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KATE DINS: Good evening. I’m really honored to be here,
And honored to have been ask to moderate the panel discussion,
which begins now.
We have just heard some very provocative
and I think fascinating comments from Professor Hellman.
And I think it will really inform our panel discussion as well.
So let's get started. And I'll ask our panelists to come up
as I introduce them,
and then we'll ask each one of them to begin with some opening remarks.
I've got a question for each of them that will kind of kick off the discussion.
And then we want to have plenty of time left over for discussion with you all.
So please be thinking of questions that you'd like to ask our panelists.
I'd like to introduce first, Tom Potiowsky,
who is for over 12 years Tom was the state economist for the state of Oregon,
responsible for developing and disseminating
the quarterly state economic and demographic forecasts,
estimating general fund revenue for the state of Oregon.
Not an easy job in the last couple of years, I can imagine.
But now he's currently chair of the economics department
at Portland State University
and director of the Northwest Center for Applied Economic Research.
Please welcome Tom to the stage.
[Applause.]
And then immediately to the right of Tom, Michael Rau.
Michael has 19 years of experience in the footwear industry,
the last 14 with Nike.
Currently he is the director of the Global Supply Management for Footwear.
Before this position, he was general manager of footwear Korea and north China,
global manufacturing operations director, Taiwan,
and manufacturing director of Indonesia. So please welcome Michael.
[Applause]
And our last panelist who has asked me to remind you
that he just got off a plane, what, on Monday from 21 days in China,
so if he seems a little jet-lagged, he probably is.
Bob Fraser is president at EduVents,
an organization with a mission of bringing our world together
one event at a time with planning and coordination of educational conferences,
domestic and international events such as study group tours.
Bob is president elect of the Portland-Suzhou Sister City Association
which promotes educational, cultural, and business exchanges
between Portland and our sister city of Suzhou.
Bob, as I just mentioned, recently returned from a 21 day journey
to China to promote Oregon colleges and universities.
So please welcome Bob.
[Applause]
So I think we're going to kick it right off, Gentlemen.
Tom, I'm going to start with you.
You have a real first-hand knowledge of Oregon's economy.
Perhaps you could focus your remarks on the importance of APEC
countries to Oregon, especially Malaysia, Cambodia, Vietnam, and Taiwan.
And what would you say regarding trade policy as being done
to raise Oregon's competitive trade advantage?
TOM POTIOWSKY: Well, Kate, now she asks me that. [Laughs.]
I would have been prepared. But actually, I do have a few slides
that can help answer those questions.
And so I'm going to be sitting here because we're tethered to our microphones.
But I do have my slides in front of me, so I'll try to coordinate
without being able to see what's up there.
But really, experts and the president mentioned how large they are for Oregon.
And really, they're absolutely important to our economic vitality.
We've seen even through this recession that as we're trying to come
out of it, the one piece that is actually sort of a brighter point
is our exports for our state.
So what I'll start with, because I think I have about 5 to 7 minutes,
is ... let's see if I can advance this. Yes!
So here, I just wanted to give you a quick picture about exports.
And the first graph on the left shows overall exports and there's two items here.
The bar graph shows the total exports
and the line takes out computer electronic products.
Because computer electronic products is approximately,
oh, you know, 40% - 45% of our total export value.
So if I stuck that in there, it would dwarf almost anything else.
Plus, we wanted to show that just recently they've been slowing up as
we've come into 2011, but the non-computer electronic exports
have actually picked up as that line shows.
So exports coming through here have done quite well.
But the big gorilla out there is just slowing a little bit.
But still, it's about where it was before the recession started.
So we had this big bounce back happen but now it's coming back down.
The graph to the right is you can see how the big gorilla there is the top line,
the exports for Oregon exports on computer electronic products.
And you can see how that's slowed down a little bit, but not too bad.
It's still at a relatively high level and then we have agricultural products
and some of the other ones are starting to come up.
But if you squint your eyes a little bit at the graph
and you kind of look at it, you can kind of see from about 2005,
it's really kind of an upward trend.
And over time, too, if you added all these graphs up, you know,
just in 10 years period of time,
probably export values are more than double what they were.
Now here what I've done is to tell you about some of the countries
that we trade with and this is a mish-mash of countries here.
The list actually has mostly APEC members like Canada, Mexico,
Japan, South Korea, Taiwan, Russia, Hong Kong, China, and Australia.
But the challenge that's hitting us right now is that
if you take a look at 2011 compared to 2010,
almost all of the economic growth is looking like it's
slowing down across the world.
And when countries' economic growth slows down,
they’re wherewith, their ability to buy our exports also slows down.
And we're seeing that a little bit in 2011 as we come in the first half of the year.
