Is Idaho's technology sector left out of Gov. Butch Otter's world?

The governor promotes an economy based on agriculture, timber and mining. Critics say that shows he's out of touch with today's Idaho.

rbarker@idahostatesman.comJuly 11, 2010 

On a bus in Beijing last month, Paul Haacke and Gov. Butch Otter did a fist bump.

Otter had gotten the Melaleuca official in rooms with two high Chinese officials, so Haacke could make the company's case for expanded licenses to sell its products in China.

Otter had devoted the meetings with the two highest officials of his June trade mission, Wuang Hua Hua, the governor of Guangdong Province, and the Chinese Vice Minister of Commerce Yi Xiao Jhun, to helping the Idaho Falls direct sales company. Haacke, the company's international vice president, was thrilled with Otter's performance.

So was Richard Larsen of Dubois. Otter used his more than 30 years of experience in international trade to personally patch up a dispute that was threatening Larsen's hay deal with a large Shanghai dairy, preserving Idaho jobs and increasing income for hay farmers across the state.

"To me that's what the government is there for," Larsen said, "to help us create jobs and be friends to business."

Criticism of Otter's trade mission and his economic vision comes not from people who were on the bus, but from those who say they were left at the curb. The creative entrepreneurs of the information economy - small software, computer and communications companies - have struggled for four years to get Otter and the Idaho Legislature to focus on their businesses, which account for most of the economic growth in the state over the past 25 years.

"Before you look across the world, look across the street," said Jason Crawforth, the founder of Treetop Tech, which grew from 1 employee to 100 before he sold it to Mobile Dataforce.

By ignoring their needs and continuing to cut money for higher education and K-12, Otter has allowed surrounding states to pull away the best employees and investors, his critics say. Otter's Democratic opponent, Keith Allred, says by pandering to "old and big" companies, Otter is letting politics prevent the free market from picking winners and creating more jobs for the state.

Otter sees it as doing what he can to boost Idaho's core businesses.

In that China meeting, Otter redirected the historic exchange with the Guangdong governor to the very specific subject of direct sales and Melaleuca.

"I felt bad because I saw his eyes roll back as soon as you said you wanted to talk direct selling," Haacke said on the bus afterward.

Otter told Haacke the gesture meant they were speaking to the right guy: "We got what we needed out of that meeting."

Two weeks later, Haacke's boss, Frank VanderSloot, introduced Otter at the state Republican convention in Idaho Falls.

WHAT MAKES AN ECONOMY?

In China, Otter repeated the economic vision he has held for Idaho for decades.

"You've got to dig it out of the ground, you've got to grow it or you've got to cut it out of the forest," Otter said in meetings aimed at bringing Chinese investors to Idaho. Even computers, Otter said, are built with natural resources like silicon.

Otter told one gathering about how he sat in the pivotal meeting in 1980 that led to the founding of Micron.

He related how the Parkinson brothers had persuaded ranchers and his then-father-in-law, J.R. Simplot, to invest in their memory business by demonstrating how microchips had made Boise farmer Alan Noble's irrigation system more efficient.

Idaho's information technology industries are valuable, said Otter, but not necessarily on their own merits.

"Because of the technology and the high-tech companies, we've seen a major resurgence, a renaissance, in our traditional industries in Idaho," Otter said.

This vision leaves out those companies who are not aimed at farming, mining and logging, said Mark Rivers, a Downtown Boise developer who opened the innovative business incubator the Water Cooler. It discourages the very creative people who are the raw material of the next economic boom.

"You can't say you are a new economy state with an old economy mentality," Rivers said.

Others in the high-tech community say Otter has been supportive of their interests. It's just a matter of education and perception.

"The governor doesn't know as much about the technology sector as he does about the rest of the economy," said Rich Raimondi, chairman of the newly formed Idaho Technology Council. "That's our responsibility."

THE COWBOY MEETS THE KIDS

Otter's skillful leadership on his exhausting seven-day marathon on the other side of the world dispelled the idea that at 68 he is not the vigorous, quick minded-charmer who has been Idaho's best salesman for 25 years.

But it reinforced for some the image of an elder politician wedded to the past and the powerful in Idaho.

That image was spread widely after he spoke in March to the Boise Young Professionals. He came to the session wearing a traditional Western formal overcoat after riding earlier in the day in a funeral procession for former Idaho Cattle Association President Dave Nelson in Mackay.

