More Wcoast RE
Seattle's economy reeling
Posted at 10:02 p.m. PST Friday, Jan. 18, 2002
BY KRISTI HEIM
Mercury News Seattle Bureau
SEATTLE -- Lately, bad economic news seems to flow like the region's incessant winter downpours.
The economy here is already bleak, and unlike other parts of the country, it's not expected to get better anytime soon. The reason? A triple whammy of a nationwide recession, drastic job cuts at Boeing and a sharp downturn in the area's vital high-tech sector.
In Washington, which has the second-worst unemployment rate in the nation after Oregon, layoffs at the state's largest employer are just getting started. More than 20,000 employees of Boeing in Puget Sound are slated to lose their jobs by 2003. That's a quarter of Boeing's local workforce, and roughly the same number of people that already have been laid off in Silicon Valley.
For Lucy Brokaw and other veterans of the aerospace giant's boom-and-bust manufacturing cycles, this time is different. In the last couple of down cycles, many of Boeing's pink-slip holders could rely on temporary work until the next upswing or even try their luck in the burgeoning dot-com industry.
Now, with so many other unemployed people competing for work in Puget Sound, the plentiful alternatives of the past have been squeezed down to a trickle.
Last year about 18,000 people lost their jobs in the local high-tech sector, according to the Washington Alliance of Technology Workers.
``There isn't a job pool out there in the tech industry to support the number of people getting laid off,'' said Brokaw, 53, who had designed aircraft wiring systems until she was cut from Boeing in December, one month shy of her 20th anniversary. ``This time, many other people are affected besides us.''
Just ask Ammy Snow, 23, who graduated from college in June with a business degree and landed her first job with Boeing in September. That was before the Sept. 11 terrorist attacks temporarily halted airline travel and crippled the industry.
Snow received her layoff notice on Sept. 24, her first day of work.
After a month of fruitless searching, she discovered the job market had become ``very bleak.'' Forget career ambitions. Snow said now she is simply looking for a temporary office job to make the monthly payments on her student loan and car loan.
``I'm applying for jobs that require no experience and only a high school diploma,'' she said. ``When I didn't get any calls back, I knew it was serious.''
And it's going to get worse before it gets better, analysts predict. Washington's jobless rate hit 7 percent in the latest state unemployment report, released Tuesday. That's well above the national rate of 5.8 percent and above the rate of 6 percent for California and 6.1 percent for Santa Clara County. Washington State economist Chang Moon Sohn expects the jobless rate to grow to nearly 8 percent in the next two years.
That's because a major Boeing downturn has a ripple effect on other businesses. One Boeing layoff means one other job lost in the short run and two more jobs lost in the long run, Sohn said.
To be sure, the region is far less dependent on the aerospace giant than it was during the so-called ``Boeing Bust'' of the early 1970s, when the company teetered on the verge of bankruptcy and let so many people go that a billboard was erected: ``Will the last person leaving Seattle turn out the lights.''
Compounding the problem today is the fact that the two pillars of the state's economy, commercial aircraft manufacturing and information technology, took a hit at the same time. International trade through the Port of Seattle, another cornerstone, never fully recovered from the Asian economic crisis. Trade declined further when business dropped at the nation's largest exporter -- Boeing.
A boost in sales of airplanes typically lags well behind an economic recovery, and Boeing's current layoffs are spread out over more than two years. As a result, Washington's slump will be deeper and more prolonged than it is in the rest of the country, Sohn said.
``Nobody is going run out and say ``the recession is over, I'll go buy a 747,' '' quips local historian Walt Crowley.
In the meantime, people like Stephanie Jefferson are on the front lines trying to help hundreds of newly employed people pick up the pieces of their lives.
``We have an emergency on our hands and we're providing triage,'' said Jefferson, who manages training programs for members of Boeing's machinists union. Boeing's retraining centers offer everything from free Internet use and computer classes to career advice and job search assistance.
``We're seeing more people go out the door with high seniority,'' she said. ``Many of them were hired right after high school 20 years ago. This is the only work experience they know.''
