By Kristi Pihl, January 29, 2014, Tri-City Herald
Tourism, health care, retail, manufacturing and agriculture are all areas where Tri-City business leaders are expecting to see more jobs and activity this year.
And last year was a better year compared with the previous year.
That’s the message more than 300 Tri-Citians heard Wednesday during the Tri-Cities Regional Economic Outlook, sponsored by the Tri-City Development Council.
Medical building and new home construction, newly opened restaurants and retail stores and booming car sales helped buoy retail sales in the Tri-Cities last year, said Barbara Johnson, Columbia Center mall’s general manager.
And the Tri-Cities has seen big growth in food processing and wine production, said Kris Johnson, Association of Washington Business president and CEO.
The local job market also shows more optimism and confidence, with employers adding jobs and more job seekers finding them, said Ajsa Suljic, regional labor economist for Benton and Franklin counties. In the past five months, the Tri-Cities added about 3,500 new jobs.
The Tri-Cities ended 2013 with jobs up about 1 percent, better than the previous year, when the Tri-Cities saw a 1.4 percent loss mainly from Hanford layoffs, Suljic said.
Service-providing industries including health care, education and financial services have been expanding and adding jobs, she said. Those industries have seen an average annual job growth of 1.5 percent each year in the last five years, even with Hanford layoffs included. The growth would have been twice as high without the layoffs, she said.
Suljic expects an average Tri-City job growth of 1.7 percent each year for the next couple of years.
More Tri-Citians are staying in town for health care and patients are coming from elsewhere in the region because the Tri-Cities has seen a significant increase in physician specialists and a range of services, said Rand Wortman, Kadlec Health System president and CEO.
Nationwide, a physician shortage will occur in the future, but Wortman said it’s possible the Tri-Cities will avoid it.
Wortman said he also expects to see consolidation in the health care industry as hospitals attempt to improve the quality of care and increase their market strength.
The Tri-Cities should draw more tourists next year. Troy Woody, general manager for Pasco’s TRAC facility off Road 68, said most facility general managers he talks to are expecting a better year this year than last.
Last year, the Three Rivers complex and TRAC welcomed about 863,000 people through their doors, said Woody, a Tri-Cities Visitor & Convention Bureau board member.
He conservatively estimates that out of area visitors to events at either location spent about $43 million for accommodations, restaurants, retail and other services while they were in town.
The Tri-Cities have seen a growth in tourism, with about 74,000 more occupied rooms last year than in 2005, Woody said. During that time, about 126 hotel rooms have been added to the local market.
The Tri-Cities still needs a winery row, a waterfront area, a performing arts center and public plaza to help draw tourists, Woody said.
If Hanford’s historic B Reactor becomes a part of the National Park Service, Woody said he expects more than 100,000 visitors a year.
“I think the international demand is just significant,” he said.
Retail spending improved in the Tri-Cities last year, with year-over-year increases across the board, Barbara Johnson said. That’s after seeing stagnant and declining retail spending in 2012.
Benton County saw retail sales tax grow by 6.3 percent, while Franklin County was up by 5.2 percent. Statewide, increases of 7 percent were seen, she said.
This year, she said she is predicting 5.5 percent growth, similar to retailers nationwide are anticipating.
The cost of consumer goods is continuing to rise, and consumer confidence remains low in the Tri-Cities area, especially with Hanford layoffs in fall 2013, Barbara Johnson said.
The Tri-Cities has so far escaped the list of locations where large chain retailers are closing stores, she said.
The Hanford nuclear reservation is coming out of a difficult, turbulent budget year, said Kevin Smith, manager of the Department of Energy Hanford Office of River Protection. With budget uncertainty caused by forced federal budget cuts and a failure of Congress to pass a detailed annual budget, small businesses took the brunt of the hit as officials limited purchases and tried to maintain core staff.
But with the passage of the fiscal 2014 budget this month, the situation is stabilized and the Department of Energy is able to make long-term plans. Stable funding will provide more predictability for Hanford workers and small businesses wanting to bid on Hanford work, Smith said.
The work ahead at Hanford will require gradually increasing budgets, and the nation will need to make a substantial investment in Hanford environmental cleanup for at least the next three decades, he said.
Hanford accounted for just 15 percent of the nonfarm jobs in Benton and Franklin counties last year, Suljic said. But those well-paid jobs added up to 34 percent of the nonfarm wages in the two counties.
Jeff Losey, Home Builders Association of Tri-Cities executive director, expects the Tri-Cities will see the same amount of new homes built this year as in 2013, if not more. And that home values will continue to grow.
A total of 1,024 permits were issued for Tri-City homes last year, with Kennewick and Richland surpassing Pasco. About 10 percent fewer homes were started in Benton and Franklin counties last year compared with 2012.
Kennewick’s Southridge and Richland’s Badger Mountain South are among the future growth areas, Losey said.
Last year was a good one for sales, with 3,296 closed sales, Losey said. That’s the highest level of activity seen in the last six years.
The average value of new homes was about $268,600 last year, up from about $261,200 in 2012, Losey said.
Overall it should be a good year for agriculture in the state of Washington, said Don Sleight, president of AgReserves, the parent company of Agri-Northwest. It may not be quite as generous as the last few years, which saw record crops and some record prices, but he said it would still be a good year.
In agricultural employment, Suljic said she’s expecting a better year this year than the last few.
Tri-City agricultural employment has grown about 32 percent in the last ten years, Suljic said. Farm work represents about 10 percent of the local jobs.
Overall, consumers can expect more moderate food prices, except for beef, which will be high because the supply of cattle continues to decline, Sleight said.
With soybean prices three times that of corn, Sleight said farmers likely will replace some corn acres with soybean acres this year.
Manufacturing makes up nearly 7 percent of Tri-City employment, Kris Johnson said. Average annual growth for manufacturing has been about 3.1 percent for the past seven years.
Local manufacturers Johnson highlighted include Pasco wheelchair maker TiLite, Pasco hydraulic jacks manufacturer Bogert Group and fuel fabricator Areva.
He said there are also about 60 Tri-City companies who contribute to the aerospace industry. The state Legislature approved tax incentives for Boeing which helped keep construction of the 777X in Washington state. Johnson said that means about 60,000 jobs.
Manufacturers currently are having a hard time finding skilled entry-level workers, Johnson said.
The Tri-Cities is fortunate to have Washington State University Tri-Cities and Pasco’s Columbia Basin College offering science, technology, engineering and math, or STEM education, along with certificate programs, he said.