Economy of Spokane, Washington
The economy of Spokane plays a vital role as the hub for the commercial, manufacturing, and transportation center as well as the medical, shopping, and entertainment hub of the 80,000 square miles (210,000 km2) Inland Northwest region.
Spokane's economy has traditionally been natural resource based—heavily dependent on extractive products produced from farms, forests, and mines—however, the city's economy has now diversified to encompass other industries, including the high-tech, healthcare, and biotech sectors.
The Spokane area is considered to be one of the most productive mining districts in North America. In the late 19th century, gold and silver were discovered in the Inland Northwest, leading to intensive development of mines in the region. After the mining rushes ended at the turn of the 20th century, agriculture and logging became the primary influences in the Spokane economy. The expansion and growth of Spokane abruptly stopped in the 1910s and was followed by a period of population decline due to economic factors such as capital flight, low commodity prices, and loss of industry.
The first permanent European settlement in the Spokane area and Washington state came with the fur trade, with the westward expansion and establishment of the North West Company’s Spokane House in 1810. The Spokane House was the center of the fur trade between the Rockies and the Cascades for 16 years.
- 1 Economic history
- 2 Regional services
- 3 Head offices
- 4 Leading industries
- 5 Economic development
- 6 See also
- 7 Notes
- 8 References
- 9 External links
The explorer-geographer David Thompson, working as head of the North West Company's Columbia Department, became the first European to explore the Inland Empire (now often called the Inland Northwest). Crossing what is now the U.S.–Canada border from British Columbia, Thompson wanted to expand the North West Company further south in search of furs. After establishing the Kullyspell House and Saleesh House trading posts in what are now Idaho and Montana, Thompson then attempted to expand further west. He sent out two trappers, Jacques Raphael Finlay and Finan McDonald, to construct a fur trading post on the Spokane River in Washington and trade with the local Indians. This post was established in 1810, at the confluence of the Little Spokane and Spokane rivers, becoming the first enduring European settlement of significance in Washington state. Known as the Spokane House, or simply "Spokane", it was in operation from 1810 to 1826. Operations were run by the British North West Company and later the Hudson's Bay Company, and the post was the headquarters of the fur trade between the Rocky and Cascade mountains for 16 years. After the latter business absorbed the North West Company in 1821, the major operations at the Spokane House were eventually shifted north to Fort Colville, reducing the post's significance.
The 1883 discovery of gold, silver, and lead in the Coeur d'Alene region of northern Idaho lured prospectors. The Inland Empire erupted with numerous mining rushes from 1883 to 1892. Mining and smelting emerged as a major stimulus to Spokane. At the onset of the initial 1883 gold rush in the nearby Coeur d'Alene mining district (which generally encompasses present day Stevens, Ferry, and Pend Oreille counties and northern Idaho), Spokane became popular with prospectors, offering low prices on everything "from a horse to a frying pan". It would keep this status for subsequent rushes in the region due to its trade center status and accessibility to railroad infrastructure.[a]
Spokane became an important rail and shipping center because of its location between mining and farming areas. In the early 1880s, gold and silver were discovered in the Inland Empire; as a regional shipping center, the city furnished supplies to the miners who passed through on their way to the mineral-rich Coeur d'Alene, Colville and Kootenay districts. The mining districts are still considered among the most productive in North America. The Coeur d’Alene district of Shoshone County (also known as Silver Valley) in northern Idaho has produced more silver than any other mining district in the United States, and is historically one of the top three silver districts in the world in total silver produced. The district competes with Potosi in Bolivia and Pachuca-Real del Monte in Mexico for the title of greatest silver district, each having produced more than a billion troy ounces of silver.
Spokane Stock Exchange
During the mining boom, Spokane had its own stock exchange, the Spokane Stock Exchange, which began trading mining shares on January 18, 1897. The exchange originally consisted of 32 members and listed 37 stocks of mines across northeastern Washington, northern Idaho and southern British Columbia.
