INDUSTRY ANALYSIS

Is Pacific Northwest Next Big Call Center Spot?

After years of job losses due to the decline in the manufacturing and lumber industries, the Pacific Northwest may be seeing a bright spot for growth as call centers target the region.

Oregon seems to have more pull when it comes to new centers being put in. Recently, Royal Caribbean chose the state for a new 1,000-job call center that would be the company’s West Coast service center.

Oregon won the business over Spokane, Washington, when it proved to have a sweeter incentive deal for Royal Caribbean, including better tax breaks and investment for infrastructure costs.

As the competition heats up for job creation, it is likely that the two states will be jockeying for top position as the region’s best call center location.

Building Up

Springfield, Oregon, is the city most likely to be Royal Caribbean’s West Coast home, and city manager Mike Kelly noted that the deal is welcome.

“Our area has had an export of jobs in the past five years, due to industry restructuring,” he told CRM Buyer. “We’ve seen more jobs exit than come in, so having someone locate here is symbolically important as well as economically.”

Several other call center deals have given Oregon hope that more call centers will be attracted to the state as well. In July, Qwest announced that it would expand its customer service operation in Portland, ending months of speculation that the company might yank jobs from the city.

In June, Wachovia indicated it would close two of its East Coast call centers and open a location in Salem, Oregon that would have 500 employees.

In Washington state, call center arrangements have also been announced this year. Most recently, Dakotah Direct announced it would add about 800 full-time call center jobs in Spokane over the next few months.

When the plan was revealed, Jon Eliassen, president of the Spokane Area Economic Development Council, said it was notable that a number of companies like Dakota, U.S. Bank and others were bringing more call center jobs into the region.

Sweetening the Deal

Companies are not deciding to explore the Pacific Northwest just for the salmon and mild weather. Both Oregon and Washington have been working to extend incentives for new business.

For Qwest, Portland offered the company training grants and forgivable loans from state and city development agencies. The total value of the grants was estimated at $600,000. A similar deal was struck with Wachovia, which was offered a grant on the condition that it would not collect the funding until it had reached its hiring goal of 500 employees.

Royal Caribbean also got an attractive offer, with a three-year waiver of local property taxes and a US$250,000 investment for infrastructure costs related to the center’s construction.

To compete, Washington might have to work harder than Oregon. One of the reasons it might have lost the Royal Caribbean deal is tax laws, according to Jack Roberts, a principal in Lane Metro Partnership, the economic development agency that helped to hammer out Springfield’s deal.

“One of the problems that Washington has is their sales tax,” he told CRM Buyer. “There’s an exemption for manufacturing, but not call centers.”

Because of this, a bill to offer call centers a sales tax exemption has been introduced in the state’s legislature. If passed, the region could look even stronger for companies seeking to locate their call center operations.

“It has strong support,” Roberts said. “And the supporters can point to how the exemption came too late for getting Royal Caribbean.”

Keep It Rolling

Added to the Pacific Northwest’s challenge to draw new business is a larger trend toward outsourcing that looms over the entire country. A recent Datamonitor report predicted that call center numbers and agent positions in the United States are due for a tumble.

The U.S. has approximately 2.86 million agent positions in 50,600 call centers. The report predicts that by 2008, it will shrink to 2.72 million positions in 47,500 call centers.

The report notes that a large proportion of the decrease is attributable to the outsourcing of customer services to locations like Canada, India, Mexico and the Philippines.

Despite such warnings, Kelly expresses confidence that the aggressive strategies of the Northwest will pay off in more call center success stories.

“We have the people available, we have the quality of life, and we’ve got the incentives,” he said. “Our goal is to diversify our local economy, and call centers are very attractive for that.”

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