Region hopes to curb loss of manufacturing jobs
Kaiser's troubles have domino effect on local suppliers

John Stucke
Staff writer

At a glance Interview with Larry Panattoni

Manufacturers believe the worst may be over.

While few expect any new companies in the region in 2003, there is some hope manufacturing employment will stop declining and perhaps even rise this year.

The manufacturing industry had a difficult 2002. The recession, exacerbated by 9/11 terrorism, led to a manufacturing crash that sent Northwest unemployment higher last year. It helped give Oregon and Washington the distinction of having some of the worst jobless rates in the country, trailing only Alaska.

In Spokane County, about 4,700 manufacturing jobs have disappeared in the past couple of years, including about 1,000 in 2002, according to the state's Employment Security Department.

The reductions cut across the manufacturing sector, from commodity production businesses making aluminum and lumber, to firms involved in packaging, electronics, publishing and food processing.

"Broadly speaking, anything in the area of steels and basic materials -- that is, taking raw resources and converting them to goods -- there's still a big glut of these products," said Grant Forsyth, assistant economics professor at Eastern Washington University. "I don't see a resurgence anytime soon, because these products are global."

One of the biggest economic hits to the region is the fall of Kaiser Aluminum Corp. The company, once Spokane's leading private employer with thousands of workers, is down to fewer than 500 employees, and is mired in bankruptcy proceedings.

Losing Kaiser as a dominant employer also has hurt the secondary manufacturers and suppliers that fed the Mead smelter and Trentwood rolling mill.

Add the problems plaguing telecommunications firms and commercial airplane maker Boeing Co., and Spokane was beset with troubles last year.

In 2000, there were about 22,400 manufacturing jobs in Spokane County. Today, there are about 17,700.

Despite the grim count, there is some hope.

"I'm hearing a lot of folks saying that the first two quarters of '03 should be flat, but then maybe some pick-up in the third and fourth quarters," said Larry Panattoni, president of Servatron, a small electronics manufacturing company with about 110 full-time employees.

Mark Turner, president of the Spokane Area Economic Development Council, said there are so many variables involved with manufacturing -- and so many different companies -- that he doesn't have a clear picture for 2003.

"In many ways, we're following the direction of the nation," Turner said. "The declines in manufacturing are not unique to Spokane.

"To some extent, we have to attribute some of our manufacturing malaise to national events. And so what to expect this year? My crystal ball is a little fuzzy."

Some of the biggest factors are mostly outside Spokane's sphere of influence, such as war in the Middle East or tax relief from Olympia.

So, Turner said, the region continues to do what it can to be a competitive manufacturing center.

"The work force is certainly our strong suit," he said.

Panattoni said for every job opening at Servatron, for example, there are more than 30 applicants.

Forsyth said he doesn't expect any economic development home runs in 2003.

"The truth is, it's hard to recruit large manufacturers. If people are looking for growth, they'll have to look at the firms who are hiring less than 20 people."

He added: "Of course, it all depends on what's being manufactured. Until there's a real recovery in the business cycle, a lot of products are priced such that they can't be made here."

Manufacturing facts

10.4 out of every 100 manufacturing employees in Washington state suffered a job-related injury in 2001.