Industry’s mixed message

After surging through 2005 with impressive job growth, manufacturers held steady in 2006.

The big question now is whether 2007 will see a cooling off, as is occurring on a national level, or whether regional manufacturers will hold onto the gains they’ve made.

Jeff Zahir, regional economist for Washington’s Employment Security Department, predicts job growth in metal, plastics and electronics manufacturing this year.

But any gains might be offset by losses in wood-products manufacturing related to the national slowdown in housing and construction, Zahir added.

“Overall employment in the manufacturing sector in Spokane is expected to remain at the same levels in 2007 that it had in 2005,” Zahir concluded.

That wood-products decline already has hit some regional firms.

Last fall, Liberty Lake-based Huntwood Industries, which had been the largest manufacturing company in Spokane County, lost roughly 100 production jobs following a national downturn in the wood products market. Those layoffs came from a softening in new housing and remodeling nationwide.

Since then, however, Huntwood has seen demand for its custom cabinets bounce back, said company President Tim Hunt. He said the company, which once had more than 850 workers, now has about 750. He predicted the company should have a stable 2007.

“We expect a good, steady year,” said Hunt.

North Idaho sawmills and wood products manufacturers remain vulnerable; after two strong years, layoffs began affecting that sector late last year, said Kathryn Tacke, regional labor analyst for the state of Idaho.

Weakness in wood products would hit the Panhandle hard, since 20 percent of Kootenai County’s manufacturing jobs are in that category.

By contrast, only 4 percent of Spokane County’s manufacturing jobs are in the wood products group, said Zahir.

Looking ahead, Tacke said, “We’ll see intermittent shutdowns and possible further reductions in shifts” among wood products firms in the Panhandle. Said Tacke, “one of the things that scares me right now is that wood products (as a sector) is falling apart.”

From an economist’s point of view, manufacturing jobs are a key business barometer. They produce a net income gain in a community, with outside customers ordering products produced locally.

And they tend to provide multiplier effects; every manufacturing job tends to create at least two other service jobs, according to most analysts.

They also tend to pay well. Zahir said the average annual wage among all 541 Spokane County manufacturers was $45,000 last year.

Zahir contends Spokane’s manufacturing economy has become more diverse than ever. Such diversification helps buffer jobs and income when business cycles retract in particular industries.

One of the area’s historically important manufacturers, Kaiser Aluminum Corp., rebounded solidly in 2006 with the upsurge in orders from the aerospace industry.

“In 2001, no one thought (a Kaiser rebound) would have happened,” said Zahir. “But look at how they’ve come back in the last two years.”

Other Spokane companies handling increasing aerospace orders include Goodrich, whose West Plains plant produces carbon brakes for military and commercial jets, and West Plains-based Triumph Composite Systems, which makes specialized duct panels both for Boeing and Airbus.

Across the border, Tacke has her own highlight reel in aerospace — Sandpoint-based Qwest Aircraft Co. That private firm has soared from about 35 workers two years ago to about 100, said Tacke. Its main product is the Kodiak, a single-propeller plane being used across the world. The company’s rapid rise helped it win the Bonner County Economic Development Corp.’s business of the year award in 2006.

“They’re expecting to keep on, growing to about 150 workers by the end of 2007,” Tacke noted.

Both Spokane and Kootenai counties should look back at 2006 with satisfaction, said Zahir and Tacke. For Kootenai and Bonner counties, 2006 marked the highest point ever in manufacturing employment, said Tacke.

Spokane County’s manufacturing employment, while not the highest ever, was a key part of the area’s healthy recovery from the low points of 2001 and 2002, said Zahir.