Loss of prosperity not easy to take in Pacific Northwest

Gresham, Ore. — The machinist leaned over the counter at the Java Bay coffeehouse, ordered his usual double espresso to propel him through his shift at the LSI Logic microchip factory up the street, and said, "Layoffs today, maybe."

Chris Gaither, Boston Globe

The shop’s proprietor, Tom Dehen, never learned what prompted the machinist’s suspicion, which turned out to be misguided that day, but workers in this hardscrabble Portland suburb have developed acute sensitivities to signs of more job cuts. They have good reason. A Fujitsu chip factory shut down last year, putting 670 people out of work. LSI Logic laid off 132 employees and furloughed 78 others before rehiring 63. The local Boeing plant shed a third of its 1,600 jobs. If the economy doesn’t improve soon, more cuts are expected.

In true Pacific Northwest fashion, the barista at Java Bay substitutes for a bartender, as factory workers lean over their steaming mugs and unload their worries about the region’s struggling economy and stubborn unemployment.

"The fear is that, in five years, none of this will be made here — it will all be made in China," said Dehen, gesturing toward the chip-making factories.

In the 1990s, the arrival of multibillion-dollar manufacturing plants for high-tech products by Intel Corp., LSI Logic, and others signified an end to the Pacific Northwest’s reliance on timber and fishing, industries mired in a decline that has lasted decades. Manufacturing orders roared into new high- tech factories like the ones Intel built in Washington and Oregon. The region’s two largest metropolitan areas, Seattle and Portland, reaped the spoils, as the booming economy boosted orders for other big-ticket items such as airplanes, motor homes, tractor trailers, and railroad cars.

Today, Washington and Oregon duel for the nation’s highest unemployment rate, with Oregon holding the dubious distinction for 15 of the past 17 months.

Together, the states are home to more than 330,000 people who are without work. Just as the Internet sector was crashing, Boeing was abandoning its headquarters in Seattle for Chicago and shedding 50,000 jobs, sending shock waves through the region.


Although their seasonally adjusted unemployment rates have dipped over the past year, Oregon’s 7 percent and Washington’s 6.8 percent for December are still well above the national average of 6 percent and a bit above California’s 6.6 percent. With 7 percent unemployment in November, Portland had the fourth-highest unemployment among major metropolitan areas, behind San Jose, New York and Miami.

"When the national economy gets sick, the Northwest gets pneumonia," said Richard Gimmi, an LSI Logic engineer.

Washington’s economy hasn’t been this sick since the aerospace meltdown of 1969 to 1971, when a Seattle billboard famously asked the last person leaving the city to turn out the lights. After 16 years on the job, Sam Faulkner, a 50- year-old truck driver in Vancouver, Wash., was put out of work in September when Consolidated Freightways filed for bankruptcy protection and laid off its 15,000 U.S. workers. Faulkner found another trucking job, but lost that only a month later. Now, through a state-funded training program for "dislocated workers," he is studying culinary arts at a community college and trying to spend more time with his family after years of hauling cargo to the East Coast.

"I have a 15-year-old daughter that I’m just getting to know," said Faulkner, whose unemployment benefits end in April.

Although many Northwesterners don’t see it yet, economists spy glimmers of hope. John Mitchell, an economist with US Bank, said Washington’s decline appears to have reached bottom, and Oregon is actually showing mild growth. During the last quarter of 2001, Oregon scored last among all states in Arizona State University’s Blue Chip Job Growth Update. Now Oregon is 16th.

Even high-tech is seeing signs of life. The software giant Microsoft Corp., one of the largest private employers in the Seattle area, has said it plans to boost its staffing by 10 percent, to 55,000 employees by the end of June. Intel, the world’s largest chipmaker and one of Oregon’s largest private employers, cut about 2,000 jobs in the state in the past two years but has begun selective hiring as the industry stabilizes. With heavy incentives from local government, Microchip Technology, an Arizona company, bought the former Fujitsu plant in Gresham for $183.5 million, rehired 60 of its workers, and plans to employ up to 360 people within a few years.

"There is a touch of progress being made," said Bill Conerly, principal of Conerly Consulting, a Portland economic research firm. "For the most part, I think we are just waiting for the capital spending cycle nationally to get going."


But the fallout has left its mark. Many states are facing budget shortfalls,

but Oregon’s is in shambles. One of only five states with no sales tax, it relies on its income tax for 87 percent of its revenue. Facing a $1.9 billion deficit on an $11.4 billion two-year budget, Oregon lawmakers are laying off public safety officers and other state workers, lopping days off the already- shortened school calendar, and weighing plans to temporarily stop prosecuting many misdemeanors, such as shoplifting, drug possession and prostitution. Late last month, Oregonians voters defeated Measure 28, which would have raised about $313 million to help the current fiscal year’s budget shortfall by boosting the top income tax rate to 9.5 percent from 9 percent.

The uncertainty has dampened Oregonians’ enthusiasm for their state. A recent poll released by the Oregon Progress Board, a state agency, found that 65 percent of residents felt their government was doing a good or somewhat good job of providing government services, compared with 79 percent who felt that way in 2000. Only 49 percent of residents approved of the government’s ability to create jobs, down from 78 percent. Yet the easy pace of life and social policies such as health coverage for the working poor aren’t easy to give up for many Oregonians. Some 83 percent expressed positive feelings about the state, down from 89 percent in 2000.

Sipping beer in the Rock Bottom Brewery in downtown Portland, Mik Loeffler said he was laid off from two jobs producing radio shows for local AM stations and hasn’t been able to find work for 11 months. His $228 in weekly unemployment benefits ran out last month. A good friend could probably secure him a job in Dallas, he said, but he doesn’t want to leave.

Gimmi, the LSI Logic engineer, said he loves Oregon and his employer but is considering a move to a chipmaker in Asia, where he believes most manufacturing will take place within a few years. But for now, the temperate Oregon climate and friendly greetings he gets from strangers are keeping him around. "For the United States, the Pacific Northwest is about as good as it gets," he said. "It’s the reason I’m still here."


But in rural parts of the state — in the "towns dependent on what they are able to wrest from the sea in front of them and from the mountains behind, trapped between both," as Oregon novelist Ken Kesey wrote — the high-tech boom that created so many jobs never arrived.

About 175 miles south of Portland, in the timber-lined hills of Douglas County, which provided the 70-foot Christmas tree that adorned the west lawn of the U.S. Capitol last year, sits Roseburg, a town of 21,000 that rises and falls with the forest. Roseburg Forest Products, owned by the Ford family since 1936, is the biggest employer in town; 3,500 workers unload pine and fir logs, process them into plywood and particle board, and ship them across the country. Hank Snow, vice president of human resources, said the company hasn’t had a big layoff in five years, but it hasn’t turned a profit since April 2000.

If that continues, more workers will be looking for jobs.

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