Cascadia Report

These Cascadia companies make case for core values

For businesses struggling to overcome the pandemic, maybe it's time to focus on core values.

Consider REI Co-op, PCC Community Markets, and MEC — three iconic community-based Cascadia businesses whose survival may depend on returning to practices closer to their roots.

Seattle’s REI Co-op recently suffered self-inflicted wounds. PCC Community Markets undermined its success with tone-deaf leadership. MEC is trying to reset under new ownership. They previously put too much emphasis on growth and now show varying signs of potential.

These are member-owned cooperatives — a popular form of corporate governance in Cascadia — so benefit from extremely loyal customers. As icons they matter more than most generic retailers.

Missing the outdoor surge

REI, founded by Seattle climbers in 1938, boomed over the last 40 years as it broadened into clothes and lifestyle equipment. Critics always say it has lost its way, yet business doubled in the 2010s to about about $3 billion annually. Still, something seemed to change after it hired a Coach executive as CEO in 2013. Stores increasing were located in strip malls, and it closed its climbing-forward store in Redmond next to trails and transit, in favor of a traditional box near freeways.

In mid 2019 a longtime retail-finance executive became CEO and shored up the books. In 2020 REI reported zero profit, but only after an $80 million gain from selling its headquarters properties, including selling a new purpose-built office complex to Facebook. The company is debt-free and has plenty of credit. Yet it sales fell as it cut inventory — it performed worse than peers, despite the pandemic-era boom in outdoor activities.

REI has a history of blaming poor business decisions on external factors rather than its own business decisions. For example, it blamed an ill-fated foray into Japan 20 years ago on the poor economy rather than its execution. Moves in 2021 to focus on products and initiatives on carbon-reduction and conservation seem aimed at shoring up support, though lack of inventory remains a challenge.

Tone-deaf grocery leadership

PCC was started by 15 Seattle families in 1953, long before organic foods could be found in major stores. As competition increased it gradually went upscale, managing to keep loyalists with ever-stricter food standards while adding locations and a fancier shopping experience. Yet the largest community-owned grocery in U.S. fueled criticism that growth was its main goal, hiring one CEO from Starbucks and another from Kroger. 

This grousing became headline news when the CEO publicly campaigned against COVID compensation for workers in Seattle, despite the company seeing a 26% increase in both net income and sales, to $2.6 million and $383 million, respectively during the year. A backlash among members led to two longtime store employees being elected to the board over management's choices, with pledges to rethink the company's practices. The CEO quit. In stores, there appears to be more employee turnover and concern about the organization's direction.

Co-op gone wrong

MEC, started in Vancouver in 1971 as Mountain Equipment Co-op, stretched the support of its loyal customers by pursing branding and growth like any other retailer. Management strayed from the cooperative ethos and still growth stalled. In 2019 MEC reported a loss of $16 million on sales of $462 million. In 2020 losses grew to nearly $23 million while sales stagnated at $463 million. By Sept. 2020 the board had sold out: a California private equity firm paid $150 million and converted MEC into a private company.

The buyers gained a trove of consumer data that alone makes the deal worthwhile, though they pledge to keep stores and employees. This weekend the Victoria store was packed and seems fully stocked, but it's unclear if that traffic translates into sales. Will MEC succeed as a regular company or will it need to return to its roots? The direction will say a lot about the viability of the co-op model.

Avoiding a Climate Disaster in Cascadia

Triple-digit temperatures along the Salish Sea this summer should make it clear that the climate crisis is real. 

Cascadia is a "green" region well known for generations of feel-good environmentalism. But now it needs policies to help solve the climate crisis by incentivizing decarbonization of our economy, a shift that is in our self-interest and a moral imperative.

I'll admit that I previously considered climate an ambiguous, distant problem. I've made the case that Seattle and Cascadia — among the richest places in the world — should be a model for how to develop a sustainable, equitable economy. But the problem is actually more urgent, and working for solutions could be a significant boon to our economy. 

How does the crisis concretely affect us? A record heatwave killed many vulnerable residents and even erased a British Columbia town. Mt. Rainier's snowcap melted more than ever. Shellfish were cooked in water along the coast. Heat and drought are altering our food supply. Wildfires are so bad they're changing the weather.

