Smorgasbord of Oregon state firms loses entree but the successful cluster focus continues to excel

Gardenburger, a well-known company in the state’s important niche food industry, is relocating

A once-rising star of a major Oregon industry will pull up its Portland roots and relocate its corporate headquarters south.

JEFFREY KOSSEFF Oregonlive.com

But, unlike Louisiana-Pacific’s decision to move to Nashville, Tenn., Gardenburger’s plan to relocate to Utah hasn’t caused much of a stir.
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Gardenburger’s quiet departure speaks to how far the company has fallen. It has 21 positions left in Portland, 17 of which will move to Utah. The move will put headquarters employees near the company’s manufacturing facilities in Clearfield, about 30 miles north of Salt Lake City.

But the exit of the maker of veggie medley patties and meatless riblets is not without significance.

The state will be losing one of its most established brand names in an oft-overlooked industry. The lack of large impact from Gardenburger’s exit speaks to how much Oregon’s food industry has grown since the meatless food-maker’s heydays in the ’90s.

While they may not be as complex as biotechnology firms or as glitzy as the sports-apparel-makers, established companies such as Reser’s Fine Foods, Stash Tea and Tillamook Cheese, along with many small, emerging startups, contribute thousands of jobs to the Oregon economy.

"Portland and the Northwest are highly developed in niche and natural products," said David Lakey, president of The Lake Group, a Portland consumer products marketing and management consulting firm. "Gardenburger fits right in with Kettle Chips and Oregon Chai and Tazo Tea."

In contrast with Louisiana-Pacific — the largest remaining publicly traded timber company in Oregon — Gardenburger leaves behind an impressive roster of companies in its industry.

According to Portland State University’s Food Industry Leadership Center, food manufacturers employ about 25,000 Oregonians in everything from milk curdling to beer brewing.

Oregon’s strong base of independent grocers such as New Seasons Market and Zupan’s Markets helps small food-makers flourish, said Tom Gillpatrick, the center’s director.

Joe Cortright, an economist with Portland-based Impresa, attributed some of the industry strength to Oregonians’ willingness to try new foods.

"The critical point here is that the local marketplace here is a huge factor in chasing the kinds of businesses that get started here, to the extent that tastes here anticipate trends that go nationally or internationally," Cortright said. "Portland is probably on the cutting edge in the country in terms of being a place where there’s a lot of innovation happening in the food business."

The state has quietly made food manufacturing an economic development priority.

For example, Oregon State University and the Oregon Department of Agriculture operate the Food Innovation Center in Portland to help food entrepreneurs develop and market their products.

Sports apparel companies and chip-makers opened facilities in Oregon to be near the same suppliers and service providers, and food companies have experienced the same phenomenon, which economists refer to as "clustering."

"We have a cluster of suppliers and marketers and distributors that understand those types of products and support them," said Lakey, the consultant.

Portland’s Moonstruck Chocolate Co. has benefited from clusters — and not only its cashew/almond/hazelnut/pistachio caramel chocolates.

Moonstruck, founded in 1993, uses brandy from Northwest Portland’s Clear Creek Distillery for two types of truffles. It also orders from Oregon Chai and Oregon Spice, co-owner Sally Bany said.

"The people here are very loyal to brands," she said.

But at least one of the best-known food-makers in Portland has considered leaving. Junki Yoshida gained fame selling his Portland company’s cooking sauces, which is marketed and distributed by H.J. Heinz. He loves Portland and wants to stay in the city, although he admits that during the past decade, he has considered moving across the Columbia River to Vancouver.

"I am kind of sad that we have to pay so many taxes," Yoshida said. "It’s tough, but I try to hang on here. I have such love for this city."

Yoshida also said Portland’s isolation from the rest of the nation can be a burden on food businesses.

"The market here is very limited," he said.

For Gardenburger, taxes and regulations were not driving factors, chief executive Scott Wallace said.

The company was looking to cut costs by moving its headquarters where most of its 175 employees work.

In better days, Gardenburger invested in a pricey late-’90s ad campaign that included a spot on the "Seinfeld" finale. But large corporations bought its main competitors, Boca Burger and Morningstar Farms, and its sales have plunged.

In the quarter that ended June 30, Gardenburger posted $15.04 million in sales, down from $17.08 million a year earlier. Its net loss for common shareholders was $856,000, compared with a net income of $221,000 a year earlier.

"We really had to look at every facet of the business and do everything we can to make the business run as efficiently as possible," Wallace said.

Jeffrey Kosseff: 503-294-7605; [email protected]

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