Now, Japan, for example, is down quite a bit and
that's really a reflection of the earthquake, the natural disaster.
And then in 2012, the expectation is that it has this bounce-back
because it's going to be in a rebuilding phase.
And that's going to sort of add to their economic growth.
But overall, the picture is a slowing world that out there. So ...
AUDIENCE MEMBER: Is number 2 missing?
TOM POTIOWSKY: No, number 2 is not missing.
It's just not on the chart. [Laughs.]
AUDIENCE MEMBER: I meant missing from the chart.
TOM POTIOWSKY: Yes [laughs]
But number 2 is going to reappear in another chart. [Laughs.]
I have a chart, the chart that's coming up is APEC countries
and you'll see the top six are all APEC countries.
The top six export destinations for Oregon exports.
I know what you meant.
Here, Oregon export history with APEC countries.
And what we did here is we also pulled out China by itself
because once again it would just dominate the graph.
But if you think about the China with the APEC non-China,
notice they're all about the same size as the non-APEC countries
which is the rest of the world that Oregon exports to.
And the interesting part here is that during the recession
that we just hit, and a little bit counter to Professor Hellman,
I think we are in recovery. It's just such a ...
I don't want to use the word *** poor, but it's such a bad recovery
that, you know, it seems like we're still in the throws of it.
But notice China, the exports dropped. APEC non-China countries
are from peak to trough dropped by over 46% in the recession.
The non-APEC countries dropped about 32%,
but China's exports peak to trough only dropped a little over 7%.
And how do we attribute this?
Part of it is because computer electronic products
is such the huge gorilla for us. And we have some connections.
It's the Intel connection with China.
Two years ago they opened up a new plant there.
And so all of these statistics, they're not necessarily finished products
that we're talking about being shipped over.
But it's a lot of parts and things that get assembled in to China.
And also the Intel plants that are in China.
And so that really sort of kept it up a little bit.
And then there's Triquint who has a real connection
with a company called Foxcon.
And they basically are the sort of manufacturing arm of Apple
and all the aspects that the Apple items, your I-Pads, your I-Phone and so on.
And they've been quite the supplier of the guts that go in there.
And that's also helped the China situation not be such a bad drop
to us as it has before.
So let me quick go through.
Here now is that chart showing all the APEC countries
and where Oregon exports are for 2010. And take a look.
The first 6, and these are the top 6 export destinations are all APEC countries
and that's 68.5% in the total value of exports for Oregon.
And all together the APEC countries sum up to 80%.
So this aspect of the Pacific Rim, extremely important for our Oregon economy.
Missing in the chart is number 7.
Number 7 is Brazil, number 8 is Germany, and number 9 is Costa Rica.
And the main reason Costa Rica is in there is once again,
sending components of electronics and computer electronics to them.
But the situation here to emphasize to you is that the APEC countries
are where the action is at for Oregon exports.
I pulled out 4 countries that I was asked to kind of take a quick look at.
And you can see, I think it's very interesting,
especially with Malaysia there on the top.
They are number 2 export destination in 2010.
And 96% is computer electronic products.
Not much other diversification there.
And it really is your connections with, especially with Intel
and a few of our other semi-conductor people.
Much more diversified is down in Vietnam.
Still computer electronic products. You can see the emphasis there.
But chemicals, agricultural products, are quite important.
We have Taiwan, once again, computer electronic products.
But agricultural products are one of the things
you tend to see towards the top.
That and food and kindry products.
Those are the process foods that come out of Oregon.
Very important.
And then in Cambodia, fairly small export destination for Oregon
with food and like products at the top.
What I didn't have here is China who's the 4 billion dollar one
as you can see that Malaysia is 2.5, what is it, 2.6 million
so you can see how huge China is just compared
to the number two export destination.
And once again, computer electronic products is quite large.
But agricultural products, things like sowing beans are very big
going out of Oregon to China.
But lately, the big one that's come up just in 2011 is the export of logs.
You go out to Astoria and you can see the port there.
Boy, they're just going out the door.
And actually they're now in terms of forestry products,
which wasn't even in the top 10, is now number 4
as the top export of Oregon that goes to China.
Now, that's good and bad for us as an economy.
What you have is doldrums in the housing market
and people aren't using the logs.
If somebody can use them, that helps that part of the industry, good.
As the housing industry, and it will come back, we just don't know when.
But it will come back. This aspect of logs could get quite expensive.
And the supply problem could hit our mills here in Oregon.
You know, I'm not too worried about that.
The economy has a way of balancing things out as we go along.
I'm very worried if China would all of a sudden
decide that they want all our hops.
I don't want the price of my beer to go up. [Laughs.]
Okay. And then the last question was efforts to promote trade.
