Story by Marc Bouvier
Photos by Dan Long-Coogan
Illustrations by Paul Ollswang
The economy of Lane County, Oregon crumbled in the early 1980’s. When US housing starts declined, layoffs in the woodproducts industry proliferated, and the heavily timber-dependent region went into recession. During these dark times, a few creative people were able to fashion new relationships among local businesses, fostering regional autonomy and diversity rather than economic dependence and monoculture.
With a grant of $10,000 from US National Bank, a Eugene-based non-profit, NEDCO (Neighborhood Economic Development Organization), initiated an educational campaign to convince consumers and area businesses to Buy Eugene. Local businesses were encouraged to replace imports used in the production process with local goods. This economic strategy, known as import substitution, was voluntary, but facilitated by a brokering system. The intent was to avoid top-down economic conversion.
In the beginning of the first year of operations, Buy Eugene discovered that many local manufacturers were not buying from each other even though prices were, in many instances, significantly cheaper. Traditional relationships held fast because many small and/or new firms lacked either the marketing capacity or a purchasing department capable of securing more effective contracts.
Buy Eugene intervened in this process by providing a broker that would A) work with a purchaser to formally document their product needs, B) conduct an extensive search of businesses that might meet that need, C) collect and submit bids to the purchaser, and D) keep information flowing between the purchaser and potential suppliers, to enhance the chances of a successful match. For this facilitation, Buy Eugene collected a small fee.
By the end of the first year, the program was clearly successful. Many businesses found it to their advantage to work with other local firms. Contracting with a local company made personal visits more common and enhanced quality control. There was usually a reduction in the order/delivery lag time. Communication costs, inventory requirements and warehousing needs were all substantially reduced. Needless to say, the reduced transportation needs created less of a burden on the environment.
In the first year of the program, 14 new contract agreements were made. These matches replaced $500,000 of imported purchases, created 90 new jobs and saved local purchasers an estimated $125,000. The total budget of Buy Eugene was a modest $35,000.
In one local match, Burley Design Cooperative cut the cost of bicycle cart wheels by purchasing from a Eugene company instead of a Taiwanese one. In another instance, a small, local company produced new band uniforms for the University of Oregon. With this new contract, four new people were hired and a new corporation was formed.
Perhaps the biggest success was a $l,200,000 contract that led to a poultry farm supplying cooked chicken to a local frozen food company. This agreement led to an estimated 80 new jobs at an hourly rate of $7.30. The food processor saved $110,000. The poultry farmer became eligible for Targeted Jobs tax credits, thus saving $189,000 in federal income tax.
Despite their successful work, the Buy Eugene campaign found itself without the sort of money it would need to continue. By the founders’ own admission, there was a greater emphasis on facilitating matches than collecting fees. Perceiving the possibility of implementing a similar program state-wide and looking for a more stable funding base, NEDCO approached the state legislature. Oregon Marketplace was born in 1986 through an initial contract of $441,000 from the Oregon Department of Economic Development.
Regional programs began in 29 of Oregon’s 36 counties. In the first full year of the program, matches totaled one million dollars. In the following year, through a unanimous vote of the legislature the organization was reauthorized and the matches climbed to $1.2 million.
Oregon Marketplace has continued to grow. Between 1987 and 1989 it brought approximately 3 million dollars worth of new business to the state. Between 1989 and 1992 this figure skyrocketed to over $70 million, with roughly the same budget. This dramatic change was the result of an expanded program to identify and screen global opportunities for Oregon industries.
For instance, the Marketplace has worked very closely in assisting local environmental industries to secure contracts for the cleanup of the aquifer in Hanford, Washington. The Marketplace found an international market for the straw that grass seed farmers have traditionally burned, making it more economically feasible to remove a serious air pollution hazard in the Willamette Valley. No local production at the time could accommodate the straw.
