Although the forecast for the South Sound economy doesn’t look bad for 1999, it doesn’t look particularly good, either, according to economy watchers. The silver lining is that there likely will be no recession, says Dr. Chang Mook Sohn, the state’s chief economist.

Statewide slowdown

“The past three years have been very active in terms of overall job growth,” Sohn says of the statewide economy. Reasons include a burgeoning aerospace industry, with Boeing hiring 25,000 employees, and booming Microsoft profits that had impacts elsewhere in the state.

But beginning in the second half of this year, the state’s economy has slowly begun to feel some of the strains from the economic crisis in Asia, Sohn continues. Excluding airplanes, exports are down more than 20 percent, he says, and imports are up more than 30 percent.

If you count airplanes, he concedes, exports overall are up 7 percent. But Boeing’s projected slowdown and plans lay off 48,000 employees are already being felt, Sohn warns.

“The company has not discussed how many of those will be in Washington,” he says, “but in our November forecast, we assumed 21,000 job reductions over the next two years. Unlike in the past, we have been expecting this.”

As a result of the Boeing cutbacks, employment growth statewide is expected to slow down by as much as half next year, Sohn says. Growth is expected to be 3.1 percent in 1998 and 1.4 percent in 1999, then go up slightly to 1.6 percent in 2000.

Thurston County buffered

Since Thurston County’s economy is less affected by what happens at Boeing or in Asia than counties further north, the impact will be felt less here, according to Sohn and Dennis Matson, executive director of the Economic Development Council of Thurston County.

But hose factors buffered the county from the economic boom.

Despite the buffer, Matson says, Thurston County feels the impact of events in nearby Pierce County. Intel’s announcement that it would lay off 650 production-line employees in Pierce’s computer assembly plant this year affected many who worked there but had homes in Thurston County, Matson explains.

The layoffs are now pushed back to the end of the first quarter of 1999, says Intel spokeswoman Kay Deasy.

Ups and downs

“We’re still seeing some level of interest in Thurston County and hoping that won’t dissipate next year,” Matson says of businesses looking for a new home. His prediction for 1999 is a mixed bag.

The good news, Matson says, is that some manufacturers are expanding operations in Thurston County, and more than a million square feet of office space is being built in Tumwater and Lacey. Large retail vacancies that blighted Olympia’s westside are beginning to be filled. The Ernst site, for example, houses a Pic N Save.

Olympia-based Heritage Bank purchased Tacoma’s North Pacific Bank in the past year, then merged with Washington Independent Bancshares. But Olympia-based Centennial Bank was acquired by Oregon-based West Coast Bankcorp.

There also have been pullouts in manufacturing and services. One that produced funereal headlines was the departure of shipping company Sunmar from the Port of Olympia. But that wasn’t all.

“Crown Cork and Seal is shutting down a whole production line,” says Matson. “That’s going to affect 80 people. And Sunset Life has announced they’re going to pull their operation.” Sunset employs 100.

Mason—slow but steady

Tim Sheldon, executive director of the Mason County Economic Development Council, says he has seen improvements in infrastructure this year and some of the results may already be felt. The county’s work force continues to grow and the unemployment rate is 6 percent—higher than elsewhere but not out of range considering the county’s history.

On the down side, the county is expected to lose 20 jobs at the U.S. Forest Service’s Hoodsport office in a downsizing with some staff going to Quilcene.

Downtown Shelton revamped its sidewalks this year, and the Port of Shelton and the Belfair Water District have been undergoing building and infrastructure projects, respectively. The Port of Shelton built a 10,000-square-foot building for tenant North Star Lumber, and the Belfair Water District is getting a new tank and booster pump. Belfair also is getting its first Safeway, which is expected to create serious grocery competition.

Downtown Shelton businesses may have suffered temporarily from the repaving, Sheldon says, but more retail businesses and offices have located there over the course of the year.

“The most stabilizing thing is that Simpson continues to be very competitive,” Sheldon says. “It helps that they can bring in logs by water and by rail.”

Simpson continues to be the county’s largest private employer, with 918 workers.

By Kamilla K. McClelland, Business Examiner staff