Seattle : Go ahead. Mock it as the capital or cappuccino. Put down the wet weather. But rain or not, business is parading to Seattle : The old lumber port has come of age. And while there are some negatives, optimism reigns supreme.
When Minoru Arakawa went to New York 12 years ago to set up the U.S. headquarters for his father-in-law’s booming video game business, folks in the great city of Gotham quickly welcomed him to urban hell.
A parking garage locked up his car at 6 p.m. sharp one evening, and by morning someone had stolen it. He recalls having to dodge bricks thrown from windows as he walked down the street. No one would cash his company checks. Worse, shippers were throwing his product off trucks; about half the video games were damaged before they got to store shelves.
And that’s why Nintendo came to Seattle, a place that is perhaps as close as America gets to urban paradise.
Forget all the recent hype, the civic boosterism and the glossy magazines that rank Seattle as the nicest city, the most livable and workable, the best for drinking cappuccino and making money in the rain.
Arakawa based his decision on an empirical experiment: He shipped crates of his Nintendo Entertainment System games from Japan through New York, San Francisco and Los Angeles, and found it took a week or sometimes longer for the goods to be unloaded at the dock and delivered into distribution.
But in Seattle, the products typically got through the port in a single day, without damage.
Nintendo, based in Kyoto, Japan, is the Godzilla of video games, controlling more than 80% of the $5.9-billion U.S. market in these addictive, high-tech toys. The company is challenging Mickey Mouse with its Mario the plumber character for the most recognizable cartoon icon among today’s children.
Nintendo’s U.S. subsidiary joins software giant Microsoft and scores of biotechnology entrepreneurs in planting their hopes for growth and development in the Seattle area. This old provincial lumber port has come of age as one of the most dynamic hubs for trade and technology flows on the Pacific Rim.
Now the question is whether Seattle will continue to grow, and challenge Los Angeles and San Francisco for leadership in West Coast commerce, or rest on its laurels and quietly slip back into mediocrity--just another nice place to live.
“Seattle is a great place to raise a family,” said Arakawa, who has two teen-age daughters. “And it’s probably the best city for business. People are friendly and work very hard--they’re proud of what they’re doing. Labor costs may be higher here than some places but, in terms of productivity, it’s the best deal.”
Arakawa became a local celebrity last summer after his father-in-law, Nintendo Chairman Hiroshi Yamauchi, invested the lion’s share--$48 million--in a new ownership of the Seattle Mariners, stopping the baseball team from leaving town.
The deal raised hackles across the country, as stubborn traditionalists questioned the wisdom of allowing foreign ownership of a professional baseball franchise. But not a peep of Japan-bashing was heard from Mariner fans here.
“The Mariners deal was a defining moment in our international destiny,” Mayor Norman Rice said. “It was as big a first step as Jackie Robinson breaking into the National League. It’s a matter of pride for us--the message is that Seattle is open, international and user-friendly.”
A steady influx of population from the rest of the United States attests to Seattle’s appeal. The Seattle area added nearly 350,000 jobs between 1983 and 1990, and regional employment growth only recently began to flatten out.
“For some reason, this area has caught the national imagination, and that’s having a strong positive effect on economic growth,” said James R. Faulstich, president of the Federal Home Loan Bank of Seattle.
The cliche around here is that the influx is dominated by refugees from the congestion and urban violence of Southern California. Statistics do not necessarily support that specific demographic trend, but the perception fits ominously with Los Angeles’ worst fears of brain-drain and deteriorating human resources.
Consider the case of George Rathmann. The co-founder of the leading-edge biotech firm Amgen Inc. in Thousand Oaks, Calif., and a Seattle transplant, plays down his recent origins to avoid being typecast.
“We tell people we’re from Minnesota, which is true originally. We don’t want to be part of the hordes coming up from California,” said Rathmann, who now heads the biotech start-up Icos Corp. in suburban Seattle. “The fear is that this is going to start looking like Los Angeles, with jammed freeways and smog.”
An abundance of pristine nature and a lifestyle that celebrates the outdoors are key ingredients to the Seattle ethos. The debate over growth versus the environment that flares up just about everywhere is particularly pitched in Seattle and its increasingly populated metropolitan area.
Major decisions over infrastructure development and the future of regional transportation systems hang in the balance. But Seattle’s rain-proof glow of optimism seems to overshadow all the negatives. Even signs that the national recession is finally creeping up on the resilient job base are given scant attention.
“It’s fragile--you’ve got to be on guard against denigrating the environment and compromising the quality of life,” Mayor Rice said. “But I think we’re still growing, or soaring, and we have yet to reach our potential, which is going to be better than anyone thinks.”
For now, the formula works. And high-technology companies have little trouble attracting top talent to live and work here.
That’s a boon to Seattle’s biotech industry, which is starting to reach critical mass--interacting synergistically with major research institutions such as the University of Washington, the largest public recipient of federal research funds, and the Fred Hutchinson Cancer Research Center, which pioneered bone marrow transplants.