And, you know, I was state economist for 11 years and a lot of people
always assume as state economist, you know, I knew every CEO
and every person that worked at every company
and knew every policy
and everything that happened in the state
that had anything to do with economics.
And unfortunately, I don't. And I know a little bit about the trade thing,
but it wasn't exactly my expertise.
So I don't think I've done this justice, really, as to the efforts that
the state has undertaken.
And then you have the local communities and so on.
The sister country relationships that are throughout our state are very important.
But the one I think is very important is, to get over a hurdle,
is the first item is really trying to set up a food safety certification agreement.
If we can do that, we have a foot in the door to an extremely large market
that other places won't have the same advantage,
by having our products certified as safe.
The governor and a group of legislators just returned
from a 13 day trip over to Asia, a trade mission.
Once again, I think this means something more over there
than it almost would mean as if they would come over to US.
And so I think that's a good sign that we are doing these things.
And lastly, this is Oregon as our sort of Oregon economic development.
One of the areas that they mention is
the Oregon manufacturing workforce strategy, really trying to help out
what we call trade in sector companies really work
in terms of their relationships overseas.
And once again I feel like I'm not doing justice to this agency.
They do a lot more than this.
And so I think I've taken up more than my 7 minutes,
and so I will hand it off to my colleagues. [Applause.]
DINS: We're going to move on to Michael
and Michael represents our home town company, Nike, as you know.
And Michael, you've spent a lot of time in Asia and in other Asian countries.
And so maybe talk a little bit about, you move a lot of goods.
You can focus maybe your remarks on how Nike works
with your suppliers in terms of materials, independent contractors
from Asia, from Indonesia, Vietnam, and India,
which is not an APEC member as we know.
But could you share with us a little bit about how Nike decides
to invest in a particular country, a particular company overseas.
And maybe give is some insights of what your experience has been
and the intricacies of working with companies in China
in particular, but other Asian countries or APEC countries as well.
MICHAEL RAU: Okay. Thank you.
So for starters, Nike is very fortunate in that in its 35 years of existence
the majority of the independent contractors or the factories
that we work with in Asia, across Asia,
have been with Nike for 20 to 30 of those years.
So those subcontractors, there's been a tremendous growth in the trust
and transparency as we work very collaboratively with those factories.
So we certainly do maintain liaison offices in each of those countries.
And again, I'm representing more footwear here.
Footwear is exclusive to about 4 countries, whereas apparel
were in many many more countries around the world.
So, our liaison offices that are located in those countries focus
on aligning with strategies with our factories to ensure change management
and things that are coming with industry through the years
and through the decades are being adopted
and for a level of consistency also across our source base.
So those are some of the things that are done, you know,
with our contractors and it's really done
in the spirit of ultimately creating great product at the end.
So as we work also with material vendors in the very same way,
our independent contractors, while we will specify a material
and the material vendor is brought on, then the relationship moves
to the contractor, the independent contractor working
with those material vendors as well to ensure the materials
meet the specifications for the great product.
Second piece of that question was just around, you know,
in terms of where or what are the criticalities in terms of
where we would go in terms of a new country.
So again for footwear, unlike apparel, footwear,
there is a lot of machinery involved.
It is not easy to take and move a factory from one place or location to another.
And so, whereas apparel, it's mainly sewing machines.
Footwear, there are a lot of molds, there are a lot of heavy machinery.
And so, we tend to stay in the same locations.
Now, in terms of investment, the criteria?
Certainly number one is infrastructure, right?
We need, if we're moving into a country with an independent contractor,
we want to ensure that we can scale.
So the infrastructure, whether it's around material suppliers
that are going to come to that country as well, whether it's around
the roadways or the ports, the logistics piece of actually getting
product and materials in and out of the country is very important.
Obviously, the stability of the government is very, very important.
And when we think about here tonight about trade,
and we look at protectionism versus preferential trade,
which is very obviously a prevailing topic as we move forward.
So that's certainly a key thing to recognize as well.
Obviously the availability of labor
because it does require, you know, a large factory.
You're talking about an abundance of labor.
And our ability then to scale that across the country or across the city.
I would say finally, again as we move forward in some of the markets
like China or Brazil or even India become bigger
in terms of the, in terms of nationals.
Buying the product in terms of that.
We certainly look for that as being another aspect
of what are our sales in that local market.
That's where there continues to be discussion around
what are the opportunities here in the US in time.
So obviously that's where we do, you know, 40 plus percent of our business
is still here in the United States in terms from a sales perspective.
So that's another thing that we certainly look at.
And I would say finally, again having started by saying
that the independent contractors have been with Nike for quite some time.
These are also folks that are quite familiar with the countries
that we're doing business in with them.
So, there are times when those contractors
have already gone to another country, perhaps with another company
that they do business with, and Nike may take that opportunity as well.
