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With more than a decade of increases behind us, did the Pierce County Economic Index roll over in 2022 and head downward?

What's the outlook for 2023?

That's part of our discussion with Tacoma Pierce County Chamber of Commerce CEO André Reay.

Plus, the Safe Boat Company's new mark six patrol and combat boat is under construction, just part of the revitalization of the Porter Tacoma, Boatbuilding tradition.

We'll take a closer look at what safe boat is working on and what the CEO's comments are about workforce.

Our annual look at the Pierce County economy is next on Northwest out.

Every year, the Tacoma Pierce County Chamber of Commerce releases the Pierce County Economic Index, or PCI report.

I help go through the data at the annual Horizon's breakfast with Dr. Neal Johnson, who crunches all the numbers from the previous year and then tries to read the tea leaves for the year ahead.

For the past decade, all the trend lines were headed up.

Well, the numbers for 2022 are in, and the Pierce County Index is down 1.5% with income spending on cars, retail sales and real estate down and unemployment starting to creep up a little bit.

Still, though, despite interest rate hikes, the consumer and housing wild down have hung in there and we really haven't seen the local economy aggressively roll over yet.

One of the bright spots has been the Port of Tacoma, where several new boat building operations are hiring skilled workers, including a company called Safe Boats.

Inside, a nondescript gray metal building at the end of the peninsula, formed by the Hale Boats and Blair Waterways at the Port of Tacoma.

The crew at safe boats is hard at work on the largest vessel the company has ever built.

The 85 foot long mark, six patrol boat being readied for use by the Ukrainian navy.

It will be armed with missiles, 30 millimeter cannons.

It also is armed or capable of being armed with a number of other both remotely operated and crew served weapons.

It's a it's basically a small warship.

It's been in service with the U.S. Navy.

The Ukrainian navy will be the first foreign military to operate the Mach six patrol boat, but is a fairly heavily armed, extremely capable multi-mission boat.

So it can be used for infrastructure protection, for escort, for special forces.

Really, it's a kind of Swiss Army knife of boats.

A half dozen of these Mach six patrol boats will be sent overseas to protect Ukrainian assets from the Russians.

Just part of the largest backlog of boat building and safe boats.

25 year history and perhaps the start of a new line of business for the recently reopened Tacoma plant.

The nice thing about the Mach six patrol boat for safe is that it is now the stepping stone to other large craft that we expect to build here in the Port of Tacoma.

So we're looking at other larger patrol boat programs for the U.S. as well as for foreign militaries.

We're also investing heavily in pursuit of vessels to support the emerging offshore wind industry.

So there's going to be an explosion of demand for vessels built in the United States to serve offshore wind farms.

It was the Mach six contract that allowed safe boats to reopen in Tacoma.

And when you listen to company CEO Richard Schwartz, it's clear the economic development machine in Pierce County has been firing on all cylinders.

Tacoma offered both proximity to kind of the West sound and Kitsap County workforces.

So, you know, we have access to a broad set of skills and people in this area.

The Port of Tacoma was very supportive and had a facility that was available that was close to the water to allow us to launch and retrieve vessels and and also a facility that had the size and the infrastructure to support building vessels like the Mach six patrol boat.

SCHWARTZ says the company has suffered through higher prices and long wait times for materials, but has adapted with longer term planning and purchasing.

And early indications are that 2023 will see materials prices flatten, with boats delivered to 70 countries.

Now, business has been good enough to interest employees and an ESOP and employee stock ownership plan.

That's part of the company's overall plan to work with local high schools, community and technical colleges and consulting organizations on skills development and building the local workforce.

That is the top priority for 2023.

Workforce is critical for safe boats.

We have about 240 people today.

We expect to be about 300 people by the end of this year.

And most of those new employees will be here in the Port of Tacoma working in this facility.

So finding skilled tradespeople, the craftspeople who really build our boats is a big challenge for us.

So both proximity to a workforce in this area, but also that support from local agencies and entities to to help us with training and recruiting is critical because we can get materials, we have the facility, but if we don't have those skilled craftspeople, we're not building boats.

Last year long time Tacoma Pierce Chamber President Tom Pierson ended his ten year with the organization.

Now the past president and CEO of the Seattle Southside Chamber of Commerce.

Andrea Ray is in that position and we're pleased to have her as our guest tonight.

Andrea, thanks so much for joining us here on Northwest.

Now want to start talking about the horizon's breakfast, which is the chamber's big event every year, a big fundraiser, but also a great opportunity for people to come in and really get a feel for what's going on in the local economy with both national and regional and local speakers, which is one of the reasons I think it's so, so valuable.

This was your first one.

You just intended it.

What was your impression of the support of the business community?

Yeah, I appreciate it.

So grateful to be here and serving this amazing, wonderful community.

My impression is it was sold out.