Years spent in specialized aerospace manufacturing jobs have left many Boeing workers without easily transferable skills, so they need retraining in other fields.
Laid-off machinist union members have access to education funds of $2,500 a year for one to three years. But contracts require employees to use government funding before tapping into company funds. Government programs are often subject to unpredictable budget fluctuations, says career adviser Mark Anderson.
With Washington facing a budget deficit of more than $1 billion, many worry that crucial government funding will be axed. ``There really isn't any guarantee of funding on any program,'' Anderson said. ``With all the cutbacks, nothing is really certain.''
Money coming into government coffers has dwindled, due in part to the drop in property values of commercial buildings with rising vacancy rates. Seattle's office vacancy rate has climbed to nearly 14 percent, the highest since 1993. Tech companies such as Amazon.com and RealNetworks have put space on the market for sublease.
But not all the economic news is bad.
Home prices in Seattle rose 8 percent over the last year, and sales are still strong. Prices in surrounding King County rose 5 percent.
Microsoft is holding firm and now has its pick of the brightest dot-com refugees, Boeing rejects and anybody else looking for a stable, high-paying job with prospects.
Rather than cutting jobs, Microsoft plans to hire 4,000 to 5,000 people this year. Last year, the company hired twice as many people, but it faced an 11 percent attrition rate. This year, attrition has dropped to just 4.7 percent.
Starbucks, which recently celebrated its 30th anniversary, continues its McDonald's-style expansion around the world.
On weekends the downtown Seattle retail core is packed with shoppers, and there is a half-hour wait to park at the Ikea store a few miles from Boeing's Renton plant.
And then there is a quality of life that's hard to beat, like the clear winter mornings when sunlight dances on the sound and snow-capped mountain ranges fill the horizon in either direction.
But something that has been a fixture in the local landscape may be changing forever. Union representatives are concerned about what they see as a growing trend to contract more work out of state or overseas, and they worry that the jobs cut now will not return to Puget Sound.
Over the last year more than 2,000 jobs were moved from Puget Sound to South Africa, China, Japan and other parts of the United States, said Mark Blondin, president of the International Association of Machinists. ``I don't think it's reasonable for people to assume that they're ever coming back to the company,'' said Charles Bofferding, executive director of the Society of Professional Engineering Employees in Aerospace. ``Even as they're laying off here, they're increasing jobs elsewhere.''
Historian Crowley compares the erosion of local control to the departure of the banking industry from Seattle in the '80s and '90s. ``It does not bode well for the future,'' he said. He sees Boeing's move of its headquarters to Chicago as ``a serious long-term political and psychological blow that will affect the region's influence and long-term stability.''
Still, Boeing does more for its outgoing employees than most corporations, not to mention the failed start-ups that marched workers out of the building with their personal belongings in a box. The company has already taken a $63 million charge -- or $5,250 per employee -- to cover severance costs for its first 12,000 job cuts, and thousands more are on the way.
The company says it plans to rehire local employees when business turns around.
``We always look for the best industrial capacity worldwide to support us,'' said Boeing spokeswoman Barbara Murphy. ``There isn't a change in our strategy. When work picks back up, we hope to have people return to their positions.''
Bob Matetich isn't waiting around.
A technician in Boeing's spare parts operation, Matetich was laid off from Boeing last month. His wife's tea shop recently went out of business, leaving them both unemployed with a house payment and a daughter in her first year of college.
``It's a challenge, but it's also very frightening,'' he said. ``I'm truly scared. At my age to be unemployed is a frightening experience.''
Matetich moved to the Seattle area 23 years ago from Cleveland to begin his career at Boeing. Surfing the Web a recent weekday at Boeing's career transition center, he didn't hesitate to apply for an opening at Boeing rival Lockheed Martin, across the country in Georgia.
``I never did really care for the Puget Sound area,'' he said. ``It rains too much.''
Contact Kristi Heim at kheim@sjmercury.com or (206) 632-8160. |
