Diversification softens hit of Hanford layoffs

By Kristi Pihl, Tri-City HeraldOctober 24, 2011 

Hanford always has been an integral part of the Tri-City economy but officials say the region never has been better prepared for another round of job cuts.

Residents are in the process of being weaned off Hanford jobs, thanks in part to the growth of Pacific Northwest National Laboratory, food processing, health care and other services.

Tri-City leaders say this diversified economy will help the area weather the layoffs of 2,000 people at Hanford so far this year and up to another 1,060 more by next fall.

While Benton and Franklin counties' population has leapt 48 percent to nearly 254,000 in 15 years, the number of Hanford jobs has remained relatively unchanged, said C. Mark Smith, who retired as Richland's economic development manager in 2005.

The area's labor force has increased by 42 percent in that time, for about 2.4 percent growth each year, said Ajsa Suljic, regional labor economist for the state Employment Security Department.

And those workers are employed in non-Hanford jobs, including construction, retail and wholesale trade, agribusiness and tourism, Smith said.

The non-Hanford economy has three main parts, agribusiness, which includes food processing and traditional agriculture, retail and wholesale trade, and services, including health care, he said.

Economy better today

The Tri-Cities' economic situation is better than it was 20 years ago, Suljic said.

But it may not be apparent to the average person.

For example, there are more manufacturers in the Tri-Cities than most people realize, said Carl Adrian, president and CEO of the Tri-City Development Council.

The area has seen growth in manufacturing jobs with companies such as Pasco wheelchair-maker TiLite and Pasco hydraulic jacks manufacturer Bogert Group, he said.

About 10 percent of the state's food processing happens here, said Dean Schau, Columbia Basin College assistant professor of economics.

ConAgra Foods Lamb Weston, which makes french fries and other frozen potato products, is the fifth largest employer in the area, with about 2,500 employees.

"This is the frozen french fry capital of the world," Adrian said.

Lamb Weston's headquarters have been in the Tri-Cities since 1989, said Becky Niiya, communication director for ConAgra Foods. The company expects to keep its headquarters in the area and its employee base stable.

Their Tri-City facilities make frozen french fries and potato products from potatoes grown in the Columbia Basin that are sold at restaurants worldwide, as well as offered at national grocery stores under the Alexia brand, she said.

The market value of the agricultural products produced in Benton and Franklin counties was $993 million, with almost 15 percent of that value sold in the state, according to a 2007 agriculture census, Suljic said.

Tech businesses growing

It isn't just industries such as agriculture that show promise in the Tri-Cities.

A firm called &yet is a company Gary Ballew, Richland's economic development manager, points to when he talks about Tri-City job diversity.

Three years ago, Adam Brault started the company, which makes web software and is a consultant for companies outside the Tri-Cities. It now has grown to 15 employees.

Brault said it's hard to imagine a better place to build a technology business. The Tri-Cities' high quality of family life makes it easier to recruit talent.

And software is a growing part of the international economy.

"The web is not going to become a smaller part of our lives any time soon," said the Richland company's president Henrik Joreteg.

There are quite a number of tech and software start-ups already in the Tri-Cities, Brault said.

&yet started a group called about a year ago for people working with the web, and Brault said it has more than 95 registered members already. It's important to have a way for those working in technology to collaborate, he said.

Technology is one area that could draw higher-wage jobs, like some of those being lost at Hanford, Adrian said.

Health care growing

Gains in the health care industry also are helping offset the difference between the average Tri-City wage with Hanford jobs and the average wage without, said Schau, who was the area's state regional labor economist for about 30 years.

And the Tri-Cities has grown more into a retirement community with its weather, amenities, light traffic and relatively low cost of living, he said.

All three Tri-City hospitals make the list of top 20 employers. And there are places in Richland where someone can stand and all they can see are health care providers, Schau said.

Kadlec Regional Medical Center has grown 200 percent in 11 years to about 2,240 employees, said Jeff Clark, Kadlec's vice president of human resources and planning.

The hospital has expanded services and draws patients from the region with its cardiac services, Neonatal Intensive Care Unit, neuroscience and neurosurgery and a full range of medical specialists, Clark said.

