Robert L. Praegitzer, a burly, middle-aged manufacturer, is an unlikely symbol of a revolution.
But Praegitzer stands at the leading edge of a movement that is transforming this forest state, reordering its economy and politics in ways that will echo here and nationally for years.
A former sawmill owner who produces electronic circuit boards, he has moved in four years from timber to high tech, heavy industry to light, wood chips to microchips. So has the state.
And what is happening here in Oregon is, in turn, a tiny part of a national upheaval, as dozens of states and communities find their politics shaken by fundamental changes in their economic bases.
Last Friday the Oregon House of Representatives voted to institute a state sales tax. The voters had rejected a sales tax six times before, but the growing high-tech industry badly wanted one. That is only one of dozens of examples around the nation of the dramatic ways in which the changing economy is altering governmental policies and shifting political power.
From the booming Dallas-Fort Worth Metroplex, where newly arrived young Republicans are unseating established Democratic officeholders, to the small college towns of once safely Republican Vermont, where a new Democratic Party is taking root, the forces of change are visible.
They can be seen at the plant Praegitzer has built on the outskirts of this tiny Willamette Valley town.
Praegitzer, 53, started working in a sawmill at 14 and had his own portable mill by 21. But in the late 1970s, with inflation leading to "crazy bidding" for timber rights and soaring interest rates crippling the construction market, Praegitzer got out of the business.
In 1981, two years after he closed his mill, he and a California partner opened a plant here to manufacture electronic circuit boards. He now employs 105 people -- almost as many as he had working for him at the height of his lumber operations. Not one is a carry-over.
The change in Praegitzer's business is directly related to the events Friday in nearby Salem, where the state house passed a bill to give Oregon a 5 percent sales tax as part of a massive restructuring of the revenue system designed to attract new jobs and industry. The sales tax, which has been rejected six times in the past by the voters, passed the Democratic-controlled house 39 to 21, with the endorsement of Republican Gov. Victor G. Atiyeh, who in the past had been as adamantly opposed to it as most Democrats were.
A key to its passage was pressure from the high-tech industry, which wanted relief from high income tax rates and sought a more stable source of school financing than the property tax provides.
It is another sign of the new era in Oregon. In the late 1960s and early 1970s, this state was riding an economic boom. Population jumped by one-sixth between 1965 and 1975. Gov. Tom McCall (R), in office during most of that decade, epitomized Oregon's efforts to slow its growth. McCall went on national television to say, "Come visit, but for God's sake, don't stay."
But even then, technological advances in the timber industry and the shift of its operations to the Southeast were reducing employment in the forests and mills. The severe economic cycles that climaxed in the 1981-82 recession knocked out any complacency in Oregon. Between 1979 and 1982, 26,000 lumber and wood-products jobs were lost. In 1982 and 1983, Oregon's population fell 65,000.
That trend turned around in 1984, but the comeback in lumbering has been spotty. A study in mid-1984 found that fewer than half the lumber and wood-products jobs lost during the recession had been been restored. Praegitzer says that "a lot of the woods and mill jobs we've lost, we'll never get back."
Fortunately for Oregon, the decline in the lumber industry has coincided with the rise of a high-tech industry, centered largely in Washington County, just outside Portland, where in 1946 Howard Vollum and Jack Murdock started a garage operation that has grown into Tektronix, an electronics giant employing 15,000 in Oregon.
Tektronix has spawned dozens of offshoots, run by former "Tekkies," and these firms have filled the flanks of the Sunset Highway and the "Silicon Forest" and are spreading down the I-5 corridor running south to Eugene. Overall employment in the industry is estimated at 40,000 jobs (compared to 63,000 in lumber and wood-products). The Oregon Employment Division has estimated that three major segments of high-tech electronics will add more than 24,000 jobs in the 1980s. Some consider that estimate modest.
There are concerns that the state may be split into two sectors, one expanding and the other declining. "The unemployment rate in the Portland area's three counties is 7.5 percent and stabilizing," Julie Tripp of the Portland Oregonian wrote. "The rate in Oregon's other economy is 4 points higher, and in many counties, climbing." In some lumber-dependent areas, year-end unemployment topped 20 percent.
A parallel concern is that the shifting economic base may force many people from high-wage to low-wage jobs. A mid-1984 legislative report warned that "the declining numbers of 'family wage' jobs" constitute "a threat to Oregon's economic health." It said "60,000 of the 75,000 jobs Oregon lost to the recession were in industries paying an average wage of more than $10 an hour . . . . [But] Oregon's recovery has been fueled primarily by growth in services and retailing industries with average wages between $5 and $6.50."
There is debate about how serious these economic threats are. Praegitzer, for example, says he starts his circuit-board employes at $3.50 an hour "but within a couple years, they're making $15,000 a year. My sawmill people made more an hour, but not in a year, because these people are working regular."
As for the "two economies" fear, such high-tech executives as C. Norman Winningstad, president of Floating Point Systems, a Tektronix spinoff, say they think that in time the high-tech industry will spread into more of the state.
