Ore. economists say Intel plan will help some

AP News
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Posted: Oct 19, 2010 10:22 PM

One of the few economic news for Oregon in the past few years shows how far the state has to go to recover from the Great Recession, economists say.

Intel Corp., the state's largest private employer, said Tuesday it would invest $6 billion to $8 billion in a plan whose centerpiece is a new factory employing up to 1,000 people in the Portland suburb of Hillsboro. The same morning, the state government released figures showing unemployment stuck where it has been for a year and nearly 200,000 Oregonians looking for work.

"Boy, it's clearly _ in what is a pretty gray environment _ a break in the clouds," said John Tapogna, president of the economic consulting firm ECONorthwest.

In addition to the permanent production jobs, Intel said the plan would also bring 6,000 to 8,000 construction jobs to build the Hillsboro "fab," as chip factories are called, and upgrade four existing plants: Two in Arizona, two in Hillsboro.

"They're exactly the kind of jobs we're looking to attract," said University of Oregon economist Tim Duy, who is the keeper of an Oregon economic index that lately has been throwing off signals of weakness in the modest expansion that followed the recession.

He calculates, though, that an Intel-size announcement once a month for the next 10 years would still leave Oregon shy of replenishing the jobs it lost in the recession.

While the statewide unemployment rate has retreated from its highs last year, it remained at 10.6 percent in September, well above the national average and about where it has been for 11 months, according to a report released Tuesday by the state Department of Employment.

Still, economists saw promise in Intel's announcement, including long-term benefits such as further entrenching Intel's operations in Oregon, where it employs 15,000 with an annual payroll of $1.8 billion, and restoring some luster to the state's reputation among businesses.

"If you have a world-class corporation like Intel saying that Oregon is a good place to do business, that definitely has a positive ripple effect," said Tom Potiowsky, the state economist.

Potiowsky is in charge of making the forecasts that, with revenue falling short time and again, signaled how deep the recession got and how halting the recovery has been. And he isn't racing to recast expectations for tax revenues: The numbers aren't firm enough to crunch, Intel itself benefits from significant tax breaks, and the new plant isn't expected to be operational for a few years.

Meanwhile, the state government is shedding workers and preparing to close a budget gap of $2 billion to $3 billion.

The construction jobs will throw off significant tax revenue for the budget state lawmakers will build next winter, he said, but even those will represent a fraction of the 70,000 construction jobs Oregonians currently hold.

"It's a help," he said, "but it's not going to alleviate the budget hole we're facing."