Study outlines importance of marine sector
Addressing industry challenges will maintain region’s economic vitality

By Hilary Parker

We see boats being transported throughout the region on a near-daily basis. But what many of us don’t realize is that the majority of these boats were built here in Washington state, one of the largest contributors to the marine industry nationwide – an industry that recently gained recognition as a key contributor to the state economy.
In 2006, Gov. Christine Gregoire unveiled a new economic development strategy, called The Next Washington, to guide the state to the next level of economic growth and global competitiveness. As part of the plan, legislation was enacted to promote 11 key industry clusters that contribute to the statewide economy. The Washington State Department of Community, Trade and Economic Development (CTED) awarded six regional grants in late 2006 to analyze these key clusters – one being marine services.
A partnership of public and nonprofit entities in four counties – Whatcom, Skagit, Island and San Juan – applied for and received a $72,000 cluster grant from CTED to analyze the economic implications within the Northwest Washington region’s marine sector.

Study Participants and Scope
The Northwest Washington Marine Cluster Study was conducted over a six-month period by the Seattle-based planning firm of Berk & Associates with participation from 13 public and nonprofit agencies and more than 50 private marine-related businesses within the four counties. The study was managed by staff from the Bellingham-Whatcom Economic Development Council (BWEDC) and the Economic Development Association of Skagit County (EDASC), who managed grant expenditures.
Other key participants were the Northwest Workforce Development Council, the ports of Anacortes, Bellingham, Skagit and South Whidbey, the Island County Economic Development Council (ICEDC), San Juan County Economic Development Council (SJC-EDC), the Northwest Center for Excellence for Marine Manufacturing and Technology (CoE), Skagit Valley College (SVC) and Bellingham Technical College. The Center for Economic and Business Research at Western Washington University assembled and analyzed industry economic data.
The intent of the study was to gain a better understanding of the issues, challenges and opportunities local marine businesses face and to develop strategies the cluster could jointly pursue to grow and promote the industry.
“A lot of intensive work has been done in the past two-to-three years in the Northwest marine sector,” stated Sharon Hart, executive director of the ICEDC. “The industry is changing, growing and vibrant, and we needed a plan to put all of the work into focus to allow us to get our arms around what we still need to do.”
As the marine industry is very diverse, the scope of the study focused on the following sectors to make it more manageable: ship and boat manufacturing, boatyards and shipyards, boat and ship suppliers, ship and boat repair and maintenance, marinas, boat charter, boat storage and non-marina boat storage facilities.

Economic Implications
The study found that the Northwest marine industry generates significant economic benefits to the region. According to the report, the boat and shipbuilding, boat dealer and marina industries directly employed more than 9,000 people in Washington state in 2005, with approximately 1,900 of these jobs located within the Northwest cluster. It is estimated that the marine industry supports more than 4,000 jobs overall within the region and generated more than $362 million in economic activity in 2005.

Employment Opportunities and Earning Potential
The majority of the businesses in the cluster tend to be small, with less than 100 employees, but there are several firms that employ a much larger workforce (employment figures approximated), including Janicki Industries (450), Dakota Creek (200), Pacific Mariner (200), Nichols Brothers (175), Nordic Tugs (170), Sampson Rope (150) and Fairhaven Shipyards (125).
But the impact goes beyond the employment base of the marine-related businesses themselves. According to the results of the study, for every one job created in the boat and ship building industries, an additional 1.2 jobs are created through indirect and induced effects statewide.
The Northwest marine industry provides workers with a living wage, defined as wage that allows a worker to support a family in reasonable comfort, with an overall annual average wage per employee of $36,059, just slightly lower than the state average of $39,132. Boat building comprises more than half of the cluster’s total employment (1,098 jobs), followed by ship building and repairing (398), which are also the highest paying of the marine industries in the study.
According to the recently completed Washington State Marine Industry Employment and Compensation Study, median wages for boat and shipbuilding ranged from $10-$25 per hour. Workers with little-to-no experience in marine related fields, or even without work experience, are typically provided salaries well above minimum wage. Within boat building, starting manufacturing wages for unskilled workers typically run from $10-$12 per hour and offer health benefits. At a journeyman level, wages can be three times that of an unskilled worker.
The overall wages generated from employment within the Northwest cluster totaled nearly $150 million in 2005.
According to Don Wick, executive director of EDASC, the results of the study underscore the significance of the industry in Skagit County, particularly in terms of employment. “Northwest Washington’s employment in the marine industry is one of the most significant in the United States. Skagit County’s per capita employment in boat manufacturing may be tops in the nation.”