“I think there’s a chance we can make Seattle one of the leading centers of biotechnology as we move into the next century,” said Leroy Hood, a former Caltech scientist who is creating the nation’s first department of “molecular biotechnology” at the University of Washington.
“It’s a wonderful place to live, and the environment is very conducive to the entrepreneurial spirit,” said Hood, who was lured to Seattle with a $12-million endowment donated by William Gates, chief executive of Microsoft.
He brought 24 of his colleagues from Caltech with him to Seattle, and he’s finding it easy to recruit top scientists from across the country who he believes would never have considered a move to Pasadena.
Hood had tried to interest the Caltech administration in his radical ideas about exploring new tools such as computers in biological research, but he ran into a wall of inertia. In contrast, he found an enthusiastic ear in Gates and the state university here.
“There’s an optimism and an excitement here that I never saw in Los Angeles,” Hood said.
It’s no coincidence that Hood is an avid hiker and camper, a frequent visitor to mountain trails in Washington state even before moving here. He’s now learning to paddle a sea kayak.
The Seattle cult of the outdoors is perhaps symbolized by Recreational Equipment Inc., the catalogue sales purveyor of serious outdoor gear and clothing, which also offers adventure travel. Started as a small buying club in 1938, REI is now the country’s largest consumer cooperative with 3.3 million members.
Despite the national recession, REI’s sales are booming, up 20% so far this year and expected to reach $300 million by the end of December. About one-fifth of those sales are in western Washington state.
“When the economy’s bad, people forgo the more elaborate vacations and go camping instead,” said Wally Smith, REI’s president. “A pair of good boots are a lot less expensive than a flight to Orlando for a visit to Disney World. And hiking is a great way to work off the stress of hard times.”
For better or worse, the economy of the Seattle area is still heavily dependent on Boeing Co., the aerospace giant that employs 98,700 people in the region.
When Boeing layoffs combined with a major slump in Washington state’s forestry industries in the early 1980s, the Seattle economy was stung hard. But while logging remains in decline, Boeing bounced back and started rehiring, leading a boom in job growth that continued through 1990.
“It was Boeing that put us well above the national average for employment growth during the 1980s,” said Richard S. Conway Jr., a Seattle consultant and former economist with the state. “I don’t think it was any particular public policy that led to that growth.”
Lately, however, Boeing’s profits are declining and the company faces an uncertain market for its planes with the commercial airline industry going through convulsions.
The company has reduced its work force by 7,600 through layoffs and retirements so far this year. But the good news is that it is hiring back 200 workers for its new 777 production line in Everett, the town north of Seattle where Boeing builds its jets.
Not everyone is happy about Boeing’s dominance as the state’s largest employer and, as top dog, the company is an easy target for criticism. The Left Bank bookstore off Pike Place Market on Seattle’s waterfront sells a bright red bumper sticker that reads: “Boeing Sucks.”
A clerk, who wouldn’t give her name, explained that it is usually Boeing workers who buy the bumper stickers. The company’s major sin, she said, was its failure to contribute to the arts in Seattle.
“We’re working very hard to be a good corporate citizen,” protested Lawrence W. Clarkson, Boeing corporate vice president for planning and international development--and chairman of the Seattle Opera.
“It’s easy to be resentful if you’re not working for Boeing, and your next-door neighbor is,” Clarkson said.
But Seattle is no longer the one-company town it used to be. Nor is it the sleepy provincial capital that the world seemed to suddenly discover in the late 1960s, and is continuing to discover with every new list of the most livable cities.
Meantime, Seattle has become a crucible of creativity, with more live theater, boosters say, than any city outside New York. It sets standards in the service industry with institutions such as Nordstrom, the classy retailer, and Starbuck’s, the ubiquitous gourmet coffee chain.
“We used to have an inferiority complex, that whatever we did had to be validated in San Francisco or New York,” said Paul Schell, commissioner of the Port of Seattle and dean of the University of Washington’s College of Architecture and Urban Planning. “But we’re self-confident now.”
Schell said it was a mixed blessing to be singled out as the nation’s “best city for doing business” in a recent issue of Fortune magazine, the latest in a long line of kudos. And he worries about Seattle’s weaknesses--its limitations as a financial center, for example. Schell bemoans the fact that the local banking industry is mostly owned by California institutions.
“We’ve been inundated with this most-livable-city thing. People are tired of that, and want to be left alone,” he said. “You can only go down from the top. It’s nice to be recognized, but urban success is a long-distance game.”
Will the Surge Continue in Seattle?
Despite recent signs that the national recession has caught up with Seattle and constrained the economic boom of the 1980s, the forecast is for continued income and job growth that is likely to exceed the national average. Seattle is also expected to have a slightly lower inflation rate than the nation as a whole over the next two years.
Sources: Dick Conway & Associates, Seattle; Washington State Forecast Council, Olympia, Wash.)
