses to stay or locate in Washington.

We passed sweeping reforms to Unemployment Insurance, as proposed by the business community. We passed Injured Workers’ Compensation reform, proposed by my administration.

We put an exclamation point on the session with our efforts to keep the 7E7 production in Washington. We passed a $3 billion tax incentive package for the aerospace industry if the 7E7 is built in Washington. We showed that we’re passionately committed to keeping our great companies. And we are hopeful that Boeing will choose Washington as the best place to build this airplane.

Seven national chains have located regional distribution centers in Washington state since January of 2002. These companies looked at our state and chose Washington over Oregon and Idaho. These companies like the business climate here. And together these companies are generating approximately 1900 jobs in our state. We are actively talking with other companies also interested in establishing major factories here.

A better business climate means more jobs, keeping our good companies, and attracting new ones. That’s good news for long-term economic development. Now we must sustain and build on this progress in the coming year.

The Competitiveness Council is continuing to develop recommendations.

We also charged ahead this year in that second area, on education reform. The strike in Marysville may have overshadowed things, but this past summer we saw very encouraging proof of success in our schools statewide. Our kids are making some of the greatest academic gains in the nation.

Our 4th and 8th graders scored above the national averages in both reading and writing. More Washington students are succeeding on Advanced Placement courses. Our state leads the nation in S.A.T. scores. The WASL scores released in August also showed great progress.

A world-class education system is the cornerstone of economic development. We must sustain this progress, too—and build upon it.

But we must reform and streamline our WASL high school graduation requirements by focusing on the basics. I’ve proposed major changes and I expect the Legislature to pass them this session.

The third area I want to highlight is international trade.

We are very committed to being a leader in global trade. Trade provides jobs and dollars for our economy. One out of every three jobs in our state is tied to trade – directly or indirectly. Our commitment was rewarded on our China Trade Mission last month.

The Boeing success I mentioned earlier was just one agreement furthered or finalized on the trip. There were millions of dollars in immediate sales for Washington businesses and farmers. And there will be more.

The list of major deals is impressive:

Web Press Corporation of Kent signed a contract estimated at $11 million annually to manufacture printing processes to China. The work will be done in Washington state.

Mercer Island-based Global Equipment and Technology Co. signed a contract that will create 20 Washington jobs with anticipated sales growing to $9 million.

MulvannyG2 Architecture, based in Bellevue, signed contracts in all three cities we visited on the mission, worth a combined total of more than $1.2 million.

More extensive work is already being discussed worth millions more – all to be done in Washington state.

Green River Community College signed exchange agreements with three new Chinese partners to offer associate degrees in China.

We helped open the newest Beijing Starbucks store, the 35th in that city and 100th for China.

We promoted Washington apples, cherries, oat seed and Timothy hay. Indeed, past trips to Taiwan saw a huge increase in the sale of Washington cherries. And last year’s trip to Japan and Korea resulted in greater sales of Washington hops.

As you know, China will be hosting the 2008 Olympic games. We want Washington state companies involved in supporting this effort. The Chinese government, at our invitation, held a seminar in Seattle – and only Seattle – on opportunities for U.S. companies to help design, construct, equip and stage the 2008 Olympic games.

Indeed, one Washington company has already signed a contract to provide critical services.

The trade mission strengthened our state's leadership in global commerce. The contracts, commitments, and prospects we gained will mean more jobs. The business and agricultural gains are a boost to our state’s economy. We’re strengthening our ties to one of the world’s most promising markets and extraordinary cultures. And we’re only scratching the surface of China’s potential as a customer for Washington’s products, agriculture and services.

Global competition continues to be intense. It’s a jungle out there. I think we’re becoming one of the tigers! Our continuing progress in global trade is good news for economic development across our state’s business spectrum, from farmers to high tech companies.

How can we best build on these and other accomplishments, and what are the next steps we should take as a state?

I believe we must focus on:

· Access to improved higher education; and
· Additional economic development tools throughout the state.

If we successfully pursue these top priorities, we will be well on the road toward developing what I call an “opportunity culture.”

We have a very good start in education reform. But from preschool to graduate school, education requires more dedicated, permanent, and stable funding. We need to come up with funding solutions quickly.

Our education system will supply the first-rate workforce we need for a thriving, competitive state economy. A strong public education system prepares our children for a lifetime of economic success. And higher education should especially be viewed as a powerful economic development tool.