Logging, forestry, and agribusiness
After mining declined at the turn of the 20th century, agriculture and logging became the primary influences in the Spokane economy. The lumber industry in Spokane began with the city's founding in 1871 when Downing and Scranton built Spokane's first business, a sawmill. As with the mining industry, lumberjacks and millmen working in the hundreds of mills along the railroads, rivers, and lakes of northern Washington and Idaho were provisioning themselves in Spokane. The population explosion and the building of homes, railroads, and mines in northern Idaho and southern British Columbia fueled the industry.
Before the construction of the railroads that connected the region, Spokane's lumber supply was largely imported from North Idaho, especially St. Maries, Idaho; lumber would be rafted 25 miles north on the St. Joe River and Lake Coeur d'Alene and then rafted down to Spokane's mills via the Spokane River. Although overshadowed in importance by the vast timbered areas on the coastal regions west of the Cascades, and burdened with monopolistic rail freight rates and stiff competition, Spokane became a noted leader in the manufacture of doors, window sashes, blinds, and other planing mill products. Rail freight rates were much higher in Spokane than the rates in coastal seaport cities such as Seattle and Portland, so much so that Minneapolis merchants could ship goods first to Seattle and then back to Spokane for less than shipping directly to Spokane, even though the rail line ran through Spokane on the way to the coast.[b] Despite this, the city became noted for processing and distributing dairy and orchard products and for producing products milled from timber. By the early 20th century Spokane was primarily a commercial center rather than an industrial center.
The surrounding area, especially to the south, is a productive agricultural region known as the Palouse. The Inland Northwest region has also long been associated with farming, especially wheat production where it is one of the largest wheat producing regions in the United States. Initially, the Palouse region to the south of Spokane was thought to be not suited for wheat production due to the hilly terrain, believing wheat could not be cultivated on the tops of the hills, but the region showed great promise for wheat production when it began in the late 1850s in part due to the hilltops. Agricultural potential and productivity depends greatly on a region's soil qualities which in turn is dependent on the climate and amount and timing of rainfall events. The Inland Empire, with its cool, snowy and rainy winters, rainy spring, and hot and dry summers lends itself to a wide variety of farming. The commercial farming activities were greatly enhanced by the founding of two state land-grant universities, Washington State University (as the Agriculture College, Experiment Station and School of Science of the State of Washington) in Pullman and the University of Idaho eight miles away in Moscow. The strategically placed universities and their experiment stations and staff would help industry by improving farm management, conducting research, and teaching students to be better, more competent farmers. Spokane Country, as the Spokane Chamber of Commerce marketed it in 1907 was defined as the area between the Cascade and Rocky Mountains, from British Columbia in the north to the Blue Mountains in the south, was a breadbasket and was able to develop and grow further with the completion of several railroad networks as well as a highway system that began to center around the city, aiding farmers from around the region in distributing their products to market at low cost. As with mining in the late 1880s, Spokane was an important agricultural market and trade and supply center. Inland Empire farmers exported wheat, livestock and other agricultural products to the ports such as New York, Liverpool and Tokyo. Today, a large share of the wheat produced in the region is shipped to Far East markets. The growth of the Inland Northwest's rural counties also was the result of the governmental and private efforts to irrigate and develop farmlands in the region. These programs, especially the Big Bend Project, resulted in an estimated 2,000,000 acres of arable farmland worth an estimated value of $50,000,000 in 1920. Wayne D. Rasmussen notes the U.S. Works Progress Administration showed in 1940, "3 flour mills, 5 meat packing plants, 23 creameries, 17 bakeries, and 6 poultry plants" as well as 300 factories operating in the city. Agriculture in Spokane is very important to the overall economy, and according to Wayne Rasmussen, continued future success of this sector will depend on efficient farm management and support of agricultural research and development at regional universities as well as support to local farmers with information for sound decision making regarding production, financing, and marketing. The four major producing counties on the Palouse are Whitman, Lincoln, Grant, and Adams counties. There is also a viticulture and craft brewing scene featuring a number of award-winning wineries and microbreweries in the Spokane area. The largest brewery in Spokane is the No-Li Brewhouse.
