The Washington State Economy Thread

[PDXPaul]

I seem to remember WaMu being talked about as a takeover target before the subprime losses. I wonder if they'll be more vulnerable after these losses are sorted out.

[NW Mike]

Good Article about the 2010 Vancouver Olympics and how Washington state can profit from all the tourists. Some great photos in the Herald Gallery of construction of the Olympic Village.

http://heraldnet.com/article/2008082...ides.of.border

[Bond James Bond]

The real reason why Boeing workers decided to go on strike.

And it cap it all off, they picked a fantastic time to go on strike. The weather forecast for the next 10 days calls for nothing but sunny weather and mild temperatures.

http://www.reuters.com/article/newsO...45578320080909

Boeing strikers picket but also hunt, improve homes
Mon Sep 8, 2008 9:51pm EDT

By Daisuke Wakabayashi and Laura Myers

EVERETT, Washington (Reuters) - Visit a Boeing worker's picket line expecting to find hundreds of workers worried about putting bread on the table because they were driven to strike by an uncaring employer and you might be surprised.

Boeing strikes are different. There is a sense of ritual, a sense that this happens every few years -- and that both the company and the workers know that in a few weeks they will reach a compromise and be back building planes.

And while some workers will talk of the bitterness felt toward the company about the outsourcing of work and about contributions for health care, some also will tell you this is a great opportunity to do work on their houses or even to go hunting in the forests of Washington state.

Ron Strempel, for example, has worked at Boeing Co for 20 years, been through eight contract negotiations with company management and is now standing on a strike picket line for the fourth time since 1988.

An electrician and team leader on Boeing's 767 assembly line in Everett, Washington, Strempel said he has lived through enough work stoppages to know that the stand-off will be resolved eventually and sees the strike, which started on Saturday, as a much-needed break from a busy factory schedule.

"I've got a to-do list a mile long," said Strempel, noting that he has neglected projects around the house while racking up extra hours due to Boeing's backlog of orders. "I used to get worked up about it, but now I know how these things work."

Boeing and the International Association of Machinists and Aerospace Workers (IAM) are locked in a dispute over wage increases, health care contributions and the company's outsourcing policy in the next three-year contract.

If a strike stretches from days into weeks, the impact at Boeing -- at the cost of $100 million a day -- will begin to reverberate to the company's suppliers around the world. Nearly 27,000 Boeing machinists, mostly in the Puget Sound region, also will feel the sting.

However, the around-the-clock picket lines outside the main Seattle-area factories were sparsely attended over the weekend and on Monday.

While no one is ready to predict that anger won't increase if the strike extends beyond several weeks, currently the atmosphere is surprisingly civil.

TIME TO HUNT

Some picketers said union leadership's decision to delay a work stoppage by 48 hours sapped a little of the initial enthusiasm for a strike, while others cited another factor: hunting season.

"We don't take this lightly, but some people vote to strike just to get some time off. It's hunting season," said Richard McCabe, 38, a wing-line mechanic in Renton, who added that the overtime work is taking its toll on the rank-and-file.

Hunting season for some game birds and deer started September 1 in Washington state. Elk hunting started on Monday.

"I voted 'no' just to get a vacation. You work a lot of hours and you just get tired," said assembly-line mechanic Brian Gross, 46, referring to Wednesday's vote on whether to accept Boeing's "best and final" offer.

His wife, Julie, a massage school owner, said she will try to make up the shortfall while Brian is out of work: "I'm going to work a lot and he's going to go hunting."

To be sure, there will be many workers like Juanita Peek, who has been with the company for 18 months, who expects to be on the picket line every day, because she sees the company's offer as a case of corporate greed unchecked.

"We're building airplanes. We're not building Tonka toys," said Peek, who, as a new hire, is not as financially secure as the veterans. "It's the executives that are greedy."

The IAM is offering to pay strikers a nominal $150 per week if a strike goes into a third week, but workers lose their normal health-care coverage after a month.

For more than a year, the union has also been instructing workers to start saving money for the possibility of a strike. The IAM has been scheduling members for picketing duty in four hour intervals, while others voluntarily show up for support.

Some Boeing veterans see the strike as an unavoidable consequence in the constant tug-of-war between the union and company management that takes place every three years and they try not to take it too seriously.

