Layoffs may hit state hard

Associated Press

OLYMPIA — Thousands of Boeing layoffs aren’t a death-knell for Washington’s economy the way they were 30 years ago, but the latest turn in the company’s cyclical fortunes strikes a state already weakened by losses in the technology sector, economists say.

The company announced plans Tuesday to lay off 20,000 to 30,000 commercial airplane workers by the end of 2002 as a response to airline cutbacks prompted by last week’s terrorist attacks. Layoffs will likely come at all the company’s commercial airplane plants, most of which are in the Puget Sound area.

Lucky timing and a robust economy protected the region from other Boeing cutbacks during the 1990s, said Roberta Pauer, an economist who tracks the region’s economy for the Washington Employment Security Department. But this time, the financial stars are aligning badly.

"We have a Boeing downturn plus a national recession on the horizon plus information technology weakness across the board," Pauer said. "I do not think this time around that we can escape a recession in Puget Sound."

Pauer said she expected the recession to be mild, especially when compared to Boeing-related downturns of the past.

From 1969 to 1971, Boeing lopped 65,000 employees in the Puget Sound area, Pauer said. The layoffs prompted double-digit unemployment, two years of negative job growth, and the famous billboard reading: "Will the last person leaving Seattle turn out the lights."

But Boeing’s not the centerpiece of the regional economy it was when it provided 15 percent of the region’s jobs in 1958. By 2000, growth and diversification trimmed that share to just 3 percent.

Boeing has always been forced to respond to the cyclical business of commercial airplane manufacturing, Pauer said. Airliners are multi-million-dollar items built to individual companies’ specifications, not cranked out like pickup trucks to sit on a lot waiting for buyers. When airlines cut back on orders, Boeing cuts back on production — and workers lose their jobs.

"If Boeing is going to live to see another up phase in this endlessly cycling history, it’s got to cut production and cut costs," Pauer said.

The company said it could deliver 150 fewer aircraft than planned in 2001 and 2002.

Boeing’s fortunes sank three times during the 1990s, Pauer said.

In the early 1990s, the company was booming, with more than 100,000 employees in the region. That helped Puget Sound escape a national downturn, Pauer said. By the time Boeing cut back in 1992, the national economy was booming enough to keep the region out of trouble.

Two other Boeing cutbacks, in 1995 and again from 1997 to 2000, were also shouted down by a boisterous economy, Pauer said.

The company cut nearly 30,000 jobs between 1997 and 2000, but no recession followed.

"Why? Because the national economy is booming and locally our information technology industries are booming, including Microsoft, with billions of dollars of stock options coming to employees as a wage supplement," Pauer said.