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POSTED: Wednesday, Dec. 03, 2008

Northwest business leaders plead for federal help

EVERETT - Business leaders from northwest Washington mostly agree on the need for a massive federal economic stimulus - as long as it is geared toward long-term recovery rather than short-term creation of tax-subsidized jobs.

During an economic stimulus roundtable here Wednesday, Dec. 3, U.S. Sen. Patty Murray and U.S. Rep. Rick Larsen said they and the rest of the Democratic majority in Congress share that perspective.

"We also want to make sure we're investing wisely," Murray said.

The first financial stimulus bill that simply mailed checks to U.S. taxpayers did little to stop the slide into recession, Murray admitted.

"None of us anticipated how big it was going to get," she said.

Larsen, whose district includes Whatcom County, said there was no time to waste.

"Now is the time to move from financial rescue to economic recovery and jobs growth," Larsen said, adding that Congress should try to have a massive new stimulus bill on Barack Obama's desk on Jan. 20, when he is inaugurated president.

Larsen pledged to do his best to make sure federal economic assistance money is spent wisely on transportation, job retraining and other projects that pay economic dividends.

He also called for more oversight on how the U.S. Treasury Department is administering its multi-billion-dollar rescue programs for financial firms, now and after the Obama administration takes over those programs.

U.S. automakers need to demonstrate that they are able to make good use of the multi-billion-dollar "bridge loans" the companies say they need to stay in business, Larsen added.

"Congress should not give them a bridge loan to nowhere," Larsen said. "They need to show us a plan that the American taxpayer can feel confident in."

Business leaders did not mince words in describing the seriousness of the economic crisis, as huge losses in subprime mortgage loans undermined the banking system and damaged even the banks that avoided the risky loans to begin with.

Lyle Ryan, president of Everett-based Frontier Bank, told the audience of more than 150 people that Frontier and most other community banks said no thanks to subprime loans, but their business customers are still feeling the pain. Retailers are seeing fewer sales, builders have unsold inventories of homes, and manufacturers' orders are in decline.

Frontier Bank remains strong, he said, but all banks are now operating in a climate of fear.

"The biggest thing we're dealing with now ... is unfounded rumors that seem to fly around, about the financial strength of banks," he said.

But Ryan did not minimize the severity of the economic downturn. In a normal month, he said, Frontier would expect to originate perhaps $175 million in new loans from its banking system of 51 branches that stretch from Whatcom County to Salem, Ore. In November 2008, that number collapsed to just $7 million.

Much of the decline is due to a decline in the number of loan applications coming in, although Ryan also acknowledged that Frontier is focused on capital preservation and improving the quality of the loans on its books. He predicted that the current crisis will be a landmark in economic history.

"I've been doing this for 39 years, and I can't wait to read the books about what we're seeing in today's economy," he said.

Other key comments:

Lisa Janicki, chief financial officer at Janicki Industries of Sedro-Woolley, said the family-owned composites manufacturing firm still has 460 people at work on aircraft and marine parts, as well as giant blades for wind power turbines. But employment was 520 a year ago, and the company had expected to be adding workers now after building 155,000 square feet of new manufacturing space in Hamilton.

She told Murray and Larsen that she gets job applications from returning Iraq war veterans she would love to hire, but they lack the skills that Janicki needs. She suggested a program to help subsidize private firms' costs in training those veterans.

"It's going to be companies like ours, and small and medium-sized businesses of this area, who will lead on the path to recovery," Janicki said.

John Littel, legislative director for the 17,000-member Northwest Regional Council of Carpenters, said construction job losses have been massive in the region. Lack of financing is stalling some projects on the drawing board, and even stopping some projects already under way.

"We have several big holes in the ground here in Snohomish County and in King County that are going to stay holes in the ground for a while," Littel said.

Skagit County Realtor Ron Wortham said the downturn in residential real estate sales is the worst since the 1970s. He argued that the federal government should do everything possible to make loans available for home sales.

"Recessions never recover without home sales stabilizing and values starting to increase," Wortham said.

Tom Lane, president of the Washington State Auto Dealers Association and CEO of the Dwayne Lane auto dealership group, pleaded for help for the U.S. auto industry. He said he realized that auto makers had made many mistakes, but if they slide into bankruptcy, they are not likely to emerge.

"People will not buy a car from an auto company that is bankrupt," Lane said.

He agreed that the auto companies will need strict conditions.

"Review their plans," he told Larsen and Murray. "Demand whatever is fair."

Murray warned her listeners that there is no quick fix.

"We got in here over time," Murray said. "We are not going to get out of here quickly."