Oregon has a long history of shipping raw logs out of state for processing. The Marketplace works actively to secure out-of-state contracts for value-added wood products, which would keep more jobs and monies local. The current executive director of the Oregon Marketplace, Rollie Wisbrock, argues that this move into the international arena is essential. “We can only create the sustainability, meaning the long-term diversity that an economy depends on, by supporting our local vendors globally.”
The success of the Oregon Marketplace experiment has led to its adoption in other states and regions, including Nebraska, Minnesota, Washington and many parts of Canada. Oregon Marketplacedoes not see these other programs as competition. On the contrary, for very modest consulting fees, they have helped most of these organizations start-up. Wisbrock is “excited about the possibility of working closely with similar programs in British Columbia and Washington. We have the opportunity to solve regional problems that no state is able to on its own.”
It has been demonstrated that the import replacement concept can easily adapt to meet local needs. The overall cost of starting a marketplace is minimal. Such programs are usually able to secure the support of people on both ends of the conventional political spectrum. But it would seem that those programs that are most successful are the ones that give the process time to grow, and that include the essential aspect of a brokering office. Government programs that try to “add on” a marketplace project to an overburdened staff or create a computer bulletin board without a live broker to facilitate, cannot expect to generate the kinds of revenues that the Oregon Marketplace has secured.
Import substitution is a relatively new concept, often lacking the funds made available to more traditional economic development strategies. But one of the organization’s founders, Glenn Gibbons remains committed to the idea.
“Import substitution is a laborious process that will never be as sexy as recruiting large firms to a region. Import replacement has never pretended to be the sole avenue of community prosperity. I do not want to question the recent moves of the organization to facilitate out of state contracts but I would hope that it does not forget the ideas that were central to its founding.”
Another founder suggested that import replacement remains one of the most viable strategies for enhancing local ownership, which carries with it many community benefits. Locally-owned firms have generated most of the new family-wage jobs since World War II. Because they tend to be smaller, local businesses tend to be more flexible in the marketplace. Their ability to customize leads to a diversity of local products, and their close contact with customers makes them more efficient at custom work. They are responsible for many innovations, despite a lack of large well-funded research and development operations.
When an out-of-state interest takes over a local bank, the lawyers, accountants or even supplies tend to come from outside the local community. Local banks, even more conservative ones, usually show greater flexibility in dealing with other local businesses. Businesses based out of the region often fail to recognize the talent that exists in the community, and tend to favor high-level transfers from their other facilities instead of letting local employees rise through the ranks. The local entrepreneur’s commitment to a particular community often means support for local charities, and a stronger will to weather through difficulties. The community is also more committed to aid the survival of local businesses.
Despite the benefits of local ownership, we live in an era when it is increasingly difficult for a community to impose restraints on economic policies and conditions created by a global market, national governments, transnational corporations and international financial agencies. Import replacement programs, as pioneered by Oregon Marketplace, remain a proven means to facilitate greater regional autonomy and self-reliance. Their program deserves the careful attention of everyone interested in creating a more just economic order.
For additional information on starting an import replacement program, contact Oregon Marketplace directly. Consulting services are available at very modest fees, as well as an excellent manual that includes sample forms and a description of the recommended software. [2014 Note: Oregon Marketplace is done, but parent CDC NEDCO is still very active.]
An Excursion Into Economic Possibilities
by Marc Bouvier
I add my breath to your breath,
The vitality of the economy lies in the robustness of the exchange between all of the participants. Rather than talking about being “self-made” and “autonomous,” economics can pursue how people can mutually support each other. It might make more sense to envision the economy as a cluster of relationships or even as stars in a constellation rather than competing factions.
This disconnection is evident in the dominant approach to nature. Wetlands, rivers, the air we breathe, and just about every aspect of the natural world is subject to an accounting procedure to determine its merits.
Yet the most simple economy involves a form of reciprocity (re and pro, back and fourth). An economy is not just people acting individually, but should be more like a circle, a round dance. How can one influence the participants, you and I, to preserve the connection, and under what circumstances is it diminished? How can we begin to recognize that we are each participants in webs of life?