So some of the learnings that are gained through that.
We're always monitoring. So, thanks.
DINS: Thanks, Michael. [Applause.]
I want again to introduce Bob Fraser.
And Bob was kind enough to step in at the last minute,
so I really want to give our appreciation to him.
We had a panelist who had to step out, and so our colleague
Bonnie Starkey was able to secure Bob's assistance in this panel,
which couldn't have come at a better moment considering
he has just returned from as I said a 21 day trip to China.
And Bob, I wonder if you could talk a little bit,
just having come back from this 21 day trip to China.
Can you share maybe some of the insights you got
or learned as you promoted Oregon Colleges and Universities.
What do you think we need to be doing? What did you learn?
And can you share some of that knowledge with us.
BOB FRASER: Well, thank you.
Yes, it's been very exciting for me to spend 3 weeks in China.
It gave me an opportunity to promote Portland Community College
and Portland State University, Concordia University,
the three universities that are presently on our board
in the Portland-Suzhou Sister City Association.
I don't know if anybody realizes this, but presently we have,
I'm going to pass the PowerPoint
and I'm just going to speak extemporisely.
We actually have right now 125,000 students studying
from China here in the United States.
And that's quite an economic impact when you consider it.
Oregon is very aggressive in terms of pursuing students
from all over the world as a matter of fact.
We have a consortium of universities called Study Oregon.
You might want to visit studyoregon.com.
Twenty-five universities belong to the consortium.
It's not an association. There's no contact point to reach.
But it is a consortium and all the universities and colleges are accredited.
All of these universities and colleges have intern student
organizations that provide full services to students who are coming
to the United States and to Oregon and to Portland to study.
I had an opportunity before I left to meet with Jean d'arc Cambell
who is our director of international students here at Portland Community College.
Agnes Hoffman and Portland State University,
as well as the director of international programs at Concordia University.
And they're all doing a wonderful job not only providing services
but actually, literally traveling the world to recruit students to our state.
And so what are the benefits to this?
Well, of course there's the immediate impact, the economic impact, right?
You know, if you're studying at Portland State University for four years,
that's probably, typically at full tuition.
And then you have to consider housing and food and all of the products
that they're buying, Apple computers and I-Phones and all of those good things.
So the immediate impact is quite significant.
And then there's the direct impact of the students studying here.
Because, you know, after they graduate, they go back to China
and they either work for the government or they work for businesses
and because of their knowledge and experience here in Portland
and in Oregon, they've developed some contacts.
They have a better appreciation of our country, of our economy.
And what do you know, they're actually doing business with us.
They're actually, you know, either importing goods or exporting goods
or they're coming over here and making investments.
You only have to look at the Wilson Chins of the world with APIC
or Jim Mae, an attorney and president of our Portland-Suzhou
Sister City Association to see the tremendous impact just, whoops,
those two individuals have made in terms of our economy in Portland.
So, it's a wonderful opportunity.
And I've got to commend the community colleges, also.
One, my daughter just graduated from Miami-Dade community college
and I'm very proud of her with her AA degree. And she's not pursuing
a certification as a physical therapist's assistant, which I'm so delighted.
Thank goodness she's taking advantage of that free paid college
tuition program that I put money in for over 12 years.
So, you know, the community colleges are a tremendous benefit to our nation.
President Obama actually spoke at her commencement address,
so the president realizes the importance of community colleges.
When I was over in China, I was promoting the community colleges
and Portland Community College because, one,
you've got the two plus two program.
So they can come over here
and they can study at Portland Community College for two years
and then automatically, of course if they're successful there in their studies,
go to Portland State University or the University of Oregon or Oregon State University.
And at a much smaller tuition fee, too. Wow!
They save, I understand, as much as maybe $35,000 over those two years.
So that's pretty good.
Also, why would a student come to Portland Community College
or Lane Community College?
One, well, because of the class ratio. You have much smaller class ratios,
student to faculty class ratio, another reason.
They get very individualized attention at a community college, right?
They're not at this big state university. I'm sorry, Portland State University.
28,000 students, 1700 international students from 100 countries.
No, they're coming to a community college, three campuses here,
where they really get individualized attention.
You know, their student advisor goes through their entire program,
talks to them about courses that they might be interested in taking,
and those two years they actually have an opportunity
to kind of get a feeling of where they want to go with their education.
They may not be quite sure what they really want
to study over the next four years.
So these two years might be an opportunity to do a little bit of the exploration.
And then by the time they graduate from Portland Community College,
they know exactly what they want to do at Portland State University.
So there's another good reason.
And then of course there's, you know, I mean, our universities
and colleges have tremendous extracurricular activities,
where perhaps they don't have those opportunities in China
where the education is much more structured and I don't know,
stress a little bit more rote.
