Bear Creek Corporation

Medford, OR

August 14, 2003

UNITED STATES SENATE FIELD HEARING – TEA-21

Good morning. My name is Pete Kratz and I am senior vice president and general manager for product supply for Bear Creek Corporation. Thank you for allowing me to address a subject that is a critical factor in our success as a business: transportation.

Bear Creek Corporation includes two of the largest catalog companies in the nation, Harry and David, and Jackson & Perkins. Also our Medford campus is the headquarters for the Harry and David stores and Jackson & Perkins wholesale. We are the largest employer in the entire southern Oregon region. This year, we will employ in excess of 7,300 seasonal and full time employees in the Rogue Valley.

Probably the most well known of our companies is Harry and David. Founded in 1919 by two brothers, Harry and David Holmes, we have been one of the primary economic backbones of this valley for years. Our current revenues approach $600 million.

The statistics associated with our companies today are impressive. We mail more than 110 million catalogs, and each year we ship in excess of 9 million packages, both in this country and internationally, to more than 100 nations. Our payroll this year in Medford is in excess of $100 million. For many people, the name Harry and David is synonymous with Medford, Oregon.

As you can well imagine, transportation is essential to a company such as ours. Back when we started, it was rail service we counted on to move our product. Today, it is the highway system.

Millions upon millions of gifts spend some time on Interstate 5. They are transported to regional air express centers in California and Portland. Daily cut-off times for these express deliveries make any delay in surface transportation critical to the service of our customers. There are trucks that take products to our regional distribution center in Ohio, while other trucks move our gifts to mailing centers and our 147 Harry and David stores in 34 states.

There are trucks that bring fruit, raw materials and packaging to our Medford campus. Many of these deliveries are made just-in-time to support our production operations. This method of operations lessens the burden on local transportation systems and reduces truck movements between local storages. Many of our packages are highly perishable fruit that are received at our packinghouse, gift packed and then shipped within one day. An efficient transportation system is essential to the viability of this business.

Last year there were over 30 inbound truck deliveries to our Medford campus per day in our peak production month. During our peak-shipping month, there also were more than 30 outbound trucks per day.

We project that over the next ten years our business will continue to grow at near double-digit rates. That means several things for this region. It means young people from local education centers won’t have to move to other cities to find excellent jobs. It means the local area will have a steady stream of good paying and dependable jobs. Conversely, it also means a need for good and dependable surface transportation. This is transportation for both our employees and for our products.

Key regional transportation projects including the South Medford interchange for I-5 and improvements to Hwy 62 in Medford are critical to sustaining and growing our business.

I would also suggest a place at the table for business on the Metropolitan Planning Organization (MPO) as a way of aligning economic growth with transportation planning.

In 1919 two creative brothers were drawn here for the rich pear orchards. Because of the rail transportation system, they were able to start the multi-million dollar business that we manage today. Just as it was in the early days, transportation is still vital to our company and its future.

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