"We have fun. We play golf. We go fishing. It's a vacation," said Sung Y Yu, a quality inspector on the 747 line and 19-year Boeing veteran. "It's good to spend time with the family."

While no one is ready to predict that anger won't increase if the strike extends beyond several weeks, currently the atmosphere is surprisingly civil.

Newer Boeing employees can not adopt such a casual attitude. Since average, new machinists start at $12.72 an hour, it was hard for many recent hires to save a lot of money especially with high gasoline prices and rising food costs.

The most experienced machinists of the same grade can make up to $28.06 an hour.

Sy Sias, who joined Boeing less than three years ago, said he is a member of several unions and he plans to find work through one of them.

"I'll be looking for other work," said Sias, who works on the company's flight line preparing aircraft for delivery. "I just hope it's not going to be a long strike."

[Seasun]

I drove by the entrances to the Everett plant early on Sunday and there were only a few people picketing at 7am just west of the bridge that lets planes drive from the plant to Paine Field over the highway. On the way back from Whidbey Island at about noon it did seem odd that there were still only a few people picketing at about noon on Sunday. If there are about 25,000 striking Washington state Boeing employees with most of them in Everett it seems like there should be at least a few dozen picketers on Sunday at noon!

[JacobR]

Top Metro Areas for Job Growth in USA:

#8 Tacoma
#9 Olympia
#17 Seattle

Job growth boosts Seattle area's standing in city study
Tacoma, Olympia also among top 25

By DAN RICHMAN
P-I REPORTER

The Seattle area ranks this year as the 17th-best-performing U.S. city on an economic index, up from 77th place last year, making it the fifth-biggest gainer from a year earlier.

Among other major cities in the top 25, Tacoma ranked eighth, up from 50th, and Olympia ranked ninth, up from 37th, in a study released Wednesday, "Best-Performing Cities 2008," by the investment firm Greenstreet Partners and think tank The Milken Institute.

Only two other states, North Carolina and Utah, had three cities ranked in the top 25.

Provo-Orem, Utah, ranked first, up from eighth last year. The biggest loser was Vallejo-Fairfield, Calif., down to 145th from 22nd last year. Nine Midwest metro areas, all in Michigan or Ohio, finished among the bottom 10 cities.

Among the nation's 124 smallest cities -- a separate comparison -- Bellingham ranked seventh, up from 14th in 2007.

The 55-page study measures which areas succeed best in job creation and retention, the quality of jobs produced and overall economic performance. The rating for Seattle encompasses the Seattle-Bellevue-Everett metropolitan area.

The study says most of Seattle's job growth is attributable to The Boeing Co. and Microsoft Corp. Transportation-equipment manufacturing, which encompasses aerospace, generated 5,600 jobs between 2006 and 2007, while professional R&D services added 6,200 jobs. The high-tech sector here produces 1.3 times the national average in output, and the one-year growth in wages and salaries was 3.2 percentage points above the national average.

Tacoma's low housing costs attract many professionals, the study says, including some who work in Seattle. The hosting and processing of data have generated an annual average job growth of 17.2 percent over the past five years there.

Overall, employment has grown more than 3 percent over the past five years. Tacoma's port, specializing in inbound containers from Asia, has benefited from capacity constraints in Los Angeles and Long Beach, Calif.

Olympia, with low business and housing costs, has gained more residents from both Tacoma and Seattle than it has lost, according to the study.

Information services has been its fastest-growing job sector over the past five years, with an average annual growth of 38 percent. With 36 percent of its employment in state and local government, accounting for 36,200 workers, the state's capital may be immune from the declines suffered by other formerly high-flying housing markets, the report says.

Bellingham benefits from the weak U.S. dollar, as Canadians often cross to make retail purchases. Western Washington University, the major employer, accounts for more than 2,200 jobs and provides economic stability.

Job growth in the city was robust from 2002 through 2007, with an average annual growth of 3.4 percent, the study said.

Report can be found here: http://bestcities.milkeninstitute.org/

[Bond James Bond]

Looks like we won't have to put up with WaaaaMoooo much longer:
http://seattlepi.nwsource.com/busine...53_wamu18.html

[NW Mike]

To bad!

[bgwah]

Yeah... "WaMu" was a really lame name (Washington Mutual was so much better) and we all knew this was coming, but I'm still sad that our state will be losing a major company.