And so they have to do this and they have to do that.
Here, they can really, they have an opportunity, I think,
learn how to think out of the box.
I think that's another wonderful opportunity when they come here.
And goodness knows, also, you know,
your technical certification programs right now in China
they cannot hire enough pilots.
They cannot hire enough aviation technicians there because there
just really aren't very good schools there.
I shouldn't say very good schools.
There just aren't enough schools there to prepare for that field.
I lived in Orenco Station in Hillsboro.
Everyday on the bicycles I see all these Asian, perhaps Chinese,
that are bicycling from my mother's apartment complex
up to the Hillsboro airport and I know what they're doing.
They're training on helicopters.
So your community colleges have an opportunity to really provide
some really good job skills and not just a degree.
You know, whether it's culinary arts or hospitality management.
Goodness knows, the Chinese are opening up I don't know how
many hotels per day there in China.
Many American brand hotels, as a matter of fact, so my hat's off
to Portland Community College, the Lane community colleges,
and I think there are 5 community colleges in the state of Oregon.
Because they're doing a tremendous job
in facilitating the students from China Thank you. [Applause.]
DINS: We have 3 panelists with very differing experiences
and very differing opinions,
I would suspect on some of the issues that we've talked about.
I was struck by something Dr Hellman said which was he saw APEC
as a transitional institution.
And kind of a need for something to evolve out of there.
To sort of take that vacuum of leadership you talked about.
And I'm curious from your opinions in terms of what's going to benefit
Oregon, maybe you could all comment,
and then I'm going to toss it out to all of you to ask some questions.
Maybe this can kick off the Q&A section.
Maybe talk a little bit about what you think the benefits of APEC are,
maybe what some of the challenges are, and what is next for bridging
the gaps between particularly the Pacific Northwest
and Asian countries in terms of trade.
POTIOWSKY: Okay.
DINS: I know it's a big question.
POTIOWSKY: It is. It is. Well, I would say unlike the portrayal
that Professor Hellman gave with the US in kind of looking
the other way in terms of the importance,
the economic importance of Asian countries.
In Oregon, I think it's the complete opposite.
I think there's been a real recognition of having
to make close connections with Asian countries.
And it's going to continue to happen.
And I think that's going to give us a step up on other places
with the connections and it really is true.
You have to have these personal connections with these countries,
not just the economic ones. The two really go hand in hand there.
And we are moving in those directions.
China, for example, you know, 20 years ago was
not even in the top 20 export destinations for Oregon.
And now it's number one and it's been number one for a couple of years.
And those type of changes are going to keep happening for us.
And so the universities as Bob was talking about,
very much trying to make connections.
I'm now chair of the Economics Department
and we got a call from Waseda University, Japan,
to start offering some courses for their students
coming over or they're going to pay for it.
You know, so these are things you didn't even hear about before.
So, and once again too, we have probably the best ambassador system
through higher ed in terms of making these connections.
And it's reaching through all levels. Before it was much more just
at the state universities and the private universities.
But it really is across the board now to also the community colleges
who play a very important role in this.
So, I'm very hopeful. I think the connections are there.
We're ahead of the game compared to a lot of the other places.
FRASER: Well, I just in Beijing we attended
the international chamber of commerce conference there.
We had chambers of commerce from all over the world.
And I attended a round table of mayors from I don't know how many countries.
And I was amazed at how much investment China has
in South America and Africa.
It was just absolutely mind-boggling.
They are spending a lot of money and a lot of time in these countries investing.
For example, Brazil. Brazil, well they started out
exporting a lot of cars, electric cars as a matter of fact, to Brazil.
And the Brazilian government felt, well you know, hmm,
I'm not quite sure we want to have this one way train experience with you.
How about if you invested in a factory whereby you manufacture
these cars and sell them to us.
And so they came to an agreement and now China is in the process
of building a factory that will build cars for the Brazilian market.
So, it's quite interesting. There was only one city from the United States
that participated in this conference and that was Houston, Texas.
So, it's as you say, networking and making contacts
and developing relationships with the Chinese is very, very important.
And I would like to see more opportunities, you know, our country and
our state and our city going over to China and making those contacts.
I'm happy to say that the Portland, that the mayor of Portland
will be visiting our sister city, Suzhou, October the 28th to the 30th
with a small delegation including myself
to explore some investment opportunities there.
And of course I will be promoting our universities and colleges.
[Laughs.] Thank you.
DINS: Michael, do you want to add anything?
RAU: Yeah, sure.
I actually let my fellow panelists go in order because I think that
obviously I'm going to provide not a different perspective,
but obviously I don't work in this part of Nike's company, right?
In terms of ... but what I can say is obviously Nike employs 22,000
people across the United States, many of which are right here in Oregon.
