Wine Cluster Study and Implications for Planning EMSI

Wine Cluster Study and Implications for Planning EMSI Conference September 11, 2012 Steven Van. Ausdle, President Walla Community College

Welcome to Walla

The Challenges of our Time Balancing Security, Prosperity, and the Environment Safety and Security Economic Competitiveness Environmental Sustainability

Jobs, Wages, and Standard of Living A Strategy for Economic Competitiveness Productivity* Innovation and Entrepreneurship Talent Investment Infrastructure *Improving Productivity will require more innovative uses of existing resources.

Regional Strategy For Economic Development Talent • STEM programs • High-demand programs • Establish high school skills center • Use instructional technology for access and efficiency • Economic studies Investment & Entrepreneurship • Increase access to expertise and capital • Strengthen capabilities of manufacturing • Provide small business incentives • Ensure regulations are not barriers • Promote entrepreneurship Infrastructure • Information Technology • Energy Technology • Water Technology • Waste Management Technology • Transportation Technology

WWCC Center for Enology & Viticulture 2006 Governor’s Workforce and Economic Development Best Practice Award

Our Vision: Wine / Food / Art

WWCC Enology Students Learning While Creating College Cellars Wine

Wine Country Culinary Institute With a Focus on Pairing Food and Wine

Port of Walla Wine Incubators

Vinea: Sustainable Wine Farming

The Cluster-Based Approach to Economic Development WWCC was awarded an $82, 000 grant, plus a $25, 000 match, to: • Define and describe the nature of the region’s functional economy; • Describe the nature of the wine industry cluster; • Develop a shared vision; • Determine the influence of the wine industry cluster; • Develop a strategic plan for the wine industry cluster; • Maintain a wine industry cluster web site.

Walla Area Functional Economy WALLA COUNTY COLUMBIA COUNTY WASHINGTON OREGON UMATILLA COUNTY WALLA AREA FUNCTIONAL ECONOMY Westernmost edge of Walla County (includes Columbia County, most of Walla County, and part of Umatilla County) Umatilla County, Oregon

Net Migration, Walla County 2000 1500 1000 2000 -2005 500 0 -500 1995 -2000 -1500 Sources: U. S. Census 2000 (Residence 5 years ago), U. S. Census Annual County Population Estimates

The Economic Impact of Walla Valley Wine Total current jobs in wine production and tourism Growth rate of jobs related directly to wine, 1997 – 2007 Total earnings generated by wine-related jobs Additional jobs created by economic multiplier effects Total regional earnings due to wine-related industries and multiplier effects Total jobs projected to be dependent on winerelated industries in 2017 1, 094 1, 052% $96 million 937 $59. 3 million 3, 975

Proposed Initiatives • • • Marketing (6) Education and Workforce (8) Infrastructure (8) Amenities (3) Policy (8)

Creating the Walla Innovation Partnership Zone (IPZ) Ecosystem Collaborators K-12 University Center County City Skills Center Tribes Water Efficiency Vision Excellence Foster a Healthy Economy and a Healthy Environment Business Development Chambers of Commerce Innovation Economic, Environmental, and Cultural Sustainability Rural Center for Entrepreneurship Downtown Foundation Learning Diversity Energy Wallowa Resources Energy Efficiency Utilities Entrepreneurship Wine & Hospitality Cluster Tourism Walla Watershed Partnership Salmon Recovery Board Renewable Partnerships Integrity Infrastructure Water Center Watershed Restoration Sustainability Confederated Mission Workforce Development Port Water Quality Values Career Pathways Collaboration WWCC Dept. of Ecology Initiatives Art Alliance Wine Alliance Sustainable Living Center Enology & Viticulture Center

Industry Cluster: Groups of similar or related industries that are geographically concentrated and may achieve collective efficiencies and increasing returns to scale through transactions, shared labor pools, infrastructure, knowledge and technology spillovers, and other complementarities.

Questions How has this regional economy changed over the past five years? How has the wine cluster changed over the last five years? What are the effects of the economic downturn on the region and the wine cluster? How do indicators of economic progress compare in 2011 with the 2006 benchmarks? What are the priority initiatives for growing the regional economy and what central role can the IPZ continue to play? What are other potential clusters the IPZ can promote?

