Friday, February 19, 2010

Reporter's Notebook

Paul Leonard can be reached at pleonard@vbjusa.com


One local take on “Why we are not hiring”

Joe Foggia, president and managing partner of Vancouver luxury yacht-builder Christensen Shipyards, has done more than most employers to keep his workers on the job.

Last fall, he devoted a large chunk of his manufacturing space to the design and production of vertical wind turbines, allowing Christensen to diversify its operations and rehire some of the workers it laid-off when orders for its custom-made ships began to slip with the onset of a worldwide recession.

But like the majority of firms across the U.S., Foggia has been reluctant to hire more employees – even as new orders at the shipyard have begun to trickle in.

What’s wrong with this picture?

Fundamental economic indicators place the U.S. economy firmly in recovery. Across the economic spectrum, save for the still-lagging commercial real estate sector, firms are increasing production, serving more customers and investing in new equipment.

However, the jobs situation looks more and more like a Catch-22. As businesses wait for a full recovery to take hold to rehire workers, the economy remains stuck in a twilight half-recession that isn’t likely to end until we get the greater share of the thousands of unemployed Clark County residents back to work.

“We are definitely looking forward to bringing some of these people back at some point,” Foggia said. “It’s just taking longer than anyone anticipated.”

As for other businesses that took state assistance to keep more workers on the job through the depth of the recession, there could be another storm lurking on the horizon that could stymie job growth even as a full-fledged recovery takes hold.

In a New York Times blog post yesterday
, Missouri business owner Jack Stack wrote about how his unemployment insurance per-employee-costs tripled after his manufacturing firm tapped funds from the state’s coffers to retain most of his staff.

Along with uncertainties in the corporate tax code and in employee healthcare costs, the added expense prompted these questions from Stack: “Is the hit we would take to income worth adding new people? Or should we just pay overtime as needed to the people we already have?”

The conundrum confronting execs like Stack begs another question: how long will it be before firms in Washington state are put in a similar situation?

Maybe some are already there.

If you will excuse the self-promotion, this lingering uncertainty in regards to taxation, healthcare and all the other barriers to job creation is exactly why VBJ plans to continue its weekly coverage of state legislation of interest to the business community, found here.

There may be little doubt that firms like Christensen will eventually begin to hire again. But as for the degree and duration of a jobs recovery – that’s a question likely to be decided in Olympia and Washington, D.C.

2 comments:

jim west said...

Paul,

I'm taking the theme from this article that part of the problem is that business won't hire because they don't trust what the government, state or federal will do with tax policy. They promise they won't raise taxes, but we all know they will so business stay as lean as possible because it is a major upfront expense to hire and train

Paul Leonard said...

In light of the tax question, I think it's important to note that the business owner quoted by the NYTimes blog post is Jack Stack, not to be confused with Joe Stack, the disgruntled software engineer who crashed his plane into an IRS building in Austin, Tex. yesterday.