At the Port of Everett, airplane cargo bound for the Boeing plant is unloaded Thursday. (Olivia Vanni / The Herald)

At the Port of Everett, airplane cargo bound for the Boeing plant is unloaded Thursday. (Olivia Vanni / The Herald)

Slowdown ahead for port as COVID pummels aerospace industry

The Port of Everett is bracing to suffer as its biggest customer, the Boeing Co., scales back production.

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.

Airplane cargo bound for the Boeing plant is offloaded from a barge on Thursday at the Port of Everett. (Olivia Vanni / The Herald)

Airplane cargo bound for the Boeing plant is offloaded from a barge on Thursday at the Port of Everett. (Olivia Vanni / The Herald)

“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.

The Port of Everett, looking toward the South Terminal. (Chuck Taylor / The Herald)

The Port of Everett, looking toward the South Terminal. (Chuck Taylor / The Herald)

“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.”

Rachel Riley: 425-339-3465; rriley@heraldnet.com. Twitter: @rachel_m_riley.

Talk to us

More in Herald Business Journal

David Simpson (left) and Scott Murphy.
Port of Everett candidates spar over transparency

An incumbent, David Simpson, is challenged by Everett City Councilmember Scott Murphy.

Rendering of the new terminal that Propeller Airports plans to build at Paine Field in Everett. The terminal, which will serve the general aviation community, will replace Castle & Cooke Aviation's existing building at the Snohomish County-owned airport. (Propeller Airports LLC)
Propeller Airports to acquire Castle & Cooke at Paine Field

Propeller, which owns the nearby passenger terminal, plans a new complex for private aviation.

Everett Farmer’s Market canceled Sunday due to weather

Organizers cited a high-wind advisory. It is to reopen Oct. 31 for the final market of the season.

FILE - In this May 26, 2020, file photo, a sign at the headquarters for the Washington state Employment Security Department is shown at the Capitol in Olympia, Wash. Washington state's rush to get unemployment benefits to residents who lost jobs due to the coronavirus outbreak left it vulnerable to criminals who made off with hundreds of millions of dollars in fraudulent claims. (AP Photo/Ted S. Warren, File)
Washington’s unemployment rate in September was 4.9%

Employers added 17,600 jobs last month, a 7.3% increase over August.

With the Olympic mountains in the background, the first passenger flight by Alaska Airlines Flight 2878 departs for Portland on opening day of the Paine Field Terminal on Monday, March 4, 2019 in Everett, Wash. (Andy Bronson / The Herald)
Alaska Airlines stalls plan for extra flights in Everett

Business has been sluggish, but the airline says it will offer 12 flights a day at Paine Field in the new year.

Hillside homes in Mukilteo are seen from the ferry line on Oct. 20. (Andrea Brown / The Herald)
Mukilteo asks for input on housing density, and it’s complicated

Here’s a guide to what voters should know about the advisory ballot measure. What does it actually do?

People hold signs in protest of the vaccine mandate after Boeing announced it would terminate workers who do not comply on Friday, Oct. 15, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Some Boeing workers protest in Everett over vaccine mandate

The Boeing Company announced earlier this week that its workers must be vaccinated by Dec. 8.

FILE - In this file photo dated Monday, March 11, 2019, rescuers work at the scene of an Ethiopian Airlines plane crash south of Addis Ababa, Ethiopia.  The number of deaths in major air crashes around the globe fell by more than half in 2019 according to a report released Wednesday Jan. 1, 2020, by the aviation consultancy To70, revealing the worst crash for the year was an Ethiopian Airlines Boeing 737 MAX on March 10 that lost 157 lives. (AP Photo/Mulugeta Ayene, FILE)
Former Boeing test pilot pleads not guilty in 737 Max case

He’s the first person to be charged with a crime in connection with the Indonesia and Ethiopia crashes.

FILE - In this March 14, 2019 file photo, Ethiopian relatives of crash victims mourn at the scene where the Ethiopian Airlines Boeing 737 Max 8 crashed shortly after takeoff killing all 157 on board, near Bishoftu, south-east of Addis Ababa, in Ethiopia. Relatives of some of the passengers who died in the crash will mark the two-year anniversary of the disaster on Wednesday, March 10, 2021, by seeking a reversal of government orders that let Boeing 737 Max jets fly again.  (AP Photo/Mulugeta Ayene, File)
Boeing pilot involved in Max testing is indicted in Texas

He’s accused of giving the FAA false information about systems that played a role in two deadly crashes.

Top (L-R): Kim Daughtry, Steve Ewing. Bottom (L-R): Gary Petershagen, Marcus Tageant.
Developers court Lake Stevens council incumbents with over $20K

Over half of the campaign dollars for four candidates came from people tied to real estate or property development.

Traffic drives in view of a massive Boeing Co. production plant, where images of jets decorate the hangar doors, Friday, April 23, 2021, in Everett, Wash. (AP Photo/Elaine Thompson)
Boeing says workers must get the COVID vaccine by Dec. 8

“Compliance with these requirements is a condition of employment,” says an internal company presentation.

The Boeing 737 Max 10 airplane landing at Boeing Field in Seattle on June 18. (Chona Kasinger / Bloomberg)
Boeing ramps up 737 Max but 787 deliveries are still blocked

Boeing last month maintained its steady trickle of sales as it navigates the aviation downturn.