Walla Valley Wine Cluster Study Grape Stock Washington State Legislature, Wine Commission, Wine Institute, and Walla Valley Wine Alliance Winemaking Equipment Fertilizer, Pesticide, & Herbicide Vendors Barrel Accessories Grape Harvesting Equipment Vendors Irrigation Technology Manufacturers Growers/ Vineyards Wineries/ Processing Facilities Bottle Etching Caps and Corks Suppliers Compostea Worm Farming Washington Agricultural Cluster INFRASTRUCTURE Educational, Research, and Trade Organizations (e. g. , WWCC Enology & Viticulture Center & Culinary Arts Program, WSU) Public Relations & Advertising Art Cluster Culinary Cluster Based on Michael Porter’s format for describing industry-based clusters Tourism Cluster

Projected IPZ Employment With and Without the Wine Cluster 45000 40000 35000 30000 25000 17 Without 20 12 20 07 20 02 20 97 19 92 19 87 19 82 19 77 19 With

The Walla IPZ Wine Cluster Percentage Growth in Overall Employment 2006 to 2011 United States Washington State IPZ - 1. 5% 1. 1% 11. 3%

Walla Regional Wine Economy, 2011 Direct jobs in wine production and wine tourism Direct wine cluster employment growth, since 2001 Total earnings generated by the wine cluster Wine cluster jobs, including multiplier effects Total regional earnings Total jobs projected to be dependent on the wine cluster in 2017 Percent of all jobs dependent on wine cluster Projected percent of all jobs dependent on wine cluster in 2020 Regional economic growth since 2007, absent the wine cluster 2, 061 76% $96 million 6, 003 $230 million 8, 913 14. 4% 19. 8% 9% 2%

Wine Cluster Research Summary • Growth in the wine industry occurs in tandem with wine tourism. • The wine cluster’s share of the regional economy is increasing: a multiplier effect of 3 and location quotient of 50. 7. • Wine cluster diversifies the region’s industrial mix and contributes to its resilience, dampening the effects of economic recession.

Cluster Research Informs Planning Decisions • Align Workforce Education programs with regional economy • Adjust the scale and scope of existing programs • Create new programs • Identify industry needs • Identify and target potential high wage/high growth sectors • Identify public policy needs

National. Journal How Wine Growing in Walla Supports the Economy By Catherine Hollander June 1, 2012 “America’s economy today feels as sleepy as Walla’s two decades ago. Middle-class workers were slammed by the financial crisis, their jobs disappearing, wages stagnating, and future uncertain. To put them back to work, the nation would do well to consider Walla, which seems to have cracked the code on how to get mid-skill workers back into the labor force while revitalizing an economy. If the country needs a model, this could be it. ”

WALLA Union~Bulletin Wednesday, May 30, 2012 College Cellars wines win regional acclaim Eight wines from the local teaching winery took home honors from recent judgings WALLA – Student-made wine brought home nearly a case full of hardware at the recent Seattle Wine Awards and Northwest Wine Summit. In the Seattle Wine Awards, College Cellars won three double gold medals for its 2011 Ice Wine, 2009 Syrah and 2008 Malbec. Silver medals were awarded for the 2011 Sauvignon Blanc and 2010 President’s Blend, along with a bronze medal for the 2010 Scholarship Red. The college’s 2011 Chardonnay won gold and its 2011 Semillon won bronze in the Northwest Wine Summit awards, which covers Alaska, Alberta, British Columbia, Idaho, Montana, Oregon, and Washington. The 7 th Annual Seattle Wine Awards is Washington State’s largest and most comprehensive independent wine recognition program. On April 21 & 22, local and national wine professionals gathered to taste and evaluate 982 Washington wines in a single-blind format (meaning grape variety or style is known, but not price or producer) and awarded the top wines by consensus with Double Gold, Silver and Bronze Grand Awards of Excellence.

Water & Environmental Center 2010 Governor’s Workforce and Economic Development Best Practice Award

Water & Environmental Center Jobs Created and Enhanced • 90 construction jobs • 27 additional jobs created associated with Center Expansion • At least 250 direct and indirect jobs created, according to Earth Economics • 129 graduates in 9 years with $414, 336 increased lifetime earnings for each graduate

Economic Impact of Establishing 1, 000 Acres Of Vineyard Production in the Walla Valley Employment, Earnings, and Sales Vineyard Operations Time New Period Acres Year 3 200 Year 6 500 Year 9 1, 000 Indirect Total New Full. Time Jobs Total Combined Earnings Gross Sales Winery Operations New Full. Time Jobs Total Combined Earnings Gross Sales 120 $4, 392, 000 $8, 750, 000 200 $6, 000 $60, 000 48 $2, 898, 720 $2, 800, 000 80 $3, 960, 000 $19, 200, 000 $7, 290, 720 $11, 550, 000 280 $9, 960, 000 $79, 200, 000 168

Can We Create An Energy Cluster in Southeastern Washington?

Wine is Prosperity in a Bottle