Remaking the Port of Olympia for the 21st Century

“A Port is something Olympia doesn’t know she has,” the Chamber of Commerce told Thurston County voters nearly a century ago. When the people of Thurston County created the public Port of Olympia in 1922, the area was riding high on the great western timber boom. A Port District could dredge a channel for ocean-going vessels, build land for industrial sites and “facilities for better markets, industrially and agriculturally.” Instead of using the harbor as a log yard, more mills could turn raw logs into lumber, adding economic value and creating jobs.

Plus, with a Port District, Olympia won the agreement of the US Army to dredge the approach channel. An army of lobbyist had been unable to wring this concession from the engineers and Congress when they had pushed for federal dredging before World War I. Now in the boom years, 25 billion board feet of timber beckoned, along with sand and gravel for the explosion of building that lay ahead.

Broader local benefit. The Port gained county-wide acceptance once the case was made that the Port could benefit the whole county and not just the timber trade. Many believed that the South Sound was positioned to become a major center of fruit, berry and nursery production, just as it had become famous for canning oysters, and it was seeing huge growth in dairy and poultry. From the start, the Port was supposed to provide warehousing and other facilities to support local agriculture.

Struggling to refine its mission. The following years saw many changes, from the Great Depression to high-tech mills, to oil tanks and a sewer plant. The Port picked up an airport along the way. By the 1960s, the Port no longer served as a log-fueled industrial hub. The industrial promise of earlier days gave way to brown fields and marinas. The Port still faces costs in the range of $100 million or more for cleaning up old sites even after years of work on polluted areas such as the Cascade Pole Superfund site.

When the marine terminal of the Port was built, I-5 did not exist. Breakbulk cargo was the norm. Industry had not migrated to Asia. Irrigation had not yet transformed Eastern Washington into an unbeatable paradise for industrialized agriculture. Yet even then, the Port was in stiff competition with similar ports like Grays Harbor.

Local boosters spent years touting the idea of constructing a canal that would carry ship traffic through the Sound in a clockwise circle, connecting back to the Pacific via a system linking Olympia to the Chehalis River. This was part of a recurrent pattern of looking to the federal or state governments to subsidize the local economy. Olympia didn’t get a canal, and its role as the seat of state government quickly became the most important aspect of Thurston’s economy.

The export trap. It is a good thing the Port’s maritime ambitions did not become the focal point of the local economy. In January of 2017, the Washington Public Ports Association (WPPA) published a draft of its periodic Marine Cargo Forecast. The report shows that the shipping industry is now utterly dependent on the rise and fall of Asia, which accounts for over 90% of Washington’s container imports and exports. If Thurston County had placed its bets on timber over state government, the results could have been disastrous.

Olympia still exports logs—as it always has. Yet the economy and environment of Thurston County have changed profoundly. The scale of Northwest logging remains huge, but there will not be another great timber boom. State log exports have leveled off, and will either decline very slightly, or grow regionally by 2.2% at best over the coming two decades according to the WPPA study. Compare this to the rise of Washington auto exports, largely to China: 23% growth between 2000 ad 2015, with projected future growth of at least 5%.

Now the main and most reliable tenant at the Port of Olympia, Weyerhaeuser, tells its investors it has faith over the short term that demand from key overseas customers, Japan and China, will continue steady for a while. Yet there are no assurances that Weyerhaeuser will keep drawing so heavily from Washington forests to supply its customers. How much longer can this global company continue to cut at its current furious pace in the forest lands of Washington?

Race to the bottom. Weyerhaeuser chooses to ship out of Olympia for now because of the very favorable deal it made to lease Port property. The Port must shave its margins very thin, to the point of losing money, in order to secure customers. For instance, while Port officials have been eager to see an end to a contract involving highly visible and controversial ceramic fracking proppants, it got stuck with storing the material—for no additional charge —when the market dried up. The Port moves much of its cargo on a single rate per ton—a little over $20 per ton for the proppants. It does not protect itself with such niceties as specifying a date by which the material must leave the Port.

At a recent information session convened by Commissioner E J Zita, outgoing Port Finance Director Jeff Smith explained the Port’s race to the bottom this way: “The Port is competing with every other port to get breakbulk cargo so that we can help pay for the marine terminal. Some people compare it to a utility, but we’re not a utility, because a utility has a group of rate-payers that can’t move and they can’t change. This is not a monopoly. Our customers can go anywhere where the prices are cheapest.”

It won’t get better. According to the WPPA, breakbulk cargo volumes of all sorts “will grow slowly due to containerization and structural changes in the industries that produce these cargoes.” Even in the very best case scenario, breakbulk imports will only grow by 2.4% per year throughout the whole Pacific Northwest.