In his latest book, How to Avoid a Climate Disaster, Bill Gates provides a surprisingly clear overview of the global challenge and argues that we need to get to net zero carbon use globally by 2050. New technology will be developed to do this, but the "green premium," or extra cost of low-carbon options, needs to shrink for the technology to be adopted. A summary of the book is available here. (As a technologist he has blind spots; see this review, for example.)

What to do about it

One thing B.C., Washington, and Oregon should do is aggressively price carbon to make clean alternatives viable. B.C. started in 2008 but Oregon has failed to follow. This year Washington finally passed a plan, though it was linked to highway expansion.

Cities should create density so there's less need to drive (vehicles are the biggest culprit of greenhouse gas emissions in Seattle), electrify their fleets, and improve building codes. Voters should ask every candidate exactly what they will do to take dramatic action on this issue.

Companies also should lead on this issue and push government to create better policy. Many companies incentivize transit and biking. But Microsoft is currently building an underground parking garage big enough to hold 8,000 school buses — the exact opposite of what Bill Gates calls for in his book. Rather than greenwashing, Microsoft should get the city of Redmond to relax parking requirements and encourage vastly more housing near its offices.

Longer term, the technology to help the world decarbonize needs to be developed and honed. If Cascadia sets the right incentives, that work could happen here. The world will add the equivalent of one New York City's worth of built environment every month through 2060, Gates says, so there's massive demand for new clean technology.

The next mayor of Seattle should meet with Gates and create a concrete plan of how the city can encourage more innovate clean technology companies here. Accelerate transit, overhaul zoning to allow more density, and make this a top priority. Serving this huge market could result in the next Boeing.

How Cascadia can gain from the coming train boom

Train projects across the U.S. have new life thanks to the priorities of "Amtrak Joe" and Transportation Secretary Pete Buttigieg. To benefit, Cascadia needs an aggressive plan to build better rail service instead of a massive new airport to replace Sea-Tac.

Improved rail will help accommodate future population growth from Vancouver to Eugene without destroying the environment. The alternative is the status quo: continued runaway sprawl helped by more roads -- all supercharged by plans for a new airport somewhere in Western Washington. This can't happen if we care about climate change. 

The Biden administration's enthusiasm for trains is the latest step in development of Cascadia's transportation connections. Now the region needs to resolve the scope, routing, and cost of trains, and kill the idea of a new airport once and for all.

Faster trains or much faster trains

Conventional Amtrak Cascades service, which maxes out at 79 miles per hour, has gradually become faster and more frequent, but it still takes 4-4.5 hours between Seattle and Vancouver or Portland. Washington's 2006 rail plan called for $6.5 billion in improvements to rails, signals, stations, and other infrastructure by 2023 to get much better service: 13 daily round-trip trains between Seattle and Portland in 2:30, and four daily roundtrips between Seattle and Vancouver in 2:37. Unfortunately the timeline has been extended repeatedly; the target is now 2040, according to the state's latest noncommittal update. 

More recently, Microsoft and governments across the region promoted true high-speed rail (HSR) -- around 250 miles per hour -- between Seattle, Vancouver, and Portland. But issues include whether getting between the cities in an hour is even necessary. The Ultra High Speed Ground Transportation Framework insists there will be demand, though exploring maglev and hyperloop technology seems unserious.

Cost estimates range from $24 to $42 billion, depending on technology, routing, and the location of the terminal stations. Some early analysis was done in 2017 by Seattle Transit Blog, arguing for HSR between Vancouver's waterfront and Seattle's King Street Station. It would be cheaper to terminate in Surrey, with last-mile connections to downtown and other points in the Lower Mainland such as YVR.

A better option is upgrading conventional service, including with new, more direct track in sections. For example, use I-5 right of way where possible rather than slowly snaking along Puget Sound. It's not clear that the route can't be straighter without completely starting over as necessary to get to 250 mph. Current technology seems less risky and could concentrates growth in existing cores like Bellingham, Burlington, Everett, Centralia, and Kelso.

Kill the new airport

The idea of a new airport to replace Sea-Tac goes back at least to the early 1990s, with planning for a third runway. The airport is still constricted by small land area.

