Winery Clusters Foster Resilience

Study explains how Walla Walla's wine center generates jobs and profits

by Peter Mitham
Alternative text
Researcher Nick Velluzzi found that the Walla Walla Valley in Washington could be a model of success for the southern Oregon wine industry to follow.
Walla Walla, Wash.—Winery clusters can bolster regional economic resilience, according to new research from Walla Walla Community College in partnership with Economic Modeling Specialists Inc. (ESMI) of Moscow, Idaho. Based on experience in Walla Walla, the research suggests that Oregon’s Umpqua Valley could see 56% growth by 2020, if its development mirrors that of Walla Walla.

The number of wineries could rise to 108 by 2020—up from 70 today—while generating 1,293 jobs. The projected employment includes 914 direct jobs in the wine industry, up from the current 579.

Alhough only a small element of a larger report focused on the Walla Walla area, the numbers were run because Umpqua Community College is seeking to replicate Walla Walla’s success with an industry that supports a workforce drawing paychecks topping $222.1 million.

“They wanted some baseline numbers and projections on what would it look like in the Umpqua Valley with a similar program,” explained Nick Velluzzi, director of institutional planning and assessment at Walla Walla Community College. Velluzzi was research director for the latest report and a previous study on the Walla Walla wine cluster undertaken in 2006 to examine the growth of the area’s wine industry and its labor needs.

A key element for both the Walla Walla and Umpqua clusters are the local community colleges. These have a key interest in tracking the growth of emerging industries to know what courses to offer, in order to train potential employees.

Walla Walla Community College established its Center for Enology and Viticulture in 2001; Umpqua Community College launched the Southern Oregon Wine Institute in 2008, using the Walla Walla center as its model.

Since the Walla Walla center opened, the local wine industry has more than tripled in size, with direct industry employment increasing from 302 in 2001 to 1,549 people today. Overall jobs attributable to the wine industry number 6,003, and could total 8,913 by 2020.

“It’s a stretch to say the program at the community college caused the growth of the wine cluster in the Walla Walla Valley, although we can say there’s a correlation between the start of the program and a spike in the growth of the wine industry,” Velluzi told Wine & Vines. “Individuals who have come through our program have gone off and started their own wineries. So, in a sense, we have helped create small businesses and generate some jobs.”

Umpqua Community College holds similar aspirations for the region it serves, hosting conferences in 2008 and 2010 to discuss the opportunities and challenges for a Southern Oregon wine cluster.

Notworthy benefits
Walla Walla’s experience shows the payoffs could be significant. “Without the area’s wine cluster, the region would have entered a period of economic stagnation beginning approximately in 1997, and remained in that stagnant pattern more or less continuously through until at least 2020,” notes the report EMSI prepared for Walla Walla Community College.

Despite the economic headwinds, the report concludes that an effective cluster is helping the region weather the current turbulence. “Absent the wine cluster, the IPZ area economy (a region including Walla Walla and Columbia counties in Washington, and the Milton-Freewater area of Oregon) would be experiencing a protracted period of no-growth economic stagnation.”

“We think we’re in a pretty fortunate position with the growth of the industry and how that growth has been able to maintain itself,” Velluzzi said. “Wine and tourism in Walla Walla have helped create a more resilient regional economy, but the outstanding question is: What are the limits of the resilience?”

The report notes that the cluster chief advantage is that it brings outside money into a region, rather than recirculating what’s already present in the local economy.

The wine cluster is the second most important driver of jobs in the Walla Walla area. But if direct industry jobs are lucrative—graduates of the Walla Walla Community College enology and viticulture program typically secure salaries of $40,000 to $70,000 per year—many of the spin-off jobs in hospitality are much lower, with an average salary of $17,000.

It’s the consumption aspect that may represent the single greatest weakness of the wine sector, particularly in recessionary times. “We’re creating a consumer product and we need to keep consumption up. And that’s where we relate back to the rest of the world,” Velluzzi said. “We’re watching Europe closely, and we’re hoping that we can weather this storm and that we don’t see a dip in folks wanting to visit us, visit our wineries, and stay in our hotels and eat in our restaurants.”

Currently no comments posted for this article.