more photosNeither is a career politician: Alley and Westlund bring decades of business experience to the race, albeit from vastly different avenues: One came from Wall Street, tthe other, Main Street.
Neither has a business degree.
Both are proud of their accomplishments and say they learned as much from their setbacks as their pinnacles.
Having a business background is frequently cited as a qualification to be state treasurer, and both candidates will tout their professional pedigrees on the campaign trail.
The Treasury Department helps hire and monitor the professional financial managers who invest the money in Oregon’s pension fund. The treasurer also sits on several finance-related commissions, is responsible for coordinating and selling state bonds, and meets with Wall Street rating agencies about Oregon’s credit worthiness.
But the position is also a political one, said Treasurer Randall Edwards, who cannot seek re-election because of term limits. He has used the post to help push lawmakers to expand state reserves, and started and championed the state’s college savings plan.
Six of the past seven officeholders — dating back to Bob Straub, who would go on to become governor — logged time in the Legislature before being elected to manage the treasury. The lone exception is Clay Myers, who had been secretary of state before serving two terms as treasurer, from 1977 to 1984.
Generally speaking, a successful business background will sway a segment of voters, notably Republicans, but it likely won’t be the determinant of the race, said Bill Lunch, a political science professor at Oregon State University.
“There have been people who have been able to parlay business success into success on the ballot,” he said. “But there have been plenty of others who have tried to do that and have failed.”
He points to the example of high-tech millionaire Tom Bruggere, who was drafted by Democrats to run for the U.S. Senate in 1996 but ultimately lost to another businessman, Pendleton frozen food magnate and now U.S. Sen. Gordon Smith.
The race for treasurer figures to be overshadowed this fall by higher-profile and big-money contests for president nationally and for the U.S. Senate in Oregon.
So the candidates will try to connect with voters one-on-one. Together.
Alley and Westlund have agreed to stage a series of joint town-hall meetings to introduce themselves, raise voter interest in the race and talk about their views for the state treasury.
A minor-party candidate, Bob Ekstrom of the Constitution Party of Oregon, a service manager for a door-making company, also could join that tour.
No dates have been announced.
Westlund the entrepreneur
For Westlund, his biggest business success was starting and growing a cattle genetics business, which at its peak in the early 1990s had 15 producing bulls and 10 salesmen across the country.
The son of a wealthy real estate developer, Westlund, 59, dabbled in several small business enterprises in Central Oregon dating back to 1974 — but he also took some chances that he admits were based more on fun than profits, including a stake in the money-losing Bend Bandits baseball team from 1995 to 1997. He tried to be a concert promoter in 1983.
“Being an entrepreneur is like baseball,” Westlund said. “You need to have the courage to step to the plate, and sometimes you are going to strike out and sometimes you are going to get hit, but sometimes you hit a home run.”
After graduating from Whitman College in Washington state in 1972 with a bachelor’s degree in education and history, Westlund went to work for a Portland business consulting firm, scouting locations across the Northwest for a savings and loan.
At the same time, he invested in an effort to restart an idled sawmill in the town of Republic, Wash., near the Canadian border.
Westlund was not involved in the management of the company, which failed after about a year, he said, but said it gave him an appreciation for the tough economics of the timber industry.
His first successful venture came next, as a partner in a mining operation in Oregon’s Christmas Valley with two childhood friends, with the main product being “Kitty Diggins” cat litter. Westlund led the marketing efforts.
The company, American Fossil, which employed more than 30 people, sold in 1979 after a bidding war and fetched more than $1.25 million, said John Floweree, one of the three partners.
Risky business
Westlund used his share of the money to buy the 6,000-acre Juniper Butte Ranch in Mitchell, where he started running cattle. Also at that time, he searched for deals in the stock market and picked up undervalued oil company stock, he said.
His father, the late Bud Westlund, had found riches in the backcountry decades earlier, when he helped develop a swath of California’s Mojave Desert into a community known as Apple Valley.
But Juniper Butte Ranch was a failure, in part because Westlund could not get cheap feed and the early 1980s economy was in the toilet, he said.
“Quite frankly, we were probably a little bit naive going into a business we shouldn’t have been going into,” said Guy Mount, who was Westlund’s partner. “At the end of the day it didn’t work, and we all lost money on it.”
Family and friends who invested in the venture as a tax shelter lost a total of about $200,000, but years later Westlund and his partner paid to offset those losses, said one of those investors, Portland real estate broker Steve Laskey.
“He was honest and upfront, and we knew going in it was risky, and he didn’t have to pay us back, but he did and that showed something,” he said.