Expansion abruptly stopped in the 1910s and was followed by a period of population decline, due in large part to Spokane's slowing economy. Control of regional mines and resources became increasingly dominated by national corporations rather than local people and organizations, diverting capital outside of Spokane and decreasing growth and investment opportunities in the city.
During this time of stagnation, unrest was prevalent among the area's unemployed, who became victimized by "job sharks", who charged a fee for signing up workers in the logging camps. Job sharks and employment agencies were known to cheat itinerant workers, sometimes paying bribes to periodically fire entire work crews, thus generating repetitive fees for themselves. It is around this time in Spokane that the first of many nationwide free speech fights conducted by the Industrial Workers of the World (IWW) or "Wobblies" had begun, spread, and garnered national attention. With grievances concerning the unethical practices of the employment agencies, they initiated a free speech fight in September 1908 by purposely breaking a city ordinance on soapboxing.
The 1920s and 1930s saw the similar, but less drastic slow growth of the 1910s, and this change of outlook forced city boosters to market the city as a quiet, comfortable place suitable for raising a family rather than a dynamic community full of opportunity. The Inland Northwest region was heavily dependent on natural resources and extractive goods produced from mines, forests, and farms, which experienced a fall in demand. The situation improved slightly with the start of World War II as defense aluminum production commenced in Spokane due to the area's cheap electricity (produced from regional dams) and the increased demand for airplanes. The two aluminum plants, the Mead Works reduction plant and Trentwood Works rolling mill brought thousands of heavy industry manufacturing jobs to the Spokane area and supplied the materials to make landing craft for use in the Pacific Theater. After the war, Kaiser Aluminum leased the facilities in 1946 and eventually purchased them in 1958.
After decades of stagnation and slow growth, Spokane businessmen headed by King Cole formed Spokane Unlimited, an organization that sought to revitalize downtown Spokane. Early but modest success came in the form of a new parking garage in 1965, The Parkade. Soon, focus to revitalize the economy focused on improving Havermale Island in downtown Spokane, which was dominated by railroad depots and warehouses. A recreation park that would showcase the Spokane falls was the preferred option, and the organization successfully negotiated with the railroad companies to free up the island property and relocate their rail lines. In the 1970s, Spokane was approaching its one-hundredth birthday, and Spokane Unlimited hired a private firm to start preparations for a celebration and fair. In a report delivered by the firm, the proposal of a world's fair was introduced, which culminated in Expo '74. This event transformed Spokane's downtown, removing a century of railroad infrastructure and re-inventing the urban core.
The growth witnessed in the late 1970s and early 1980s was interrupted by another U.S. recession in 1981, in which silver, timber, and farm prices dropped. The period of decline for the city lasted into the 1990s and was also marked by a loss of many steady family-wage jobs in the manufacturing sector. In the 1990s, market forces began to impact Kaiser Aluminum and layoffs, pension cuts, a 1998-1999 labor strike, and eventually bankruptcy in 2002 followed. Although this was a tough period, Spokane's economy had started to benefit from some measure of economic diversification; growing companies such as Key Tronic and other research, marketing, and assembly plants for technology companies helped lessen Spokane's dependence on natural resources. Mining, forestry, and agribusiness continue to be important to the local and regional economy, but Spokane's economy has diversified to include other industries, including the high-tech and biotech sectors. Spokane is still trying to make the transition to a more service-oriented economy in the face of a less prominent manufacturing sector. Developing the city's strength in the medical and health sciences fields has seen some success, resulting in the expansion of the University District with a University of Washington and Washington State University medical school branches. The opening of the River Park Square Mall in 1999 served as a catalyst and sparked a downtown rebirth that included the building of the Spokane Arena and expansion of the Spokane Convention Center.