Washington created a commission that is supposed to recommend a location for a brand-new major airport by the end of this year. Already it narrowed the options to six existing airports: Arlington, Bremerton, Paine Field, Shelton, Gig Harbor, and South Lewis County Airport. All have problems and would encounter opposition to major expansion, not to mention disastrous environmental impacts.

Much of the need could be relieved if trains tied directly into transit and connected to Sea-Tac, similar to how DB trains connect to Frankfurt airport.

Most of Sea-Tac's traffic is small planes and, before the pandemic around 10% of daily flights were to two places: PDX and YVR. In 2019, there were 450,487 total operations (averaging 1,200 a day, or 68 an hour assuming an 18-hour day). In 2019, there were an average of 96 flights per day between SEA and PDX, and 24 per day SEA to YVR, according to Kayak.com.

According to the FAA, Sea-Tac's capacity is 56-99 flights/hour depending on weather. Shifting PDX and YVR flights to rail opens an entire hour of capacity. Much of the rest could be accommodated by up-gauging planes. By comparison, Narita airport handled most of Japan’s commerce for decades with a single runway with fewer large planes on each route. A new airport in Washington seems like another megaproject in search of a purpose.

The key is integrating planning for ground and air transportation. A $24-$42 billion rail program isn’t prohibitive if it eliminates the need for new airport. It's an investment to spur development of transit, density, and less car-intensive cities for a fraction of the cost of freeway expansion.

More from the Cascadia Report archives:

• Cutting Amtrak at exactly the wrong time
• Argument against another Seattle airport
• New trains may get a step closer to Whistler

Solar farms grow in new energy mix

If Cascadia is going to get serious about leading on the global climate crisis, it will need more forms of clean energy, in addition to benefitting from its lucky inheritance of hydropower.

According to my former colleague Hal Bernton, there are 21 proposed projects that would cover 22,000 acres in Eastern Washington with solar panels, a source of clean power and income in an economically challenged area:

“The sun is a crop and I think we need to harvest it too if we are going to move away from fossil fuels … Anyone who thinks that the climate isn’t changing is crazy and we need to do our part,” one landowner said.

This is a potential boon for Cascadia, both as an opportunity to build and expand new industry and to demonstrate how to combat climate change.

The epicenter is Goldendale -- where I've been traveling for 25 years -- and where wind power is a booming industry. There are lots of crosscurrents between new and old residents and businesses. The story doesn't detail the potential electricity generation or grid connections.

Hopefully Klickitat County guides development and lifts its moratorium on new solar farms, rather than letting nimbys prevail. 

Looking for inspiration? Consider this dramatic growth in India. Or Australia and China. Or urban environments that could be partial models for Cascadia.

Compare this to the early days of Cascadia Report less than 15 years ago:

• Wind company proposes first turbines in Yakima
• Push for more renewable energy meets nimby
• Wanted: Someone to make windmills

 

After a year of COVID-19, ready for a cruise

Cruises may soon resume between Alaska and Washington, boosting tourism in both states but cutting out British Columbia.

Alaska cruises typically stop in B.C. because U.S. law prohibits foreign-flagged vessels – most of the industry – from transporting passengers directly between two American ports. In 2019, Victoria and Vancouver had a combined total of 553 ship visits.

After Ottawa extended its ban on cruises until Feb. 2022 – saying these sailing petri dishes potentially tax the healthcare system – Alaska’s U.S. senators announced plans for an exemption that would allow cruises to skip Canada.

Given  a year of COVID-19, a cruise may not be on everyone’s to-do list. Yet the industry is a driver of Cascadia’s previously booming tourism sector, even if the environmental impacts are severe and the economic benefits are probably overstated.

The ships are floating cities, burning dirty fuel and bringing a city’s worth of sewage. Canada should use the current hiatus as an opportunity to ban dumping raw waste and cut emissions, notes a recent report. (Luckily Victoria's Mr. Floatie isn't fully retired yet.)

The biggest economic benefit goes to home ports, which get the flights, hotel stays, restaurant visits and shopping before and after sailings. Vancouver had the Alaska cruise market to itself until 1999, when Seattle's terminal opened and faster ships made it attractive, especially for American passengers. In 20 years, Seattle's business grew to 1.2 million annual passengers, generating $900 million and 5,500 jobs in 2019, according to the Port of Seattle. Despite the competition, Vancouver still had 800,000 passengers in the last year before the pandemic.

