The Boeing Co.’s new 787 jetliner didn’t fly. Houses didn’t sell. And boat builders and construction-related companies didn’t stay in business.
The housing crunch and financial crisis of 2008 found a way into a Snohomish County, an area typically insulated from economic upheaval faced by much of the nation. Lake Stevens’ developer Barclays North went bust. Milgard Windows and Meridian Yachts closed their doors.
Yet the county’s unemployment rate remained below the state and national averages in 2008.
The economic woes of 2008 have created much uncertainty for the county going into 2009. Retailers aren’t hiring. And even the aerospace industry, Snohomish County’s backbone, looks less stable than it has in recent years.
Here’s a glimpse of what’s to come for Snohomish County in 2009:
Aerospace
The year ahead could be the calm before the storm for jet makers the Boeing Co. and Airbus.
After losing about $5 billion in 2008, airlines around the world will suffer another bad year in 2009, with losses of $2.5 billion projected. But aerospace analysts don’t see a drastic downturn in jet deliveries from Boeing or rival Airbus in 2009. They do, however, see a flurry of deferrals that could eat away at jet production in 2010.
Local aerospace analyst Scott Hamilton recently noted in a column that both Boeing and Airbus overbooked sales in 2009 and 2010. Deferrals of jet deliveries would relieve the situation to some degree.
“For Boeing, deferrals also will help relieve pressure of catching up from the two month strike by the (Machinists) and supplier issues,” Hamilton wrote.
Prior to the Machinists’ strike, Boeing had expected to deliver between 475 and 480 commercial airplanes in 2008. At the end of November, the company had delivered just 334 jets and seemed likely to fall roughly 100 aircraft deliveries shy of its previous goal.
Scott Carson, president of Boeing Commercial Airplanes, assured investors at a conference in November that the company’s 2009 order book was solid — with Boeing ready to assist some carriers in financing their aircraft if needed.
Boeing had estimated it would deliver between 500 and 505 jets in 2009. But 25 of those deliveries, for the company’s new 787, already have been pushed out of 2009 by delays to the 787 program.
Still, between the nearly 100 jets deliveries the company had to delay in 2008 due to the strike and the more than 400 deliveries it had scheduled for 2009, Boeing has room for a moderate amount of cancellations and deferrals.
And airlines will feel squeezed to run their fleets as cost-effectively as possible.
“The current low oil price can’t last; airlines still need modern, fuel-efficient airplanes. The need to continue deliveries remains,” Hamilton noted.
Economic development
As the national economic climate changes rapidly, 2009 will bring a lot of uncertainty to Snohomish County, said Deborah Knutson, president of Economic Development Council of Snohomish County.
But one thing is certain, she added.
“It’s not the time to stop economic development,” she said. “The recession doesn’t last forever.”
Officials may not be taking many business recruitment trips next year, but they plan to continue to build and maintain relationships with businesses and study policies and tax issues, Knutson said. Some aerospace suppliers are considering moving to the county.
“Right now, we are not predicting a lot,” she said. “I think there’s so much uncertainty right now. Companies that don’t need to move won’t.”
Still, the Puget Sound region seems to be weathering the economic downturn better than the rest of the nation, Knutson said. An economic stimulus package prepared by Congress is expected to create many jobs to rebuild the nation’s infrastructure.
“There’s an awful amount of expectations and wishful thinking,” she said about the stimulus package.
The economic development council continues to work with state lawmakers to bring a four-year university to the county, Knutson said. The group also plans to work hard to make sure that the Boeing Co. will stay in the region.
Retail
Conservatively — that’s how retailers anticipate that consumers will spend in 2009. And, in turn, that’s how retailers will respond in terms of hiring.
“Nobody in retail has a crystal ball that’s working,” said Linda Johannes, general manager of the Everett Mall.
Retailers small and large haven’t seen before such a maelstrom of economic hardship. Between the credit crunch and general recession, consumers are clutching tightly their pocketbooks. Most try to avoid using the “d” word — depression, Johannes said.
