Former Starbucks CEO Howard Schultz. (GeekWire File Photo / Kevin Lisota)
For the second time in the past 60 days, former Starbucks CEO Howard Schultz has penned an opinion piece in the Wall Street Journal that takes direct aim at the state’s political leadership, calling Seattle Mayor Katie Wilson “inept” and noting that Gov. Bob Ferguson continues to “burden businesses with one tax increase after another.”
In his piece, Schultz points specifically to Kent-based Stoke Space, the reusable rocket startup that has raised more than $1 billion in funding, as the kind of company Washington needs to fight to keep.
Schultz, who decamped for Miami earlier this year, is obviously concerned about the well-being of his former state. And the one-time presidential hopeful certainly has a lot of ideas for the place he just left — arguing that the reindustrialization of the U.S. could be sparked by matching entrepreneurs with young people seeking apprenticeship opportunities in the trades.
Schultz makes some good points, and he echoes the statements of many in the business community who are concerned about the current direction. We’ve also reported recently on how other states — including Ohio — are out to eat the lunch of Washington state.
And we’ve pointed out the the long slide in Washington state’s business climate, reporting on CNBC’s report this week that ranks Washington No. 11 for business. That’s down from No. 2 four years ago, and No. 1 in 2017.
But you have to wonder: Is the coffee magnate really the best messenger for what ails Washington state? And what’s his end game? It seems his words would carry more weight had he decided to stick around, and try to fix the broken system.
Then again, Florida has its own challenges. Perhaps his next editorial will tackle a few of those.
Gov. Bob Ferguson announcing the new Economic Development Council. (Washington Office of Financial Management Photo)
Gov. Bob Ferguson last week recruited top executives from Microsoft, Amazon, T-Mobile, Boeing and other major employers to help shape Washington state’s economic strategy, launching a new advisory council as concerns mount that the state is becoming less competitive for business.
The 26-member Governor’s Economic Development Council is the first such governor-led economic advisory body in roughly two decades, reviving an approach last used under former Gov. Christine Gregoire in 2006. The group includes leaders from technology, aerospace, organized labor, higher education, tribal governments, ports and economic development organizations who will advise the governor on policies aimed at strengthening Washington’s economy. (See full list below).
One missing ingredient: No members from Washington’s venture capital or startup ecosystem are on the council, even though they are often considered the bench strength of a growing economy.
The announcement comes as executives, startup founders and business organizations have increasingly warned that higher taxes, rising costs, permitting delays and an uncertain regulatory environment are making Washington a more difficult place to build and grow companies. Ferguson recently signed the so-called “millionaires tax” — a proposed 9.9% tax applied to taxable, personal annual income that exceeds $1 million.
Some of the region’s wealthiest and most prominent entrepreneurs — including Zillow and Expedia co-founder Rich Barton; Amazon founder Jeff Bezos and former Starbucks CEO Howard Schultz — have publicly announced moves out of Washington state in recent years.
Starbucks also recently announced a major expansion in Nashville, and Montana Gov. Greg Gianforte of earlier this month announced that Sedro Wooley, Wash.-based Janicki Industries chose Great Falls for the site of an $800 million manufacturing center expected to create 1,000 jobs.
“Washington is our home, and that is not changing,” said John Janicki, president of Janicki Industries, in a press release. “Our footprint in Washington has continued to grow but is slowing due to ever-increasing regulations and lack of business understanding at an executive and legislative level.”
Meanwhile, a recent survey from the Association of Washington Business found that 24% of businesses are considering a relocation out of the state, up from 17 percent in the prior quarter.
Washington’s economic climate was also one of the reasons why GeekWire recently traveled to Cleveland, where we explored how the Midwestern city was positioning itself for a changing economy, and the lessons that Washington could learn from it.
“We cannot take our strength for granted,” Ferguson said in announcing the council. “I’m launching a historic convening of top leaders from around Washington state to help guide the next chapter of economic prosperity for our state.”
The council will help develop Washington’s long-term economic strategy, identify opportunities to create family-wage jobs, evaluate the state’s competitiveness against other states and global markets, recommend ways to attract new employers and review regulatory barriers that may be slowing economic growth. The group will meet quarterly and submit recommendations to the governor.
