Slower economic growth in Tri-Cities seen as new normal

By Kristi Pihl, Herald staff writerJanuary 25, 2013 

The Tri-Cities can expect to see steady growth during 2013 in a number of industries from real estate to retail.

Industry experts described the slower growth the Tri-Cities has seen in the past year as the new normal, during Thursday's 14th annual Tri-Cities Regional Economic Outlook sponsored by the Tri-City Development Council.

The Tri-City economy remains fairly positive, said Carl Adrian, TRIDEC president. While Hanford layoffs have caused a few hiccups, most economic sectors have grown, he said.

Industries relying on discretionary spending -- such as travel, food service and retail -- have stabilized, said Ajsa Suljic, regional labor economist for Benton and Franklin counties.

Local economic growth stalled in 2012, but Benton and Franklin counties should start seeing economic growth at the end of this year, Suljic said.

Jobs in health care, education and food manufacturing should lead to growth in the local economy, she said.

Health care

Health care continues to be one of the fastest-growing industries, which translates to job growth, said Glen Marshall, Kennewick General Hospital CEO.

Marshall said premiums are continuing to increase and so are the number of uninsured and underinsured residents.

KGH, Kadlec Health System and Lourdes Health Network have all been working on enhancing and expanding services, which allows more patients to stay in the community to be treated and attracts patients from other areas, he said.

In 2010, health care salaries amounted to $231.2 million in the Tri-Cities.

"From my perspective, Tri-Cities health care is healthy," Marshall said.

Real estate

The Tri-Cities has seen 21/2 years of consistent home sales, said Wayne Langford, president of the Tri-City Association of Realtors.

Sales volumes were up 2 percent in 2012, which wasn't near recent record booms, but is in line with pre-boom sales, he said.

"We believe that we are in for more of the same, gradually consistent growth," said Langford, a broker/Realtor with Windermere Real Estate/Tri-Cities.

The Tri-Cities is expected to attract 6,000 new households in the next five years, he said.

"We've out performed the national average at 58.6 percent," Langford said. That's how much home values have appreciated since 2000.

Tourism

Projects like the Washington State University Tri-Cities Wine Science Center and a possible Manhattan Project National Park will bring more travelers to the Tri-Cities, said Kathy Moore, Richland's Courtyard by Marriot general manager.

Tourists come to the Tri-Cities for leisure activities like golfing, wineries and boating, for events, for business and for sporting events, she said.

Overall, tourism brings $392.6 million in visitor spending, with about $63.5 million going to retailers, she said.

The 182 sports tournaments and conventions held in the Tri-Cities in 2012 brought about $36 million in visitor spending and more than 107,000 delegates, she said. Tourism means about 5,100 jobs in the Tri-Cities.

Retail

Barbara Johnson, Columbia Center mall general manager, said she expects to see lower sales in the first half of 2013, thanks in part to a cut in paychecks because of the end of a federal deduction in payroll taxes.

But in the second quarter, sales should begin to pick up, with an overall sales growth of about 5 percent expected this year, she said.

While Kennewick was the only one of the Tri-Cities to see more sales tax revenue last year, with a 1.5 percent growth, Johnson said, actual sales in the Tri-Cities were up about 8 percent.

That's lower growth than what the Tri-Cities has seen in the past five years, which has been closer to 12 to 15 percent, she said.

Some of the areas that were up were auto sales, theaters, convenience and grocery stores, home entertainment and electronics and family apparel, Johnson said.

Manufacturing

Manufacturing continues to see growth, said Kris Johnson, vice president of operations for the Association of Washington Business. Last year, the industry had a $132 billion impact on the state.

More than 7,000 people in Benton and Franklin counties work in manufacturing, which has remained stable, said Suljic, the regional labor economist.

The average Tri-City manufacturing wage is about $52,600, about 21 percent more than the average non-manufacturing wage, according to the business association.

Kris Johnson said he anticipates a 7 percemt to 10 percent growth in manufacturing this year.

The Tri-Cities has a great opportunity to attract manufacturers with the Hanford site, he said.

The real challenge is finding skilled and trained workers for manufacturers. The Tri-Cities has a gem in Columbia Basin College when it comes to creating training programs to meet industry needs, he said.

Agriculture

2012 was an outstanding year for Washington state agriculture, said Don Sleight, president of AgReserves, the parent company of Agri- Northwest.

And in 2011, the state had the most valuable harvest in history, according to the Washington State Department of Agriculture. The state's total value last year for commodities was $9.4 billion, 14 percent up from 2010's value of $8.25 billion, according to the USDA.

Sleight said he expects to see that success continue for the next several years.

U.S. agricultural products are competitive on the world market, with a lot of export activity to Asia and India, Sleight said. As countries grow, they upgrade the quality of food they eat.

Worldwide, food prices are more than double where they were in 2002 through 2004, Sleight said. Food prices remained high, but stable, during 2012.

-- Tri-City Herald Staff Writer Annette Cary contributed to this report.

-- Kristi Pihl: 582-1512; kpihl@ tricityherald.com

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