Businesses and consumers remain optimistic about the new presidential administration, she said. But no “quick fix” could turn around the economy to give retail an emphatic kick start in 2009.
“I think people will conserve and simplify,” Johannes said.
Tourism
With the economic crisis on their minds, people likely will travel less in 2009, spending less at area restaurants, hotels and attractions, said Amy Spain, executive director of the Snohomish County Tourism Bureau. Tourism across the country could fall to 2002 levels when post-Sept. 11 travel declined steeply. Locally, hotel and restaurant owners hold out hope for a more modest decline.
“Best case scenario is that it would be flat compared to 2008,” Spain said.
Some around the county are bracing for up to a 5 percent drop in occupancy and sales of food and beverages.
Snohomish County has a bit more buffer from the economic woes of the nation, thanks to the Boeing Co., she said. Many hotels have a solid corporate base — especially through the week. In general, Washington has a high percentage of in-state travel and tourism compared to other states. That could bode well for Snohomish County. And the county also benefits from its proximity to Canada, with travelers coming south to shop and visit the casinos.
The county tourism bureau plans to increase its marketing and presence at trade shows in 2009. Spain hopes that sporting events will draw visitors to the region.
“It’s not doom and gloom,” Spain said. “Yet everyone is sort of tightening their belts.”
Job outlook
A tough time is expected to continue for job seekers in 2009.
The recession plagued by the ailing housing market continued to cost various jobs, especially in construction and manufacturing, in Snohomish County in 2008.
In November, the county’s unemployment rate climbed to 6.3 percent despite jobs gains in education, health care and retail. In January, the rate is expected to go up further when temporary jobs added in late 2008 disappear, said Donna Thompson, regional economist for state Employment Security Department.
The job market is expected to remain tight in 2009, but local biomedical companies continue to hold job events and could hire people in the spring, according to Sam Virgil, business services manager for WorkSource Snohomish County.
Meanwhile, T-Mobile USA Inc. is expected to relocate its information technology center to Canyon Park in Bothell in spring 2009. The center aims to house mainly existing employees, but it could add new jobs, according to Ryan Crowther, communications manager for the Economic Development Council of Snohomish County.
Banking
It’s expected to be a year of uncertainty for banks — big and small.
Community banks such as Cascade Bank, Frontier Bank and City Bank suffered losses in the sagging real estate market in 2008. The mortgage crisis that battered the nation’s biggest banks has spread to smaller ones.
In 2009, Everett-based Frontier Bank is expected to go through major changes to weather mounting losses in the real estate market, said Pat Fahey, who was named as the bank’s top executive in December in a major management shake-up.
Frontier is creating a new business banking division to generate more business loans to diversify its loan portfolio, which heavily relies on real estate loans. The bank also hopes to get capital through the U.S. Treasury’s capital purchase program.
Cascade Bank secured $39 million through the same program. That should help the Everett-based bank prepare for future growth in “uncertain economic times,” said Carol Nelson, the bank’s president and chief executive officer.
City Bank in Lynnwood didn’t need to apply for the government program because it remains well capitalized. The bank plan to continue to operate conservatively in 2009, said Conrad Hanson, the bank’s president and chief executive officer.
“This economy is still troubling and not stabilized,” Hanson said.
The port
The Port of Everett expects a good year in 2009, partly because of all the back orders at the Boeing Co., which ships many of its parts to Everett from Asia.
“There are so many orders in the queue right now that even if some do drop out, we won’t see the effects until 2010,” said John Mohr, executive director.
He said some of the port’s lines of business, such as containers from Asia, will slow. But others, such as sending equipment to gold mines and oil rigs in Russia and shipments of windmill parts to the U.S., should expand. “When people go to a flight for safety, gold holds pretty well,” Mohr said.
Herald writers Yoshiaki Nohara and Mike Benbow also contributed to this story.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
