Local economic outlook likely not all that grim
Friday, January 18, 2008 5:33 AM PST
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E-mail this articleThe local economy, resurgent over the past few years, appears to be losing some of its steam. The county's jobless rate rose to 6.9 percent in December, according to the latest figures from the Washington Employment Security Department. That's up half of a percentage point from November and nearly a full percentage point higher than the August unemployment rate.
The slowdown will surprise no one who's been reading the headlines of late. The national economy has cooled considerably, with some economists predicting recession. Scott Bailey, regional economist with the Employment Security Department, expects to see indications of a statewide economic slowdown soon. He told Daily News business writer Erik Olson this week that previous recessions in the state have started in Southwest Washington.
By all indications, the economy is in for a rough stretch. Bailey suggested that we can look for more increases in the county's jobless rate in months ahead, noting that December's figures included just the first of a planned work-force reduction at Longview Fibre. Fibre has cut roughly 75 of the 200 job cuts planned over the next six months. An additional 100 jobs will be cut over the next few years.
There's no denying the impact of these and other job losses on the lives of affected workers and their families. And certainly, a higher jobless rate impacts the local economy. Bailey observed last fall that just the word of Fibre's impending job cuts had caused job growth in the local retail sector to slow.
But it's also true that the new jobless figures remain low for Cowlitz County. It's not so many years ago that double-digit jobless rates were the norm for this community. The statewide jobless rate is at a historic low.
Moreover, the manufacturing job cuts at Fibre are part of a restructuring plan aimed at putting the company on solid financial footing, rather than a reaction to an unexpected economic slowdown.
Fibre's new owner, the Toronto-based Brookfield Asset Management, knew the company had been bleeding cash for some years. Accordingly, they undertook a four-month review of market conditions and operations at the plant. The result was a new business plan that they believe will enable the local plant to be successful over the long term. The plan involved shutting down two paper machines that were no longer profitable, which meant cutting about a quarter of Fibre's work force in the months and years ahead.
If this restructuring accomplishes what the owners believe it will, there should be no job losses in addition to the 300 planned. The plant should continue to be profitable for the foreseeable future. That expectation bodes well for the local economy.
If the truth be told, the local economy is in better shape than Wednesday's headline about the rising jobless rate might have suggested to readers. According to Bailey's report on the regional economy, Cowlitz County, in fact, gained around 500 jobs over 2006. Most of that job growth was in construction and health care. The higher jobless rate stems from both a bigger county work force and the loss of some 300 jobs in manufacturing and government service sectors,
This area, with its deep-water ports and transportation infrastructure, is an attractive location for industries and businesses. New construction continues. Next summer, a Clark County-based high-tech company is expected to add 30 well-paying jobs to the local economy.
The months ahead may well be difficult, particularly if the nation slips into recession, as many economists expect. But our local economy has much going for it. It seems to us that the community's economic future holds more promise than uncertainty - even in these uncertain economic times.
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