Taxable Retail Sales on the Rise
In the four-county Northwest region, taxable retail sales (TRS) have grown steadily over the past five years. In fact, with the exception of marinas, growth rates in all marine industry categories have outpaced statewide average growth. Shipbuilding and repairing experienced the largest annual average growth at 24.9 percent in TRS, although boat dealers have the largest absolute TRS growth between 2001 and 2006, generating $130 million in taxable retail sales.
For cities like Anacortes, which have large numbers of boat dealers and repair and marina facilities, the success of the marine cluster plays a crucial role in their local economies, as tax revenue generated by marine activities contributes significantly to city budgets.

With the Benefits Come the Challenges
While several challenges were documented in the study, one concern expressed by a majority of participants is the lack of skilled workers to fill open positions – a particularly difficult situation for boat and ship manufacturers. Competition is strong between marine manufacturers and from other industries, such as aerospace, which employ the same type of labor force including carpenters, fiberglass technicians and mechanics. Such competition has led to better employee benefits and incentives such as four-day work weeks (10-hr workdays, Monday - Thursday) to retain and attract skilled employees.
“Even though we offer the best benefits package of any boating manufacturer in Skagit County, we still experienced a labor shortage,” stated Kathryn Brown, human resource manager at Nordic Tugs.
The labor shortage has opened up opportunities for workers to change jobs or acquire new jobs skills that they could take with them into other industries in the future.
“Experienced workers are extremely scarce. To fill nearly 30 open positions, we placed advertisements stating we were looking for quality candidates with or without experience. We were willing to train people who exhibited a strong work ethic,” explained Brown.

Workforce Development Key to the Future
Though many manufacturing industries are becoming more automated, the marine industry heavily relies on the physical labor of skilled craftsmen. Work hours to complete a task increase with unskilled labor, and these increased production costs cut into a company’s profitability. The study suggests that effective training programs are a critical factor for the industry to remain economically viable and continue to grow.
“The labor challenges were documented directly from those within the industry during focus groups and round-table discussions,” said Ann Avery, CoE director. “The study helps put the need for skilled labor into a quantifiable format, which we can address through development of various education and training initiatives.”
Unfortunately, only two post-secondary educational entities that provide marine-related training are situated within the four-county region – Bellingham Technical and SVC (Whidbey Campus). SVC, the only American Boat and Yacht Council certified community college in the state, is now working with the National Marine Electronics Association for additional training certification.

Marine Skills Center Will Provide Needed Training
In 2007, the state approved $6.6 million in funding to build a 27,000-square-foot marine trades skills center in Anacortes. The Anacortes School District, the only district in the cluster that provides marine training at the high school level, will oversee the skills center, though the SVC marine-trades program and the CoE intend to move into the facility upon completion.
Avery noted the Marine Skills Center would focus on training and education initiatives for current worker retraining, advancing the education of those already in the industry, and providing training and educational opportunities for workers interested in entering the industry and to students expressing interest in training at the high school level. “We must continue to develop programs to meet the needs of the industry, and the Marine Skills Center will play a key role in educating the workforce,” Avery said.
The majority of students graduating high school today will not go to college and earn a four-year degree. The availability for training at the Marine Skills Center at the high school level will allow students to graduate with skills that will equip them to enter the marine industry and earn a wage that can support a family.

Taking the Next Steps
According to Wick, the next steps will be for the stakeholders to meet and set priorities based on the key strategic actions outlined in the study. “Some of the recommended actions will be dealt with by the individual communities they affect. For others, such as workforce education and training, we can work together on a regional basis. And for other actions recommended in the study, such as branding and marketing the industry, it might make sense for these actions to be implemented on a statewide level.”
“Marine is a vital industry to the region, and the industry is receiving some of the same pressures throughout the state,” noted SJ-EDC Program Coordinator Bill Watson. “We need to determine how some of the marine clusters can work together and to encourage the state to position the industry as a global economic participant.”
“A lot of people truly don’t know about the importance of the marine trades to the economies of the counties in the Northwest cluster – or even to the state as a whole,” explained ICEDC’s Hart. “That’s one of the benefits of this study – it documents its importance and will help put the industry on the state’s radar. It’s time the state began giving the marine sector the respect it deserves and put some priority on growing it globally.”