Seattle Times' annual ranking of Northwest companies comes up short of usual top 100

This is an age of downsizing. Companies are slashing their payrolls, people are trading their SUVs and McMansions for hybrids and condos, and the tumbling stock market has turned a lot of 401(k)s into 201(k)s. In fact, the whole U.S. economy has shrunk for the past three quarters in a row, according to government figures.

So, in keeping with current trends, the Northwest 100, The Seattle Times' annual ranking of the region's best-performing public companies, also has slimmed down. For the first time in the 18 years The Times has compiled the Northwest 100, fewer than 100 companies qualified for it.

The main culprit: last fall's stock-market slide, which pushed dozens of Northwest stocks below $2 a share. The Northwest 100 long has excluded companies whose shares have dropped below $2, but never -- not even during the dot-com collapse earlier this decade -- have so many companies fallen below that threshold.

Among the missing names on this year's list of 87 companies: Micron Technology, Red Lion Hotels, Cray and Hecla Mining, last year's top performer.

But there's another, longer-term trend at work, too: Fewer and fewer publicly traded companies are headquartered in Washington, Oregon or Idaho.

A decade ago, nearly 200 Northwest companies were trading on major exchanges; today, there are just 136. Dozens evaporated in the dot-com bust; others, from big names like Safeco, Puget Energy and Immunex to younger tech firms such as Captaris and Advanced Digital Information, have been vacuumed up by larger companies and private-equity firms.

At the same time, the pipeline of new public companies has run dry. Only two Northwest companies, Kirkland-based Clearwire and First Financial Northwest of Renton, have gone public in the past 2 ½ years; as recently as 2004, that many could go public in a week.

"There haven't been any real barnburners coming out of the Pacific Northwest for the past three or four years," said Fred Dickson, chief market strategist for the D.A. Davidson brokerage in Portland.

The flow of venture-capital dollars that fertilized dozens of local startups never really recovered from the dot-com bust, Dickson said. During the real-estate boom, much investment capital that might have gone into nurturing young software developers or biotechnology firms got shunted into land development or mortgage finance.

And several local companies that might have been attractive candidates for initial public offerings, such as Qpass or Attachmate, were scooped up by larger companies or private-equity firms earlier this decade, when they were flush with cash.

The excesses of the dot-com years have been well documented, but the lure of a big stock-market payday also inspired much of the innovation and entrepreneurship that has marked the Northwest's economy over the past two decades.

Should the dearth of new public companies persist, the region could become a less vibrant, compelling place to work and create.

Which isn't to say that the best Northwest firms are lacking in innovation or ambition. And at a time when so much of what went wrong with the U.S. economy involved the movement of bits of paper or bytes of financial data in ways no one could really quite track, the top ranks of the Northwest 100 are dominated by companies that make stuff you can actually touch.

Take Oregon's Flir Systems, this year's top performer. Flir, the first company to top The Times rankings three times, has relentlessly pushed its core technology -- infrared cameras and other imaging systems -- into more markets, from law enforcement to home inspections to pleasure boating.

"We believe every policeman ultimately should carry an infrared device" to see in dark, murky environments, said Flir chief executive Earl Lewis. "Every soldier should have one, every builder. When you get more electric cars, mechanics will have them."

Amazon.com, having grown into the world's biggest e-commerce company, seems poised to revolutionize the media and publishing worlds with its Kindle e-reader.

Key Technology of Walla Walla is living up to its name by building more sophisticated technology into its food-processing machinery and branching out into new markets.

Precision Castparts and Schnitzer Steel Industries, both headquartered in Portland, have shown that old-line manufacturing industries such as metal forging and scrap steel can thrive in today's internetworked global market.

The stock markets have recovered from last fall's swoon, and it's likely that many of the four dozen public companies that fell out of NW 100 contention this time around will return in years to come.

The real question, though, is whether investors will get the chance to buy into the next generation of pioneering Northwest companies -- or whether they'll be located here to begin with.

In a struggling economy, with investors more risk-averse, it may be a while before significant numbers of companies complete the life cycle from garage startup to Nasdaq listing, replenishing the region's shrunken roster of public companies.

"It doesn't seem like you're seeing as many groups of excited, disgruntled engineers leaving the Tektronix and Intels and Xilinx to start up their own shops," Dickson said. "People who have capital are reluctant to lend it, and people who might have an innovative idea are pulling back and being very cautious after seeing what happened to the region and the nation."

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

The information in this article, originally published June 14, 1009, was corrected July 1, 2009. Key Technology is headquartered in Walla Walla. A story on Sunday's front page about this year's Northwest 100 rankings incorrectly said the company was based in Spokane.