A Formerly Booming Northwest Faces a Dimmer Forecast on Jobs

THE Northwest, which in the last few years has outperformed the national economy, is seeing its job growth slow down.

Despite a buoyant high-tech sector and the prospect of expanding trade, the region is being hurt by a cyclical downturn in aerospace and a long-term structural change in the forest-products sector, say economists John Mitchell of U.S. BankCorp and Paul Sommers of the University of Washington's Northwest Policy Center.

The Boeing Company's downsizing represents ``one gigantic brake on the economy'' in Washington State, Dr. Sommers says. The state's 5 million people represent about half the population of the Northwest region, which also includes Alaska, Idaho, Montana, and Oregon.

Although all five states have had job-creation rates above the United States average since 1992, next year ``Washington and Alaska are likely to be below the national average,'' the economists conclude in their newly released ``Northwest Portrait,'' an annual economic survey.

A similar conclusion was reached by Western Blue Chip economists, who recently revised their consensus forecast downward to only a 0.8-percent job-growth rate next year.

Overall, the region still has an enviable lead over neighboring California, which the Blue Chip forecast predicts will see no job growth next year. And some of the small, mountain-nestled inland cities in the Northwest, such as Boise, Idaho, continue to attract businesses from the Golden State.

``Idaho is the bright spot in the Pacific Northwest,'' Dr. Mitchell says. Aided by the success of high-tech companies, Idaho promises to repeat its roughly 3-percent job growth of this year, he forecasts. But ``watch the construction sector,'' which may build too fast for the underlying economy, he warns.

Oregon, with about 3 million people, is another positive story, with employment growth likely to hit 2.3 percent next year, up from 2 percent in 1993, Mitchell says. This upturn is occurring without a boost from the timber industry, which faces diminishing access to public forests throughout the region because of environmental concerns.

In part, construction activity has been strong as the state becomes a haven for retirees, Mitchell says. Oregon also has been bolstered by a 44,000-job technology sector centered around Portland.

THE news in Washington State is not all bad. Boeing, the world's No. 1 airplane manufacturer has laid off more than 10,000 workers this year and will shed about the same number next year.

But unlike past ``Boeing Busts,'' the Seattle area is weathering the current downturn without a net loss of jobs. A particularly harsh regional collapse in 1969-70 boosted talk of diversifying the economy beyond aerospace. Sommers says there has been diversification, but less because of economic-development policies than because of private-sector initiatives.

An example is the success of the area's other big capital-goods producer, truck manufacturer PACCAR Inc., which is on the upward side of its demand cycle.

The rise of Microsoft Corporation as the world's most powerful software company, and of a host of smaller high-tech firms in the area, is another example.

Sommers says Boeing's down cycle may be starting to turn for the better, but employment is unlikely to ratchet upward even after airlines start buying again. Instead, the company is trying to boost productivity. Moreover, any new planes introduced by the company are expected to be assembled in states with more business-friendly climates, such as Kansas, where Boeing already has substantial operations.

The region's smallest states in terms of population are the largest in terms of land. Alaska and Montana have heavily resource-based economies that will have trouble in the year ahead, the report predicts.

The two states have been hurt by weak prices in areas such as oil and metals. Employment growth next year promises to be about 1 percent for Montana - based mostly in services and tourism - and 1.5 percent in Alaska.

Global prices for silver, gold, zinc, copper, and aluminum have been declining in recent years. Throughout the Northwest, aluminum smelters face a new problem: the combined squeeze of a worldwide glut caused by Russian competition and rising hydropower costs here. ``Five to 10 years down the road there surely won't be 10 aluminum smelters'' in the region, Sommers says.

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