Weyerhaueser chops 750 jobs

By ERICA JAHN

Staff writer

Weyerhaeuser’s announcement earlier this week that 750 jobs will be eliminated over the next two years was unexpected to outsiders, but, internally, was a long time coming.

The forestry and wood-products giant, headquartered in Federal Way, announced last Wednesday that 750 jobs — about 26 percent of its Federal Way staff — will be cut by 2004 to streamline operations and reduce costs.

The economic recession and Weyerhaeuser’s recent acquisition of its closest competitor, Oregon-based Willamette Industries, played into the decision to lay off employees, but they weren’t deciding factors.

“We knew in early 1999 that we needed to take a hard look at our internal costs,” Weyerhaeuser spokesman Paul Barnum said. “As we studied (Willamette), we saw they were a very lean organization. Even if we hadn’t acquired Willamette, we knew we needed to Willamette-ize.

“The acquisition of Willamette accelerated that and gave us more confidence that we’d be successful,” he said.

More job losses are bad news for the region, particularly in light of recent announcements at Capitol One and Boeing that layoffs there are imminent, too, but the city won’t be directly or forcefully impacted by the cuts — at least not right away.

“The city is strong and the budget is strong,” said Patrick Doherty, the city’s deputy director of community development for economic development.

“We’re of course concerned about this, we’re not trying to downplay this. The first hit of course is that it’s bad news, but we’re happy they’re talking about how strong they still are and hope in the near future they’ll be able to grow back,” he said.

The announcement didn’t come as a huge surprise, Doherty said.

“I don’t think it was expected, but, if asked if someone was going to do layoffs, somebody would have said yes without maybe knowing which one. You wouldn’t know which ones, but, well, yeah, there probably would be more,” he said. “We weren’t expecting specifics, but in a generic way, we could have expected something.”

The cuts will hit primarily positions in Weyerhaeuser’s information technology and computer services departments and in the finance departments — two areas that Barnum said currently are “very large.”

Layoffs at Weyerhaeuser have been ongoing since February, affecting between 200 and 300 employees in corporate affairs divisions of the company like communications and environmental safety.

There currently are 8,200 Weyerhaeuser employees in the state and 2,850 at the Federal Way headquarters.

This round of layoffs are expected to begin next year, though Barnum said the company “hopes to lose the majority of positions though attrition.”

While the layoffs might not impact Federal Way immediately, a loss of 750 employees could eventually equate to a loss of about 1,900 jobs in support services — jobs like grocery workers, coffee shop employees and barbers, for example — on which Weyerhaeuser employees spend their wages.

Still, there are 1.7 million jobs in Puget Sound, according to Seattle economist Dick Conway, who co-publishes The Puget Sound Economic Forecaster.

“With 1.7 million jobs in the regional economy, those 1,900 jobs are one-tenth of 1 percent. The layoffs in themselves wouldn’t cause the unemployment to rise even to 6.9 percent,” he said. “That said, this is not good news for an economy that’s already in recession.”

Those 1,900 jobs aren’t literally people, Conway said. They translate in the business world to cutbacks on hours, delayed or abandoned expansions or hiring freezes. And the effects won’t be immediate. Rather, they could take years to work their way into the local economy.

“Impacts work out in all kinds of ways, but they do equate to a job loss,” he said.

Doherty said it’s especially important for cities to move forward with economic development plans in uncertain times.

“In any community, when you see a downturn, generally you want to continue, maybe with more vigor, to make the city an attractive place to see and live and play,” he said. “We don’t want the psychology of these events to bring everything down.”

Each of Weyerhaeuser’s affected departments will make their own cuts. Employees will receive 60 days paid notice and a severance package based on the length of service with Weyerhaeuser, health care benefits, special tuition reimbursements and job search assistance.

Conway said it will be difficult for those workers in the short-term but, if they’re anything like other unemployed workers in Washington, they won’t seek greener pastures elsewhere.

“Companies simply are not hiring. Potentially there are jobs at those companies, but it’s going to be awhile before those companies feel like hiring,” he said. “They’ll do well in the long-run. It’s the short-term that’s going to be hard for them.

“Here, there’s a tendency to hang around. In the Seattle, just because it’s a desirable place to live, it hangs onto people longer,” he added. “This is a more attractive place to live, so people are willing to sweat out the unemployment period.”

Doherty said it wouldn’t be immediately apparent whether layoffs will lead to a loss of consumer confidence in Federal Way.

“It’s hard to know if people will shake their heads and carry on or if it’s the straw that breaks the camel’s back,” he said.

Unemployment can be shown to have a correlation to consumer confidence, Conway said. When the unemployment rate is up, consumer confidence generally goes down. While Weyerhaeuser layoffs will raise the unemployment almost imperceptibly in the region, “the story itself is more bad news, and that might lower confidence,” he said.

And the relative impact will be greater in Federal Way than it will be in the rest of the region because employees of Weyerhaeuser won’t be spending any money here.

Still, the city, with budget intact and conservative projections in place, will carry on with its economic development plans and projects as before.

“We’re going to be concerned about this,” Doherty said. “But it’s almost more reason to pursue economic development and city center objectives to harness the energy and do what’s best for everyone. More reason than ever.”

Meanwhile, Weyerhaeuser’s workers will be OK if they get through the short-term.

“A lot of workers at Weyerhaeuser are going to hang around and try to get jobs here,” Conway said. “If they’re skilled, they might have a period of unemployment, but then they’ll get jobs and probably good ones.”

Staff writer Erica Jahn can be reached at 925-5565 and ejahn@fedwaymirror.com

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