EVERETT — With a global pandemic showing no sign of abating, and turbulence in the aerospace industry, the Port of Everett is bracing for a plummet in revenue in 2021 and 2022, according to port officials.
The coming downturn could rival the drastic decline the port suffered in the wake of 9/11, when concerns over terrorism decimated aerospace production demand, pushing the port to the “lowest of lows,” Port CEO Lisa Lefeber told the Snohomish County Council on Monday.
“This is actually teeing up to be worse than that, which is hard to process,” Lefeber told the council.
She expects revenue will drop 25% to 30% in 2021, mostly due to a decline in aerospace shipments.
The port plays a key role in the supply chain for the Boeing Co., its largest customer. Aerospace components from Japan arrive at the port’s deepwater shipping areas, pass through the satellite Mount Baker Terminal near Mukilteo, and are loaded onto rail cars headed for Boeing’s Everett assembly plant at Paine Field.
But airlines have canceled and postponed orders for new planes as the COVID-19 pandemic has stifled demand for air travel.
Boeing sold no airliners last month. The aircraft maker said in a recent news release that it would reduce production rates for some of its models in 2021, including the 777 and 777X, which are built in Everett with components that pass through the port.
“When aerospace suffers, just like every other business in our area, we suffer,” Lefeber said in an interview.
The port saw about $13.7 million in operating revenue in the first half of 2020, with a goal of about $31.3 million by the end of the year, Chief Financial Officer Eric Russell told Port commissioners at their meeting Tuesday.
“Historically, ports are the last ones to feel effects of an economic downturn and the first to recover,” Lefeber told the County Council. “Twenty-twenty is going to be an OK year for the port. Twenty-twenty-one-2022 is going to be rough.”
So far, the port has avoided layoffs. It has taken key steps to curb spending, putting a hold on the filling of 10 vacant positions and cutting back on employee raises, as well as training and travel expenses. Officials have delayed about $17 million in projects, including improvements to the marina and boat launch, a new commercial and office building, and infrastructure installation in some waterfront areas that are slated for development.
The timing is right for a hiatus in spending to plan for future improvements, Lefeber said. The port has poured nearly $200 million into construction projects in recent years, from its South Terminal to Riverside Business Park.
Meanwhile, the port is bolstering other revenue streams in anticipation of declining aerospace cargo, Lefeber said.
Recent investments in terminal infrastructure have cleared the way for the port to begin receiving more cargo and new commodities by rail — an advantage that will allow it to attract new customers that have historically ruled Everett out for logistical reasons. Officials are also considering reconfiguring marina slips to cater to larger vessels on the moorage wait list, Lefeber said.
“We, like every other organization, have taken our hits,” she said. “But we are going to adapt and modify and continue to move forward with our mission.”
While some projects have been paused, waterfront development and a major environmental cleanup are forging ahead. Both efforts were recently dealt setbacks, but not by the pandemic.
The Fisherman’s Harbor District, which now includes Hotel Indigo, has plenty more space for restaurants and retailers.
Last month, a four-alarm fire ripped through part of an apartment complex under construction on the waterfront, destroying one of two buildings.
Construction has resumed on the north building of Waterfront Place Apartments, which did not sustain any serious structural damage during the blaze; that building is still slated to open in 2021 with 135 units.
Lefeber said she expects work will start again soon at the site of the lost building, too.
The long-awaited cleanup of the former Kimberly-Clark paper mill site remains on schedule, to be completed by the end of the year, Lefeber said.
The port plans to build a terminal at the site but recently lost a $15.5 million grant from the U.S. Department of Transportation because federal officials questioned changes in the project’s scope. The port has reapplied, though, for grants from the agency that could cover half the cost of preparing the land for cargo.
Ultimately, if the project isn’t awarded the funding, the new terminal will be built in phases instead of all at once, port officials have said.
“Twenty-twenty has been a rough year for everybody,” Lefeber told the County Council on Monday. “It just seems like nothing is unexpected these days.”