[Bond James Bond]

JP Morgan has just bought WaMu's deposits:
http://seattlepi.nwsource.com/busine...07_wamu26.html

Not sure what'll happen to the rest.

No more WaMu.

[Seasun]

How does the "JP Morgan Family Fourth" sound? kind of has a nice ring to it if they choose to keep sponsoring the Lake Union fireworks show. WaMu built a really nice conference center near Sea-Tac Airport. I wonder if in a year or two from now someone will have bought it from JPM. How about "WaMu Theater"? JP Morgan Theater - doesn't sound too good. Hey is the Boeing strike still on? What a great way for B to move assembly and jobs away from Puget Sound.

[Bond James Bond]

^
Most of the assets bought by JP Morgan will probably be under their Chase division (which does their retail banking). So it would probably be the Chase Family Fourth and the Chase Theater. Which doesn't sound too bad.

However, even though I saw the inevitability of this and, along with everyone else, saw it coming, and even though I loathed their trend toward calling themselves "WaMu," I've had the same checking account at Washington Mutual since I moved to Seattle in '88, so it has just this tad bit of poignantcy to me.

[Seasun]

Good point on the Chase name - I thought JP Morgan sounded too stuffy for a bank branch. I can almost see the Lusty Lady sign now. Something like "CHASE SOME TAIL THEATER"

[JacobR]

The Saudis own a nice chunk of Chase right?

[ragerunner1]

Seattle will face some serious job loses from the WaMu take over. It will also have a nice up tick in vacant office space when this is done.

[Backstrom]

Originally Posted by ragerunner1

Seattle will face some serious job loses from the WaMu take over. It will also have a nice up tick in vacant office space when this is done.

This could spell bad news for the Downtown economy. A few months ago, there was speculation that if Safeco was ever bought out, we'd get a huge opening for office space Downtown and lots of job losses. This could very well turn out like that.

[citruspastels]

Does anyone else smell self-fulfilling prophecy here? 16 billion dollars of deposits taken out within the last week! I mean it seems like a relatively small percentage of their portfolio was even invested in bad loans. I think they could have weathered the storm if people we're freaking out so much.

Anyone have a local credit union they want to shill for?

[citruspastels]

Originally Posted by Backstrom

This could spell bad news for the Downtown economy. A few months ago, there was speculation that if Safeco was ever bought out, we'd get a huge opening for office space Downtown and lots of job losses. This could very well turn out like that.

Yes, but possibly good news for those of us looking to start a company in Seattle ;-)

[testdrive]

.....Wa MU, the sale of Tulley's, Safeco....and I can't remember a worse year in sports for the area. That said we are still fortunate compared to other areas of the country....no hurricanes and nothing compared to the rust belt and as bad as the housing market is not nearly as bad as Fl Vegas, Mi so I guess it is a mixed bag. When this period is over I think we will recover faster than other areas or at least that is my hope. On an up note just read where the Seattle DBA is now looking for another major retail anchor store to compete with Bellevue and the improved Southcenter and Northgate.

[Seasun]

There's a Wamu specific posting on this blog that I found interesting. Go down to the Sept 18 entry titled "Why Wamu Must Die" which describes irresponsible lending by Wamu. Other postings are also instructive as the Reno market presents some extremes.

[Seattlelife]

The week that changed Seattle's economy
The events of the past week leave a crater in the Puget Sound economy. It may well widen.
Jon Talton
Special to The Seattle Times

How are you coping with economic hard times?
The events of the past week leave a crater in the Puget Sound economy. It may well widen.

Safeco, founded in 1923, was absorbed Monday into Liberty Mutual of Boston. The home-business-auto insurer was a victim of the equivalent of a financial drive-by shooting: fears about its portfolio, though unfounded, in the credit crisis, and the Wall Street addiction to mergers, helped along by rootless chief executives, highly compensated for selling off their firms.

By Friday, the largest bank failure in U.S. history leveled Washington Mutual. The 119-year-old institution's headquarters helps define the city's skyline; its leaders helped precipitate the worst financial collapse since the Great Depression. Depositors will be protected as JPMorgan Chase takes over. The same can't be said for its thousands of employees and Northwest shareholders who loyally supported the hometown thrift.