So, obviously very much promoting free trade around the world.
And so obviously our largest footprint
with our independent contractors is throughout Asia.
And we've actually hosted several contingents from China recently
on the Nike campus and that's mainly just to talk about ...
They've got a number of protectionism activities against
some of the other countries shipping product to them around product safety
and around product quality testing.
Which is very interesting because these, they actually pass all the
quality tests anywhere else in the world.
But it's a matter of, you know, it's a layer of is part of it just
a cover for something else?
You know, so again, we're continuously offering the opportunities
to host Chinese contingents and others back here on campus in order
to break down some of those walls.
Brazil obviously is a very big challenge that Nike has,
as many other companies do as well,
where they're trying to maintain their footwear industry in Brazil,
and really build up the walls so that no one can import footwear
into their countries.
And so, we follow all of the guidelines to ensure that when we do ship
product there, all the certificates of origins and things like that are met.
A number of other companies don't that do business with Brazil,
and that's a challenge. And so it will be a matter of just seeing where
that level of protectionism goes.
Because on the surface, very difficult legislation.
But how closely are they monitoring it across the businesses?
So, again, Nike is continuing to lead the way on those types of efforts. So.
DINS: Thank you. Well, Greg. Let's start with Greg.
GREG: I've got a question that just came up.
DINS: Greg, could I stop you? Maybe before you ask your question
you could give your name and what you do.
GREG: Sure. I'm Greg Rapp. I teach business at the Sylvania campus.
The question relates to free trade and connections between countries.
And it's probably not a surprise about our current
free trade agreement that stalled in congress.
Free trade agreement between Columbia and South Korea.
And I guess I'm wondering from you, Tom, and Michael,
what impact would passage of that free trade agreement have
on the state of Oregon that would be good for Oregon.
And how would that affect Nike?
RAU: I'm sorry, could you just repeat the question? I'm sorry.
GREG: The current free trade agreement.
RAU: Right.
GREG: With Columbia and South Korea. It's stalled in congress
right now. And I'm wondering if that is passed,
what affect it would have on Nike and also on the state of Oregon.
POTIOWSKY: You know, in some ways
I'm a dyed in the wool economist. You know?
And dyed in the wool economists always tout free trade.
And I believe in free trade that works best if the rules of the game
are set up correctly for free trade.
And what that means is that sometimes these free trade agreements
will be clouded a little bit by, yes, we can free trade through this,
but you know, this particular product, you know, is hands off.
And we'll protect that at home
and thus you can protect your hands off at home.
And I think it then sort of defeats the real true process of free trade.
So I'm feeling if these things go through, I think marginally
it will be beneficial to Oregon.
Part of it is for example in the Columbia area, there may be a little hit
on the rose growing industry in Oregon
because they are quite large producers of roses.
So you have one part may be hit a little bit here.
On the other hand, in terms of food products, computer electronic products,
and things like that, I think we come out on top.
And so the same with the South Korea area for various products.
So there's always in free trade, because of the way things
that have been set up, there's going to be some winners and losers.
But my feeling is on net, we would gain.
DINS: Michael, did you want to come in?
RAU: Yeah, actually I don't see it having
a very significant impact.
South Korea in terms of Nike is where we have a small liaison office there.
And we tend to do a lot of our high end innovation development there
with the mass production and the contractors coming
in the off-shores from there, which would be China, Vietnam, and Indonesia.
And while there might be a very small footprint
of apparel product being made in Columbia, again,
I don't think it will have a significant impact at all.
DINS: Thank you. Jane?
JANE: I'm Jane.
I teach English at Cascade campus where we'll be tomorrow.
And my question is for Michael.
Given that Nike has, from my perspective, taken the earliest
and the most heat about over-hiring an overseas labor pool.
And it seems like Nike's kind of the biggest, easiest target out there
for what many companies are doing overseas.
So what do you think some of the lessons have been in that area
and what do you think you can share now
with other companies in a global economy?
RAU: Yeah, again, the business model has been obviously
to work collaboratively with independent contractors
that have that expertise in those countries.
So they have a product expertise, they have a capability to scale,
you have a build the factory and mass production.
So I think Nike, well I know Nike is a ... obviously has a certainly
a responsibility to that.
However, that business model is the Nike business model.
And that's why as I mentioned, the majority,
the vast majority of the independent contractors that we work with
have been with Nike for 20 to 30 years.
So almost from the beginning.
So we have grown up and I guess you could say
changed the industry in that way together.
And that continues to be a business model that works.
DINS: Let's go to Deborah and then we'll go over here.
DEBORAH: Hi, I'm Deborah Sykes. I'm an administrator at Sylvania.
I had a question for Michael Rau.