Think of all the technology, companies and jobs that have been spawned by just the University of Washington alone! Kidney dialysis, ultrasound, and the Hepatitus B vaccine were developed at the UW. PC operating systems and search engines for the World Wide Web were pioneered there too. Think of all the new variety of disease resistant crops developed at WSU.

We need to better harness higher education to help drive economic growth. We are home to some of the most accomplished universities and innovative companies and accomplished universities in the country. We should be performing better in training people to work for these companies. Boeing, Microsoft, Starbucks, Immunex, Fred Hutchinson Cancer Research Center, Battelle, WaferTech, Intel and our other great companies hire the best and the brightest.

We should make sure we educate and train them right here in Washington. We should make sure those hirees are our sons and daughters!

Many Washington companies need workers with post-secondary vocational credentials. But they can’t find them. We’re not producing enough! The Workforce Training and Education Coordinating Board performed a statewide survey of employers in 2001. They found that 83 percent had difficulty finding qualified applicants. There is a gap between the number of jobs available and the number of people prepared for this type of work.

The Workforce Board estimates that currently only 73 percent of the jobs can be filled with qualified workers. That’s a workforce gap of 6,700 workers. This gap will grow in the next few years.

Yet we keep turning away more and more students who want to attend our colleges and universities because of a lack of funding. Despite rising tuition, tuition only covers a part of the costs of educating students. The state pays the rest. Without more money from Olympia, colleges and universities won’t admit more students. We won’t produce an adequate workforce for the future.

We can’t tell our kids to just wait a few years. “Wait until we have more revenue available to send to our colleges and universities before you attend college.” We can’t ask them to put off college and training they need right now. Especially when all those good jobs are going to people from out of state!

And companies won’t wait to fill their hiring needs for several years while our students attend college!

And companies obviously can’t wait to fill their hiring needs for 2-to-4 years while our students attend college.

Even as we continue to improve our business climate, it’s painfully clear that we must focus now on higher education access and on workforce training for high demand fields.

The Competitiveness Council is now working hard in each of these areas. We must also approach the coming legislative session with these high priorities in mind. Our future economic vitality—and the good jobs that go with it—depends on better developing our human capital.

We simply must find the money for our colleges and universities so our students can compete for the jobs being developed.

We must also work harder to create jobs throughout our state. We must make sure our communities have the tools they need to build on their strengths and implement their economic development strategies.

First, our state should partner with local communities to fund the infrastructure they need for new and growing businesses. Tax increment financing is a tool that is used in 48 other states to allow growth to pay for itself. The additional tax revenues that state and local governments collect when businesses grow can be used to pay for the infrastructure needed to attract them. My proposal provides a state match to local governments willing to invest in the future using this tool. It passed the Senate last session and has the votes to pass the House. We must pass it and get it signed into law this session.

Second, we must look to the future and guarantee that we are creating an environment where the industries of the future will thrive. The goods and services that will be sold in the future are being developed today. From biotechnology to software to clean and efficient energy systems and technology.

We need to identify these industries of the future that are particular or unique to our communities or state and develop strategies to promote them.

That’s why we must extend the research and development tax credits that are due to expire in 2004. This is an investment in our future, in creating family-wage jobs. An investment in creating the opportunity culture that we must have to thrive.

We also must continue to expand trade in our state by ensuring that our maritime industry is competitive. Just last week we held our first-ever Maritime Industry Summit to develop a strategic plan to enhance the visibility and strengths of our maritime industry.

The success of our ports in attracting inbound trade is key to so many related jobs, from shipping to trucking, from warehousing to trade financing. Our export industries like agriculture are dependent on thriving inbound trade so that ships and containers are available to transport Washington crops to customers throughout the world.

Our state’s economic development is a shared destiny. We cannot afford a development imbalance. We cannot succeed without engaging the full potential of our state. We will only succeed together, playing to all of our state’s strengths. Rural and urban, services and agriculture, manufacturing and high-tech—we are all part of the complex equation by which our state will prosper.

That’s what brings us together today. We have seen that meaningful long-term economic development requires a comprehensive meeting of the minds. We are here to exchange ideas, sharpen our state’s focus, and direct our efforts for the coming year. Let’s draw inspiration and motivation from each other, and charge out of here ready to work even harder.

This group is a strong core of thoughtful leaders and decision-makers for economic development in our state. Let’s build on our strengths and shore up our weaknesses. Let’s all work together to promote our state. Help show the world what Washington has to offer. Let’s work in partnership for a better Washington. A Washington that will always be a great place to live, work and raise a family.

Thank you.

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