The growing community and aging population are two reasons for the increasing demand for medical care, he said.

Some still go outside the community for medical services, but Clark estimated that the three Tri-City hospitals provide 85 percent to 95 percent of the care the community needs.

Partnerships at work

The region has been working to diversify the economy since 1965, although no one called it that then, Ballew said.

One of the things the Tri-Cities has done well is in understanding that jobs at Hanford are temporary, Smith said.

Effective partnerships in economic development have been created with a level of cooperation that Smith said is unusual.

For example, the Tri-Cities Research District may be in Richland, but Pasco and Kennewick are among the many partners participating in that project.

The research district's goal is to draw in jobs that will help retain the current work force, said Diahann Howard, Port of Benton director of economic development and governmental affairs.

That means recruiting new companies to the area and supporting startup firms, said Howard, who serves as the district's executive director.

She said the district is doing better than expected, with a private developer, Innovation Center, that has scheduled $165 million in investments in the research district this year and next. One building is done, and another should be finished this month. The open space in the finished building should help with recruitment.

PNNL and Washington State University Tri-Cities are anchor partners with the district. That will help when leveraging the community's strengths in agriculture and energy, she said.

Another avenue for future jobs is an energy park on about 1,341 acres of Hanford land that TRIDEC has requested from the Department of Energy.

Adrian said the park could include businesses that generate energy and related companies, such as manufacturers of equipment used in the energy industry.

It's a unique opportunity because most communities don't have that much available land for industrial development, he said.

Adrian said TRIDEC has been focusing on attracting value-added agriculture, research and development companies and advanced manufacturing, which includes energy.

They hope to attract businesses that export their products outside of the community, which brings capital back in, Adrian said.

Much of that work is networking, by attending trade shows, gatherings of corporate real estate executives and site selectors and visiting companies in other communities, he said.

"We are trying to plant seeds so that when and if a company does have a project, they know that we are open for business," he said.

Contractors diversifying too

And it isn't just the area that has been adding variety.

Even Hanford contractors have diversified.

Lockheed Martin, which provides information technology services at Hanford, also provides data center and information technology services to other government agencies, said Adrian.

And PNNL -- the community's top local employer with nearly 4,500 employees in Richland -- has lessened its dependence on Hanford contracts. Less than 7 percent of its current work is tied to Hanford, Howard said.

And new companies have spun out of PNNL, taking research developed there and putting it into practice, Adrian said.

"Hanford is still a big gorilla ... but there are a lot of little monkeys too," Ballew said.

Top 10 industries for jobs in Benton and Franklin counties

* Public administration (includes local and state education and health services), 16 percent.

* Professional, scientific and technical services, 11 percent.

* Administrative and support and waste management andremediation services, nearly 11 percent.

* Retail trade, 10 percent.

* Agriculture, forestry, fishing and hunting (mainly agriculture), 10 percent.

* Health care and social assistance (private ownership), 9 percent.

* Accommodation and Food Services, 7 percent.

* Manufacturing, 6 percent.

* Construction, 5 percent.

* Other services (except public administration), 4 percent.

-- Source: Bureau of Labor Statistics and WA Labor Market Information, courtesy of the state Employment Security Department

Major Mid-Columbia employers

Battelle/PNNL, research and development, 4,890

URS, government, 3,400

CH2M Hill, government, 3,096

Bechtel National, government, 2,897

ConAgra, food processing, 2,498

Kadlec Medical Center, health services, 2,242

WA River Protection Solutions, government, 1,670

Washington Closure Hanford, government, 1,600

Mission Support Alliance, government, 1,405

Tyson Foods, food processing, 1,300

Energy Northwest, utilities, 1,198

Kennewick General Hospital, health services, 1,104

Broetje Orchards, food processing, 1,000

Lourdes Health Network, health services, 740

AREVA, manufacturing, 685

Boise Cascade, manufacturing, 572

Lockheed Martin, IT/government, 500

Fluor Federal Services, government, 474

Department of Energy (DOE), U.S. government, 414

Pasco Processing, food processing, 400

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