With the arrival of the Northern Pacific Railroad in the late 19th century, Spokane became a transportation hub for the Inland Northwest region. After the arrival of the Northern Pacific, the Union Pacific, Great Northern, and Chicago, Milwaukee, St. Paul and Pacific railroads, Spokane became one of the most important rail centers in the western United States, being the site of four transcontinental railroads. Spokane became an important rail and shipping center because of its location between the Rocky Mountains and the Cascade Range and between mining and farming areas (namely the Silver Valley and the Palouse). As a regional shipping center, the city furnished supplies to the miners who passed through on their way to mine in the Coeur d’Alene as well as the Colville and Kootenay districts. Spokane is still a major railway junction for the BNSF Railway and the Union Pacific Railroad and is the western terminus for the Montana Rail Link. Spokane, eastern Washington and northern Idaho are also served by air through the Spokane International Airport at Geiger Field (GEG). Spokane International Airport is the second largest airport in the state of Washington and is recognized by the Federal Aviation Administration as a small hub. Not far from the airport will be an Amazon.com fulfillment center, in 2018 it was announced the building of a fulfillment center on the Spokane's west plains. The fulfillment center will employ at least 1,500 people year-round and could employ nearly 3,000 people during peak delivery times near the holidays. The fulfillment center is expected to be operational in late 2019 and made possible due to the cooperation and efforts of the City of Spokane, Spokane County, and the airport.
As the metropolitan center of the Inland Northwest as well as southern British Columbia and Alberta, the city serves as a commercial, manufacturing, transportation, medical, shopping, and entertainment hub. The city is also the hub for the service industries, and the wholesale and retail trade center of the 80,000 square miles (210,000 km2) Inland Northwest region. In 2017, the Spokane–Spokane Valley metropolitan area had a gross metropolitan product of $25.5 billion while the Coeur d'Alene metropolitan area was $5.93 billion.
Due in part because Spokane is the largest city between Seattle and Minneapolis and because it lies along the route to many regional attractions, tourism is on the rise in the area. Spokane can be a "base camp" for activities such as river rafting, camping, and other activities in the region. Also, the expansions of square footage at the Spokane Convention Center and other convention space and increased hotel capacity have led to more interest in Spokane as a destination for conventions.
Spokane and its metropolitan area is the headquarters to some notable companies, such as Fortune 1000 company Potlatch Corporation, which operates as a real estate investment trust (REIT) and owns and manages timberlands located in Arkansas, Idaho, Minnesota, and Oregon,. Also computer equipment manufacturer Key Tronic, micro-car maker, Commuter Cars, gold mining company Gold Reserve, newspaper publisher Cowles Publishing Company, local utility, Avista Utilities, steel manufacturer SCAFCO wholesale hardware distributor, Jensen Distribution Services, and marine equipment manufacturer, EZ Loader Boat Trailers have their head offices in Spokane. Avista Corporation, the holding company of Avista Utilities, is the only company in Spokane that has been listed in the Fortune 500, ranked 299 on the list in 2002. Advocacy groups and associations that have their main offices in the city include the American Exploration and Mining Association.
Other company headquarters in the Spokane metropolitan area include the technology companies Itron and Telect in Liberty Lake, Washington, computer game developer Cyan Worlds in Mead, Washington, and retailer Mountain Gear in Spokane Valley, Washington.
From 2005 to 2007, the leading industries in Spokane for the employed population 16 years and older were educational services, and health care, and social assistance, 25 percent, and retail trade, 12 percent.
The top five employers in Spokane are the State of Washington, Spokane Public Schools, Providence Sacred Heart Medical Center and Children's Hospital, the 92nd Air Refueling Wing, and Spokane County. Sizable companies with locations in the Spokane region include, BlueStar Technologies, Ciena, Cisco, F5 Networks, Goodrich Corporation, Honeywell, Itron, Kaiser Aluminum, Telect, and Triumph Composite Systems.
The health care industry is a large and increasingly important industry in Spokane, the city provides specialized care to many patients from the surrounding Inland Northwest and as far north as the Canada–US border. According to the US Department of Labor, Bureau of Labor Statistics, Spokane ranked #4 in the country for metropolitan areas with the highest published employment concentrations and wages of this occupation. Wood and food processing, printing and publishing, primary metal refining and fabrication, electrical and computer equipment, and transportation equipment are leaders in the manufacturing sector.