His historical narrative of Idaho's past economic growth did not resonate with the young audience. The speech sparked a flurry of criticism on the social network Twitter - the online soapbox of Boise's creative class.

"His tone was condescending towards us," said Dave Quintana, an Idaho native who is a web developer, business owner and educator. "He would not answer questions. (There was) very little substance."

Otter's focus was on how technology communities can help the state's traditional industries: "To the extent we can apply the new innovations" to our base resources, Otter said, Idaho can become "the lowest-cost producers and the highest-quality producer" of goods.

"It highlighted where his values are," Quintana said. "Old tech, old economy."

OLD MEETS NEW

Not all tech leaders feel the same way about the governor.

Otter's most productive meeting in Beijing was with Jin Kening, chairman of the China National Chemical Engineering Corp., on behalf of Blackfoot's Premier Technology. Premier is one of the companies that has crossed the divide between the old and new economies.

The construction and engineering firm, which started in a trailer in 1996, builds high-tolerance steel equipment and buildings for Department of Energy contractors, food processors and the mining industry. Today, it employs 370 people in high-paying jobs.

Doug Sayer, Premier's president and CEO, worked with China National for months before the meeting.

After Otter's pitch, Jin said he was ready to partner on several projects with Premier, which Sayer said he continues to work toward. Sayer said he is awaiting an answer on two projects and also has worked on a third for an unnamed company that he may or may not benefit from.

Sayer serves on the new Idaho Technology Council, and he hears the criticism that comes from some in the high-tech community. He believes it's misguided.

"It's unfortunate there is a stigma out there," Sayer said. "Butch has an extraordinary vision and it's about technology. ... What Butch has done is help companies like my own, that would not be viewed as a technology-based company, really grow through the technology."

THE UTAH EXAMPLE

Some technology leaders and Keith Allred point to Utah as the model for success. Two successive Republican governors there, Mike Levitt and Jon Huntsman, partnered with the state's business community to create incentives for entrepreneurs and increase funding for schools - especially the University of Utah, which has become a national leader in turning research into new businesses and jobs.

Last year, when Idaho was forced to cut education budgets, Utah was able to hold the line. The Idaho Technology Council's Raimondi is confident his group has Otter's attention. If technology businesses lobby together they can educate Otter and lawmakers about what steps are needed to help their industry grow.

But Crawforth, the Treetop Tech founder, said he thinks Otter and Idaho's Legislature are lost causes and only with change at the top will Idaho shift its attention to helping small start-ups that are the biggest job producers.

"Every time we try to make incremental changes the rest of the world changes more and we keep falling behind," Crawforth said.

ALLRED: MISGUIDED MISSIONS

Democratic challenger Allred is not against trade missions. But he said he doesn't think the time devoted to the individual needs of single companies should be a priority for the governor. That's a better job for the lieutenant governor.

Otter's strategy of allowing the companies to set the agenda for trade missions attracts the same kind of businesses and leaves out many Idaho sectors, Allred said.

"The amount of time spent is out of proportion to what Melaleuca contributes to the state economy," Allred said. "The governor and the leaders of Communist China are not going to pick the winners of Idaho's economy better than the market."

Allred said he would focus economic development efforts differently: He said he agrees with Republicans that Idaho's income tax rate is too high and with Democrats that education is under-funded.

"I would cut taxes and improve education with strategic investments," Allred said. He'd do that by eliminating tax exemptions that favor the state's old and large businesses, which, he said, are not going to produce the new industries and the new jobs over the next 15 years.

"When state government passes tax exemptions, it's replacing its judgment for the free market," Allred said. "I believe in the free market."

Allred said he would cut special-interest exemptions and split the proceeds between cutting income tax across the board and funding schools. He won't be specific about which exemptions he would target; he wants to get Idahoans involved in deciding which exemptions to do away with.

"That doesn't mean I'm against agriculture or big business," Allred said. "I just don't think they should get preferential treatment."

LOW TAXES HELP HIGH-TECH, OLD STANDBYS

Otter said repeatedly in China in June and at the young professionals meeting in March that the keys to keeping Idaho competitive with other states in attracting business are stable tax and regulatory policies. He said last month that he continues to reach out to the technology community, first with his Innovation Council and now to the Idaho Technology Council.

"I'm the first to admit the velocity and the technology in those new operations is hard for me to keep up with," he said. But he's not giving up, he said; he's just impatient and aware of the financial limits.

"We're not leaving anybody at the curb," he said. "We're absolutely trying to engage everybody that we can.

Rocky Barker: 377-6484

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