Economic Diversity, Where Do We Start?

Recent smoke events and the impacts of COVID-19 not only encourage, but demand, we look at Ashland’s economy and the diversity of its’ industries. More to the point, we may say we need greater economic diversity in Ashland but what does that look like and how do we achieve the goal without adversely impacting affordability and access to basic needs for residents?

The goal is to maintain what we love about Ashland, and grow our economic diversity with strategic intention, while balancing affordability for our residents, reflective of our community values.

When we look at our economy in Ashland our core competency is tourism, and businesses that support tourist activity, also known as a local-sector business. As an economy we are well versed in tourist related business and therefore it is a strength our city possesses. In diversifying our economy, we cannot forget our strength and our strategy for diversification must include leveraging this strength as a component of the solution. Diversification does not mean turning away from our existing local-sector businesses.

Also important in our diversification strategy is the traded-sector. Traded-sector businesses sell the products and services they generate to consumers and clients outside of our city, region, and state. Ashland is home to traded-sector businesses and partnering with these businesses to help them grow is essential to diversifying and growing our economy.

Thus far we see Ashland possesses a strong local-sector, businesses and services consumed locally within the city and region in which they were produced. Examples of local sector businesses include but are not limited to, restaurants and health care. To a lesser extent Ashland also has traded-sector businesses like BioSkin, Blue Marble, and Pickled Planet. These company produce goods that are sold outside of Ashland and our region.

The interdependent relationship between local-sector and traded-sector businesses holds a key to diversifying Ashland’s economy. Traded-sector and local-sector business work together to support the economic health of a city.  Traded-sector businesses through goods exported out of the region, bring money into the region.  These funds are then, at least partially, spent within the local-sector economy thus supporting local jobs and incomes. The local-sector economy in turn provides the goods and services that contribute to the quality of life of those employed by the traded-sector¹. The quality of life supplied by the local-sector then influences those who would want to work for the traded-sector employer and contribute to the competitive nature of the traded-sector business. The sectors are interdependent and each has a role in creating a healthy, resilient economy within a city or region.

Economist Enrico Moretti describes the interdependence of traded-sector and local-sector businesses within an economy. In Moretti’s paper “Local Multipliers,” Moretti finds that for each skilled job added in the traded-sector, 2.5 local-sector jobs are created². It follows that the presence of traded-sector jobs in Ashland contribute to stable, living-wage jobs which by extension support our local-sector through avenues outside of tourism.

So how does Ashland encourage traded-sector growth and development?

• First, our commercially zoned property is located primarily within the Rail Road District, Hersey Street, Clear Creek and a few parcels in the south of town. If we as a city wish to help our existing traded-sector businesses grow, having locations that are zoned to support their growth will be vital.
• Second, though Ashland does not possess the financial resources to directly support such business, we do have the ability to advocate for traded-sector business on the state level and match businesses with state level programs designed to support traded-sector growth. Such programs include: Oregon Business Development Fund³, Oregon Business Expansion Program⁴, and the Oregon State Trade and Export Program (STEP)⁵.
• Third, traded-sector business services companies that specialize in management consulting, engineering services, advertising, and public relations also offer an opportunity. Through Covid-19 the option to work remotely has presented itself as a viable option for employers and employees. Such a model lends itself well to traded-sector business services and may present an opportunity to attract new residents to our community over the longer term.

Finally, as our city explores, and strategically pursues economic diversification, it is important to remember the local-sector that contributes so much to our community. Our economy can be further diversified within the local-sector by renewing our focus on building the shoulder season offerings within our community. The shoulder season consists of the weeks immediately before and after peak tourist season. By supporting and expanding opportunities for visitors to enjoy Ashland during shoulder season, we smooth out the seasonal impacts on our local-sector.

As a member of the Economic, Cultural, Tourism and Sustainability Grant Committee I am regularly inspired by the breadth of non-profit groups who enrich our unique city with their offerings. Ashland Independent Film Festival is a prime example of a group that brings visitors to our town outside of the traditional tourist season.  Granted Covid-19 significantly impacts this example.  Accounting for Covid-19 we have groups such as Rogue Valley Mountain Bike Association and the Klamath Bird Observatory that offer outdoor activities in seasons other than our core tourist season and likewise bring people to our community.

Let’s look specifically at Rogue Valley Mountain Bike Association (RVMBA)⁶. After speaking to members of the mountain bike community, it is evident that many prefer riding conditions in spring and fall, off season for our traditional tourist activities. Our community already boasts the services and amenities to support mountain bikers who require overnight stays, a cup of coffee before a ride, a beverage and food post ride, and over a half dozen bike shops in the case of a mechanical issue or gear need.  Ashland benefits from the seasonal smoothing effect that comes with visitors enjoying off season activities, our local cycling-based businesses, hotels, bed and breakfasts, and restaurants also benefit. In short, yes this is tourism, but the diversification into off-season opportunities is tangible and should be included in any comprehensive strategic plan for economic diversity. Diversity applies to the type of business, its’ industry and seasonality.

In summary, a plan to diversify our economy in Ashland would be wise to include these strategies:

1. Identify and partner with, existing traded-sector businesses to encourage and enable growth.
2. Advocate for our traded-sector businesses, and encourage new traded-sector business within Ashland, through uniting state programs with our traded-sector businesses and entrepreneurs.
3. Leverage the benefits of work from home opportunities to encourage and entice business services employees, within the traded-sector, to live and work from Ashland.
4. Maintain our current local-sector businesses and find opportunities that smooth out the seasonal cycle of tourism as outlined in the example of encouraging mountain bike opportunities in spring and fall.

These ideas are just a start. I have had the pleasure of meeting residents with incredible experience in the area of economics and business development. Now is the time to bring our collective intellectual resources together to determine the best plan for Ashland while remaining true to our community’s values.

1. https://portlandalliance.com/assets/cta_items/pdf/traded-sector-study-FINAL.pdf
2. https://eml.berkeley.edu/~moretti/multipliers.pdf 
3. https://www.oregon4biz.com/How-We-Can-Help/Finance-Programs/OBDF/
4. https://www.oregon4biz.com/Oregon-Business/Tax-Incentives/BEP/
5. https://www.oregon4biz.com/Global-Connections/Export-Promotion/
6. https://rvmba.org/

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