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Downturn Catches Up to Seattle
Oldest Newspaper's Woes Follow String of Job Cuts by the Region's Biggest Employers
By NICK WINGFIELD
Wall Street Journal
MARCH 10, 2009
SEATTLE -- The region that spawned Microsoft, Starbucks and Boeing, already coping
with layoffs at those corporate titans, is bracing for its latest indignity: the likely
shutdown of print operations at its oldest newspaper, the Seattle Post-Intelligencer.
Seattle, which has weathered the downturn better than most regions, is enduring a string
of major job losses. - Getty Images
Hearst Corp., publisher of the 146year-old P-I, is expected as early as
this week to stop publishing the paper
and move it to an online-only format.
Hearst plans to keep about one-tenth
of its existing 160 newsroom staff for
its online publication, plus some
advertising sales personnel, according
to people familiar with the matter. A
Hearst spokesman says it hasn't made
a decision on the P-I's fate. The
publisher had also been considering
shutting the paper entirely.
The demise of the newspaper -- which would leave the city with one major print daily,
the Seattle Times -- would be yet another blow to a city refashioned as a crucible for
high-tech and retail innovation from one overly dependent on the boom-and-bust cycles
of aerospace giant Boeing Co.
"It is definitely a shock to our civic pride," said Charles Royer, who was Seattle mayor
between 1978 and 1990.
Starbucks Corp. has said the coffee company is cutting about 1,000 jobs in the Puget
Sound region, which is home to about 3.3 million people. About half of Boeing's 10,000
announced job cuts are in the region. Adding to the pain is the fall in September of
Washington Mutual Inc., which became the biggest bank failure in U.S. history and sold
most of its operations to J.P. Morgan Chase & Co.
But the biggest jolt was Microsoft Corp.'s decision in late January to eliminate 5,000 jobs
over the subsequent 18 months because of slow sales, most of them at the software
company's sprawling campus in suburban Redmond. The company had never had mass
layoffs in its history.
"There was an understanding that Microsoft just didn't do that," said Chris Early, a
former manager in Microsoft's videogames group who was let go as part of the recent
layoffs.
By some measures, Seattle is weathering the downturn better than other regions. The area
had estimated unemployment of 6.8% in January, compared with 7.6% for the U.S. as a
whole. Locally based Internet merchant Amazon.com Inc. has bucked the gloomy
economy with its emphasis on low-priced goods. And median home values in the Seattle
area were among the country's last to fall, starting a slide in the fourth quarter of 2007
and only dipping into double-digit declines in the fourth quarter of last year, according to
estimates by Zillow Inc., a Seattle-based real-estate Web site. That was two years after
median home values began to fall in the San Francisco area and one year after they began
to drop in the U.S. as a whole, according to Zillow.
"I can't tell you how many times in the past year I heard people say, 'Yeah, but Seattle's
different,' when the topic of the housing market came up," said Amy Bohutinsky, a
Zillow spokeswoman.
Amid the "Boeing depression" of the late 1960s and early '70s, when the company laid
off nearly 70,000 employees because of a slump in the aerospace business, the region's
unemployment hit 13% in 1971, one of the highest rates in the nation. Now, one in eight
jobs in the Puget Sound region is directly or indirectly tied on Boeing, compared with one
in three jobs in the late '60s, estimates Dick Conway, a Seattle-based economist. Boeing
is now based in Chicago but retains sizable operations in the Seattle area.
There are some visible signs of the downturn, in the form of stalled building projects
blemishing many of Seattle's picturesque neighborhoods -- a jarring sight in a place
where the whirring of power tools was a constant presence in the construction sites that
seemed to spring up in every crevice of the city.
A block away from the fish and flower stalls of the iconic Pike Place Market there is a
hole in the ground nearly the size of a city block, where a hotel and condominium project
has stalled. The project, led by developer Starwood Capital Group Global LLC, is on
hold indefinitely because of the credit crisis, according to people familiar with the matter.
A spokesman for the Seattle department of planning and development said it doesn't track
stalled real-estate projects. Applications for new construction projects in the city were
down 40% in the fourth quarter compared with the same period the prior year.
Some longtime residents believe the downturn is leading locals to urge a rethinking of the
city's priorities. In a new book called "Pugetopolis," Seattle writer Knute Berger
chronicles a local identity crisis in which a lust for growth competes with a push for a
more ecologically minded town that is more affordable for the middle class.
"Deep within our roots, we have this sense that we should have our cake and eat it too,"
he said. "We can be a very dense, global, growth-oriented city and do it in such a way
that we can live in this beautiful, pristine environment. That's a fantasy we're loath to let
go of."
—Shira Ovide contributed to this article.
Write to Nick Wingfield at [email protected]