Jun. 6--A New Outlook for The Dalles

Galen May rode his bicycle along the Columbia River as a boy, watching workers build the aluminum plant that would become the economic heart of The Dalles.

"Little did I know, 50 years later, I'd be the one tearing it down," says May, who spent his career here, mostly as environmental manager.

During boom times, this expanse of long, skinny buildings -- almost a million square feet -- hummed 24 hours a day, seven days a week, run by 500 workers who bought houses, raised children, shopped at the local hardware store and ate at local restaurants.

During bad times, jobs and hope burned like molten aluminum. Home values plummeted, and Wasco County posted some of Oregon's worst unemployment rates.

Golden Northwest Aluminum closed the smelter in 2000, crippled by rising power costs, and began demolition in 2007. All that's left is a few mounds of rebar and steel, waiting to be hauled. Resident cats outnumber May and his crew. And this time, everybody knows aluminum jobs won't return.

But something strange is happening: As Oregon staggers through the worst recession in memory, The Dalles is doing OK.

Sure, unemployment climbed in the past year. Housing prices slid. On both counts, though, this town of 13,000 is coping better than the Portland area -- and better than most of the state.

Agriculture provides a solid base in the cherry-growing haven around The Dalles, and public and private investments create new opportunities.

The most visible symbol of change, a 3-year-old Google data center, gleams in the background of the aluminum plant.

Locals are equally excited about the new wind energy program at the community college. Several health care facilities are opening or expanding, and chains such as Shari's and Jack in the Box plant themselves here.

You won't find weekend crowds and fancy boutiques in the 1860s-era downtown -- as the chamber of commerce director puts it, "You don't have to pay $50 for a pair of tube socks" -- but you won't find many vacant storefronts, either. You can print business cards, bowl, get a haircut, browse Oregon's oldest bookstore or eat a croissant at an outpost of Portland's Petite Provence bakery.

The city is building a dock for boats and cruise ships; plazas and walkways will connect the water to downtown. A winemaker plans to retrofit an old flour mill, with hotel rooms in silos.

And, within a few months, the old aluminum property can be marketed to industrial companies. At 240 acres, it will be one of Oregon's largest available sites.

"I'm hoping when this is all done," May says, "we wind up with as many jobs as we had before."

The Dalles has always been a crossroads.

An hour-and-a-half drive east of Portland, the city was a major Native American trading post and an Oregon Trail campsite. It still makes a good layover, a place to fuel your car and belly.

Somewhere in the 20 miles between Hood River and The Dalles, the sun gets brighter and the landscape dustier. Politically, people split the difference between conservative eastern Oregon and the liberal Willamette Valley. (President Barack Obama eked out a majority last fall in Wasco County.)

But upheaval has dogged The Dalles. When the aluminum plant closed for two years in the mid-1980s, storefronts emptied and for-sale signs sprouted. Dan Durow, the community development director, calls that era "the economic hell." When the smelter got going again, so did The Dalles -- until aluminum died for good.

Community leaders say they've unleashed the city from aluminum, but the recession will be a good test.

It's premature to declare the city cured, says Dallas Fridley, the state's Columbia River Gorge-area economist. The government still provides about a quarter of nonfarm jobs in Wasco County. And, unlike the Portland area, The Dalles doesn't have private companies big enough to crash the economy with mass layoffs.

"If you're jumping off a 10-story building, you're going to get hurt," Fridley says. "If you're jumping off a one-story building, you might get a scratch."

By no means has The Dalles escaped economic gloom. Wasco County's unemployment nearly doubled in the past year, surpassing 10 percent. Still, that figure places the county among Oregon's strongest one-fourth.

Fewer homes are selling, and average prices dropped more than 6 percent in the past year -- a decline that real estate agents in Bend would kill for.

"Obviously, things have changed," says broker Bob McFadden, whose resume includes a long list of community boards and commissions. "But we're not nearly as bad as some other areas. We've worked hard to get ourselves that way."

The number of Wasco and Hood River County residents filing for unemployment has quadrupled since last spring. But that includes newcomers to the area, and no single company accounts for a large number of layoffs, state employment officials say.

During past recessions, aluminum workers without high school diplomas lost $50,000-a-year jobs, says employment specialist Eric Proffitt, who grew up in The Dalles. Some were former classmates, with no way to replace their income.

Now the crutch is gone. Proffitt and his co-workers host several classes a week for the newly jobless, helping update resumes and scout options.

"There is no aluminum industry to go back to," Proffitt says. "So where else can I transfer my skills?"

When Google discovered The Dalles several years ago -- drawn by reliable power and fiber connectivity, available land and a cooperative community -- people were quick to paint the company as savior or villain.

There was talk of a high-tech boom, and real estate values soared 50 percent in a year as speculators scooped up houses. During construction, the data center created jobs and filled hotels. But many natives bristled at Google's secretive approach: The project was known by a code name, and critics feared the company would simply import workers from its California headquarters.

The reality is more nuanced.

Home prices inched back down, and you won't find Facebook or Microsoft in The Dalles.