In this world of growing competition and shrinking demand, the Port has landed some strange cargoes besides the unpopular fracking proppants: cattle exported for massive industrial dairies in Vietnam; gold ore imported from North Ireland over the objections of local residents who fear the despoiling of Irish farmlands and wilderness to little local benefit; and corn imported from Europe for “organic” dairy cow feedlots—contrary to the hopes of Thurston County farmers who had voted for a public port to export our agricultural goods to the world, not the other way around.

The critical challenge for Washington ports, besides surviving competition with Southern California and British Columbia, is to improve the railway and highway systems that choke off the flow of goods to and from terminals. Compared to mega-Ports Tacoma or Seattle, Olympia seems far from the front of the line to receive the benefits.

The fate of the marine terminal poses a tough challenge for its three Port Commissioners. So far, the Port has not taken a realistic approach to addressing the long and inevitable decline of the marine terminal in the face of profound structural changes to the industry.

How well does the Port serve the local economy? That is not a simple question, and the Port has not tried to find out. In 2014 the Port of Olympia commissioned an “Economic Benefit Study” by a firm that specializes in “impact analysis.” The contractor, Martin Associates, was careful to state that “the impacts measured in this study are the current jobs, income and taxes generated” by Port tenants and commercial cargo activity. But they added, these were “not necessarily net economic impacts in the sense that if the Port were to disappear, these jobs would be lost from the economy.” Not only does the study fail to consider the relative economic good the Port provides compared to other possible uses, but it does not even weight the benefits against costs. That is not the kind of “impact” modelling that Martin sold to the Port.

Even so, the results did not come out well. According to the Port overview of the study, 643 direct jobs were lost between 2009 and 2014 (the latest year for which figures are given). The comparative loss of annual business revenue was over $774 million, with similar relative losses in taxes and local purchases. One of the government jobs lost in 2017 is that of Finance Director. Despite the desperate need for good economic analysis and management in these troubled times for the Port, two commissioners—Downing and McGregor—preferred to outsource that job to a contractor.

The Benefit Study claims that there were 2400 direct jobs created by Port activity in 2014, mostly generated by port tenants. Full time Port staff numbered 44 in 2009; and the peak year of 2013 saw the equivalent of 32 full time longshore jobs — double the number for 2012. For comparison, there were 108,500 jobs in Thurston County at that time, and a third of them were in government.

The future direction of the county economy. According to the Washington State Employment Security Department, recent growth areas for taxable sales in terms of dollar value for Thurston County have been in auto dealers, accommodation and food services (with particularly rapid growth in specialty food and beverage stores), specialty trade contractors (professional, scientific and technical service) and e-commerce.

The Port is moving toward the retail and rental sectors, following the lead of the Washington Public Ports Association in promoting tourism. Yet the retail sector is among the worst-paying for the County. Simply bringing in people to buy things, or to rent space, does not foster the kinds of jobs that truly benefit the community. In terms of providing a living family wage to the average Thurston County resident, government jobs still lead the way.

Stuck in the extraction economy? Over the years the Port has struggled to reinvent itself, yet it has also stood by its old mission of delivering the bounty of our forests to the world. In the 1920s many hoped that raw logs would give way to modern timber-based industries on the Port Peninsula; jobs that would provide steady work and lift family incomes. That dream sprouted and died quickly, leaving behind a polluted landscape and trapping the Port in a continuing downward spiral handling breakbulk cargo. This is a common fate in the world of globalized trade, but that doesn’t make it any easier to live with.

Steering the Port into the new economy. People no longer hope or expect the Port to drive Thurston County economically, if indeed they ever did. Its main line of business, the Marine Terminal, shows no hope of improvement. Swantown Marina is not expected to do much more than break even, rendering it more of a cultural asset than an economic one. Yet the Port is still valued, and is gaining recognition for the role it plays in the life of the community.

At the direction of the Port’s newest commissioner, EJ Zita, the Port has begun to study other ports to find better opportunities for the marine terminal; opportunities that might promise good wages while adding jobs through incubator hubs, food hubs and light industrial activities, among other options.

A century on, many of the things that make this place beloved, are touched by the Port: the Farmer’s Market, Percival Landing, the Airport, and even the Weyerhaeuser forest lands. The Port may find a way to reshape its role for Thurston County once again, but only by looking at its own situation as honestly as possible and finding a way forward through sustained, serious and inclusive conversation with the whole community.

Helen Wheatley is a historian, activist and writer who has lived in Olympia with her family for fifteen years. She also serves on the Hanford Advisory Board on behalf of the citizen watchdog group Heart of America Northwest.

 

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