Westlund hit it big when he looked for what he calls a “value-added agricultural business” and put his marketing savvy to work. He borrowed $200,000 and bought a 3,000-pound bull named Reggie — whom Oregon cattle industry veterans including retired OSU professor Dean Frischknech still recall as an amazing specimen — and started selling semen to breeders.
It was a gold mine, Westlund said. He doesn’t say how much he netted but did say the bulls paid for themselves in the first three months of, well, production — and allowed him to consider retirement at 46 in 1994.
Real estate ventures
At about that time, he dabbled in the construction business and developed what were supposed to be 28 vacation condos and a house at Bend’s Broken Top.
That endeavor yielded a transaction that raises questions. In late 1994, he financed the purchase of the Broken Top house for $353,000, via a primary mortgage, which means the buyer must physically occupy the house he or she buys. However, Westlund’s family was living in Tumalo and never moved.
Asked about that loan, Westlund said his wife wanted to move to Broken Top at some point. But he said he had no idea that it was a potentially fraudulent loan and that he went through Bank of America Private Bank to get all his loans and was sure they did nothing illegal.
He inked a land-sale contract three months later, in February 1995, and then sold the house outright for $425,000 in August 1995, according to Deschutes County records.
Also in 1995, Westlund joined investors to buy an independent, minor league baseball team, the Bend Bandits, for $50,000. The team lost about $75,000 a year, he said, but the partners were able to sell it for $250,000 three years later, so almost broke even.
For Westlund, an avid baseball fan, the experience was priceless despite the red ink, he said: He was able to travel with his son during the summer and watch “their team” together.
Legislative experience
After considering becoming a nurse, he ran successfully for the Legislature, as a Republican, in 1996. During his tenure in the state House, he was the co-chairman of the powerful Joint Ways and Means Committee from 2001 to 2003. It oversaw the drafting of the state’s then $11 billion budget and then was forced to pare state spending during the economic downturn of 2002 and 2003.
He also touted a tax increase to soften that blow — which earned him scorn among many fellow Republicans. Voters sent a sharp rebuke and rejected two tax-raising measures he helped write. He also has been an outspoken advocate of creating a sales tax and lowering income taxes.
After staging an independent campaign for governor is 2006, he switched parties to become a Democrat.
In addition to being a legislator and still selling frozen bull semen, he now works part time as a health care consultant for Redmond-based Advantage Dental. Mike Shirtcliff, the owner, said Westlund is helping to oversee outreach efforts and to negotiate a major merger.
“He is a great negotiator,” Shirtcliff said. “He’s fair, straightforward and honest, but he also knows how to play poker.”
Westlund said a business background is just one part of the necessary qualifications to be treasurer.
“You have got to know the importance and the value of making payroll, and you need to have been in those negotiations and know how hard it is,” he said. “But the job is far more than that. It’s stewardship of the state’s natural resources, and it’s a public policy position, and it’s being able to affect legislation in the very difficult arena of the Legislature.”
Bob Harrell Jr., whose family owns a cattle ranch in Baker County and worked with Westlund in the breeding business, said Westlund was destined for success and would be a fine treasurer.
“His decisions were driven by common sense, and you can’t say that about a lot of people,” Harrell said.
Alley the engineer
Alley, 53, started his career as an engineer, designing air bag systems for Ford cars. He went on to become a venture capitalist and is best known for co-founding Tualatin-based Pixelworks in 1997.
The company designed computer chips for flat-panel television monitors and was considered a high-tech rising star in the early 2000s.
Alley stepped down as CEO in 2006 — after the company missed some product development deadlines and overpaid to acquire a California company — but he remains the chairman of the board.
The outlook for the company is now so grim that it faced delisting from the NASDAQ stock exchange in June, until executives employed an accounting maneuver known as a “reverse stock split” to elevate the share price above $1. But since then, the stock has lost more than 30 percent of its value.
Still, Alley said, the company has during its life sold more than $1 billion in products and created jobs, putting $150 million into its Oregon payroll. He said he wishes there were more Oregon companies like Pixelworks.
The majority of the work force has been shifted out of Oregon to China, where the television manufacturers are, he said.
In an interview, he said he hopes the company rebounds.
“You gain a lot of practical experience when you go through the cycles when times are up and through the crashes,” he said. “It has been a long time since anyone with that experience has had this position (of treasurer).”
More of Alley’s business background is a public record because he worked for publicly traded companies. Westlund’s businesses were privately held, and he declined to offer specific details about his profits.
Even though Alley earned an engineering degree from Purdue University, he was just as interested in how companies and markets work.
