Forget the earthquake, last week’s layoffs rattled Puget Sound
I was invited by my friends at KCTS-TV in Seattle to come on tonight’s edition of “About The Money,” their weekly business and personal finance show, to talk about the state of the Puget Sound economy after last week’s announcements of layoffs at a number of companies, including Boeing.
About The Money host Josephine Cheng
The show airs tonight at 7:30 on Channel 9 in Seattle. It’s also on KYVE, which is Channel 47 in Yakima, and it’s carried by some eastern Washington cable systems on Channel 99. But in case you can’t wait — or like me, can’t figure out your DVR, here’s my take on the situation:
The layoffs clearly aren’t good news. There are two reasons why the Puget Sound economy has been stronger than the nation’s as a whole during this recession, and that’s been steady hiring at Boeing and Microsoft. Both of them have announced layoffs this month, so clearly that’s over.
But, as we’ve discussed, the news could be a lot worse. Right now, we’re talking about losing roughly 5,000 Boeing jobs in Washington state, and 10,000 people companywide. Following 9/11, Boeing cut 30,000 people in Washington alone.
Boeing will probably have to continue hiring for certain kinds of jobs. There are a lot of Baby Boomers in production jobs who are close to retirement. As they leave, Boeing will have to replace them, and that means hiring new people. Since the first layoff announcement in early January, the Machinists union says Boeing has hired more than 30 new people for jobs it represents.
We’ll see something similar with Microsoft, which is cutting 5,000 people in some job categories, but adding “a couple thousand” jobs in key areas, like its “Live” search division. Overall headcount may not go up, but new people will keep coming in.
Getting back to Boeing, some people I talk with are worried that Boeing won’t be able to find enough trained aerospace workers. Right now, there aren’t enough people in the training pipeline to replace the people we know are going to retire soon. The layoffs may ease the pressure a little bit, but that issue isn’t going away. In fact, it could get worse if the Legislature cuts community college funding 6 percent — as proposed by Gov. Chris Gregoire — to try to balance the budget.
In real economic terms, the Boeing layoffs aren’t a disaster. Instead of collapsing, aerospace hiring is leveling out. Boeing cut its projections, but still expects to be profitable in 2009, and given its production projections, its factory workforce should stay at about this level through the rest of this year; 2010 may be another story, but for now, it’s OK.
But in terms of our business confidence, these layoffs are really bad. WaMu‘s gone, Weyerhaeuser‘s closing mills and we’ve got corporate-level layoffs at Starbucks; the construction industry has tanked and there are a lot of banks in trouble. Really the only hot growth companies we had were Boeing and Microsoft, and now they’re cutting back too. The recession, finally, has caught up with us.
This is the kind of news that makes other business owners nervous, and nervous business owners aren’t likely to hire new workers, buy new computers or rent bigger buildings. More than the layoffs themselves, it’s that fear that is bad for the region’s economy.
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