Oracle to Oregon

Governor John Kitzhaber with Another Assist

It’s no secret: What Apple does, others will do their best to follow. But when CEO Tim Cook announced last December that the company would begin manufacturing some iMacs in the U.S., not many would have predicted a new trend within the industry—at least not in the near future.

Perhaps we ought to be more optimistic.

Oracle, the computer technology heavyweight based in Redwood City, California, announced in February plans to “onshore” its high-end servers and storage systems manufacturing to one of its Oregon facilities. The numbers are not staggering— just about 130 new jobs—though moving manufacturing salaries from Mexico to the United States certainly bucks an old trend. And though unconfirmed by Oracle, the deal has also prevented 300 jobs from going overseas.

“By moving production of our industry-leading systems and servers from Mexico to Oracle’s Hillsboro facility, we’ll be able to meet customer demand while bringing new technology jobs to the state of Oregon,” vice president Luke Kowalski said in a joint press conference with Oregon Governor John Kitzhaber. Last December, Kitzhaber signed a bill providing Nike a tax certainty for the company’s $150 million investment within the state, a deal that could generate 12,000 direct and indirect jobs over the next seven years.

“This is further proof of Oregon’s competitiveness in the global economy and a recognition that Oregon workers are second to none in their skills and training,” said Kitzhaber, now in his second term as Oregon’s governor. Oracle was also promised a $750,000 forgivable loan from the Governor’s Strategic Reserve Fund, in addition to $649,000 from the Business Expansion Program.

For a man who shuns the suit for denim and boots, Kitzhaber’s corporate-friendly policies have surprised many Oregonians who are now eager to reap the rewards in the form of nine to fives.

A Hairy Situation

Animal Health Options’ Japanese Setback

Animal Health Options (AHO), a Golden, Colorado-based animal supplement manufacturer, has been successfully navigating new international markets since 1996, but business can occasionally get a little hairy.

When AHO got a call from a Japanese distributor, informing the company that its products were being sold in Japan by veterinarians returning from Hawaiian vacations and looking to recoup expenses by selling the highly regarded products, the two parties—AHO and the distributor—decided to go into business together.

In 2009, the partnership yielded six-figure profits, but AHO would learn how quickly fortunes can change. The next year, a Japanese government regulation classified one of the company’s products as a drug and booted it from the market. The regulation and reclassification cost AHO more than $1 million in sales; the market that had yielded six-figure profits in 2009 churned out a loss in 2010.

“Fortunately, we were able to launch a replacement product in late 2011,” Teresa Lynch, AHO’s president, told The Business Journals. Those products were also delayed by the earthquake, tsunami and nuclear reactor damage in Japan that year. “This is an example of the kind of risks small-business people deal with every day. You could lose a key customer or face a government rule change that has a negative impact.”

Today, AHO distributes to six countries, thanks in part to strategic support from the Export-Import Bank of the United States. In tandem with a 2006 Vectra Bank working-capital loan, the ExIm bank backed AHO with an insurance policy for export receivables, providing a solution for the cash-flow gap caused by 60- to 90-day delays in international settlements.

“We never could have gotten our working capital loan without ExIm Bank’s guarantee,” says Lynch. “It was critical for Vectra Bank and the Small Business Association.

“What’s nice about the insurance policy is that I can put in a claim and get paid for my receivables. It costs money, but it’s well worth the money to get rid of the risks.”

AHO now hopes to expand to South Korea, Taiwan and the Netherlands, with South America also on the horizon.

Easy as Cake

FoodTools’ Sweet Export Success

“One of our major customers out of Australia started selling to McDonald’s,” recalls Marty Grano, president and founder of FoodTools, makers of food portioning products and headquartered in Santa Barbara, California. “They had to ramp up so fast, they couldn’t do it by hand anymore, they had to do it by machinery.”

The good news for FoodTools? Grano’s company patented “the machinery” back in the early 1980s. Since first exporting to Canada in 1985 and Europe in 1990, FoodTools has turned its attention to India, China and Australia, a region that now buys 50 percent of its total manufacturing. Western behemoths such as McDonald’s and Pizza Hut have moved eastward and are demanding more food products, and quickly. FoodTools simply followed the market.

“I was in a bakery in Shanghai in 2006. They had four plants and 14,000 people working for them—and these were just baked goods,” says Grano. Not surprisingly, China has been a focus for FoodTools since Grano’s visit, thanks in part to his son, a then-Stanford student studying abroad who connected his father with the college graduate who would eventually help establish a sales office in Zhuhai.

FoodTools emerged in 1983 with the CS-2, an “electric machine that could cut a cake into even portions and deposit a divider insert between the slices.” Grano’s technology had a profound impact for commercial bakers. Companies such as Sara Lee and Eli’s Cheesecake “grew up with our technology,” according to Grano, and similar food manufacturers began sprouting up across the country. In short, the CS-2 and its disciples have streamlined the packaging process once cakes leave the oven, and Grano says that in turn has changed the way restaurants handle dessert.

“If the restaurants can buy a wholesale cake and have it taste as good as what they could bake in their own kitchen, why not do it?”