His first jobs were stints at Ford Motor Co., where he worked on safety systems; Boeing, where he helped design flight systems for planes; and then for Computervision, which was developing computer-aided drafting programs.
Wall Street
Then he jumped into the rough-and-tumble arena of Wall Street finance.
From 1986 to 1992, he worked for the Boston venture capital firm Battery Ventures and rose to become a general partner.
One of the companies he liked was Wilsonville-based InFocus Systems, a designer of digital screens for projectors. After leaving Battery Ventures, he moved to Oregon and was hired at InFocus.
Four years later, in 1997, he joined with four partners and founded Pixelworks, which would make semiconductor chips for InFocus. He was chosen to be the chief executive.
The company took off — and in 2000, it went public, selling shares on the NASDAQ exchange. In a day, the company raised $66 million, and the stock started at $20 a share and went up.
Under Alley’s guidance, the company looked destined for success. It set up satellite shops in China, where he could hire engineers cheaply, and where the company would be closer to its customers, said Frank Gill, a former Intel executive who sat on the board of directors at Pixelworks.
“Certainly it was a decision that was made with the full support and knowledge of the board,” he said. “If you look at that time in history, probably 90 percent of the revenue was in Asia, and it is pretty easy to make a case if all the customers are in Asia. Businesses want to be good citizens where they operate — but is their role to create jobs in Oregon or the states where they operate, or is their job to take care of their customers?”
But Pixelworks only turned a profit in one year — 2004 — and doubts grew on Wall Street because of missed deadlines. Manufacturers looked to other suppliers. Then, in an attempt to branch into new products, Alley decided to buy a company in California for $170 million.
“They repeatedly misexecuted,” said Tayyib Shah, a semiconductor industry analyst who tracks Pixelworks for Longbow Research in Cleveland. “There was a lack of execution in the core business in a fairly competitive space to begin with. … Then they attempted to dig themselves out of that hole they were in and made a poor decision.”
Shah said it is “going to be very difficult” to turn the company around.
Entering the public sector
After Alley resigned as chief executive, he was hired as a deputy chief of staff for Gov. Ted Kulongoski, advising him on business and economic development matters.
Alley said the experience, his first job in the public sector, gave him a glimpse of how the government works and strengthened his belief that he can make the government work better.
His opinions were valued, he said, even though he was working for a Democrat.
Alley turned heads this spring when he announced his bid for treasurer. In late 2007, he assured the governor in writing that he would not run.
Kulongoski has endorsed Westlund in the race.
A Minneapolis-based investment group that bought 5.36 percent of Pixelworks’ total stock this month offered this observation in a news release in which it said it would propose new members for the Pixelworks board: “Frankly, the decline in share price from over $20 per share to 60 cents per share over the past five years speaks volumes on the performance of the board and management,” said Marc Kozberg, general partner of Xenia Contrarian Partners.
Alley disagrees with those assessments. He said about one-third of the company’s acquisitions worked well, but one-third had less-than-hoped-for results.
And he said the company is still producing in a highly competitive market, and he sees it coming back into profitability.
Confidence in his company
A turnaround at the company, which is still selling $20 million in products each quarter, will also help him personally, he said. SEC filings in May showed he still owned 1.8 million shares and has the rights to buy 552,750 more through stock options.
“I think a lot of companies that are in trouble try to manage a stock price, but we want to try to build a good company, and the stock price will take care of itself,” he said.
“We are very focused on restructuring to provide value to shareholders. Global competition is hard, but I am still a shareholder, and I want the company to do well, and I want shareholders to reap the benefits along with me.”
But the stock — which is a gauge of confidence in the company — continues to slide. Since June 5, when the company used a 3-to-1 reverse split to avoid a delisting, the price has fallen from $2.42 a share to $1.45 at the close of the markets Friday.
Alley, who was named a 2007 distinguished engineering alumnus at Purdue, said he will bring a Wall Street insider’s perspective to the treasury, and that he understands the investment world from all sides because of his two decades of work in the field, particularly when it comes to venture capital.
He will be able to speak the language to those who hope to obtain investment funds from Oregon, he said.
“I know what they’re talking about because I’ve sat in that chair,” he said.
“We can do a lot more in terms of attracting attention to Oregon. Probably nobody has had the job of treasurer, who has my background.”
Gill, the former Intel executive and a donor to Alley’s campaign, said Oregon needs a treasurer like Alley — someone who has accomplished much in his career.
“Allen is an extraordinarily astute and clever businessman and a successful venture capitalist who founded a company and grew a company.”