The growth wasn't a straight line. For example, in 2006 Cascadia Report wrote about Seattle losing a cruise line to Vancouver. That turned out to be a blip.

Surely cruises will be back eventually. Now is a chance for some towns to take Sitka's example and reorient toward independent travel and for the region to rethink blind investment given the pros and cons of the industry.

Some of us have a gun problem

After yet another horrific mass shooting in the U.S., many in Cascadia are wondering if something similar could happen here. And how could we possibly let it happen here.

Today 10 people were killed by a gunman with an AR-15 semiautomatic rifle in a grocery store in Boulder, Colo. -- the second mass-shooting in the U.S. this week. President Biden is calling for a ban on assault weapons, while shills for the gun lobby are offering thoughts and prayers for the dead and their survivors. This is on top of more than 600 mass shootings (four or more dead or injured) in the U.S. last year.

This is insane.

A few years ago I was having breakfast with my family at a diner in Goldendale, Wash., at the eastern end of the Columbia Gorge, when a man walked in with a gun hanging from his belt. He didn't appear physically fit or capable of controlling the firearm, which didn't look safely secured. When I pushed back on this power play I learned that Washington is an "open carry" state where it's okay to walk around with a lethal weapon, regardless of the need or the potential harm it could cause. If you're worried about your family's safety, there's nothing you can do about it. So we got up and left.

Judging from Twitter today, I'm not the only one with such a reaction:

 

Carrying a weapon remains totally legal in Washington and Oregon. There are more rules for driving a car than owning a gun. Local authorities aren't even allowed to pass more restrictive laws to protect their residents. In Washington citizens passed an initiative in 2018, I-1639, that requires recording of semiautomatic rifle sales and mandates that the purchaser have some sort of safety training. But even those gentle restrictions are vehemently rejected by law enforcement officials in some parts of the state. 

When it comes to personal safety, B.C. wins. Per the Firearms Act, a license is required. Anything besides an ordinary shotgun or rifle used in hunting must be registered. A gun buyer must take a Canadian Firearms Safety Court and pass a test, buy a five-year license, and wait 28 days while the RCMP conducts background checks. 

It's way past time for commonsense safety measures in the U.S. Trips to the grocery store shouldn't put us at risk of COVID-19, let alone being shot. A generation of kids shouldn't grow up with the trauma of active-shooter drills. We should be free to move around all of Cascadia without fear.

Reopening the Cascadia border

Fear of COVID-19 closed the border to non-essential travel a full year ago. Now that more Cascadia residents are getting vaccinations, when will they be able to start crossing again? 

"The truth is: There is no plan," according to a recent CBC report on efforts to at least prepare for reopening.

Until the pandemic, the Canadian and U.S. parts of Cascadia were growing relentlessly more integrated, despite a two-decade struggle with border security in the wake of 9/11. For frequent travelers, the border was often seen as a mere formality.

By 2019 about 14 million people crossed and all the talk was about continued growth. That year saw the long-awaited start of seaplane flights between Lake Union and Coal Harbor. The main complaints were about too many users for the crowded water in Seattle. Harbor Air got slews of international headlines for pioneering fully-electric floatplanes.

Then the border closure halted flights, stopped the Victoria Clipper and Coho ferries, and slammed the border economies. Whatcom County lost 506,000 tourists in just a few months, according to a report by Western Washington University. There are similar stories from Whistler, Victoria, and elsewhere, even amid recent talk of B.C. sealing itself off from other provinces.

Despite criticism of how the closure has been handled to date, the assumption of huge pent-up demand for travel is widespread. Cascadia is bound to get more closely connected, with studies calling for high-speed rail between Seattle and Vancouver, along with plans to make conventional trains more competitive with driving or flying.

Back in 2007 Cascadia Report fretted about the impact of a closed border during the Olympics. That seems quaint by comparison.

Could the border start reopening as soon as May? That assumes vaccinations, flatter curves, and management of new strains. Plan on requirements for tests, vaccine documentation, and other red tape.