We do not want to romanticize native ways of life, but examination of cultural practices different than our own serves to remind us of the constructed nature of our actions and the possibility of forming an economy with entirely different goals and means.
Lewis Hyde’s wonderful book, The Gift: Imagination and the Erotic Life of Property discusses how many of the American Indian tribes that once occupied the northwest Pacific coast of North America shared a fundamentally different sort of economic exchange than what we have accepted as normal.
“The first salmon to appear in the rivers was always given an elaborate welcome. A priest or his assistant would catch the fish, parade it to an alter, and lay it out before the group (its head pointing inland to encourage the rest of the salmon to continue swimming upstream). The first fish was treated as if it were a high ranking chief making a visit from neighboring tribe. The priest sprinkled its body with eagle down or red ochre and made a formal speech of welcome, mentioning, as far as politeness permitted, how much the tribe hoped the run would continue and be bountiful. The celebrants then sang songs that welcome an honored guest. After the ceremony the priest gave everyone present a piece of fish to eat. Finally...the bones of the first salmon were returned to the sea...The skeleton of the first salmon had to return intact; later fish could be cut apart, but all their bones were still put back into the water. If they were not, the salmon would be offended and might not return the following year with their gift of winter food.”
These tribes developed a relationship to the natural abundance of their environment based upon a cycle of gifts. In their mythology the salmon will remain plentiful because they are treated as gifts. It is easy to dismiss such examples of a gift cycle as nostalgic, but in doing so we indicate how far removed the contemporary economy is from operating under a vision that would keep the cycles of nature abundant.
Although state-socialist programs are certainly no more sensitive in this regard than capitalist markets, Karl Marx (despite being a product of the nineteenth century) made a number of observations that offer clues to what a more humane economy might look like.
In his Paris Manuscripts he writes of a future society rooted in intimate relationships. He used two models of relationships. In his artistic model, he points to how the artist does not create in a competitive manner. What the artist creates for himself is created for others.
For the artistic work to be completed, it must be seen, heard, and touched by others, and thereby reproduced again. Furthermore, the artist awakens what is creative in the others, so that they can participate in creating their own works of art.
The truly rich man and woman are social persons, erotic persons, connected to their creative sources, each other, and the world around them. Thus to be connected is to be social, is to be erotic, is to be rich in an infinite possibility of human manifestations.
Likewise, in authentic sexual relations, human beings discover that they need other people not as objects, but as complements to themselves. It is in the midst of erotic sexual love that human beings catch a glimpse of what true community is all about — intimate, cooperative, social.
In this intimate mutual fulfillment, the old dichotomies are overcome: Man vs. Man; Man vs. Nature; freedom vs. necessity; self-affirmation vs. objectification; alienation vs. authority. Marx was justifiably angry that an economy based on capital had permeated even our sexual relations. By turning women into sexual commodities, he understood that all of us were reduced to objects. What we become is due to the quality of our relationships.
This sort of mutual, creative exchange is impossible when transactions occur over many miles, despite the increasing capacity of communications technologies to form linkages between people. Face-to-face encounters are still necessary.
Through import substitution programs, community supported agriculture projects, barter networks, cooperatives, and even in lending a rake to our neighbor, or in countless other instances, we get a glimmer of the convivial communion possible in a greater economy.
by Greg Bryant
January 29, 2014
Although Oregon Marketplace itself is no longer active, the approach -- lobbying businesses towards import replacement -- was effective. The non-profit Community Development Corporation that started this project, NEDCO, is extremely successful at promoting self-reliant local economics. They have kept on mission and play a key role in the extraordinary Whiteaker neighborhood economic revival, in Eugene, Oregon. This is done entirely through a focus on local production for local consumption.
Above: Putting local goods to work: Operations manager Janet Kerans watches as regional manager Brenda Cheatham flips Oregon Marketplace paperwork with a locally-produced pizza scraper.
Below: These reusable, labeled vegetable bags, meant for gathering and refrigerated storage, were produced through brokering among local producers by the Oregon Marketplace.