Military booming, private sector lagging

The contrast was clear.

Grim-faced business panelists talked about tightening belts, delaying expansion plans, and cautious hiring during the Kitsap Regional Economic Development Council’s (KREDC) annual Decision Makers Breakfast Jan. 15.

Then military representatives and Rep. Norm Dicks, D-6th District, talked about new hires, an influx of government projects and increased spending at Kitsap County bases.

“Looking three years ahead, I see an average growth in man hours,” said Capt. Gregory Bryant, commanding officer of Puget Sound Naval Shipyard. “From a shipyard point of view we see a stable, somewhat higher (employment) than we’ve seen in the past.”

Even before the start of the war on terrorism, shipyard spokeswoman Mary Anne Mascianica reported that PSNS boosted its workforce last year by 600, to a total of 8,100. The base will hire at least 500 civilians per year for the next three to five years, she added.

Dicks said he was confident the region will not be impacted by an upcoming round of base closures.

In short, the military is booming and the private sector is lagging.

The more than 200 people who attended the breakfast heard tips on weathering the recession from business panelists. One tip: Don’t cut marketing when the going gets tough.

“Heavy marketing has helped us get through,” said panelist Mary Buretta, regional manager for EDS Pacific NW Business Solutions in Poulsbo.

The event featured a state-of-the-economy presentation by John Mitchell, an economist with U.S. Bankcorp.

Drought and electricity price spikes left Washington markets vulnerable, Mitchell explained, and the Sept. 11 attacks were the straw that broke the camel’s back. Economic circumstances deteriorated under the weight of the dot-com bust and aerospace-industry layoffs.

“Most economists thought we would scrape by with a slowdown,” Mitchell said, but the “shock factor” of Sept. 11 was enough to push the teetering economy over the edge.

But Mitchell noted that this is Washington’s first recession since 1982, and the worst likely has passed. He was critical of federal efforts to stymie the slowdown through tax cuts and economic stimulus, saying such steps take too long to be effective.

Lawmakers should simply let the business cycle run its course, Mitchell said.

Inventory will run low, manufacturing equipment will wear out and the sluggish economy slowly will turn around, he predicted.

“The textbook says in a recession you want to cut taxes and increase spending. That’s the theory, but it hasn’t worked well,” Mitchell said.

Overall, Mitchell was cautiously optimistic about the long-term economy — he forecasted 1-2 percent growth in the coming year.

“One thing to keep in mind about recessions is there has never been one that didn’t end,” Mitchell said.

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