Not a Panic Situation

Bill Ward says he grew up in the town of Bethlehem, Pa., a community that through much of its history owed its identity and its livelihood to the steel mills that took the same name.

“About 60% of the population worked for Bethlehem Steel, and there was probably a supply chain of another 20%,” said Ward, executive director of the Regional Employment Board of Hampden County, referring to conditions years ago (the company was dissolved in 2003). “When that industry went, there was nowhere to hide.”

He related that story to explain why concern, and not panic, is the watchword for the region’s job market. It comes down to one word: diversity.

“We’re not as sector-sensitive here,” he explained, adding that the once-manufacturing-dominant region now has jobs spread across a number of business groups, none of which seem to have been very hard hit to date by a recession that is devastating other parts of the country, where unemployment is approaching 10%

Indeed, ‘stable’ is the word that Ward and others used to describe sectors ranging from health care to education; from financial services to manufacturing. They mixed it in with ‘holding their own’ to describe these industries and the impact to date.

There have been some layoffs and hiring freezes in each of these sectors, said Ward, but nothing approaching the shock waves hitting construction-related businesses in many regions and the widespread devastation in the financial districts in New York, Boston, Charlotte, N.C. (home to several large banks, including Bank of America), and even Hartford.

This is evidenced by a current unemployment rate in the region that is slightly below the national average of 6.5%. As of the end of October, jobless rates in Springfield (7.8%) and Holyoke (7.5%) were significantly higher than the state average of 5.5%, but many Hampden County communities lie well below that figure.

That’s not to say that there isn’t concern or apprehension about the future of the local job market. Some sectors, especially those dependent on state and federal funding (and there are many), are hurting, and there are some warning signs, said Rexene Picard, executive director of the Springfield-based one-stop career center FutureWorks.

These include growing numbers of individuals showing up at her agency and also at CareerPoint in Holyoke looking for job opportunities, and also greater interest in temporary employees, with some business owners wary of hiring on a more-permanent basis due to uncertainty about what the future will hold.

“The major impact that I see every single day is the number of people coming in for unemployment assistance,” she told BusinessWest. “I’ve never seen it this difficult.”

Seeking Hire Ground

Moving down an unwritten list of the region’s major employment sectors, Ward and Picard said none of them have been unscathed by the downturn, but, by and large, they remain stable — there’s that word again.

The term accurately describes the state of manufacturing, an important sector because it brings money into the region from outside its boundaries and has a high ‘job-multiplier effect,’ said Ward, meaning that for every job in that realm, another two to three are created in other sectors.

“If you lose manufacturing jobs, your economy is likely taking a bigger hit than what a raw number of job statistics would suggest,” he explained. “In general, though, the high-tech and precision manufacturing sector in Western Mass. is holding its own.”

The same can be said of the financial-services arena, said Ward, noting that other regions and individual cities, such as Hartford, with its high concentration of insurance industry-related jobs, have been hit much harder.

“The dramatic financial collapse we have seen on the national level and on the state level are clearly reverberating in our region, but we are not going to see a big hit like you see elsewhere,” he told Business-West. “Our financial markets are stable, but I’m sure they’re very cautious as well.”

Picard agreed, and noted, as others have over the years, that the region actually benefits from its historically moderate pace of growth in trying times such as these.

“In contrast to the financial sector in Boston, we haven’t grown as rapidly out here,” she explained, “so we aren’t laying off as many now.”

In health care, one of the region’s strongest employment sectors, the sagging economy has created a new set of hurdles for an already-challenged industry (see related story, page 26). These have led to some layoffs at Northampton’s Cooley Dickinson Hospital and Baystate Health, the region’s largest employer, as well as some hiring freezes involving non-clinical workers. But overall, the sector remains solid, and in some cases is still experiencing difficulties filling job openings.

This is a separate challenge for the region, said Picard, noting that there are ongoing efforts to close a recognized skills gap with many positions within the health care industry and to put workers into the pipeline.

As for the education sector, another pillar of the local job market, the private colleges have yet to be seriously affected by the economic downturn, said Ward, and the public schools have taken small-scale steps to date. This could change, however, as those institutions adjust to $1 billion in budget cuts recently announced by Gov. Deval Patrick, and the possibility of additional reductions.

There are a number of institutions threatened by federal and state cutbacks, said Picard, listing her own as just one example; the two one-stop career centers have been forced to lay off 11 workers between them, she explained, adding that a host of social services, encompassing everything from mental-health services to childcare to transitional services (all of which are in greater demand during an economic downturn), are seeing their funding cut.

Meanwhile, other sectors are struggling. The sharp decline in the housing market has deeply impacted Realtors, said Picard, and also businesses in a host of related industries, including retail, which is smarting from an overall erosion in consumer confidence.

This phenomenon can be seen in a drop-off in holiday-season hiring, said Picard, with many stores wary about adding additional personnel. A lackluster holiday shopping season is predicted for the region and the nation, and if this comes to pass, then January will not be kind to some workers in that sector.

“What we’re hearing is that, come January, we might see additional layoffs,” she explained, “or actually more stores closing.”

Overall, caution is the prevailing attitude among employers, said those who spoke with BusinessWest, and this is reflected in greater reliance on temporary workers and temp-to-hire scenarios.

Rick Caneschi, corporate account manager for the Valley Employment Group, has seen seen such patterns develop, especially the hiring of temporary workers instead of permanent employees, a clear sign that business owners are apprehensive about the months ahead. And he knows from experience and navigating through more than three decades of business cycles that 2009 will be more challenging than ’08.

“I hate to say it, but I think it’s going to get worse before it gets better,” he said. “We’re seeing more and more companies asking how long they can keep their temporary employees on the payroll; they are being very cautious.

“It was in 1989 when we had an economic slowdown,” he continued. “But it was in 1990 when we saw the cuts. The question I ask myself is, where will we see the cuts in 2009?”

Strength in Numbers

This is the question on everyone’s mind as a dizzying year draws to a close.

The volume of traffic at FutureWorks is certainly enough evidence that the local job market is not exactly healthy, but it remains stable, as the experts told BusinessWest, and the signs point to more of the same in the year ahead.

“It’s going to be tough here,” said Ward, “but we do have that fundamental diversity, which gives us strength.”