So that interest that that hunger of the business community to want to access that information about what is happening with our local economy, what is on the horizon that businesses can expect as they look forward to what 2023 is going to bring?

That was a huge takeaway.

Businesses need want that information.

And then the second takeaway is just how excited people are to get back together.

We've spent so long in virtual events and webinars, and here is an opportunity for us to gather together as a community, meet and greet, to build those relationships, strengthen those relationships.

It's a fundamental human need to connect and engage together, and that those are my two takeaways that need and that desire for the information and that need and that desire for human connection.

The difference between a Zoom meeting and a room full of people.

Oh, it's it's it's a much different dynamic.

Yes.

Yes, absolutely.

So Dr. Neil Johnson and I help him present his annual read on the CEI, the Pierce County Economic Index, which takes a pile of data and condenses it into one index where we can see year over year how how the economy is doing well for the first time in a long time.

Down 1.5%.

So is it serious yet?

I love that question.

Is it serious?

I would say I mean, it's always serious.

We are always looking at how dynamic our economy is, and especially for the business community.

What we thrive most is in that, you know, predictability.

So knowing that we are looking at a little bit of a of a downturn, you know, is serious and is cause for preparation.

Again, it is a horizons.

And we are also always looking forward.

And when we start looking at, you know, what does that forecast look like?

And that's you know, the forecast is going up 1.6%.

So it's so it's a little bit of this kind of reset for, you know, a little bit more of a, we hope, stabilization of of the local economy with so much dynamic fluctuations happening in the past.

I think we're looking forward to that post-pandemic reset and more of a of a settling in kind of the business community and quite frankly, the the all of the community of the world kind of taking that deep breath, that collective kind of reset, offer opportunities.

So, you know, assets are being revalued.

I mean, absolutely, interest interest rates are going up.

Money's not for anymore.

So there is if we can kind of do this reset, I think you suggest without a crash, that's that's I think that's what we're all looking at is is that rollercoaster just starting to do this or is it just going to be what's what's the shape of that going to be, I guess?

Right.

And it looks like the shape of it is pretty flat.

And so that's what we're hoping for.

And that's where what we're predicting and sometimes flat is good, right?

Sometimes flat is good.

I you know, I would be I would be happy with, you know, no news is good news, right?

You know, that opportunity to just, like I said, just kind of reset restructure.

I was interested to find in the data too that the the PCI that while the prediction for 2023 sees the roller coaster maybe going up a pinch 1.6%, we also end up with a 6% unemployment rate in Tacoma and Pierce County.

I'm having a hard time balancing those two ideas that we're doing a little better.

But employment might go up, unemployment might go up.

But then I'm thinking, well, maybe that helps with labor force.

I'm I'm trying to kind of connect those dots.

What are your thoughts about that?

Yeah, I appreciate that.

I think that, again, it all comes back to this, this reset.

And so when we're looking at the labor market, we know that for the last couple of years, it very much has been a workers market.

I dislike the term quiet quitting.

But that's you know, we went from great resignation to quiet quitting.

And I think now what we're going to see as more of that opportunity coming back into the labor market, it's going to be less of a of a workers market and it will be resetting some.

What I also appreciate in the report is that the index looks at what is that labor force participation rate.

And so as unemployment does go up, a little bit of a tick, we also see that participation rate go down.

And so dialing in a little bit more on those questions about, well, why are less people participating and you read my mind, isn't that right?

How are people how can people quit their jobs or had quietly quit and make it?

I think that what we have seen, again, post-pandemic are our families making different choices.

So when you're looking at, you know, before the pandemic, maybe people worked two or three part time jobs and they were able to pay for daycare and then that daycare closed and then, well, now I don't have to work that third part time job to pay for the daycare.

We're going to reset all, reevaluate, you know, restructure our lives so that we can maybe do more with less.

And so there is a lot of data on, you know, where are those skilled jobs and where are the unskilled jobs?

Are people leaving the unskilled labor market to do other things?

What what are those things diving into a little bit more of of that information, I think is is really key when we start to be thinking about what does that five, ten, 20 year plan look like with education, workforce development, with that realignment of, you know, what are the business needs of today and and tomorrow will look like with how we're producing that that pipeline of skilled workers.

And I think tying your two ideas together there, the reset in terms of business operations financing, there's that reset but families and individuals also we're doing a little reset to where all so that word really applies on both sides of that employment equation, doesn't it?

Absolutely.

Yeah, absolutely.

What are local businesses owner, business owners telling you about all the things in the news that we hear typically characterized as headwinds?

We've got inflation and supply chain problems.

And we you talked about the labor piece a little bit, but all those things that seem to be working against them.

Is some of that going to ease up, do you think?

What are those headwinds looking like at a higher interest rate environment?

Talk a little bit about that.

Small businesses in the business community always have headwinds and they're like farmers.

It's always a rough year.

