POSTED: Thursday, Dec. 31, 2009

Despite recession, bright spots emerged in the Whatcom economy in '09

For many in the Whatcom County business community, 2009 was gut-check time.

Owners and employees of many businesses have spent the past year in survival mode, dealing with layoffs, furloughs and paycuts in order to keep the business open. Those challenges reverberated throughout the economy.

While the recession did some damage to the local economy, it appears to have created less havoc than many feared at the beginning of 2009. In the first quarter of 2009, it appeared Alcoa Intalco Works was going to shut down, laying off more than 500 employees (last week the company reached an agreement to remain open for the near-term) and there was an expectation that the local unemployment rate would reach 10 percent, which did not happen.

Rather than compiling the traditional list the top business stories of 2009, I thought it would be more appropriate to touch on several economic drivers in what was a transformative year for the local economy:

STRAIN IN THE HOME: FORECLOSURES AND BANKRUPTCIES

The final totals aren't in yet, but it appears there will have been around 800 Whatcom County bankruptcy filings this year (Through November there were 736 filings). In 2006, there were 283 local bankruptcy filings for the entire year.

While this has an impact on the bankruptcy filer, it also hurts the businesses and residents owed money. As a result of this rise in financial troubles, businesses became conservative when it came to extending credit and more consumers began thinking twice about buying gift certificates if they were not sure of the health of a company.

The rise in personal bankruptcies seemed to go hand-in-hand with home mortgage troubles. According to the Whatcom County Assessor's Web site, there were 872 trustee sale notices - typically the first stage of the foreclosure process - sent out to Whatcom County residents through mid-December of this year. There were 253 such notices for the entire year of 2006.

DEALING WITH JOBLESSNESS

At 8.2 percent in November, Whatcom County's unemployment rate remains below the Washington (9.2 percent) and the U.S. (10 percent) rates. However, there are nearly 2,800 more people actively looking for work than in November 2008, in addition to the discouraged workers not being counted. Whatcom County's rate peaked in March, reaching 8.8 percent.

Construction was the one industry that suffered significant job losses. Last month there were 6,100 people employed in the industry; that's the lowest total since April 2002, when there 5,900 people employed in construction.

BUSINESS CLOSURES, OPENINGS

By mid-December there were nearly 90 business closures counted in Whatcom County, ahead of the 83 counted in 2008 and the 35 in 2007. Retailers in particular struggled, as consumers curtailed spending - through the first half of the 2009, local retail sales were down more than 10 percent compared to the first half of 2008, according to the Department of Revenue.

Some of the bigger closures in Whatcom County include Johnson Outdoors, Circuit City and Joe's Sports Outdoors & More.

While the closures grabbed the headlines, there were also significant business openings locally, including two grocery stores - The Market at Birch Bay and the Community Food Co-op's Cordata store.

THE UPS AND DOWNS OF REAL ESTATE

While the number of homes sold appears to have stabilized, with numbers tracking close to 2008, the median price continues to drop.

The latest federal report estimated home prices were down about 5 percent year-over-year, while other national and local surveys indicate the price drop is around 8 percent compared to 2008.

There has been an increase in sales in the second half of 2009, with the $8,000 homebuyer tax credit a possible factor.

STRUGGLES OF LONGTIME LOCAL INSTITUTIONS

While many companies suffered this year, two long-time local institutions have generated quite a bit of concern this year: Horizon Bank and Homestead Northwest.

Suffering from a slew of bad commercial and residential loans throughout Western Washington, Horizon Bank received a cease-and-desist order earlier this year and now has until next week to bring in new capital or combine with another bank under an order from the Federal Deposit Insurance Corp. The directive doesn't say what will happen if Horizon doesn't meet this order, but the FDIC has already stepped in to close 140 banks across the U.S. this year.

Earlier this year it appeared Homestead Northwest was headed toward Chapter 11 bankruptcy protection, but CEO James Wynstra decided to work with investors, banks, contractors and suppliers to get his company back to financial health without reorganization. To date, Wynstra has succeeded in avoiding bankruptcy.

RISE IN AIRPORT, BORDER TRAFFIC

With Allegiant Air and Alaska adding flights out of Bellingham airport, there's been a significant increase in airport traffic. In the first 11 months of 2009, the number of people using the airport was up more than 15 percent compared to the same period in 2008.

With a rebound in the Canadian dollar this summer, there has also been a double-digit increase in border traffic since August.

GOOD YEAR FOR HARVEST, BAD FOR DAIRY

Whatcom County's main crop, raspberries, saw a very good year that was helped by good weather and decent prices. It was a different story for local dairy farmers, however, who have been struggling this year because of low prices for their products.