Yet the danger to the dwindling number of Fortune 500 companies in the Northwest is not over. Whatever one calls this economic distress, it is putting companies under stress they haven't seen in years — even decades — and shows no sign of letup. Two companies that must be on every local chamber of commerce's worry list are Alaska Airlines and Weyerhaeuser.

Alaska Airlines is eliminating 1,000 jobs starting in November. Ultimately, it may fall victim to the same misplaced dynamics of consolidation. High fuel costs and a litany of structural woes have hit nearly every airline save Southwest on the merger watch list.

Then we have Weyerhaeuser, a company that literally built the Northwest economy from the forests up. It's not in danger of being acquired. In the last year, it has sold off large divisions and announced that 1,000 headquarters jobs are being eliminated.

Already sliced in half from its former dominant size, Weyerhaeuser is destined to become a Wall Street play called a real estate investment trust (REIT). It may be good for investors. Yet it will certainly mean a smaller engine in the regional economy.

Regular readers of this column know I am obsessed with the importance of major headquarters companies. These are the ones with large, well-paid employment bases, where decisions of national and international reach are made, where talent and capital flow.

These companies not only support a quiet universe of vendors, but they produce ranks of experienced executives that leave to start new firms. When the chief executive lives here, he or she can knock heads and write checks to make the kind of great community that will attract the best and brightest. At their best, these companies have deep roots of stewardship and philanthropy. I don't know of a successful city without them.

Loss of headquarters

To be sure, Boeing moved its headquarters, but the heart of its business — building commercial airplanes — lives here. The loss of headquarters jobs was a small percentage of the well-paid work force that remains in the region.

Boeing workers continue to be the top givers to United Way, in total dollars. The Chronicle of Philanthropy reported that in 2006, Washington Mutual employees pumped $50.5 million into various organizations; Weyerhaeuser employees gave $15.7 million.

In the cases of Washington Mutual and Safeco, the damage will be severe. It includes the loss of paychecks, talented workers, giving to arts and charities, and power in world capital markets.

Most cities lost their major financial headquarters in the 1980s and 1990s. Seattle, while losing the likes of Seafirst, happily preserved two significant players for years, but now even they are gone.

Downtown office space

For downtown Seattle, the loss of workers with disposable income and the vacating of vast tracts of office space will present a major challenge. Washington Mutual owns or leases 1.6 million square feet of space downtown — more than any other company.

More than 3,500 workers report to WaMu jobs downtown. I know of no successful city without a healthy center-city downtown.

But the real and potential fallout from Alaska Airlines and Weyerhaeuser is also great. For example, having a major airline hub is a big part of the revenue flowing into Seattle-Tacoma International Airport.

And Weyerhaeuser, sawed down to a REIT from an integrated timber company: It's difficult to see it reaching its ambitious promises of innovation when most revenue must pass directly to shareholders, rather than go to research and development.

Another consequence of these losses is a body blow to the region's enviable economic diversity. One-trick ponies don't do well: Ask Houston in the 1980s or Phoenix now.

A healthy mix of sectors ensures that at least some businesses will be prospering. Now Seattle, which has seen the pain that can come from over-dependence on aerospace in the 1970s and technology in the late 1990s, is more vulnerable.

This turning point comes at an unsettling time, and not just with the sea changes in the capital markets. Part of Seattle's genius has been reinvention. Like most U.S. cities, it lost iconic companies. Unlike them, it kept growing new ones. But now Microsoft, Starbucks and Amazon.com are maturing. And a cohort of growing firms has been snapped up by outside companies this year.

We're net losers in the critical game of mergers and acquisitions. For example, Getty Images and Pyramid Breweries were sold. While some operations will remain, the decision-makers will be based elsewhere. Tully's Coffee sold off its wholesale business. Meanwhile, promising technology and biotech firms are being pinched by the credit crisis.

Fortunately, Seattle and the Puget Sound area are blessed with so many assets and advantages. So many, indeed, that we might be tempted to be complacent about becoming a branch-office town. Or we might try to cleverly say we've transcended all that, thanks to technology, become a postmodern whatever.

Don't kid yourself.

The world is not flat. More than ever, it's sorting itself into big winners and big losers, and the key units of competition are metropolitan areas. Last week, we lost wealth that had taken decades to create. Last week is history. Going forward, the region will need to take stock of what it must do to compete in the street fight that is the world economy.

http://seattletimes.nwsource.com/htm...ltoncol28.html