I mean, always.

And, you know, I think about you know, my dad was a small business owner.

You know, it was, you know, every day it's another challenge.

And some of those challenges are you you know, you can see are coming like inflation.

You know, my my credit's going to get this hit like the job market.

It's going to be harder for me to, you know, hire and retain quality employees.

And then there's the things that no one can predict, you know, like a pandemic.

Right.

And so it is this constant juggle and equation that every small business owner is making, which how do you have the time, have the space to be able to navigate around the the obstacles that and the barriers that are there that you know of and make space for those unforeseen things that will just always happen?

Yeah, that is a huge part of what we do at the chamber is help provide that technical assistance, help provide that, that navigation for.

Look, this is what works best for most.

Let's, let's connect to you.

Let's get you those resources.

Let's let's help you navigate around that.

So, yes, absolutely.

You know, supply chain challenges.

I used to always buy my you know, to go boxes from this company.

Now they're out of to go boxes.

I still do.

60% of my you know, service is to go and take away orders where where am I going to find that next supplier.

Right.

So it's it's a pretty consistent issue.

Supply chain challenges, workforce issue challenges, inflation challenges.

We know about all of those.

I say bring those on.

We can help people navigate around a lot of that stuff.

It's and how do how do we prepare and keep that space for for the unknown that we also know is going to be coming at us.

You talked about the Chambers role in the Chambers business there in terms of connecting, you know, suppliers and providers and and vendors and just having that general connectivity throughout the Pierce County business community.

Let's talk about chamber business a little bit.

I want to give you an opportunity to talk about equity inclusion, which I know has been a major focus of of the Pierce County Chamber for a while, and that is an overlay on to the whole COVID reset piece.

Talk a little bit about some of the initiatives taking place there.

Yeah, absolutely.

It really is the lens through which we are filtering all of our operational and programing work.

So specifically we work and partner with the county and their program for the Pierce County Business Accelerator.

That's a phenomenal program that takes women veteran Bipoc business owners helps provide them with the tools and the resources that they need to make their small business successful.

We know that when they are successful, our community is successful.

How do we create and support more entrepreneurship?

That's truly the American dream and a wonderful way to build generational wealth.

Because then you, as a small business owner, again, thinking back to, you know, my childhood and my family, my dad is a small business owner.

I also I always had a job, right?

You know, you're providing jobs for family or providing jobs for the community.

More of that money stays within the community.

That's good for for all of us.

So programs like that, the PCB program Space Works and our Black Business Investment program also really encouraging more storefronts on Hilltop.

You know, that's huge.

How do we guard against displacement as we continue to see more development and certainly redevelopment in different areas and in Tacoma and Pierce County?

How do we how do we guard against that?

How do we create more commercial affordability, create that that space?

And then of course, we local entrepreneur.

Absolutely.

I mean, absolutely.

It's it's supporting and building what you have at home.

Economic development, you know, 80% retain and support what you have here now.

Yeah that we always want the big sexy you know company coming in and knocking everybody's socks on but it's growing your own were the real start that's that's been that that's and that's nuts and bolts of it and we have larger companies like Comcast that are investing in our community through their thrive program through RISE program.

So it's it really is about how are we reducing barriers, increasing access, putting money tools and resources into the pockets of people where maybe they haven't had that opportunity before.

You mentioned space works.

There's been some changes there.

What's going on with space Works?

One of your training programs downtown.

What's happening?

Yeah, absolutely.

So again, I think, you know, reset is maybe the theme for 2023 Space works is doing a little bit of a reset, too, and rethinking the space that they have downtown for their co-working space, wanting to have a new opportunity to have a first floor ground level, you know, a studio space, but also along with the studio space that need for micro retail and selling and vending.

And how are we how are we doing all of that together?

So I would say, although we've left the current space, that means that we're which was above street level, it was above street level and, and hard to access sometimes.

Right.

You know, so how, how and where we go next.

You know, we want to be able to really, you know, fulfill that mission of of space work supporting the creative economy, supporting entrepreneurship and having and finding a better space to be able to do that is is part of the long term vision and plan for us and encouraging that that make our ethic and some of that dynamic that's that's exactly that's exactly and that and that co-working environment where people can again like you talked about that synergy that that happens you know when people are working together and you know being part of that that same community we're talking about downtown a little bit.

And in years past, prior to your arrival at the chamber, one of the consistent themes along with workforce and everybody getting on 167 and driving north was we have no class-A office, but well, we have.

So we need more class-A office space in Tacoma.

Oh my gosh, that's killing us.

That's why we're not getting big things.

Do you think maybe that's not a problem anymore With the advent of remote work, some of this resetting taking place, what are your thoughts about that?

Is that kind of falling off the radar or not?

I'm I'm trying to appease myself that we don't have the class we need, though I think you are right in a lot of ways.

Right.

