Whatcom’s economy looked a lot different 10 years ago. Here’s how we’ve changed
Few events can illustrate better what’s different about Whatcom’s 2010 economy compared to today than what happened on Jan. 8, 2010.
It was the end of the business day on a Friday when black-suited bank examiners from the Federal Deposit Insurance Corp. swarmed Horizon Bank’s Bellingham headquarters on Cornwall Avenue and Champion Street. The 87-year-old financial institution was the first government takeover of 2010; a 156 more would follow that year, including Everett-based Frontier Bank in April.
Like many other community and regional banks, Horizon Bank’s portfolio was decimated by risky real estate development loans as larger national institutions took on more market share of the home and auto loans.
“When the market turned, it just resulted in tremendous losses for the bank... more than the bank’s capital could withstand,” said Brad Williamson, director of the banking division at the Washington Department of Financial Institutions, in a Jan. 12, 2010 article in The Bellingham Herald.
By Monday morning Horizon Bank reopened as Washington Federal, providing a smooth transition for customers.
The government takeover served noticed to other community and regional banks that the numbers better be penciling out for them or else they might get that Friday evening visit from government officials. Banks reacted by scaling back on any loans, whether it was residential or commercial. Without those loans circulating, construction came to a standstill, resulting in big layoffs of construction workers. That industry didn’t recover locally until at least the middle of the decade.
The tighter lending practices in 2010 had a cascading effect; businesses also had trouble getting credit, leading to delays in expansion and hiring. The local unemployment rate hovered around 10% that year, according to the Washington State Employment Security Department.
The local economy appeared to be back on track by the middle of the decade, with unemployment down to around 5% by 2017. That’s about where it’s remained the past two years. Government takeovers of banks across the U.S. have also quieted down; there were just four in 2019, and none in 2018.
Whatcom County experienced significant overall job growth in the past decade, with manufacturing rising 40.3%.
The decade saw the Whatcom County housing market go from falling prices and plenty of inventory in 2009 to high prices and low inventory in 2019.
The strong economic recovery that led to local job growth helped change the fortunes of the housing market, but the lack of construction between 2009-2012 also had a big impact.
Here’s what happened with other economic influences in the last decade:
Canadian dollar
Heading into 2010 there were two factors that pointed toward increased cross-border activity in Whatcom County:
▪ The Canadian dollar was nearly at par with the U.S. dollar, giving British Columbians strong purchasing power in the U.S. This was welcome news for Whatcom retailers, since U.S. consumers were not so confident about spending following the recession.
▪ The Winter Olympics in and around Vancouver also provided an influx of activity in Whatcom County, which included visitors and construction projects along the border to help make traffic flow better.
The strong Canadian dollar remained in place through 2014. The second half of the decade was a different story, with the loonie weakening to around 70 cents compared to the U.S. dollar in 2016. The Canadian dollar has been relatively stable for the past few years, sticking around 75 cents.
The number of crossings into Whatcom County has tracked closely with the Canadian dollar. The peak year in the decade was in 2013, when around 16.2 million crossed the five border crossings. In recent years, with the weaker loonie, the annual total has been in the 12-13 million range.
This past decade also brought the rise of online retail, leading to dozens of new mail services businesses, particularly in Blaine and Sumas.
Something that steadily grew during the decade was enrollment in the NEXUS pass program. The program, which accepts pre-approved, low-risk travelers, has grown in this region from 200,000 to 600,000 between 2010 and 2018. That’s according to Laurie Trautman, director for the Border Policy Research Institute at Western Washington University.
Trautman believes the coming decade will bring about major changes to how the border is managed, driven by technology. She thinks facial recognition devices will be at the Seattle and Vancouver airports. She also expects wider use of mobile passport apps and changes to how cargo is processed.
Retail sales
As the general economy improved and the population in Whatcom County increased by 12.2% according to the U.S. Census, retail sales rebounded strongly in Whatcom County.
Sales totaled $4.55 billion in 2018, a 56.4% increase compared to 2010. That averages out to about 6.3 percent a year, which is well above annual inflation for that period.
While most other retail sectors grew in Whatcom County, one area that didn’t was sales at big box stores. That goes to show the strong influence cross-border shopping has at those stores. In 2010, the Canadian dollar was around 95 cents compared to the U.S. dollar. In 2018, the loonie was around 75 cents.
Agriculture
Farming in Whatcom County continues to get more complicated as knowledge of geopolitical events is becoming more important when it comes to pricing berries or milk.
For Whatcom raspberries, the competition for the U.S. market mostly came from Eastern Europe and Chile in 2010. The growth of Mexico’s crop in the past decade has made the competition tougher, with the result being lower prices for local farmers.
Competing globally has resulted in farm consolidation among raspberry growers in Washington state, said Henry Bierlink, executive director of the Washington Red Raspberry Commission. While there is slightly more raspberry acreage, the number of growers has shrunk from around 130 in 2010 to under 75 at the end of 2019. According to the commission, 99.2% of raspberries were grown in Whatcom County by 67 farmers.
“This is closely related to the global nature of berry markets,” Bierlink said in an email, adding that it is very difficult for farmers who don’t handle all aspects of production, shipping and storage to compete with growers in other parts of the world.
The other issue that has intensified in the past decade is labor, both in cost and availability, Bierlink said.
Whatcom County dairy farming has also become more globally complex and has taken part in the acceleration of consolidation trend in the past decade. Larry Stap of Twin Brook Creamery near Lynden has noticed the uptick in small and medium farms being purchased by larger companies. Labor shortages, increased environmental litigation and low prices/compensation is not inspiring the next generation to take over family businesses, he said.
“If I didn’t have my family, I don’t know if I could continue to be a part of this business,” said Stap, 65. Twin Brook is a fifth-generation farm that bottles and processes its own cream-top liquid milk and sells it at stores in Western Washington and Oregon.
Changes in the industry are being seen across the U.S. Two major U.S. dairy processors, Dean Foods and Borden, recently filed for bankruptcy. Most Whatcom dairy farms send milk to Darigold, which Stap said is in a better position in the market because of its diversity in products, including selling powdered milk for other food products. The two U.S. companies that filed for bankruptcy mostly processed fluid milk, he said.
As farmers continue to deal with the complex global issues that go beyond the day-to-day operations, Stap said one goal for the industry in the coming decade should be doing a better job communicating what they do to consumers. One way they are doing that is working with an organization called Whatcom Family Farmers, but farmers themselves should also be talking more, he said.
“In Whatcom County we’re still fortunate that many can drive out to see the farms, but we don’t talk about our story enough to consumers,” Stap said.
