Snohomish County industries have hope for 2010

Published 5:18 pm Tuesday, December 29, 2009

After a year of high unemployment and low expectations, Snohomish County showed signs late in 2009 that its economy could be on the mend. In a county with such close ties to the aerospace industry, the region got a symbolic boost in late December when the Boeing Co. flew its 787 Dreamliner for the first time. Local home sales increased for the first time in two years, thanks to federal incentives. And retailers reported a merrier holiday shopping season than in 2008.

Although Snohomish County’s economy still has a long way to go to return to its pre-recession high, representatives in the county’s biggest industries were cautious but hopeful for 2010.

Aerospace

While 2009 had its share of ups and downs in the aerospace industry for Snohomish County, 2010 could usher in several positives. Overall, air transportation is expected to pick up in 2010 compared to 2009, which is good for airlines.

“The worst is likely behind us. For 2010, some key statistics are moving in the right direction,” said Giovanni Bisignani, CEO of International Air Transport Association. “But fuel costs are rising and yields are a continuing disaster. Airlines will remain firmly in the red in 2010 with $5.6 billion in losses.”

For jet makers Airbus and Boeing, the two likely will get fewer order cancellations and deferral requests in 2010. If the cargo market continues to be slow, however, Boeing could see a few cancellations for its delayed 747-8 Freighter, said Scott Hamilton, an analyst with Issaquah-based Leeham Co. Those cancellations could be offset with orders for the passenger version of that Everett-built jumbo jet.

In 2010, Boeing will have two widebody aircraft in flight testing: the 787 and the 747-8 Freighter, which could make its first flight in early January.

“You always worry about the unknown unknowns in flight testing,” Hamilton said.

As long as Boeing can resolve any unexpected troubles quickly, the company is expected to deliver the first 747-8 in the third quarter and the first 787 in late 2010. Deliveries mean that Boeing’s local suppliers will be paid for their work and possibly could look to hire additional employees.

Also in 2010, Boeing will begin to establish a “surge” line for its 787 Dreamliner in Everett as it looks to ramp up production on the delayed jetliner. Eventually the company will move that capacity to South Carolina, where it plans to open a second 787 final assembly line in 2011.

The U.S. Air Force could finally award its multi-billion dollar aerial refueling tanker contract this summer. Hamilton said he’s “99 percent sure” that Boeing will offer a tanker based on its Everett-built 767 commercial jet. Winning the contract would ensure jobs on that production line for years to come.

Shipping

The Port of Everett saw cargos fall in 2009, but not as much as it had expected. By the end of November, 140 ships and barges had visited Everett, compared with 158 in 2008.

Tonnage was down from 121,980 tons in 2009 compared with 335,443 the previous year. But that was nearly entirely due to the fact that the port didn’t receive any cement from Asia this year because of the plunge in construction work during the recession. Last year, it received 185,488 tons of cement for distribution around the Northwest.

“We were off a little bit, but we actually had net revenues in excess of what we predicted because we managed costs in such a way that we were running ahead,” said John Mohr, port executive director.

He expects business to be tougher in 2010, mostly because of production cutbacks at the Boeing Co., one of the port’s major customers. The port handles oversized plane parts for the 777, 767 and 747 assembled in Everett, and Boeing has announced plans to cut back by 10 percent to 17 percent next year.

The port is hoping the Obama administration’s push for green energy will boost its business in parts for giant windmills that come from Asia.

“As the country looks for new ways to have less oil-dependent power we’ll see more wind farms in the northern tier from here to Minnesota,” Mohr said.

The port has been importing parts for those windmill farms from Mitsubishi in Japan, especially blades and power hubs.

Because of the weakened dollar, the port also hopes to continue exporting things like farm equipment to Asia. And for years it has been shipping equipment and supplies to a big gold mine in Russia, a good business as gold prices continue to rise.

Retail

Retailers began to see an increase in sales during the 2009 holiday season.

At Everett Mall, sales of mall gift cards were double during the 2009 holiday shopping season as compared to the 2008 season. But winter weather in 2008 prevented many shoppers from getting out of their homes.

Still Julie Tennyson, marketing director with the Everett Mall, is cautiously optimistic about retail in Snohomish County in 2010.

“We think sales and consumer confidence will continue to build,” Tennyson said.

Tennyson believes that by mid- to late-2010 consumers will begin to buy items – clothing, electronics – for themselves that they held off purchasing during the recession.

Real estate

For the first time in two years, real estate agents saw business improve toward the end of this year because of the $8,000 tax credit offered for first-time homebuyers.

The tax credit, which had been set to expire in November, boosted sales considerably in Snohomish County and throughout the nation.

Congress continued the $8,000 credit until spring of 2010 and expanded it to offer $6,500 for existing homeowners who buy a new principle dwelling.

Agents hope the new credits for continue to spur sales through the winter, typically at tough time for the business, and continue until spring, generally the best time for the industry.

Whether the economy will improve enough by spring to encourage people to buy without a tax credit is anybody guess.

Banking

Caught up in the residential housing crunch, Snohomish County’s community banks limped through 2009. Shares of the county’s community banks took a beating in 2009, forcing Frontier Bank to split its stock to remain listed on NASDAQ.

Only Cascade Bank survived the year without receiving strong warnings over lending practices from state and federal lending regulators. After receiving federal stimulus money, Cascade Bank went ahead with plans to open up a branch in Edmonds.

Although City Bank lost more than $66 million through the third quarter of 2009, the bank has been selling off $20 to $30 million monthly in residential housing as the Lynnwood-based bank hopes to diversify its lending portfolio in 2010. And Frontier Bank aims to boost its small business lending in 2010, after opening a Small Business Administration department in late 2009.

Tourism

Snohomish County tourism officials have expressed reserved optimism going into 2010. Initial hopes that the Winter Olympics in Vancouver, B.C., would boost tourism in Western Washington have dimmed due to the recession. Gas stations and restaurants along I-5 still could see an increase in sales during the games, officials say. Hotels, however, aren’t likely to land lots of extra business during the games.

Snohomish County will welcome several new hotels and attractions in 2010. In January, Holiday Inn Express opens a new location on 196th Street SW in Lynnwood. Later that same month, Staybridge Suites launches its second site in Washington state at Harbour Pointe in Mukilteo. And finally, in April, the Hilton Garden Inn will be ready for business in Bothell.

The county will add to its list of aviation attractions when Kilo-6 opens one of its new hangars at Paine Field. The center showcases historic aircraft and focuses on telling the story of aviation from 1927 to 1957. The full historic education center is expected to open in 2011. And the Tulalip Tribes Hibulb Cultural Center and Natural History Preserve is scheduled to open next summer.