And I ask this in terms of our students and what they need to know
and what this means to them.
When you are looking at overseas managers,
what are the key competences that you're looking for
that they need to have to be successful in Asia?
RAU: Okay. Well, certainly a sensitivity to culture.
Because having grown up as a boy
in a small town in Massachusetts of 6,000 people,
I think you know obviously I was very small town.
And I had an opportunity to move to Indonesia
when I was in my mid-20's.
And I guess in a way would have never thought I would have adapted so easily.
My parents are German, so maybe there's some culture there.
But what I've seen is what traits Nike is looking
for in terms of managers that go overseas.
So certainly a cultural awareness.
Throughout the company, Nike is always leading, always changing.
So anybody that works in Nike or even the independent contractors,
they, there's a sense of change will always happen.
And that's a good thing. So, innovative thinking, certainly being
very collaborative, okay, in my world working in supply management,
you know, one day I'm obviously working
with our geographies on delivery,
I'm working with Asia on setting up capacity and sourcing
and delivery and at times integrating with governments, you know,
through other folks to talk about protectionism and things of that nature.
And so in terms what then happens is these employees
or these folks, they grow.
They grow in their capabilities and competencies
and then what Nike would like to be able to do is then bring those
people back to other, whether it's world headquarters here or it's
somewhere in Europe at another office to ensure that cultural blend occurs.
That's happening quite a lot because you don't want it to be where
it's foreign what's going on over there.
You want that to be very much integrated into it.
When I was in Korea as a general manager, one of the programs that
we actually started was to take some of the Korea nationals
that worked in the Nike office and give them an opportunity to work in China.
And give them an opportunity to work in the US.
And so those exchange programs are happening all the time.
Which again makes it very global and very natural to accept cultures
and to understand that we have a common interest.
DINS: Thank you. And a question here?
RAY: I have a question for Michael. My name is Ray Olsen.
I'm an independent film maker, retired community college, sociology teacher.
I heard Elton Stolz speak last month.
He's a sociologist at [?] University, used to be at the University of Hawaii.
And he made one point that I hadn't heard of before
and I was wondering how it's affecting Nike.
He said the government is starting to support the workers, the unions
and pushing for better working conditions and higher salaries.
And you know, the Chinese government... one of the sociologists
at this event also said that the Chinese government
is the smartest Chinese government there ever has been
as Chinese governments go.
So I was just wondering if you're feeling pressure and getting that
for unions to or for workers, for government to increase their salaries
and improve their working conditions, that kind of thing.
RAU: Okay. Well, one thing I can say is is that again,
in collaboration with the factories, Nike is always attempting
to stay ahead of that curve in terms of the working conditions.
And our factories primarily in Vietnam have been open for years
to universities to travel there and visit a factory and walk through
and see the experience and see how it's set up.
So definitely staying ahead of the curve there.
And then the other part of your question? Excuse me.
RAY: The [unintelligible.]
RAU: Oh, in terms of wages. My apologies.
RAY: How do you support those workers in dealing with multinational corporations?
RAU: Right. Right.
And so I would not necessarily say that we're feeling that more so than ...
I mean the turn over rates are certainly something
that you monitor at your factories.
These are very large factories.
And so the turnover and the change there has not changed to any great degree.
Wages certainly are going up.
They're actually going up in all the countries that we mass-produce footwear.
So I think, well I know that Nike's feeling is that it's not a matter of
going somewhere else because there's cheaper labor.
Like China, Vietnam, Indonesia and now India have been
the sources for footwear for quite a long time.
Some of the independent contractors will migrate
some of their factory or build an additional factory perhaps inland
in China where there may be some opportunities.
But we're not seeing a dramatic change in terms of our operations.
DINS: Go ahead, Bob.
FRASER: Yeah. Yeah.
Things are beginning to change in China right now.
China is very worried about the US economy.
China is very worried about the European economy.
China is very worried about their exports to these parts of the world
and so what they're starting to think about is turning inwards
and looking at increasing the standard of living of their own citizens.
I kept reading China Daily. It was the propaganda periodical,
but they are now talking about limiting the export
of their natural resources to the world and better utilizing
these resources for internal manufacturing and consumption.
So they're starting to think inward.
They're starting to think about increasing their own consumerism
rather than increasing ours. So it's going to be kind of interesting
what happens in the long run.
I mean, some of these natural resources I understand
are used for manufacturing such products as I-Pads and I-Phones.
So we may begin seeing increased pricing in some
of the natural resources that are coming out of China.
So this is big worry to us.
And then also when you think about the investments that China
is making in Latin America and Africa. And they're no fools.
They know that there are a lot of natural resources
in these parts of the world.