Other industries include construction and mining, manufacturing, transportation, communication and networking utilities, finance, insurance, real estate, and government. Furthermore, all branches of the U.S. armed forces are represented in Spokane County. The largest military facility in the area is Fairchild Air Force Base.
Despite diversification to new industries, Spokane's economy has struggled in recent decades. Spokane was ranked the #1 "Worst City For Jobs" in America in both 2012 and 2015, while also ranking #4 in 2014. Additionally, Forbes named Spokane the "Scam Capital of America" in 2009 due to widespread business fraud. Trends of fraud were noted as far back as 1988, again in 2002, and continuing through 2011.
Economic development in the Spokane area primarily focuses on promoting the following industries: manufacturing (especially aerospace manufacturing), health sciences, professional services, information science and technology, finance and insurance as well as clean technology, and digital media. The local and state government are undertaking steps to develop the economy of the Spokane region. At the local level there is The Spokane Area Economic Development Council, which works with businesses to locate and utilize local and state business incentives. Also, advocating for regional economic growth in workforce, industry, manufacturing, public policy, and healthcare is Greater Spokane Incorporated, a joint organization consisting of the former Chamber of Commerce and the former Economic Development Council. There is also the typical patchwork of member business associations and improvement districts such as the Downtown Spokane Partnership and the East Spokane Business Association that work in conjunction with the city to pool their resources to enhance services and make improvements to the public or private infrastructure that help create a vibrant business climate as well as cooperatively promote business and advocate on city policy matters pertinent to them. In addition to these traditional economic development mechanisms, there has been the addition of the City of Spokane's Targeted Investment Pilot program, which aims to use a significant portion of city neighborhood development funds and focusing them on a single, visible and important business corridor to transform and revitalize it by reconstructing and updating infrastructure such as streets, sidewalks, trees and landscaping, intersections, and lighting, etc., spurring further private investment. The East Sprague District was the first corridor selected for this program and has been met with some praise. Innovate Washington, a business incubator seeks to help and develop Spokane companies for success.
A number of companies have located or relocated to the Spokane area, drawn by the easy access to raw materials and lower operating costs, such as cheap hydroelectric power. In an effort to further attract companies, area community and business leaders created the "Terabyte Triangle", a sizable area downtown with high bandwidth fiber optic infrastructure in many buildings and wireless connectivity. Spokane's downtown was the site of a 100-block wireless "HotZone" network—one of the largest of its kind in the country, which was seen as symbolic of its dedication to the development of technological opportunities and resources. In 2010, the HotZone was falling into disrepair but local firms have stepped in to continue its operation.
^[a] Secretary of the Spokane chamber of commerce, John R. Reavis tells of Spokane's significance to the Inland Northwest region as an entrepôt distributing center (largely the city's raison d'être) in his 1891 Annual Report, writing: "By reason of her geographical position and railroad connections Spokane is fitted as no other city is, or ever can be, to be the distributing center of all that country within a radius of 150 miles, and in some instances territory much farther away. There is no point 150 miles from Spokane that is not at least 225 miles from any other city of 10,000 population. We have about us a territory of 60,000 square miles in extent, to every point of which we are nearer than any other city, to every point of which we have better railroad connections and easier grades than any other city ... We have eight lines of railroad that radiate out in all directions through it, so that shipments made here in the morning can reach any point within its borders by nightfall. We have a telephone system connecting us with almost every shipping town and shipping station within its borders. Goods may be ordered, shipped and received, in most instances, within one day. Never was a city more intimately knit to its surrounding territory than Spokane, and never was one more free from a legitimate rival in trade ..."
^[b] In 1892, the Interstate Commerce Commission agreed with the city after it filed a complaint about these practices, but that decision was struck down by a federal court. In 1906, Spokane sued under the newly passed Hepburn Act, and won on July 24, 1911.
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