The council’s creation comes after months of growing unease within Washington’s technology and business community.
GeekWire has reportedextensively on criticism surrounding this year’s tax package, which raised business taxes on many employers and expanded the sales tax to additional services, including advertising. Business groups warned the measures could discourage investment and expansion in Washington, while lawmakers argued the revenue was necessary to close a multibillion-dollar budget gap and preserve essential public services.
The broader economic backdrop remains mixed. Washington continues to rank among the nation’s strongest state economies and remains home to global leaders in artificial intelligence, cloud computing, aerospace and life sciences. At the same time, employers are navigating higher borrowing costs, federal policy uncertainty, trade tensions and intensifying competition from states aggressively courting new investment.
As one example, Ohio Gov. Mike DeWine recently encouraged people and businesses from places like Washington to consider Ohio.
“Come work in Ohio,” DeWine noted after a question from GeekWire about advice he’d provide to Washington. “You will not find a better place, better people, quality of life. Cost of living is low compared to the two coasts.”
In the press release announcing Janicki Industries’ Montana expansion, Gianforte was a bit more blunt.
“The Treasure State is proud to attract job creators like Janicki that choose to expand from high-tax, high-regulation blue states to take advantage of our unmatched quality of life, lower taxes, and strong workforce,” he said. “I look forward to seeing the impact of this significant investment.”
Ferguson has sought to make economic development a central priority during his first year in office. His administration has highlighted efforts to speed permitting across state agencies, increase housing production and invest in sectors including quantum computing, advanced manufacturing and clean energy.
However, some have argued that the governor’s efforts come a bit too late, and are only be instituted in response to criticism. Gov. Ferguson shot back at that contention in the press conference last week, saying he doesn’t worry about critics and he’s interested in “solving problems.”
“I didn’t wake up last week and think about forming this council,” he said. “To be clear, as I mentioned in my talking points, this was an effort we really started last year and was an outgrowth of having conversations with many of the folks behind me and many other people across the state.”
Whether the new council ultimately leads to meaningful policy changes remains to be seen. But its creation sends a signal that Ferguson intends to place economic competitiveness — and closer engagement with Washington’s business community — near the center of his administration.
Amazon Chief Global Affairs and Legal Officer David Zapolsky, a member of the newly created council, called the formation of the group an “important step.”
“When the public and private sectors align around shared goals, communities benefit,” he said.
Governor’s Economic Development Council members:
Michael Cade — Incoming Board Chair, Washington Economic Development Association; Executive Director, Thurston County Economic Development Council
Dr. Betsy Cantwell — President, Washington State University
Leonard Forsman — Chairman, Suquamish Tribe
Denny Heck — Washington State Lieutenant Governor
Kris Johnson — President, Association of Washington Business
Trevor Johnson — CEO, Blackwood Homes
Dr. Robert Jones — President, University of Washington
Mike Katz — Chief Business & Product Officer, T-Mobile
Mary Kipp — President & CEO, Puget Sound Energy
Heather Kurtenbach — Executive Secretary, Washington State Building & Construction Trades Council
Dr. Thomas J. Lynch Jr. — President & Director, Fred Hutchinson Cancer Center
Julianna Marler — CEO, Port of Vancouver
West Mathison — President & CEO, Stemilt Growers
Stephen Metruck — Executive Director, Port of Seattle
Denise Moriguchi — President & CEO, Uwajimaya
Stephanie Pope — President & CEO, Boeing Commercial Airplanes
Heather Rosentrater — President & CEO, Avista
Michael Senske — Chairman & CEO, Pearson Packaging Systems
April Sims — President, Washington State Labor Council, AFL-CIO
Brad Smith — Vice Chair and President, Microsoft
Rachel Smith — President, Washington Roundtable
Bill Sterud — Chairman, Puyallup Tribe
Shane Tackett — President and Chief Financial Officer, Alaska Airlines
Monique Valenzuela — Executive Director, Ventures
Dr. Rebekah Woods — President, Columbia Basin College
David Zapolsky — Chief Global Affairs & Legal Officer, Amazon