And the interesting thing is, you know, while we're you know,
selling guns and planes to Taiwan and having wars here, there,
and everywhere, they are not just tapping into the natural resources
of Africa, but they're also helping Africa.
They're building infrastructure in Africa.
They're building hospitals in Africa. They're building schools in Africa.
It's quite incredible. It goes back to, you know, what I was saying
before
or commenting is that, you know, the Chinese have this vision.
And they're able to do it. There's no conversation about whether
we're going to do this or whether we're going to do that,
whether we're going to send a satellite in space, you know,
regardless of the fact that you know half our population still is hungry.
I mean, you know, when they decide to do something, by George, they do it.
And so I think we've got a real challenge on our hands.
DINS: We've got time maybe for one more question. Yeah.
WARREN: Yeah, Warren Banks,
international trade advisor at Klein Center SBDC.
Bob, I've been affiliated in the past with state government
and international trade division and I've talked to other states.
And other states when they go overseas, say for example
you went representing educational systems.
Many times they will integrate the educational part will integrate
into the economic part and others so they aren't just a sole silo going overseas.
But they will say, yeah, what can I do for you? What message can I take?
And I don't see that happening in Oregon. Do you?
FRASER: Oh, interesting. Okay.
Well, as a matter of fact, the way I got involved in this,
and it's a long story so I'm not going to tell the entire story.
But I was invited by a friend from business Oregon
to possibly participate in this trip with the 16 legislators from Oregon.
And I looked at ... because I'm involved with Portland-Suzhou Sister
City Association and I'm somewhat passionate about educational exchange.
And I was looking at the list of participants
and I didn't see anybody representing education. I said, oh my goodness.
There was an opportunity for Portland Community College
and Portland State University and Concordia and other universities t
o send their brochures over.
And I said, well. You know, those brochures, what are they going to do?
They're going to sit there in our trade booth there in Chamen
where we were intending an investors conference and great,
people are just going to pull them out of the rack?
Okay, no. We needed a voice.
So I said, okay, well maybe this is an opportunity.
Because I figured, you know, yeah, okay, we export Intel chips
and we export agricultural products
and yeah those are great opportunities to help our bottom line,
but what about education? My goodness!
That has a tremendous impact on us both in the short term and the long term.
So I thought, hmm, maybe I'll go as a private citizen and represent education.
So I started doing some investigation and I started calling our board member:
Stark Campbells and Agnes Hoffmans
and Concordia Randolf Donahue with Concordia University
and get their feedback, and asking them, is this a crazy idea
for me to go and represent education?
And they said this would probably be a really good opportunity.
So I did a little bit more research and came upon Study Oregon and the consortium.
And I said, oh my gosh! I actually have something to go over there and sell.
And Sunum with Business Oregon put together
a nice promotional piece on our 25 colleges with all of the colleges
listed on the promotion piece along with the URL.
And I went over there and I became a voice.
And so, you know, I was making presentations to high school students
and to university students, teachers, and administrators in many of the cities.
And had a tremendous response. These kids, they start learning English
from 5th grade, so you can imagine how well they speak English
by the time they get to 12th grade.
And many of these students are interested in coming to the United States
and hopefully now to Oregon to further pursue their studies.
So you're absolutely right.
One last point.
I think we should turn Portland into one big education center and brand it.
I mean, think about it. I mean Portland State University right there
in south Portland. I mean right there in the heart.
And then Portland Community College with their three campuses.
And the wonderful programs that you have, you know,
BA's, MA's, PhD's at Portland State University. The research center.
Their wonderful international management program.
Confucius Institute, okay?
They have a tremendous Chinese language program.
They have tremendous tie-ins with the business community.
All sorts of internships with our government offices
as well as many of the businesses in Portland.
So why don't we brand Portland as an educational learning center
and the next time we go over to China we really give it a big push.
DINS: Good point, Bob. Thank you. [Applause.]
So we're going to tie up our remarks. I like that closure, actually,
because one of the things that's always struck me about education.
Education is a business, as much as we feel passionate about it
and it's our avocation and our vocation, it's also a business.
And I think keeping that in mind as we look at the future,
we have a part to play in this discussion
about globalization, APEC, the Pacific Northwest.
Two things that really struck me that I'll leave you with:
One was this idea of building connections and building relationships.
Not just across countries, but with individuals, with groups.
And I think how do we educate people that that is important to do.
That we all have a responsibility to do that.
To be innovators, to be change agents, to be culturally aware
is something I think we all need to take on as a challenge
both for ourselves and those of us that are educators to take it on
and how do we communicate that in our classrooms
and throughout our institutions.
And then the other thing that will stick with me
is Vladimir Putin and Sarah Palin debating. [Laughs.]
And with that, I'd like you to thank our panelists one more time
and thank you so much for coming.
[Applause.]