Part of Oregon's high-tech growth comes from people and companies moving out of California's high-priced, densely packed Silicon Valley. Both Winningstad and Thomas H. Bruggere, president of four-year-old Mentor Graphics, are Californians who worked for Tek before starting their own firms. Both have emerged as spokesmen for the high-tech industry in reshaping Oregon's economic policy toward expanding the electronic job pool.
The impact can be seen clearly in the related areas of taxation and education policy. High-tech lives off education facilities; Stanford University's engineering school virtually spawned Silicon Valley. Tek's birthplace in Washington County was in that sense an anomaly, for there was no first-class university nearby. But the industry is forcing the state to fill the vacuum. Although Oregon State University in Corvallis, 80 miles south of the main high-tech center, traditionally has been the locus of engineering studies, Portland State has been adding courses. The high-tech firms have organized a privately financed graduate center in computer sciences to allow a handful of their people to work for advanced degrees.
This year Portland Community College President John Anthony took the lead in creating a "higher-education shopping center" on his Washington County campus -- where 13 public and private colleges are offering regular courses in business, computer sciences, technology and education. Started five months ago, it has some 420 students in about 20 undergraduate and graduate courses.
Anthony said high-tech industry enthusiasts envision it developing into a major education center, offering doctoral degrees and sponsoring research.
Meanwhile, the more pressing concern of maintaining and improving the quality of basic education in the state puts the high-tech people into the middle of the legislature's tax fight. They got their feet wet last summer, in a special session that repealed the state's unitary tax -- a tax on worldwide operations of multinational companies. The reward for Oregon from that action was a rush of Japanese investment -- some designed to send a message to neighboring California, which has a unitary tax.
Many high-tech leaders were also active in the fight that narrowly defeated a Proposition 13-type property tax rollback on the ballot in November. Bruggere of Mentor Graphics flew around the state warning that "if we cut the property tax, we will decimate education, and education is essential for expanding our business." Winningstad says, "When we are recruiting people, the best thing we can tell them is that we have excellent schools from kindergarten through the 12th grade and their kids won't have to knife-fight their way through the halls."
This year, the Oregon council of the American Electronic Association, representing 88 major high-tech firms, played a lead role in lobbying for Friday's house passage of a sales tax. Much of the revenue gained from the 5 percent tax would be devoted to property tax abatement, thus providing a more stable financial base for public schools. Another chunk would go toward reducing the state income tax, one of the stiffest in the nation. And that, too, Bruggere and Winningstad said, would attract high-tech entrepreneurs.
The sales tax vote displayed not just the growing influence of the high-tech industry but the relative power loss of the timber industry and organized labor. Timber officials helped block a sales tax from getting to a referendum vote in 1983. This year, seeing the way the cards were stacked, they agreed to back it in return for a reduction in their severance tax.
Organized labor faced a tougher situation. Irv Fletcher, president of the Oregon AFL-CIO, said his organization has "opposed the sales tax since 1933" as being regressive. But labor is reeling in the state, its membership down almost one-third in the past five years, as unionized lumber and construction jobs have been replaced by nonunion high-tech manufacturing and service jobs.
While complaining that "all these legislators want to do is give tax breaks to nonunion employers," Fletcher fought with his executive board and gained permission to negotiate on the terms of the sales tax proposal. If the sales tax passes the state senate, there will be a public referendum on it. The labor federation plans to hold a convention to decide its final stand on the issue if it reaches the referendum stage.
But there is no question that the strong trend in the Democratic Party is to accommmodate the perceived needs of the fastest-growing industry, high-tech. As Winningstad, an active Democrat, said, "The Democratic Party here has traditionally been dominated by labor; it was the major source of funds. But the old-line Democratic politicians who represent the labor position have lost their voice in the state legislature."
The high-tech industry's political action committee gave its biggest contribution in 1984 to Vera Katz, a Portland legislator who won a 101-ballot battle to become speaker of the house and who stacked the house Ways and Means Committee to assure passage of the sales tax.
The industry was also persuasive, Salem observers say, in getting Gov. Atiyeh to drop his long opposition to the sales tax and become a major proponent.
On other issues, however, high-tech has reinforced progressive and even liberal tendencies that came to dominate Oregon politics in the McCall era. Unlike the timber industry, high-tech prizes the state's tough environmental and land-use controls. Easy access to unpolluted beaches and unscarred ski slopes is a major lure to high-tech executives and workers.
While the timber companies have often sought protection against foreign competition and, in many cases, been slow to adapt to export markets, the high-tech people are a major force behind the state's increasing interest in developing trade, particularly with Japan and China.
They also support the flurry of local economic-development plans spurred by last year's passage of a state lottery, which will funnel an estimated $40 million a year into attracting new jobs.
Some cities, like McMinville, which saw the lumber mills pull out as long ago as the 1950s, are ahead of the game in economic development, with a Hewlett-Packard plant in town and diverse small industries in two industrial parks. But most are only now getting into a serious search for replacement of the diminishing lumber jobs.
Praegitzer, who has made the transition, said, "I don't see any reason the state can't make this kind of shift. I know a lot of high-tech people in California who want to come here to get out of the rat race. The ones that move here really like it. They even like the rain."