We have fundamentally shifted, you know, how we approach work, how we think about work from that perspective of the family, the family unit, How are how is the family working?

But then also, you know, how it how is office you know, what does what does a workplace look like and how has that reset?

So I'm excited and I'm encouraged by some of the development happening in downtown Tacoma to convert office space to residential space.

We know we have a housing crisis.

Housing is a huge part of business attraction and economic development.

Businesses want to relocate places where it's a livable, thriving community, where there's affordable spaces to live.

So creating more product, creating more spaces for people to live in, but residential, not necessarily pounding the table for class-A office.

I mean, I think I think we can pound the table for all of it.

I think I think I think that we need to to compete and we need to be available and open to the opportunities that that come our way.

And we also need to seek out those opportunities.

But it's an exciting opportunity when we're looking at welcoming more residents downtown.

What does that look like when people are living here, when it's not a monday through Friday, you know, 9 to 5 vibe downtown, but it is a 24 seven, you know, type of environment with restaurants and shopping and exciting activity.

Walkability provides a nice segway.

We all want to have that vision of a nice downtown with walking and shopping.

Unfortunately, there's a little thing that's gotten in the way lately called Crime Tacoma Police Department.

It has got a new emphasis going with property crimes, business owners, small group them, and a couple of different independent ways have come together trying to encourage city leadership to to take crime.

I think they take it seriously, take it more seriously.

We've had Chief Avery Moore on this program talking about it.

What is the chamber's position on crime in Tacoma in the central business district?

How do you see it on your where do you rank it on your list of problems?

And is there anything the chamber can do, do, and how are you engaging in this to to help the business community?

Crime and public safety is economic development, and the chamber is focused on economic development and equitable economic development.

So it is huge.

Are we encouraged by the emphasis, patrols and some of the work that's happening?

Yes, absolutely encouraged.

Can we and do we expect more?

Yes.

All crime is is unacceptable.

And we need to do more together as a community to say that this is this is not okay.

Public safety as also a team sport.

We all take some responsibility and creating safe communities and safe places to live, work and play.

And the chamber is absolutely part of the conversation, part of that solution finding for how do we create safer places.

Is it activation of public spaces and new ways that that's something we can do?

Tough question.

Do you believe in the resolve of the city of Tacoma?

I say, Oh, absolutely.

I believe 100% that as a as a community and as a city, that we are going to find the solution.

And I think in general, we have to believe that tomorrow is going to be better today if I do, in terms of what the administration is delivering and talking about.

Do you have faith in the city leaders?

Yes.

To solve this.

Okay.

I think, again, city leaders are not in this bubble by themselves.

You know, off trying to solve this problem.

We as a community need to come together to solve the problem.

So I would say, do I do I expect my city leaders to do this without input or without support or without the business community coming to the table?

No.

I expect that we need to and should play a vital role to come up with the solutions that will actually work and start to move the needle.

What's cool for 2023?

I know we're in this big reset.

We talked about some of the headwinds, but is there anything good in the works?

Is there anything to look forward to?

I think there's a lot to look forward, not generally specifically.

So specifically, we are really excited about getting our advocacy work back.

So again, there was so much that happened during COVID, so much of that reset that was, you know, how do we support our small businesses to get them through the pandemic?

And so, so much of that advocacy work was directly in pandemic response.

Now we are getting back to business and thinking about how do we continue to advocate for those issues that matter most.

So with legislative session continuing at the state, looking at this as our legislative agenda, how do we continue to push forward supporting entrepreneurship, supporting education, workforce development, supporting housing equity, equitable economic development.

You mentioned, you know, crime and public safety.

You know, how are we really moving the needle and getting back to work and kind of back to basics with that advocacy work?

So I'm excited about our RDC getting back together and getting the community together to continue to have those conversations and be more strategic with our advocacy work.

I'm excited about doing more long range planning and not just thinking about how are we going to get through this next week, how are we going to get through this next month?

But what is our three year plan as an organization and as a community?

What's our five year plan?

What's our what's our ten year plan?

And actually putting the work into place to get that.

So I'm excited about being in a place where we are getting back to work, kind of getting back to basics and the opportunity to be able to do that.

And finally at a place where we can start to look forward, where we can plan for and anticipate and welcome a brighter future, Tacoma and Pierce County, we're always the kinds of places that were among the first to plunge into a recession and the last decline back out of it.

The bottom line things have changed with a more diversified employment base and years of investing in training, apprenticeships, infrastructure and the quality of life, the hope is that it will become the kind of place that doesn't necessarily have to crater during a downturn.

I hope this program got you thinking and talking to watch this program again or to share it with others.

Northwest now can be found on the web at kbtc.org and be sure to follow us on Facebook and Twitter at Northwest.

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that that's going to do it for this edition of Northwest now and till next time I'm Tom Layson.

Thanks for watching.