Double-digit unemployment in Clallam County is part of a picture in which construction is down, lumber mills have cut back and employers are considering how to cut labor costs, say economic experts.

They warn that improvement in the economy may not be seen until the third quarter of the year.

Unemployment figures announced Tuesday by the Washington State Employment Security Department show a rapid rise in joblessness, with a 10.9 percent unemployment rate in Clallam County in January, compared to 8.6 percent in December.

In Jefferson County, the rate was 9.3 percent in January, rising from 7 percent in December.

“That’s sizeable in this town,” said Linda Rotmark, Clallam County Economic Development Council, executive director.

“I think we all know someone” that is without a job.

Construction ‘tanked’

Tess Camilon, who represented the Economic Security Department’s Olympic Consortium of Clallam, Jefferson and Kitsap counties workforce development area, said Wednesday that “construction in almost all counties has really tanked.”

“It is the result of the mortgage fiasco that has happened,” she said. “Jefferson County has felt the impact, but not as much as Clallam.”

“It’s not seasonal, I think, it’s just that we are in a very volatile situation, and it’s not just the state,” she said.

“It’s how things are panning out right now across the nation.”

She said that many are waiting to see if the federal economic stimulus package will filter down to then.

“But President Obama is right,” sheadded. “It is not going to be an overnight thing.”

On the bright side, Camilon said, “If you have the means to buy a home or car without the fear of losing your job, now is the time to buy. So I’m not saying that it’s all doom and gloom.

“Like any recession, it’s not going to last long. We’re going to bounce back.”

Rotmark also said that the downturn appears not to be seasonal.

Business declines

Rotmark said about every business is planning for a 10 to 15 percent decline in their budget.

“Everybody is taking a serious look at their employment,” she said.

Camilon said Clallam County has been hardest hit in the construction and retail sectors, losing 220 construction jobs in the past month and 130 in retail.

Camilon cited the decision of the Jamestown S’Klallam tribe in Blyn to hold off on construction of its long-planned resort hotel adjacent to its 7 Cedars Casino as a sign of the times.

“Everyone is in a wait-and-see pattern until the end of 2009, to see what will happen,” she said.

Faleana Wech, North Peninsula Building Association executive officer, agreed that construction has taken a hit.

She said the number of new houses built this year is expected to be cut in half nationwide over last year, but she said Clallam County will do better than the nationwide average primarily because it is an attractive retirement location.

“Although we have seen a substantial decline in building permit activity, still people choose to move to this area,” she said.

A decline in business is still a decline in business, and Wech said some construction companies in Clallam County have begun layoffs or have reduced hours for employees.

Mills

Also contributing to Clallam County’s unemployment figures is that three of the county’s four remaining mills are operating with only one shift.

The other mill, Nippon Paper Industries USA Co. in Port Angeles hasn’t laid off workers, but is reducing the number of employees through attrition, said Cathy Price, Nippon human resources manager.

The paper mill employes 229 people, down 10 people from three years ago, she said.

“We try to do whatever we have to do to keep the mill as a whole in business,” she said.

“Hopefully that won’t be anything drastic, but I don’t have a crystal ball.”

Price said mills, whether make lumber or paper, are affected by the drop in new housing construction.

“The whole supply chain is in turmoil right now,” she said.

The economic downturn is also affecting the yacht-building industry.

While Westport Shipyard, which builds yachts, is completing expansion of its cabinet-making workshop in Port Angeles, it may offer less additional work than previously anticipated.

Westport General Manager Phil Beirnes said that the company is putting on hold adding boat construction lines outside of Port Angeles.

“That would increase the number of employees up there, because the cabinetry is done up there,” he said.

“We are going to keep as many people employed as we can. We have growth plans. They are temporarily on hold for a little bit until it gets turned around.”

Beirnes said the workshop expansion will be finished in about a month, and thatWestport doesn’t have plans for reducing its workforce.

“That’s not to say we are not affected by this,” he said.

Westport employs 274 people at the cabinet workshop and 299 people at its yacht-making plant in Port Angeles.

Beirnes estimated in November that expanding the cabinet workshop will allow Westport to hire 50 more workers.

He said Wednesday evening he couldn’t say how many have been added or whether the workshop will meet that mark.

Economic stimulus

Camilon said Jefferson and Clallam counties better have “shovel-ready” projects planned if they want to see the benefits of federal economic stimulus dollars for infrastructure.

“I think we can say it will stay the same for now,” Camilon said. “Hopefully by spring it will turn around.

“We might be able to feel some recovery by the third quarter of the year.”

February unemployment rates, however, could remain at the same level or increase, she said.

Government and education jobs in both Clallam and Jefferson counties remain the strongest sector, Camilon said.

Jefferson County

Bill Wise, WSU Team Jefferson’s operations manager for Jefferson County, pointed out that the county at least has its major kraft paper mill, Port Townsend Paper Corporation, still in operation and employing about 300 at last count.

Camilon said the strongest part of Jefferson County’s economy, and to some extent Clallam’s, comes from the marine trades sector, which is somewhat protected by its market of wealthy boat and ship owners.

Rotmark said that one way employers can cut labor cost without layoffs is the state Employment Securities Department’s shared work program, which allows employers to reduce work hours from 40 to 32 a week.

Rotmark said business owners can also be connected to resources, such as WorkSource, Peninsula College business classes and the Small Business Development Council, at the EDC, located at 102. E. Front St., Port Angeles.

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Reporter Tom Callis can be reached at 360-417-3532 or at tom.callis@peninsuladailynews.com.

Jefferson County Editor Jeff Chew contributed to this report.